1
EXHIBIT 10.21
AGREEMENT OF PURCHASE AND SALE
between
AMERICA'S BEST INNS, INC. and THE OTHER
SELLING ENTITIES LISTED ON SCHEDULE 1
TO THIS AGREEMENT
(collectively, "Sellers")
and
BEST ACQUISITION, INC.
("Purchaser")
Dated: December 15, 1997
2
Table of Contents
Page
----
Article 1 Purchase and Sale......................................................................1
1.1. Purchase and Sale......................................................................1
1.2. Certain Definitions....................................................................3
1.3. No Assumption..........................................................................7
Article 2 Purchase Price.........................................................................7
2.1. Purchase Price.........................................................................7
2.2. Allocation of Purchase Price...........................................................7
Article 3 Review Period..........................................................................7
3.1. Review Period..........................................................................7
Article 4 Representations and Warranties.........................................................8
4.1. Representations and Warranties of Sellers..............................................8
4.2. Representations and Warranties of Purchaser...........................................24
Article 5 Conditions Precedent..................................................................25
5.1. Conditions Precedent to Purchaser's Obligations.......................................25
5.2. Conditions Precedent to Sellers' Obligations..........................................31
Article 6 Covenants.............................................................................31
6.1. Covenants of Sellers..................................................................31
6.2. Covenants of Purchaser................................................................39
Article 7 Right of First Refusal................................................................40
Article 8 Closing and Closing Documents.........................................................41
8.1. Closing and Closing Documents.........................................................41
8.2. Deeds and Other Instruments of Conveyance.............................................41
8.3. Notices to Vendors....................................................................42
8.4. Security Deposits.....................................................................43
8.5. FIRPTA................................................................................43
8.6. Title Affidavits, etc.................................................................43
8.7. Escrow Closing........................................................................43
8.8. Additional Deliveries at Closing......................................................43
8.9. Apportionments........................................................................44
8.10. Tax Reduction Proceedings.............................................................45
8.11. Purchaser's Closing Documents.........................................................45
3
Page
----
Article 9 Termination Prior to Closing..........................................................46
9.1. Termination of Agreement..............................................................46
9.2. Termination of Obligations............................................................47
Article 10 Brokerage.............................................................................47
Article 11 Closing Costs.........................................................................47
Article 12 Condemnation..........................................................................47
Article 13 Insurance; Destruction or Damage......................................................48
Article 14 Miscellaneous.........................................................................49
14.1. Governing Law.........................................................................49
14.2. Entire Agreement......................................................................49
14.3. Waiver................................................................................49
14.4. Severability..........................................................................49
14.5. Exhibits and Schedules................................................................49
14.6. Further Assurances....................................................................49
14.7. Headings..............................................................................49
14.8. No Third-Party Beneficiaries..........................................................50
14.9. Assignment............................................................................50
14.10. Notices...............................................................................50
14.11. Successors and Assigns................................................................52
14.12. Attorneys' and Other Professionals' Fees..............................................52
14.13. Liability Joint and Several...........................................................52
14.14. Plural and Singular...................................................................52
4
AGREEMENT OF PURCHASE AND SALE
AGREEMENT OF PURCHASE AND SALE ("Agreement"), dated as of
December 15, 1997, made by and between AMERICA'S BEST INNS, INC., a Delaware
corporation, having an address at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
and EACH OF THE OTHER SELLING ENTITIES LISTED ON SCHEDULE 1 TO THIS AGREEMENT
(collectively, "Sellers"), and BEST ACQUISITION, INC., a Georgia corporation,
having an address at ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
("Purchaser").
Preliminary Statement
Sellers are the owners of the "Assets" described in Article 1
below. Sellers desire to sell the Assets, and Purchaser desires to purchase the
Assets all upon and subject to, the terms, covenants and conditions set forth
in this Agreement.
Accordingly, the parties hereto hereby agree as follows:
Agreement of the Parties
Article 1
Purchase and Sale
1.1. Purchase and Sale. Sellers shall sell, convey and
assign and Purchaser shall purchase, subject to the terms and conditions of
this Agreement:
(a) A fee simple interest in the parcels of land
described on Schedule 1.1(a) annexed hereto (collectively, the "Land");
(b) Leasehold estates in the parcel of land and
office space described on Schedule 1.1(b)(1) annexed hereto ("Sellers' Leased
Land") held by the applicable Seller pursuant to the leases described on
Schedule 1.1(b)(2) annexed hereto (the "Sellers' Leases");
(c) A fee simple interest in all of the buildings and
improvements (collectively, the "Sellers' Improvements") situated on the Land or
Sellers' Leased Land, as applicable;
(d) All right, title and interest of each Seller
(whether as owner in fee simple of the Land or as tenant under any of Sellers'
Leases) in and to any land lying in the bed of any highway, street, road, or
avenue, open or proposed, including vaults, if any, and any strips and gores in
front of or abutting or adjoining the Land or Sellers' Leased Land, and any
award made or to be made in lieu thereof and in and to any unpaid award for
damages to any Land, Sellers' Leased Land or any of Sellers' Improvements by
reason of a change of grade of any highway, street, road or avenue adjoining
any of the Land or Sellers' Leased Land;
5
2
(e) All right, title and interest of each Seller in
and to all easements, tenements, hereditaments, privileges and appurtenances in
any way belonging to the Land, Sellers' Leased Land, Sellers' Leases or
Sellers' Improvements;
(f) All Bookings, Books and Records, Consumables,
FF&E, Miscellaneous Assets, Small Operating Equipment (each, as hereinafter
defined) and all other articles of personal property, whether tangible or
intangible, which are attached, appurtenant to, installed or placed in or upon
or used for or adapted in any way to the complete and comfortable use,
enjoyment, occupancy and operation of the Hospitality Assets (as hereinafter
defined) and the Related Assets (as hereinafter defined), and all contractual
rights of every kind relating to the Hospitality Assets and the Related Assets
(all of the above being hereinafter collectively referred to as "Sellers'
Personal Property"). Notwithstanding the foregoing, Sellers' Personal Property
shall not include any items (x) which are owned by Tenants under the Leases
(defined in paragraph (h) below), other than those items which are not
removable by such Tenants pursuant to the terms of their respective Leases, (y)
which are owned by guests at Sellers' Improvements or (z)constituting Excluded
Assets. Each parcel of Land and the Sellers' Improvements located thereon and
the property interests described in paragraphs (d), (e) and (f) appurtenant
thereto, and each Sellers' Lease, Sellers' Leased Land leased pursuant thereto
and Sellers' Improvements located on such Sellers' Leased Land and the property
interests described in paragraphs (d), (e) and (f) appurtenant thereto is
hereinafter individually referred to as a "Hospitality Unit", and collectively
as the "Hospitality Units";
(g) To the extent assignable or transferable to
Purchaser, all "Permits" (as defined in subsection 4.1.12) relating to
Hospitality Units, all "Service Agreements" relating to Hospitality Units; and
all of Sellers' rights under any unexpired warranties or guarantees relating to
Sellers' Personal Property or Sellers' Improvements;
(h) All of Sellers' right, title and interest in and
to the leases, license agreements, concessionaire agreements, franchises not
constituting a part of the Franchise Business or other agreements and all
modifications, renewals and amendments thereto and third party guarantees
thereof any person or entity (each, a "Tenant") to use or occupy space at
Hospitality Units (collectively, "Leases"), and all rental, security deposits,
receivables, and other monetary items payable by Tenants and all rentals paid
by Tenants prior to the date hereof, but relating to the period on or after the
Closing Date;
(i) (i) All of Sellers' right, title and interest in
and to all trademarks, service marks, trade dress, logos, trade names, and
corporate names, together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith, and all
trademarks or business or corporate names confusingly similar thereto in
relation to any goods or services, and
6
3
all applications, registrations, and renewals in connection therewith, (ii) all
copyrightable works, all copyrights, and applications, registrations, and
renewals in connection therewith, (iii) all trade secrets and confidential
business information (including ideas, research and development, know-how,
formulas, compositions, marketing processes and techniques, technical data,
designs, drawings, customer and supplier lists, pricing and cost information,
and business and marketing plans and proposals), (iv) all Software (as
hereinafter defined) (including data, source code and related documentation),
(v) all other proprietary rights, and (vi) all copies and tangible embodiments
thereof (in whatever form or medium) and including, without limitation, the
items listed on Schedule 1.1(i) attached hereto (collectively, the
"Intellectual Property").
(j) All right, title and interest of ABI (as
hereinafter defined) in, to and under the Franchise Business (as hereinafter
defined);
(k) All right, title and interest of BMC (as
hereinafter defined) in, to and under the Management Business (as hereinafter
defined); and
(l) All right, title and interest of ABI in, to and
under the Reservations Business (as hereinafter defined).
Each of the items referred to in paragraphs (a) - (h) above
are collectively referred to as the "Hospitality Assets"; each of the items
referred to in paragraphs(i) - (l) above are collectively referred to as the
"Related Assets"; the Hospitality Assets and Related Assets are hereinafter
collectively referred to as the "Assets".
Notwithstanding the foregoing, the Assets shall not include
the Excluded Assets.
1.2. Certain Definitions. For purposes of this Agreement,
the following terms shall have the following meanings. Such definitions shall
be equally applicable to the singular and plural forms of the terms defined.
(a) "ABI" means America's Best Inns, Inc., a Delaware
corporation.
(b) "Affiliate" means with respect to any Person, any
Person that directly, or indirectly through one or more intermediaries,
controls or is controlled by, or is under common control with such Person.
(c) "BMC" means ▇▇▇▇▇▇ Management Company, Inc., a
Delaware corporation.
7
4
(d) "Bookings" means the contracts or reservations
for the use of guest rooms, banquet facilities, restaurants or meeting rooms in
any Hospitality Unit.
(e) "Books and Records" means all books, records,
ledgers, files, information, data and other written materials to the extent
relating to the operation of any Hospitality Unit or Related Business,
including, without limitation, books and records (i)relating to taxes which are
payable in connection with the operation of any Hospitality Unit or Related
Business, including, without limitation, accounting and tax records and
information pertaining to events occurring in connection with the operation of
any Hospitality Unit or Related Business prior to the Closing Date, and
(ii)required to be retained by the Purchaser after the Closing Date pursuant to
obligations imposed by applicable law.
(f) "BRC" means Best Reservations Corporation, an
Illinois not-for-profit corporation.
(g) "Consumables" means all of Seller's unused food
and beverages, all unused engineering, maintenance and housekeeping supplies,
including soap, cleaning materials, fuel and other materials, all unused
stationery, brochures, advertising materials and other printed items, and all
of Sellers' other unused supplies of all kinds which are held in storage and
available for use in connection with the maintenance and operation of any
Hospitality Unit.
(h) "Employee" means each employee of any of the
Sellers who regularly works for such Seller in connection with the operation of
the Hospitality Units, the Franchise Business, the Management Business or the
Reservation Business.
(i) "Environmental Laws" means, without limitation,
the Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. ss.ss.9601 et seq., the Emergency Planning and Community Right-to-Know
Act of 1986, 42 U.S.C. ss.ss.11001 et seq., the Resource Conservation and
Recovery Act, 42 U.S.C. ss.ss.6901 et seq., the Toxic Substances Control Act,
15 U.S.C. ss.ss.2601 et seq., the Federal Insecticide, Fungicide, and
Rodenticide Act, 7 U.S.C. ss.ss.136 et seq., the Clean Air Act, 42 U.S.C.
ss.ss.7401 et. seq., the Clean Water Act, 33 U.S.C. ss.ss.1251 et seq., the
Safe Drinking Water Act, 42 U.S.C. ss.ss.300f et seq., the Occupational Safety
and Health Act, 29 U.S.C. ss.ss.641, et seq., the Hazardous Materials
Transportation Act, 49 U.S.C. ss.ss.1801, et seq., as any of the above statutes
have been amended from time to time prior to the date hereof, all rules and
regulations promulgated prior to the date hereof pursuant to any of the above
statutes, and any other federal, state or local law, statute, ordinance, rule
or regulation governing environmental, health or safety matters, as the same
have been amended from time to time prior to the date of this Agreement,
including any common law cause of action, all indemnity agreements and other
contractual obligations relating to environmental, health and safety matters.
8
5
(j) "ERISA Affiliate" means each business or entity
which is a member of a "controlled group of corporations", under "common
control" or an "affiliated service group" with any Seller within the meaning of
Sections 414(b), (c) or (m) of the Code (as hereinafter defined), or required
to be aggregated with any Seller under Section 414(o) of the Code, or is under
"common control" with any Seller within the meaning of Section 4001(a)(14) of
ERISA (as hereinafter defined).
(k) "Excluded Assets" means each of the assets listed
on Schedule 1.1(k).
(l) "FF&E" shall mean all fixtures, furniture,
furnishings, fittings, equipment, machinery, apparatus, appliances and other
articles of personal property owned by any Seller and located on the Land or
Sellers' Leased Land, as applicable, or in any Hospitality Unit as of the date
of this Agreement and used or usable in connection with the operation of any
Hospitality Unit or any Related Business. FF&E does not include (i)Consumables,
(ii)Small Operating Equipment, (iii)equipment leased by any Seller or provided
to any Seller pursuant to a Service Agreement and not owned or leased by any
Seller, (iv)the Sellers' Improvements and (v)property owned or leased by
guests, employees or other persons furnishing goods or services to any
Hospitality Unit.
(m) "Franchise Business" means ABI's Best Inns and
Best Suites franchise program, including, without limitation, all operational
concepts and manuals, advertising programs, training programs, franchise fees
receivable accruing from and after the Closing Date (as hereinafter defined),
and all of ABI's rights under any franchise agreement.
(n) "Hazardous Materials" means any pollutants,
contaminants, substances, materials, wastes, constituents, compounds,
chemicals, natural or man-made elements or forces (including, without
limitation, petroleum or any by-products or fractions thereof, any form of
natural gas, lead, asbestos or asbestos-containing materials, polychlorinated
biphenyls ("PCBs") or PCB-containing equipment, radon and other radioactive
elements, pesticides, defoliants, and urea formaldehyde foam insulation) that
are regulated by, or may form the basis of liability under, any Environmental
Laws.
(o) "Management Business" means BMC's motel property
management services business, including, without limitation, sales and
marketing support, financial planning and reporting, maintenance services,
human resources services, contracting for outside services and all of BMC's
rights under any motel property management agreement.
(p) "Miscellaneous Assets" shall mean all contract
rights, Books and Records, technology and technological information,
warranties, guarantees, plans, drawings, specifications, surveys, building or
engineering records and reports,
9
6
schedules and the like in any Seller's possession relating to the original
construction or any renovations of any of the Hospitality Units.
(q) "Pension Plan" means each Employee Plan (other
than a multi-employer plan) which is an "employee pension benefit plan" within
the meaning of Section 3(2) of ERISA.
(r) "Person" means any individual, partnership,
limited partnership, corporation (including a business trust), not-for-profit
corporation, limited liability company, joint stock company, estate, trust,
business trust, unincorporated association, joint venture or other entity or a
government or an agency or political subdivision thereof.
(s) "Related Business" means, collectively, the
Franchise Business, the Management Business and the Reservations Business.
(t) "Reservations Business" means BRC's central
reservation system pursuant to which BRC books guest reservations, additions
and cancellations with respect to each participating Hospitality Unit under the
"Best Inn" or "Best Suite" names.
(u) "Sellers' knowledge" The terms "Sellers'
knowledge", "Sellers' best knowledge", "to the knowledge of Seller", or "to the
best knowledge of Seller" mean the knowledge of any director or executive
officer of a Seller that is a corporation; the managing general partner of any
Seller that is a limited partnership or a general partnership; the manager of
any Seller that is a limited liability company; ABI's knowledge (as defined
above) for any Seller that is a contractual joint venture, and in each case,
the knowledge of any employee of any of the foregoing entities who is involved
in the management of such entities.
(v) "Small Operating Equipment" means all china,
glassware, stemware, bath mats, bath rugs, shower curtains, tools, linens,
towels, uniforms, bedding, silverware, telephones, televisions, cable
equipment, computer equipment and peripherals and any other equipment, goods,
utensils, supplies or reserve stock owned by any Seller, located in any
Hospitality Unit and used or held in reserve or storage for future use in
connection with the maintenance and operation of any Hospitality Unit. The term
"Small Operating Equipment" does not include Consumables and the FF&E.
(w) "Transaction Documents" means, collectively, this
Agreement and each other agreement, deed, instrument, certificate or other
document executed or otherwise delivered in connection with the transactions
contemplated by this Agreement.
10
7
(x) "Welfare Plan" means each Employee Plan which is
an "employee welfare benefit plan" within the meaning of Section 3(1) of ERISA.
1.3. No Assumption. Except as expressly provided in this
Agreement, Purchasers will not assume any of the liabilities of Sellers
relating to or incurred or in connection with the ownership or operation of the
Assets, it being understood that any liabilities under any of the Service
Agreements, Intercompany Contracts, Third Party Contracts, transferable
Insurance Policies or Permits transferred to Purchaser at the Closing (a) which
arose prior to the Closing, shall not be assumed by Purchaser and shall remain
Sellers' responsibility and (b) which arise after the Closing, shall be assumed
by Purchaser and shall become Purchaser's responsibility.
Article 2
Purchase Price
2.1. Purchase Price. Subject to the terms of this Agreement
and to the adjustments, credits and additional payments hereinafter
specifically provided for, the Purchaser shall pay to Seller Eighty-Four
Million Dollars ($84,000,000) (the "Purchase Price") on the Closing Date by
wire transfer of immediately available funds to such account as Sellers shall
specify to Purchaser, in writing, prior to the Closing Date.
2.2. Allocation of Purchase Price. Purchaser and Sellers
confirm that Schedule 2.2 accurately sets forth the portions of the total
consideration to be paid by Purchaser allocable (i) to each of Hospitality
Units and (ii) to each of the other Assets to be conveyed to Purchaser in
connection with the transactions contemplated by the Agreement and the other
Transaction Documents.
Article 3
Review Period
3.1. Review Period. (a) During the period (the "Review
Period") between the date hereof and January 29, 1998, Purchaser shall have the
right to review the financial and physical condition and methods of operation
of the Hospitality Units and the Related Businesses, any of the documents,
instruments or agreements heretofore or hereafter delivered to Purchaser
pursuant to this Agreement or otherwise, or any of the matters referred to
therein, and to determine whether the same are satisfactory to Purchaser, in
its sole discretion. On or before the end of the Review Period, Purchaser shall
notify Seller, in writing, of whether it has elected to terminate this
Agreement. If Purchaser elects to terminate this Agreement, it shall provide
Seller with its reason for such termination in its notice, it being understood
that no such reason shall affect the validity or effectiveness of such
termination notice.
(b) In the event that Purchaser's environmental
consultant shall recommend that Purchaser have a Phase II environmental
assessment performed in any
11
8
Hospitality Unit, Purchaser shall notify Sellers and Purchaser shall provide
Sellers with a copy of Purchaser's Phase I environmental assessment relating to
such Hospitality Unit. Sellers shall within five (5) days of such notice advise
Purchaser, in writing, whether or not it has agreed to allow Purchaser to
perform a Phase II environmental assessment in such Hospitality Unit. If
Sellers do not allow a Phase II environmental assessment be performed in such
Hospitality Unit, Purchaser shall have the right to elect to terminate this
Agreement upon written notice to Sellers, whereupon this Agreement shall
terminate and be of no further force or effect, except for those provisions
which by their terms are intended to survive. Purchaser's rights under this
Section 3.1(b) are not intended to limit any of Purchaser's other rights
otherwise set forth in this Agreement.
Article 4
Representations and Warranties
4.1. Representations and Warranties of Sellers. Sellers
represent and warrant as follows:
4.1.1. Organization of Sellers; Authority of Sellers;
Validity. (a) ABI is a corporation, duly formed under the laws of the state of
Delaware and in good standing under the laws of such state and is authorized to
do business in each state in which the conduct of its business or the ownership
of any of the Assets requires it to be so qualified. ABI has full power and
authority to execute and deliver to Purchaser this Agreement and all other
Transaction Documents to which it is a party and to own and operate those
Assets owned by it and perform the obligations and carry out the duties imposed
on ABI by this Agreement and by all the other Transaction Documents. This
Agreement has been duly authorized, approved and executed by ABI and
constitutes the valid and binding obligation of ABI, enforceable against ABI in
accordance with its terms. The Transaction Documents to which ABI is a party
have been duly authorized and approved, and upon due execution and delivery of
such Transaction Documents, will constitute the valid and binding obligations
of ABI, enforceable against ABI in accordance with their respective terms.
(b) BMC is a corporation, duly formed under the laws
of the state of Delaware and in good standing under the laws of such state and
is authorized to do business in each state in which the conduct of its business
or the ownership of any of the Assets requires it to be so qualified. BMC has
full power and authority to execute and deliver to Purchaser this Agreement and
all other Transaction Documents to which it is a party and to own and operate
those Assets owned by it and perform the obligations and carry out the duties
imposed on BMC by this Agreement and by all the other Transaction Documents.
This Agreement has been duly authorized, approved and executed by BMC and
constitutes the valid and binding obligation of BMC, enforceable against BMC in
accordance with its terms. The Transaction Documents to which BMC is a party
have been duly authorized and approved, and upon due execution and delivery of
such Transaction Documents, will constitute the
12
9
valid and binding obligations of BMC, enforceable against BMC in accordance
with their respective terms.
(c) BRC is a not-for-profit corporation, duly formed
under the laws of the state of Illinois and in good standing under the laws of
such state and is authorized to do business in each state in which the conduct
of its business or the ownership of any of the Assets requires it to be so
qualified. BRC has full power and authority to own and operate those Assets
owned by it. The Transaction Documents to which BRC is a party will have been
duly authorized and approved on or prior to the Closing Date, and upon due
execution and delivery of such Transaction Documents, will constitute the valid
and binding obligations of BRC, enforceable against BRC in accordance with
their respective terms.
(d) Carbondale Hospitality Partners, an Illinois
limited partnership ("Carbondale"), is a limited partnership, duly formed under
the laws of the state of Illinois and in good standing under the laws of such
state and is authorized to do business in each state in which the conduct of
its business or the ownership of any of the Assets requires it to be so
qualified. Carbondale has full power and authority to execute and deliver to
Purchaser this Agreement and all other Transaction Documents to which it is a
party and to own and operate those Assets owned by it and perform the
obligations and carry out the duties imposed on Carbondale by this Agreement
and by all the other Transaction Documents. This Agreement has been duly
authorized, approved and executed by Carbondale and constitutes the valid and
binding obligation of Carbondale, enforceable against Carbondale in accordance
with its terms. The Transaction Documents to which Carbondale is a party have
been duly authorized and approved, and upon due execution and delivery of such
Transaction Documents, will constitute the valid and binding obligations of
Carbondale, enforceable against Carbondale in accordance with their respective
terms.
(e) Paducah Joint Venture, an Illinois general
partnership ("Paducah"), is a general partnership, duly formed under the laws
of the state of Illinois and in good standing under the laws of such state and
is authorized to do business in each state in which the conduct of its business
or the ownership of any of the Assets requires it to be so qualified. Paducah
has full power and authority to execute and deliver to Purchaser this Agreement
and all other Transaction Documents to which it is a party and to own and
operate those Assets owned by it and perform the obligations and carry out the
duties imposed on Paducah by this Agreement and by all the other Transaction
Documents. This Agreement has been duly authorized, approved and executed by
Paducah and constitutes the valid and binding obligation of Paducah,
enforceable against Paducah in accordance with its terms. The Transaction
Documents to which Paducah is a party have been duly authorized and approved,
and upon due execution and delivery of such Transaction Documents, will
constitute the valid and binding obligations of Paducah, enforceable against
Paducah in accordance with their respective terms.
13
10
(f) Fort ▇▇▇▇▇ Joint Venture, an Illinois general
partnership ("Fort ▇▇▇▇▇"), is a general partnership, duly formed under the
laws of the state of Illinois and in good standing under the laws of such state
and is authorized to do business in each state in which the conduct of its
business or the ownership of any of the Assets requires it to be so qualified.
Fort ▇▇▇▇▇ has full power and authority to execute and deliver to Purchaser
this Agreement and all other Transaction Documents to which it is a party and
to own and operate those Assets owned by it and perform the obligations and
carry out the duties imposed on Fort ▇▇▇▇▇ by this Agreement and by all the
other Transaction Documents. This Agreement has been duly authorized, approved
and executed by Fort ▇▇▇▇▇ and constitutes the valid and binding obligation of
Fort ▇▇▇▇▇, enforceable against Fort ▇▇▇▇▇ in accordance with its terms. The
Transaction Documents to which Fort ▇▇▇▇▇ is a party have been duly authorized
and approved, and upon due execution and delivery of such Transaction
Documents, will constitute the valid and binding obligations of Fort ▇▇▇▇▇,
enforceable against Fort ▇▇▇▇▇ in accordance with their respective terms.
(g) Johnston, Iowa Joint Venture, an Illinois general
partnership ("▇▇▇▇▇▇▇▇"), is a general partnership, duly formed under the laws
of the state of Illinois and in good standing under the laws of such state and
is authorized to do business in each state in which the conduct of its business
or the ownership of any of the Assets requires it to be so qualified. ▇▇▇▇▇▇▇▇
has full power and authority to execute and deliver to Purchaser this Agreement
and all other Transaction Documents to which it is a party and to own and
operate those Assets owned by it and perform the obligations and carry out the
duties imposed on ▇▇▇▇▇▇▇▇ by this Agreement and by all the other Transaction
Documents. This Agreement has been duly authorized, approved and executed by
▇▇▇▇▇▇▇▇ and constitutes the valid and binding obligation of ▇▇▇▇▇▇▇▇,
enforceable against ▇▇▇▇▇▇▇▇ in accordance with its terms. The Transaction
Documents to which ▇▇▇▇▇▇▇▇ is a party have been duly authorized and approved,
and upon due execution and delivery of such Transaction Documents, will
constitute the valid and binding obligations of ▇▇▇▇▇▇▇▇, enforceable against
▇▇▇▇▇▇▇▇ in accordance with their respective terms.
(h) Springfield Joint Venture, an Illinois general
partnership ("Springfield"), is a general partnership, duly formed under the
laws of the state of Illinois and in good standing under the laws of such state
and is authorized to do business in each state in which the conduct of its
business or the ownership of any of the Assets requires it to be so qualified.
Springfield has full power and authority to execute and deliver to Purchaser
this Agreement and all other Transaction Documents to which it is a party and
to own and operate those Assets owned by it and perform the obligations and
carry out the duties imposed on Springfield by this Agreement and by all the
other Transaction Documents. This Agreement has been duly authorized, approved
and executed by Springfield and constitutes the valid and binding obligation of
Springfield, enforceable against Springfield in accordance with its terms. The
Transaction Documents to which Springfield is a party have been duly authorized
and approved, and upon due execution and delivery of such Transaction
Documents, will
14
11
constitute the valid and binding obligations of Springfield, enforceable
against Springfield in accordance with their respective terms.
(i) ▇▇▇▇▇▇▇▇ Joint Venture, an Illinois general
partnership ("▇▇▇▇▇▇▇▇"), is a general partnership, duly formed under the laws
of the state of Illinois and in good standing under the laws of such state and
is authorized to do business in each state in which the conduct of its business
or the ownership of any of the Assets requires it to be so qualified. ▇▇▇▇▇▇▇▇
has full power and authority to execute and deliver to Purchaser this Agreement
and all other Transaction Documents to which it is a party and to own and
operate those Assets owned by it and perform the obligations and carry out the
duties imposed on ▇▇▇▇▇▇▇▇ by this Agreement and by all the other Transaction
Documents. This Agreement has been duly authorized, approved and executed by
▇▇▇▇▇▇▇▇ and constitutes the valid and binding obligation of ▇▇▇▇▇▇▇▇,
enforceable against ▇▇▇▇▇▇▇▇ in accordance with its terms. The Transaction
Documents to which ▇▇▇▇▇▇▇▇ is a party have been duly authorized and approved,
and upon due execution and delivery of such Transaction Documents, will
constitute the valid and binding obligations of ▇▇▇▇▇▇▇▇, enforceable against
▇▇▇▇▇▇▇▇ in accordance with their respective terms.
(j) Libertyville Joint Venture, an Illinois general
partnership ("Libertyville"), is a general partnership, duly formed under the
laws of the state of Illinois and in good standing under the laws of such state
and is authorized to do business in each state in which the conduct of its
business or the ownership of any of the Assets requires it to be so qualified.
Libertyville has full power and authority to execute and deliver to Purchaser
this Agreement and all other Transaction Documents to which it is a party and
to own and operate those Assets owned by it and perform the obligations and
carry out the duties imposed on Libertyville by this Agreement and by all the
other Transaction Documents. This Agreement has been duly authorized, approved
and executed by Libertyville and constitutes the valid and binding obligation
of Libertyville, enforceable against Libertyville in accordance with its terms.
The Transaction Documents to which Libertyville is a party have been duly
authorized and approved, and upon due execution and delivery of such
Transaction Documents, will constitute the valid and binding obligations of
Libertyville, enforceable against Libertyville in accordance with their
respective terms.
(k) Nashville Joint Venture, an Illinois general
partnership ("Nashville"), is a general partnership, duly formed under the laws
of the state of Illinois and in good standing under the laws of such state and
is authorized to do business in each state in which the conduct of its business
or the ownership of any of the Assets requires it to be so qualified. Nashville
has full power and authority to execute and deliver to Purchaser this Agreement
and all other Transaction Documents to which it is a party and to own and
operate those Assets owned by it and perform the obligations and carry out the
duties imposed on Nashville by this Agreement and by all the other Transaction
Documents. This Agreement has been duly authorized, approved and executed by
Nashville and constitutes the valid and binding obligation of
15
12
Nashville, enforceable against Nashville in accordance with its terms. The
Transaction Documents to which Nashville is a party have been duly authorized
and approved, and upon due execution and delivery of such Transaction
Documents, will constitute the valid and binding obligations of Nashville,
enforceable against Nashville in accordance with their respective terms.
(l) ▇▇▇▇▇▇▇ Best Suites, L.L.C., an Illinois
limited liability company ("▇▇▇▇▇▇▇"), is a limited liability company, duly
formed under the laws of the state of Illinois and in good standing under the
laws of such state and is authorized to do business in each state in which the
conduct of its business or the ownership of any of the Assets requires it to be
so qualified. ▇▇▇▇▇▇▇ has full power and authority to execute and deliver to
Purchaser this Agreement and all other Transaction Documents to which it is a
party and to own and operate those Assets owned by it and perform the
obligations and carry out the duties imposed on ▇▇▇▇▇▇▇ by this Agreement and
by all the other Transaction Documents. This Agreement has been duly
authorized, approved and executed by ▇▇▇▇▇▇▇ and constitutes the valid and
binding obligation of ▇▇▇▇▇▇▇, enforceable against ▇▇▇▇▇▇▇ in accordance with
its terms. The Transaction Documents to which ▇▇▇▇▇▇▇ is a party have been duly
authorized and approved, and upon due execution and delivery of such
Transaction Documents, will constitute the valid and binding obligations of
▇▇▇▇▇▇▇, enforceable against ▇▇▇▇▇▇▇ in accordance with their respective terms.
4.1.2. Governmental Approvals. As of the date hereof,
no approval, consent, order or authorization of, or designation, registration
or declaration with, any governmental authority is required in connection with
the valid execution and delivery of, and compliance with, this Agreement or any
of the other Transaction Documents by Sellers. To the extent that either
Purchaser or Sellers determine that any such approval, consent, order,
authorization, designation, registration or declaration is required in respect
of Sellers by any such governmental authority, then Sellers shall obtain such
approval, consent, order authorization, or designation, or effect such
registration or declaration in accordance with subsection 5.1.12.
4.1.3. Compliance with Other Instruments. Neither the
execution, delivery or performance by Sellers of this Agreement, nor any of the
transactions contemplated hereby or by the other Transaction Documents will (a)
conflict with, or will result in a breach of, violate, or will constitute a
default under, (i) the organizational documents of any Seller, (ii) any
judgment, statute, rule, order, decree, writ, injunction or regulation of any
court or governmental authority to which any Seller is subject, or (iii) any
material agreement or instrument to which any Seller may be bound or which may
affect the Assets (other than the agreements or instruments for which Sellers
are obligated to obtain consents pursuant to subsection 5.1.3), or (b) result
in the creation or imposition of any lien, charge, or encumbrance upon any of
the Assets or any other property of any Seller. Without limiting the foregoing
provisions of this subsection 4.1.3, all franchise agreements relating to the
Franchise Business and Service Agreements, including, without limitation,
Hospitality
16
13
Unit management agreements are transferable by Seller to Purchaser or to any
designee or assignee of Purchaser.
4.1.4. Bankruptcy; Insolvency; Litigation. (a) There
is not pending against any Seller, or any of their respective Affiliates (i) a
petition in bankruptcy, whether voluntary or otherwise, (ii)an assignment for
the benefit of creditors, (iii) any petition seeking reorganization or
arrangement under the bankruptcy or insolvency laws of the United States or any
state, or (iv)any other similar action brought under such bankruptcy or
insolvency laws; (b)no trustee or receiver has been appointed to take control
over any Seller, or any part of the property of any Seller and (c)except as set
forth on Schedule 4.1.4, to Sellers' knowledge, there are no other material
claims, litigation or proceedings against any Seller or any of the Assets.
4.1.5. Financial Statements. (a) Prior to the date
hereof, Sellers have furnished Purchaser with copies of (i) audited
consolidated financial statements of Sellers as of December 31, 1996 and 1995,
and (ii)unaudited statements of income and expense for each of the Hospitality
Units for the period ending on October 31, 1997 (the "Interim Operation
Statements"). Such financial statements (collectively, the "Operation
Statements") are true, accurate, complete and correct copies and the statements
of income and expense contained therein present fairly the results of
operations for the periods then ended in conformity with generally accepted
accounting principles applied on a consistent basis ("GAAP") (or in the case of
the Interim Operation Statements, GAAP for interim financial statements). Since
October 31, 1997, there has been no material adverse change in the results of
operations for any of the Hospitality Units or any Related Business.
(b) As of the date of such Operation Statements,
there were no liabilities of Sellers, whether accrued, contingent, absolute,
determined, determinable or otherwise, required to be reflected on the balance
sheets included in such Operation Statements or disclosed in the notes thereto
which were not so reflected or disclosed which would have a material adverse
effect on the Sellers. Since October 31, 1997, no liabilities have been
incurred by Sellers other than liabilities incurred in the ordinary course of
Sellers' respective businesses, which would be required to be reflected in a
balance sheet of Sellers prepared in accordance with GAAP, other than as
disclosed in the Operation Statements.
(c) Prior to the date hereof, Sellers have
furnished Purchaser with copies of unaudited statements of income and expense
for ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ for the annual periods ended December 31, 1995 and
December 31, 1996. Such financial statements are accurate, complete and correct
copies and present fairly the results of operations of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ for the
periods then ended, prepared in conformity with GAAP.
4.1.6. Sellers' Leases. The copies of the Sellers'
Leases heretofore delivered to Purchaser by Sellers are true, complete and
correct copies
17
14
thereof and have not been otherwise amended, modified or supplemented. No
Seller has heretofore waived any obligations of the landlords under the
Sellers' Leases, except as set forth in the Sellers' Leases heretofore
delivered to Purchaser, and no Seller shall waive any landlord's obligations
prior to the Closing Date without the prior written approval of Purchaser. The
Sellers' Leases are valid and subsisting and in full force and effect, no
Seller (nor to the best knowledge of Sellers any other party) is in default
thereunder, and to the best knowledge of Sellers, no event or omission has
occurred which but for the passing of time or giving of notice or both could
give rise to any such default. There are no percentage rents payable pursuant
to any of the Sellers' Leases. The landlord under each Seller's Lease is not an
Affiliate of any Seller. Each Seller's Lease was entered into an arms-length
terms.
4.1.7. Leases. There are no Leases of any space at
any Hospitality Unit by any Seller, as landlord to any other Person, as tenant,
and no Person has the right to occupy any portion of any Hospitality Unit
pursuant to any written or oral agreement, other than transient guests staying
at any Hospitality Unit.
4.1.8. Service or Other Agreements. There are no
equipment leases, building service agreements, management agreements,
agreements for advertising billboards or similar matters or other agreements
relating to the operation of the Hospitality Units, except as set forth in
Schedule 4.1.8. annexed hereto (collectively, the "Service Agreements"). To the
Sellers' best knowledge, none of the Service Agreements has been amended or
otherwise modified, each of the Service Agreements is valid and subsisting and
in full force and effect, none of the parties thereto is in default thereunder,
and no event or omission has occurred which but for the passing of time or
giving of notice or both could give rise to such default. Sellers have
heretofore delivered to Purchaser true, correct and complete copies of each
Service Agreement in their possession. Sellers shall deliver to Purchaser true,
correct and complete copies of each Service Agreement not heretofore delivered
to Purchaser within fifteen (15) days after the date hereof. No Affiliate of
any Seller is a counterparty to any Service Agreement.
4.1.9. Insurance. Schedule 4.1.9 is a complete and
accurate list of all insurance policies maintained by Sellers with respect to
the Hospitality Units and the Related Businesses (collectively, the "Insurance
Policies"). Each of said Insurance Policies is now in full force and effect,
and all premiums due thereunder have been paid. No Seller has received any
written notice from the insurance company which issued any of said Insurance
Policies stating in effect that such Insurance Policy will not be renewed or
will be renewed at a higher premium than is presently payable therefor. No
Seller has received any written notice from any insurance company which has
issued an Insurance Policy requesting performance of any structural or other
repairs or alterations to any Hospitality Unit, which has not been complied
with.
4.1.10. Facilities; Related Businesses. The
facilities of the Hospitality Units do not materially vary from the
descriptions thereof in Schedule
18
15
4.1.10(a). The operation of each Related Business does not materially vary from
the descriptions thereof in Schedule4.1.10(b). As used herein, the term
"Operation" means the use and operation of the facilities described in
Schedule4.1.10(a), and the businesses described in Schedule4.1.10(b) for the
respective purposes and in the respective manner they were used and operated
immediately before the execution of this Agreement, as described more
particularly in such Schedule4.1.10(a) and Schedule4.1.10(b).
4.1.11. Legal Requirements. To the Sellers'
knowledge, the Hospitality Units, and each of the Related Businesses are in
compliance with all laws, rules, regulations, codes and other requirements of
any governmental authority having jurisdiction over any of the Hospitality
Units or any of such Related Businesses, as applicable, and with the
requirements of any local board of insurance underwriters and of the insurance
company which is presently insuring any of the Hospitality Units or any of such
Related Businesses, as applicable ("Legal Requirements"). The Land and the
Leased Land has been lawfully subdivided from all adjacent properties. To the
Sellers' knowledge, there are no Legal Requirements which would materially
inhibit or materially adversely affect (a)the operation or occupancy of the
Hospitality Units as presently operated or occupied or (b)the operation of any
of the Related Businesses, as presently operated.
4.1.12. Permits. To the knowledge of Sellers, all
governmental or private easements, permits, licenses (including, without
limitation, liquor licenses), consents, and approvals, (collectively,
"Permits") which are necessary in order to own or operate the Hospitality Units
or the Related Businesses, as applicable, in accordance with Legal Requirements
for the Operation and for the purposes provided for by the Sellers' Leases have
been issued and paid for and are in full force and effect. The Permits are
listed on Schedule 4.1.12 hereto. To the best of Sellers' knowledge, there is
no pending threat of modification or cancellation of any of the Permits. To the
best of Sellers' knowledge, none of the Improvements depend on any variance,
special exception or other special municipal approval for their continuing
legality. None of the Permits depend upon any real property or rights
appurtenant thereto other than the Land or the Leased Land.
4.1.13. Public Access. Each of the Hospitality Units
has public vehicular and pedestrian access adequate for its intended purpose,
by roadways duly dedicated and accepted by all relevant governmental
authorities. Other than as set forth on Schedule 4.1.13, Sellers have no
knowledge of any Federal, State or local plan to substantially change that
portion of the highway or road system abutting any of the Hospitality Units or
to restrict or change access from any such highway or road to the Hospitality
Units.
4.1.14. Utilities. All drainage facilities and water,
sewer, gas, electric, telephone and other utilities required for the normal
operation of the Hospitality Units (collectively, "Utilities") enter the Land
or the Leased Land, as
19
16
applicable, through adjoining public property or, if they pass through
adjoining private property, do so in accordance with written and duly recorded
private or governmental easements. All Utilities are connected and in service,
are adequate to service the Hospitality Units and are supplied directly by
facilities of public utilities. All costs of installing Utilities required to
be paid by the owner of the Hospitality Units or any of them, if any, have been
fully paid.
4.1.15. Parking. Schedule 4.1.15 accurately sets
forth the number of indoor and outdoor parking spaces at each of the
Hospitality Units and the same fully comply with all applicable provisions of
law and with all Leases, Sellers' Leases, and to Sellers' best knowledge, title
conditions and other agreements with respect thereto.
4.1.16. Condition of the Hospitality Units. The
electrical, plumbing, heating, drainage, air conditioning, mechanical, roofs
and other systems in the Hospitality Units are in good working order and repair
(ordinary wear and tear excepted) and are adequate in quality and quantity for
the proper operation of the Hospitality Units. The Hospitality Units are in
good condition (ordinary wear and tear excepted) and there are no structural or
other material defects therein.
4.1.17. Condemnation. No Seller has received notice
of any condemnation proceeding with respect to all or part of any of the
Hospitality Units and to the knowledge of Sellers, no such proceeding is
contemplated by any governmental authority.
4.1.18. Restrictions. Sellers have not received
notice of any violation of any restriction, condition or agreement contained in
any instrument affecting any of the Hospitality Units or any of the Related
Businesses.
4.1.19. No Options, etc. No party has any contract
right, option, right of first refusal, right of first offer or other right to
acquire all or any part of the Assets.
4.1.20. Sellers' Personal Property. (a) Schedule
4.1.20(a)(1) is a complete and accurate inventory of the Sellers' Personal
Property located at each of the Hospitality Units and each location in which
the Related Businesses are located. Such inventory contains at least "two par"
(as such term is used in the motel business) for each of the Hospitality Units.
Sellers have good and marketable title to the Personal Property free and clear
of all liens, encumbrances, equipment leases, chattel, mortgages and claims of
others, except as set forth on Schedule4.1.20(a)(2). All of the Personal
Property has been paid for in full.
(b) (i) All Consumables, FF&E and Small Operating
Equipment consist of a quality and quantity usable or saleable in the ordinary
and usual course of business, except for items of obsolete materials and
materials of below standard value;
20
17
(ii)the quantities of each type of Consumables, FF&E and Small Operating
Equipment are reasonable and appropriate in the present circumstances of each
of the Hospitality Units and the Related Businesses; (iii)all Consumables, FF&E
and Small Operating Equipment is located at the Hospitality Units or at ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇; (iv)no Consumables, FF&E or Small Operating
Equipment is stored with a bailee, warehouseman or similar party; and (v)no
Consumables, FF&E or Small Operating Equipment is under consignment to any
person.
4.1.21. Assessments. No assessments for public
improvements have been made against any of the Hospitality Units which remain
unpaid, and to the best of Sellers' knowledge none have been proposed.
4.1.22. Flood Hazard. None of the Hospitality Units
lie in any area designated as a flood hazard area under the document entitled
"Department of Housing and Urban Development, Federal Insurance Administration
-- Special Flood Hazard Area Maps".
4.1.23. Mechanics and Materialmen. No services,
materials or work have been supplied by contractors, subcontractors or
materialmen with respect to any of the Hospitality Units for which an invoice
has been rendered and for which payment is not delinquent.
4.1.24. Employment Matters. (a) Employees. There
are no written agreements or understandings (including, without limitation,
employment or collective bargaining agreements) between Sellers and the
Employees at any of the Hospitality Units, or the Employees of any of the
Related Businesses, as applicable (including, without limitation, severance
agreements). No Employee of any Seller is a member of any labor union, trade
union, or similar organization. Each employee of each Seller is an employee at
will. Schedule 4.1.24(a) is a complete and correct list of all persons who are
employed by Sellers, in connection with the management, operation or
maintenance of the Hospitality Units and the Related Businesses, setting forth,
with respect to each of them, his or her name, employer name, date employment
commenced, and regular wages or salary.
(b) Documents. Neither Seller, nor any Affiliate
of any Seller contributes to or sponsors any "pension plan" (within the meaning
of Section3(2) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") (each such plan individually herein referred to as an
"Employee Pension Benefit Plan") on behalf of Employees at any Hospitality Unit
or any Related Business. Schedule 4.1.24(b) sets forth a true, correct and
complete list of each other agreement, arrangement, plan or policy to provide
deferred compensation, bonuses, fringe benefits or other compensation or
benefits to any employee at any Hospitality Unit or any Related Business
(herein referred to as the "Other Employee Benefit Plans") (all Employee
Pension Benefit Plans and Other Employee Benefit Plans herein collectively
referred to as the "Employee Plans"). Neither of the Sellers nor any
21
18
ERISA Affiliate has any plan or commitment, whether legally binding or not, to
establish any new Employee Plan or to enter into any agreement related to terms
of employment, nor has any intention of Sellers to do the foregoing been
communicated to the Employees by Sellers or by any of their respective
Affiliates. To the extent in existence, the Sellers have provided, or will
cause to be provided, to Purchaser (i)current, accurate and complete copies of
all documents embodying or relating to each Employee Pension Benefit Plan,
including all amendments thereto and trust or funding agreements with respect
thereto; (ii)the two (2) most recent annual reports (Series 5500 and all
schedules thereto), if any, required under ERISA; (iii)the most recent summary
plan description; and (iv)all material communications to any Employee or
Employees relating to each Employee Pension Benefit Plan.
(c) Neither the Sellers, nor any ERISA Affiliate,
to the knowledge of Sellers, presently sponsors, maintains, contributes to, nor
is required to contribute to, nor has the Sellers or any ERISA Affiliate ever
sponsored, maintained, contributed to, or been required to contribute to with
respect to any Employees (i) a Pension Plan which is subject to Title IV of
ERISA; (ii) a multi-employer plan (within the meaning of Sections 3(37) or
4001(a)(3) of ERISA); or (iii) any Employee Plan which provides, or has any
liability to provide, life insurance, medical, severance or other employee
welfare benefits to any Employee upon his retirement or termination of
employment, except as may be required by Section 4980B of the Code.
(d) Compliance. All contributions, payments or
premiums due under any Employee Plan have been made. To the knowledge of
Sellers, each Employee Plan has been administered in material compliance with
its terms, and applicable provisions of the Code (as hereinafter defined),
ERISA and other laws, and neither Sellers nor, to the knowledge of Sellers, any
fiduciary of any Employee Plan has engaged in any transaction prohibited by
Section 406 of ERISA or described in Section 4975(d) of the Code and for which
there is no exemption.
(e) Employment Matters. Except as set forth on
Schedule 4.1.24(e) and, to the knowledge of Sellers, the Sellers (i)are in
compliance with all applicable federal, state and local laws, rules and
regulations (domestic and foreign) respecting employment, employment practices,
labor, terms and conditions of employment and wages and hours, in each case,
with respect to Employees; (ii)have withheld all amounts required by law or by
agreement to be withheld from the wages, salaries and other payments to
Employees; (iii)are not liable for any arrears of wages or any taxes or any
penalty for failure to comply with any of the foregoing; and (iv)are not liable
for any payment to any trust or other fund or to any governmental or
administrative authority, with respect to unemployment compensation benefits,
social security or other benefits for Employees.
4.1.25. Labor Matters. (a) Except as set forth on
Schedule 4.1.25, no Seller has received notice of any:
22
19
(i) pending grievances or arbitration
proceedings or unsatisfied arbitration awards, or judicial proceedings or
orders respecting awards, relating to Sellers, or any of the Hospitality Units
or any of the Related Businesses or any employees of Sellers;
(ii) pending unfair labor practice charges
or complaints, unsatisfied unfair labor practice orders or judicial proceedings
or orders with respect thereto relating to Sellers, or any of the Hospitality
Units or any of the Related Businesses or any employees of Sellers;
(iii) pending charges or complaints with or
by city, state or federal civil or human rights agencies, unremedied orders by
such agencies or judicial proceedings or orders with respect to obligations
under city, state or federal civil or human rights or antidiscrimination laws
or executive orders relating to Sellers or any of the Hospitality Units or any
of the Related Businesses or any employees of Sellers; or
(iv) other pending or actual claims,
actions, proceedings, charges, investigations, complaints, petitions or
unsatisfied orders, or to the best of Sellers' knowledge, any threat thereof by
or before any administrative agency or court respecting alleged obligations of
Sellers, their respective employees, or the employees' representatives.
(b) There are no strikes, picketing, job actions,
slowdowns or other curtailment of work by any employees or their
representatives or attempts to interfere with the normal operation of any of
the Hospitality Units or any of the Related Businesses by any person, group of
persons or organization.
4.1.26. Advance Reservations. Schedule 4.1.26 sets
forth, with respect to each Hospitality Unit, the "rack rate" applicable to the
rooms in each Sellers' Motel, as well as the group and other promotional rates
offered with respect to each Sellers' Motel, setting forth the size of the
group entitled to group rates and the persons entitled to any such promotional
rates.
4.1.27. Taxpayer Identification. The United States
taxpayer identification number of ABI is ▇▇-▇▇▇▇▇▇▇, of BMC is ▇▇-▇▇▇▇▇▇▇, of
BRC is ▇▇-▇▇▇▇▇▇▇, of Carbondale is ▇▇-▇▇▇▇▇▇▇, of Paducah is ▇▇-▇▇▇▇▇▇▇, of
Fort ▇▇▇▇▇ is ▇▇-▇▇▇▇▇▇▇, of ▇▇▇▇▇▇▇▇ is ▇▇-▇▇▇▇▇▇▇, of Springfield is
▇▇-▇▇▇▇▇▇▇, of ▇▇▇▇▇▇▇▇ is ▇▇-▇▇▇▇▇▇▇, of Libertyville is ▇▇-▇▇▇▇▇▇▇, of
Nashville is ▇▇-▇▇▇▇▇▇▇ and of ▇▇▇▇▇▇▇ is ▇▇-▇▇▇▇▇▇▇. No Seller is a foreign
person (as defined in the Internal Revenue Code of 1986, as amended and the
regulations promulgated thereunder (the "Code")), and Purchaser is not required
to deduct and withhold any tax under Section 1445(a) of the Code in connection
with the disposition of the Assets pursuant to this Agreement.
23
20
4.1.28. Taxes. Sellers have previously provided to
Purchasers true, correct and complete copies of all federal, state and local
tax returns filed by Sellers for the tax years 1995 and 1996 relating to
income, motel occupancy, franchise or sales taxes. Each Seller has duly filed,
or has obtained a filing extension from the appropriate federal, state and
local governments or governmental agencies with respect to, all tax returns
required to be filed by Sellers for all such taxes. Payment in full of all
taxes shown to be due on such tax returns or otherwise due and payable by
Sellers has been made. All amounts required to be withheld by Sellers from
employees for income taxes, social security and other payroll taxes have been
collected and withheld and, together with all sales or hotel occupancy taxes,
accrued through the date hereof, have either been paid to the respective
governmental agencies, set aside in accounts for such purpose or accrued,
reserved against and entered upon the applicable Seller's books and records.
4.1.29. Environmental Matters. Except as disclosed on
Schedule 4.1.29:
(a) to the Sellers' knowledge, Sellers, the
Related Businesses and the Hospitality Assets have been operated at all times,
and are, in compliance with applicable Environmental Laws, including all
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained therein;
(b) to the Sellers' knowledge, Sellers and the
Related Businesses have obtained, are in compliance with, and have made all
appropriate filings for issuance or renewal of, all permits, licenses,
authorizations, registrations and other governmental consents required by any
applicable Environmental Laws ("Environmental Permits"), and all such
Environmental Permits are in full force and effect;
(c) Sellers have not received notice of any
claims, notices, civil, criminal or administrative actions, suits, hearings,
investigations, inquiries or proceedings pending or to the Sellers' knowledge,
threatened against Sellers or the Related Businesses, or any of their
respective predecessors, and no requests from any governmental authority or
other third party to perform any investigatory or remedial activity have been
made to Sellers, the Related Businesses or any of their respective
predecessors, that are based on or related to any actual or alleged release of
Hazardous Materials or any other environmental, health or safety matters or the
failure to have any required Environmental Permits;
(d) to the Sellers' knowledge, there are no past
or present conditions, events, circumstances, facts, activities, practices,
incidents, actions or omissions that (x)would give rise to any liability or
other obligation of Sellers or the Related Businesses under any Environmental
Laws, or (y)would interfere with or
24
21
prevent continued compliance by Seller or the Related Businesses with
Environmental Laws and/or Environmental Permits;
(e) to the Sellers' knowledge, there are no, and
have never been any, underground or aboveground storage tanks, incinerators or
surface impoundments at, on, under, or within any of the Hospitality Units;
(f) to the Sellers' knowledge, there have been no
releases (i.e., any past or present releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
disposing or dumping) of Hazardous Materials by Sellers, the Related Businesses
or any of their respective predecessors on, at, under, affecting or migrating
from any of the Hospitality Units, and to the Sellers' knowledge, each is free
of contamination arising from, relating to, or resulting from any release
discharge or emission of Hazardous Materials, other than such releases and
contamination that are permitted by, and would not result in liability under,
Environmental Laws.
4.1.30. Software. Schedule 4.1.30 identifies all of
the software used in connection with the ownership and operation of each of the
Hospitality Units and the Related Businesses (collectively, "Software").
Sellers are the owners or licensees of the Software and, except as listed on
Schedule 4.1.30, and for Software licensed to the Sellers under "shrinkwrap"
software licenses, the Software and all rights thereunder are transferable to
Purchaser without restriction. No Seller has granted any person a license to
use any proprietary Software owned by any Seller.
4.1.31. The Americans with Disabilities Act. To the
knowledge of Sellers, the Land, the Improvements and the Leased Property, when
used for the purposes and in the manner presently used, complies with the
provisions of the Americans with Disabilities Act of 1990, 42 U.S.C.
ss.ss.12101 et seq. as presently enacted and interpreted by applicable
governmental entities (the "ADA"), and all other Legal Requirements governing
the use of any portion of the Land, the Improvements and the Leased Property by
persons with disabilities.
4.1.32. Third Party Consents. Except as set forth on
Schedule 4.1.32, no approval, consent or authorization of any third party,
including, without limitation, any general or limited partners, shareholders or
members of or joint venturers with any Seller (or with respect to BRC, from any
other person in connection with the maintenance of BRC's not-for-profit status)
is required in connection with the valid execution and delivery of and
compliance with this Agreement or any of the other Transaction Documents by
Sellers.
4.1.33. Intellectual Property. (a) Sellers own or
have the right to use all Intellectual Property necessary for the operation of
the Hospitality Units and the Related Businesses as presently conducted. Except
as otherwise set forth in subsection 4.1.30, each item of Intellectual Property
owned or used by Sellers
25
22
immediately prior to the Closing hereunder will be owned or available for use
by the Purchaser on identical terms and conditions immediately subsequent to
the Closing hereunder.
(b) To Sellers' knowledge, Sellers have not
interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property rights of third parties, and Sellers
have not received any charge, complaint, claim, demand, or notice alleging any
such interference, infringement, misappropriation, or violation (including any
claim that Sellers must license or refrain from using any Intellectual Property
rights of any third party).
(c) To the knowledge of Sellers, no third party is
presently interfering with, infringing upon, misappropriating, or otherwise
coming into conflict with any Intellectual Property rights of Sellers.
(d) Schedule 1.1(i) hereto identifies each
trademark, service ▇▇▇▇, item of trade dress, logo, trade name, corporate name,
or copyright owned by Sellers, and identifies each license, agreement, or other
permission which Sellers have granted to any third party with respect to any of
their respective Intellectual Property. Sellers have delivered to the Purchaser
correct and complete copies of all such licenses, agreements, and permissions
(as amended to date) and has made available to the Purchaser correct and
complete copies of all other written documentation evidencing ownership and
prosecution (if applicable) of each such item. With respect to each item of
Intellectual Property required to be identified on Schedule 1.1(i):
(i) Sellers possess all right, title, and
interest in and to the item, free and clear of any security interest, lien,
license, or other restriction;
(ii) the item is not subject to any
outstanding injunction, judgment, order, decree, ruling, or charge;
(iii) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending or, to the
knowledge of Sellers is threatened which challenges the legality, validity,
enforceability, use, or ownership of the item; and
(iv) Sellers have never agreed to indemnify
any entity or person for or against any interference, infringement,
misappropriation, or other conflict with respect to the item.
(e) There exists no item of Intellectual Property
which is necessary for the operation of the Hospitality Units or the Related
Business as presently conducted, which is owned by a third party and for which
Sellers do not have a valid, transferable license or other right to use such
Intellectual Property.
26
23
4.1.34. Title to Real Property. Sellers hold good and
marketable title in fee simple to that portion of the Land underlying the
Hospitality Units, free and clear of all mortgages, options, liens, charges,
easements, agreements, claims, restrictions or other encumbrances of any kind
or nature, except as disclosed on Schedule 4.1.34 and as would otherwise be
shown on an accurate title report in respect of any such Hospitality Unit.
4.1.35. Agreements in Respect of Related Businesses.
Schedule 4.1.35(a) sets forth a list of all contracts and other agreements
between any Seller and any unaffiliated third party, together with any
amendments, which relate to any of the Related Businesses (collectively, the
"Third Party Contracts"). Schedule 4.1.35(b) sets forth a list of all material
contracts and other agreements between any Seller and any of its Affiliates,
together with any amendments, which relate to any of the Related Businesses
(collectively, the "Intercompany Contracts"). Each of the Third Party Contracts
and each of the Intercompany Contracts are unmodified, in full force and effect
and are each enforceable in accordance with their respective terms. Each of the
Intercompany Contracts have been and continue to be performed in accordance
with their respective terms. Sellers have no knowledge of any defaults under
any of the Third Party Contracts or the Intercompany Contracts which remain
uncured, or of any event or omission which has occurred and which but for the
passing of time, or the giving of notice, or both would constitute such a
default.
4.1.36. Additional Representations Regarding BRC. (a)
All of the membership interests in BRC are held by the Persons listed on
Schedule 4.1.36. ABI has good title to its membership in BRC, free and clear of
all liens, charges, claims, agreements, restrictions or other encumbrances of
every kind or nature. ABI's membership in BRC has been duly authorized, validly
issued, and is non-assessable. BRC is in compliance in all material respects,
with all laws applicable to not-for-profit entities under the Code (as
hereinafter defined) and in the State of Illinois and in each other state in
which BRC is doing business.
(b) There are no warrants, options, rights
(including stock or membership interest appreciation, phantom stock, profit
participation or similar rights and rights to demand registration of, or to
sell in connection with a registration by BRC of, any securities of BRC under
the federal securities laws), calls or other commitments of any nature relating
to the membership interests of BRC and there are no outstanding securities of
BRC other than the membership interests listed on Schedule 4.1.36. Other than
with respect to the right of each franchisee of the Franchise Business to be
issued membership in BRC, BRC is not obligated to issue any of its memberships
for any purpose.
(c) There are no corporations, partnerships,
associations, trusts, joint ventures or other entities in which BRC owns,
directly or indirectly, any capital stocks or other equity, ownership or
proprietary interest.
27
24
(d) Without duplicating any of the representations
set forth in this Article 4, BRC (i)does not own any material assets other than
as set forth on Schedule 4.1.36(d)(i), and (ii)does not have any liabilities or
obligations of any kind whatsoever (whether accrued, absolute, contingent or
otherwise) except for the liabilities set forth on Schedule 4.1.36(d)(ii).
(e) Prior to the date hereof, BRC has furnished
Purchaser with copies of unconsolidated, audited financial statements of BRC
for the periods ended December 31, 1995 and December 31, 1996, each prepared in
accordance with GAAP.
4.1.37. Safe Deposit Boxes and Baggage. No
Hospitality Unit contains any (a) safe deposit boxes or similar storage systems
or (b) baggage storage facilities, in each case, available for the use of
guests at any Hospitality Unit.
4.1.38. Materiality. No representation or warranty of
any Seller contained in this Agreement or in any Exhibit or Schedule hereto
contains an untrue statement of a material fact or omits to state a material
fact necessary to render the statements therein contained not misleading in any
material respect.
4.2. Representations and Warranties of Purchaser.
4.2.1. Organization of Purchaser. Purchaser is a
corporation duly formed under the laws of the state of Georgia and in good
standing under the laws of such state and is authorized to do business in each
state in which the conduct of its business or the ownership of any of its
assets requires it to be so qualified. Purchaser has full power and authority
to execute and deliver to Sellers this Agreement and all other Transaction
Documents to which it is a party and perform the obligations and carry out the
duties imposed on Purchaser by this Agreement and by all the other Transaction
Documents. This Agreement has been duly authorized, approved and executed by
Purchaser and constitutes the valid and binding obligation of Purchaser,
enforceable against Purchaser in accordance with its terms. The Transaction
Documents to which Purchaser is a party have been duly authorized and approved,
and upon due execution and delivery of such Transaction Documents, will
constitute the valid and binding obligations of Purchaser, enforceable against
Purchaser in accordance with their respective terms.
4.2.2. Compliance with Other Instruments. Neither
the entry into nor the performance of, or compliance with, this Agreement and
the other Transaction Documents to which Purchaser is a party will result in
any violation of, be in conflict with or constitute a default under any
articles of organization, operating agreement, corporate charter, certificate
of incorporation, bylaw, mortgage, indenture, contract, permit, judgment,
decree, order, statute, rule or regulation applicable to Purchaser.
28
25
4.2.3. Governmental Approvals. No approval, consent,
order or authorization of, or designation, registration or declaration with,
any governmental authority is required in connection with the valid execution
and delivery of, and compliance with, this Agreement or any of the other
Transaction Documents by Purchaser.
Article 5
Conditions Precedent
5.1. Conditions Precedent to Purchaser's Obligations. The
fulfillment by Sellers of each of the following conditions ("Sellers' Closing
Conditions") on or before the Closing Date (any or all of which may be waived
in whole or in part by Purchaser) is a condition precedent to the obligations
of Purchaser under this Agreement.
5.1.1. State of Title; Title Policies; Title
Commitments; Surveys. (a) Sellers shall have, and shall convey to Purchaser in
accordance with Article 8, good, marketable and insurable title to the
Hospitality Units, subject only to the exceptions to title as shown in the
commitments from the Title Insurer (as hereinafter defined) to issue the title
insurance policies described in clause (b) (the "Commitments"), and either
consented to, or not objected to by Purchaser, acting as a reasonably prudent
purchaser of improved real property (the "Permitted Exceptions"), relating to
the Hospitality Units.
(b) ▇▇▇▇▇▇▇ Title Guaranty Company, or such other
nationally-recognized title insurance company acceptable to Purchaser ("Title
Insurer") shall have issued to Purchaser an ALTA owner's title insurance policy
with respect to each of Hospitality Units in amounts and in form reasonably
acceptable to Purchaser. Each such policy shall insure fee title to the
Improvements and the Land, except that the policies issued with respect to
Hospitality Units which are subject to Sellers' Leases, shall insure (x) that
the applicable Sellers' Lease is a valid and subsisting lease of Leased Land
for the unexpired portion of the term of such Sellers' Lease, subject to the
terms, covenants and conditions of such Sellers' Lease, (y) fee title to the
Improvements located on the applicable parcel of Leased Land and (z) the
validity of Purchaser's rights with respect to any option conveyed to
Purchaser, by Sellers at Closing to purchase all or any portion of Sellers'
Leased Land and the Improvements located thereon. No such policy shall contain
any standard or other exceptions other than the Permitted Exceptions, and each
such policy shall contain the following, whether by endorsement or otherwise,
all in form and substance satisfactory to Purchaser and to the extent available
in the applicable jurisdiction:
(i) Affirmative insurance against
mechanics' liens, including inchoate mechanics' liens;
29
26
(ii) With respect to any Land or Sellers'
Leased Land consisting of more than one parcel, affirmative insurance that such
parcels are contiguous;
(iii) Affirmative insurance that no
restrictive covenants of record have been breached and that no such breach
shall result in any forfeiture or reversion; and
(iv) Such other affirmative insurance as
Purchaser shall reasonably request.
(c) In order to evidence Sellers' title to the
Hospitality Units, as promptly as possible, Purchaser shall have received
current as-built surveys of each of the Hospitality Units prepared by a
licensed surveyor satisfactory to Purchaser, prepared to the standard of the
"Minimum Standard Detail Requirements for Land Title Surveys" jointly
established and adopted by ALTA and ACSM, as currently in effect (collectively,
the "Surveys"), and otherwise satisfactory to Purchaser, Title Insurer and any
lender designated by Purchaser.
(d) Within five (5) business days after receipt of
the Commitments and the Surveys, Purchaser shall advise Sellers of any
objections it may have to the state of title to the Hospitality Units indicated
in the Commitments or the Surveys. Sellers shall cause such objections to title
(other than Permitted Exceptions) to be removed of record at or prior to the
Closing. Subject to clause (e), if Sellers fail to cause any such objections to
be discharged of record, the provisions of Article 9 shall apply.
(e) In the event that there shall be a defect in
the state of title which cannot readily be removed by the expenditure of money
or other commercially reasonable methods, Sellers shall be entitled to a
reasonable adjournment of the Closing Date of at least thirty (30) days in
order to attempt to cure such defect. If such defect has not been so cured
within such 30-day period, or such longer period as may be granted to Sellers
by Purchaser, at the election of Purchaser, this Agreement may be terminated by
Purchaser upon two (2) business days prior written notice to Sellers, whereupon
this Agreement shall terminate and be of no further force or effect, except for
those provisions which by their terms are intended to survive. If Sellers cure
such defect, to the satisfaction of Purchaser, prior to the expiration of such
adjournment period, then Purchaser and Sellers shall proceed to consummate the
Closing upon the terms and conditions set forth in this Agreement, within ten
(10) business days after Purchaser has received notice of Sellers' cure of such
defect.
(f) The parties hereto acknowledge that Purchaser
shall order the Commitments and the Surveys promptly after execution and
delivery of this Agreement. Notwithstanding the foregoing, Purchaser's receipt
and approval of such
30
27
Commitments and Surveys in accordance with this subsection 5.1.1 shall continue
to be a Seller's Closing Condition.
5.1.7. Estoppels. There shall have been delivered
to Purchaser estoppel certificates dated not more than fifteen (15) days prior
to the Closing Date, in form and substance reasonably satisfactory to Purchaser
from (a) the landlords under each of the Sellers' Leases and (b) the
counterparties to each of the management agreements in respect of the
Management Business and each of the franchise agreements in respect of the
Franchise Business.
5.1.3. Consents. There shall have been delivered
to Purchaser agreements, in form and substance reasonably satisfactory to
Purchaser, consenting to the transfer of the Hospitality Units, the Related
Businesses and the other Assets, as applicable, from each of the persons listed
on Schedule 4.1.32. None of such consents shall require any modifications of
any of the terms of the Sellers' Leases, Service Agreements, Third Party
Contracts, or Intercompany Contracts, and any fees or costs incurred in
obtaining such consents shall be borne solely by Sellers. Sellers shall have
delivered each such consent to Purchaser on or prior to the date fifteen (15)
days after the date hereof (the "Consent Date"). The expiration of the Review
Period shall be extended by one (1) day for each day beyond the Consent Date
that any consents have not been delivered to Purchaser.
5.1.4. Cancellations. If Purchaser by written
notice given at or prior to the Closing shall have elected not to take an
assignment of one or more of the Intercompany Contracts or transferable
Insurance Policies, Sellers shall have canceled the same (or caused the same to
be canceled), shall have paid all cancellation fees due in connection
therewith, and shall have provided evidence of the foregoing satisfactory to
Purchaser.
5.1.5. Opinion of Counsel. There shall have been
delivered to Purchaser a customary opinion of Sellers' counsel covering matters
which include, without limitation, the formation, existence and good standing
of the Sellers, due authorization, due execution and delivery of this Agreement
and the other Transaction Documents, no conflicts and validity and
enforceability of this Agreement and the other Transaction Documents, in each
case, in a form reasonably acceptable to Purchaser.
5.1.6. Updated Financial Statements. Sellers
shall have delivered to Purchaser (a) updates of the Operation Statements
delivered pursuant to subsection 4.1.5, as soon as such updates are available,
but in no event later than twenty (20) days after the end of each month, and
such updates shall indicate no material adverse changes in the financial
condition of the Hospitality Units, the Related Businesses or any of the other
Assets, as applicable and (b) letters from ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇'▇ auditors within
fifteen (15) days of the end of each month, indicating no material adverse
changes in the financial condition of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
31
28
5.1.7. Updated Schedules. Sellers shall update, as
of the Closing Date, the information set forth on each Schedule to this
Agreement, as of the Closing Date.
5.1.8. Representations and Warranties True; No
Default. All of the representations and warranties of the Sellers set forth in
Article 4 shall be true and correct in all material respects as if made on the
Closing Date, and Sellers shall have complied in all material respects with the
covenants and agreements set forth herein to be performed or complied with by
them on or before the Closing Date.
5.1.9. Delivery of Documents; etc. All of the
documents, instruments and other items required to be executed and exchanged
between Sellers and Purchaser at Closing or delivered to Purchaser at or prior
to Closing shall have been executed and exchanged or delivered as appropriate.
5.1.10. No Pending Adverse Litigation. On the
Closing Date, there shall not then be pending or, to the knowledge of any
Seller, threatened, any litigation, administrative proceeding, investigation or
other form of governmental enforcement, or executive or legislative proceeding
relating to the Assets, not covered by insurance and which, if determined
adversely, would either individually, require the payment by Sellers of more
than $5,000, or in the aggregate, require the payment by Sellers of more than
$50,000.
5.1.11. Taxes. Sellers shall have paid any state,
federal or local gains tax or transfer tax, if any, payable in connection with
the transfer of the Land or the Sellers' Leases in accordance with Article 11.
5.1.12. Governmental Approvals. Any and all
governmental regulatory compliance and any approvals necessary to consummate
the transactions contemplated by this Agreement or any other Transaction
Document have been performed and/or obtained, as the case may be, including,
without limitation, any approvals, consents, orders, authorizations,
designations, registrations or declarations determined, after the date hereof,
in accordance with subsection 4.1.2, to be required.
5.1.13. Bulk Sales. The parties hereto waive
compliance by the Sellers with the provisions of any so-called bulk sales or
bulk transfer laws or similar laws in connection with the transactions
contemplated by this Agreement.
5.1.14. No Bankruptcy, etc. Between the date of
this Agreement and the Closing Date, (a)no Seller shall have applied for or
consented to the appointment of a receiver, trustee or liquidator for itself or
any of its assets unless the same shall have been discharged prior to the
Closing Date, and no such receiver, liquidator or trustee shall have otherwise
been appointed, unless same shall have been discharged prior to the Closing
Date, (b)no Seller shall have admitted in writing an inability to pay its debts
as they mature, (c)no Seller shall have made a general
32
29
assignment for the benefit of creditors, (d)no Seller shall have been
adjudicated a bankrupt or insolvent, or had a petition for reorganization
granted with respect to such Seller, and (e)no Seller shall have filed a
voluntary petition seeking reorganization or an arrangement with creditors or
taken advantage of any bankruptcy, reorganization, insolvency, readjustment or
debt, dissolution or liquidation law or statute, or filed an answer admitting
the material allegations of a petition filed against it in any proceedings
under any such law, or had any petition filed against it in any proceeding
under any of the foregoing laws unless the same shall have been dismissed,
canceled or terminated prior to the Closing Date.
5.1.15. Sellers' Certification. Sellers shall have
certified in writing to Purchaser that all of the Closing Conditions have been
complied with in full.
5.1.16. Membership in BRC. Sellers shall have taken
all necessary and proper actions, including, without limitation, amending BRC's
by-laws, to cause the substitution of Purchaser for ABI as a member in BRC.
Seller shall, on or prior to the Closing Date, have delivered evidence
reasonably satisfactory to Purchaser that such substitution has taken place and
that at Closing, Purchaser shall have succeeded to all of ABI's right, title
and interest in and to BRC.
5.1.17. Advance Reservations. (a) Sellers shall
have delivered to Purchaser on or before the date five (5) days prior to the
Closing Date a certificate setting forth all of the advance reservations
accepted by Sellers for the period after such date, setting forth the name of
the guest, the date of such reservation, the type, and if applicable, the grade
of room, the daily rate and the amount and date of any deposit received or to
be received.
(b) Sellers shall have delivered to Purchaser on
the Closing Date, a certificate updating the certificate described in clause
(a) to show such advance reservations accepted by Sellers for the period after
the Closing Date.
5.1.18. Existing Mortgages. Unless Purchaser has
requested, in writing, that Sellers cause any mortgagee to assign any mortgage,
at Purchaser's expense (together with the applicable promissory note)
encumbering any Hospitality Unit to Purchaser's lender or other designee (to
the extent such assignment is permissible in the applicable jurisdiction and to
the extent such mortgages and related promissory notes are, by their terms,
freely assignable), Sellers shall have caused, at Sellers' expense (a)the
repayment, in full, of such indebtedness, together with any interest accruing
thereon and prepayment premiums, upon receipt of customary payoff letters and
(b)the satisfaction of each such mortgage and any other security document
(including, without limitation, UCC-1 financing statements) sufficient to
remove such matter from the public record, in each case, in a manner acceptable
to Purchaser.
33
30
5.1.19. Personal Property Search. There shall have
been delivered to Purchaser (a) a search by Title Insurer (or another person
satisfactory to Purchaser) of the relevant public records indicating that
except as may be approved by Purchaser in its sole discretion, there are no
financing statements, conditional sales contracts, chattel mortgages or other
liens and encumbrances of record affecting the Personal Property and there are
no bankruptcies, federal or state or local tax liens or judgments affecting
Sellers or any of the Assets and (b) by Sellers, to the extent such search
discloses any such matters, satisfactions or terminations of each such matter
to Purchaser's satisfaction (including, without limitation, UCC-3 terminations)
sufficient to remove such matters from the public record.
5.1.20. Management and Franchise Agreements. (a) BMC
and the applicable Sellers shall have entered into management agreements on
substantially the same terms and conditions as BMC would have entered into on
the date hereof, in its capacity as a hotel or motel manager, with a third
party hotel or motel owner, containing a management fee of five percent (5%) of
total hotel or motel revenues for such property and otherwise on arm's-length
terms which are mutually acceptable to the parties hereto, in each case, in
respect of the hotel properties under development by Sellers listed on Schedule
6.1.2(b).
(b) To the extent legally permissible in the
states where the applicable Hospitality Units are now or will be located, ABI
and the applicable Sellers shall have entered into franchise agreements on
ABI's standard form of franchise agreement with third party franchisees and
otherwise having a fifteen (15) year term, a franchise royalty fee of 5% of
room revenues, a reservation fee of 1% of room revenues, a national marketing
fee of 1% of room revenues, no up-front franchise application fee and otherwise
on arm's length terms which are mutually acceptable to the parties hereto, in
each case, in respect of the hotel properties under development by Sellers
listed on Schedule 6.1.2(b). If it is not legally permissible for ABI and such
Sellers to enter into one or more of such franchise agreements with respect to
one or more of such hotel properties listed on Schedule 6.1.2(b) on or prior to
the Closing Date, then, as soon after the Closing Date as it is legally
permissible for U.S. Franchise Systems, Inc. or an Affiliate thereof ("USFS")
and such Sellers to enter into franchise agreements in respect of such hotel
properties, the applicable Sellers and USFS shall enter into franchise
agreements on USFS's standard form of franchise agreement for the America's
Best Inns or America's Best Suites brands, and otherwise containing the terms
described in the immediately preceding sentence, with respect to such hotel
properties (it being understood that such standard form of franchise agreement
shall not materially differ from the standard form of franchise agreement
heretofore provided to Sellers by USFS, other than with respect to such terms
described in the immediately preceding sentence). The provisions of this clause
(b) shall survive the Closing.
34
31
5.2. Conditions Precedent to Sellers' Obligations. The
fulfillment by Purchaser of each of the following conditions ("Purchaser's
Closing Conditions") on or before the Closing Date (any or all of which may be
waived in whole or in part by Sellers) is a condition precedent to the
obligations of Sellers under this Agreement.
5.2.1. Payment of Purchase Price. Purchaser shall
have paid the Purchase Price, subject to adjustment in accordance with the
terms of this Agreement.
5.2.2. Representations and Warranties True; No
Default. All of the representations and warranties of the Purchaser set forth
in Article 4 shall be true and correct in all material respects as if made on
the Closing Date, and Purchaser shall have complied, in all material respects,
with the covenants and agreements set forth herein to be performed or complied
with by Purchaser on or before the Closing Date.
5.2.3. Purchaser's Due Authorization. Purchaser
shall have delivered to Sellers, on or prior to the Closing Date (a) a
certificate of existence or good standing, or similar certificate, issued by
the secretary of state of the state in which Purchaser is organized, (b) a
certificate of an officer, managing member or other authorized Person, on
behalf of Purchaser, attaching true and correct copies of (i) the portions of
Purchaser's operating agreement, by-laws, or similar organizational document
forming the basis for the authority of the Person executing and delivering this
Agreement and the other Transaction Documents on behalf of Purchaser (the
"Signatory") to take such actions on behalf of Purchaser and (ii) to the extent
required by the terms of such operating agreement, by-laws or similar
organizational document, an instrument of consent, executed by the Persons
required to authorize the Signatory to take such actions on behalf of Purchaser
and (c) a true, correct and complete copy of Purchaser's articles of
organization, certificate of incorporation or similar original document,
certified by the secretary of state of the state in which Purchaser is
organized.
Article 6
Covenants
6.1. Covenants of Sellers. In addition to the other
covenants, agreements and obligations of Sellers under this Agreement, Sellers
covenant as follows:
6.1.1. Inspection and Access. (a) Purchaser shall
be entitled to have representatives of Purchaser at each Hospitality Unit and
the offices of the Related Businesses, at reasonable times, during normal
business hours, and otherwise under reasonable circumstances, to observe and
become familiar with the operations of the Hospitality Units and the Related
Businesses (which shall include reasonable access to the Books and Records),
provided (i) Purchaser shall give Sellers at least two (2) days prior written
or oral notice in each instance Purchaser desires to send such
35
32
representative(s) to any Hospitality Unit or office of any Related Business,
(ii) such representative(s) do not unreasonably or materially interfere with
Hospitality Unit management or employees or any of the operations of the
Hospitality Units and (iii) Sellers shall have the right to accompany such
representative(s) at all times at any such Hospitality Unit or office of any
Related Business. Sellers will instruct senior management of the Hospitality
Units and the Related Businesses to reasonably cooperate with such
representative(s). Without limiting the foregoing provisions of this subsection
6.1.1, Sellers shall, upon request of Purchaser, make available to Purchaser,
and Purchaser's authorized representatives and employees, all records, tax
returns, accounts, employee information, surveys, plans, engineering studies
and other files relating to the Assets which are in the possession of Sellers
and shall on the Closing Date deliver the same, as may be directed by
Purchaser.
(b) Sellers will allow an independent appraiser
and/or engineer(s) and/or environmental consultant(s) and/or land surveyor(s),
selected and paid for by Purchaser and by Purchaser's lender which is providing
financing to Purchaser for the purchases contemplated hereby, access to the
Hospitality Units at reasonable times, during normal business hours and
otherwise under reasonable circumstances, in order to conduct a review of the
Assets (which review shall be physically non-intrusive), provided (i)Purchaser
shall give Sellers at least two (2) days prior written notice in each instance
Purchaser desires or is required to send such appraiser(s) and/or engineer(s)
and/or environmental consultant(s) and/or land surveyor(s) to the Hospitality
Units, (ii)such appraiser and/or engineer(s) and/or environmental consultant(s)
and/or land surveyor(s) do not interfere with Hospitality Unit management or
employees or any of the operations of the Hospitality Unit and (iii)Sellers
shall have the right to accompany such appraiser and/or engineer(s) and/or
environmental consultant(s) at all times at the Hospitality Unit.
(c) Without limiting the terms of this subsection
6.1.1, Purchaser shall have the right to (i)inspect records, reports, permits,
applications, monitoring results, studies, correspondence, data and any other
information or documents relevant to environmental, health and safety matters
affecting Sellers, the Related Businesses, and/or the Hospitality Units,
(ii)inspect the Hospitality Units and the Related Businesses, including,
without limitation (A)perform Phase I environmental site assessments, and
(B)conduct tests of the soil and groundwater at, in, on, beneath or about the
Hospitality Units as may be recommended by an environmental consultant engaged
by Purchaser; provided that in the case of clause(B), such tests and
inspections shall be conducted in the manner set forth in clauses (i) - (iii)
of paragraph (b) above.
6.1.2. Noncompetition. Sellers agree that in order
for Purchaser to protect the value of the Assets being acquired pursuant to
this Agreement neither Sellers nor any entity owned or controlled by Sellers
shall for a period of 10 years from the date hereof (or such shorter period as
may be requested by Purchaser from time to time with respect to one or more
Hospitality Units) (x) induce or attempt to induce any employees of Purchaser
to leave its employ, (y) own, operate, manage,
36
33
lease or otherwise acquire any interest in any motel, hotel, motor inn or
similar establishment located within the areas described on Schedule 6.1.2(a)
or (z) own, operate, manage or otherwise acquire any interest in any
hospitality franchise or reservation business similar to any of the Related
Business, it being understood that nothing set forth in this subsection 6.1.2
shall prevent Sellers or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, as applicable, from (a) owning or
managing the America's Best Inns Motels described in Schedule 6.1.2(b) or (b)
participating in the development and management of any Hawthorne Suites or
Microtel hotels. The provisions of this subsection shall survive the Closing.
6.1.3. Closing Conditions. Sellers will use their
respective reasonable, good faith efforts, and will cooperate with Purchaser,
to secure all necessary consents, approvals, authorizations and exemptions from
governmental agencies and other third parties, including, without limitation,
all consents required by subsections 4.1.2 and 4.1.32. Sellers will use their
respective reasonable, good faith efforts to obtain the satisfaction of the
conditions specified in Section 5.1.
6.1.4. Operation of the Assets. (a) Between the
date hereof and the Closing Date, Sellers shall continue the Operation of the
Hospitality Units and the Related Businesses in the ordinary course of Sellers'
respective businesses and shall timely make all repairs, maintenance and
replacements to keep the Hospitality Units and all fixtures and equipment
thereon and therein in good and operable condition, and shall keep supplies
adequately stocked, as if the sale of the Assets hereunder were not to occur.
(b) Between the date hereof and the Closing Date
Sellers shall continue to accept reservations with respect to the Hospitality
Units in accordance with Sellers' ordinary practices as if the sale of the
Assets hereunder was not to occur.
(c) Between the date hereof and the Closing Date
Sellers shall maintain in effect all advertising and promotional campaigns
(including any radio, television, billboard, pamphlet, auto club or other
campaigns) at the level usual for the Hospitality Units and the Related
Businesses as if the sale of the Hospitality Units and the Related Businesses
were not occurring. Without limiting Sellers' obligations elsewhere in this
Agreement, Seller shall provide all information reasonably requested by
Purchaser regarding its current and planned advertising and promotional
campaigns.
(d) Between the date hereof and the Closing Date
Sellers shall, with respect to Hospitality Units and the Related Businesses,
timely pay and perform all of the obligations to be performed by Sellers and
the Partnerships under the Leases, Permits, Ground Leases, Service Agreements,
Third Party Contracts and Intercompany Contracts. Between the date hereof and
the Closing Date, Sellers shall not amend, modify, or terminate any of the
foregoing or waive any of the material obligations of any other party thereto,
without obtaining in each instance, the prior
37
34
written consent of Purchaser. Between the date hereof and the Closing Date
Sellers shall keep all of the Insurance Policies in full force and effect.
6.1.5. Disclosure; Press Releases. Except with the
prior written consent of Purchaser or as otherwise required by applicable law
or regulations, Sellers shall not disclose to any third party the terms of this
transaction. Purchaser agrees to consult with Sellers prior to issuing any
press release relating to this Agreement or the transactions contemplated
hereby, it being understood that Sellers' consent shall not be required with
respect to any such press release.
6.1.6. Other Transactions. From and after the date
hereof until the earlier to occur of (a) the Closing Date or (b) the expiration
or termination of this Agreement, Sellers shall not (i) provide any
information, financial or otherwise, relating to any of the Assets, to, or (ii)
conduct negotiations concerning the sale, assignment, transfer or other
disposition of any of the Assets with any prospective acquirer of any of the
Assets, other than Purchaser.
6.1.7. Discharge of Liens. Without limiting Sellers'
obligations to discharge liens and encumbrances to the extent provided
elsewhere in this Agreement, Sellers shall, at or prior to Closing, discharge
of record any liens or title conditions created or suffered to be created by
Sellers on or after the date hereof to the extent that at Closing, Sellers
shall be able to convey such property, free and clear of any such leases or any
other liens, encumbrances or claims of third parties. If Sellers are unable to
discharge of record any such liens or title conditions, Sellers may cause such
liens or title conditions to be discharged of record in accordance with
subsection 5.1.1(e).
6.1.8. Mechanics' Liens. If, subsequent to the
Closing Date, any mechanic's or other similar lien, charge or order for the
payment of money shall be filed against any of the Hospitality Units or against
Purchaser, based upon any act or omission, or alleged act or omission of
Sellers, their agents, servants or employees, or any contractor, subcontractor
or materialman in connection with the construction, completion and installation
by Sellers of improvements at any of the Hospitality Units (including, without
limitation, Tenant improvements) or repairs made to any of the Hospitality
Units then, within twenty (20) days after notice to Sellers of the filing
thereof, and regardless of whether such lien, charge or order shall be valid or
enforceable as such, Sellers shall take such action, by bonding, deposit,
payment or otherwise, as will remove or satisfy such lien, charge or order, of
record. The provisions of this subsection shall survive the Closing.
6.1.9. Indemnity. (a) Remedies. Except as
otherwise limited by this subsection 6.1.9, Sellers and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall,
jointly and severally, defend, indemnify, and hold harmless and reimburse
Purchaser and each of Purchaser's assignees and designees and each of their
respective Affiliates, officers, directors, agents and consultants
(collectively, the "Purchaser Indemnitees") for any
38
35
and all claims, losses, liabilities, damages, costs (including court costs) and
expenses (including reasonable attorneys' and accountants' fees) exclusive of
Environmental Costs (as hereinafter defined) incurred by any Purchaser
Indemnitee (hereinafter "Loss" or "Losses") suffered or incurred by any
Purchaser Indemnitee as a result of, or with respect to, (i) any breach or
inaccuracy of any representation or warranty of the Seller set forth in this
Agreement (other than as set forth in subsection 4.1.29) or in any certificate
or other document delivered by Sellers pursuant hereto or in connection
herewith, whether such breach or inaccuracy exists or is made on the date of
this Agreement or as of the Closing Date; (ii) any breach of or noncompliance
by Sellers or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, as applicable, with any covenant or agreement
of Sellers or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, as applicable, contained in this Agreement;
(iii) the acquisition, development, construction, ownership or operation of the
Assets prior to the Closing Date; provided, however, and without limiting the
indemnity set forth in subsection 6.1.9(b), the indemnity set forth in this
subsection 6.1.9(a)(iii) shall not provide any right of recovery with respect
to (w) any violation of Environmental Laws by Sellers or otherwise, (x) any
Loss related to Hazardous Materials, (y) the costs of any investigative,
enforcement, cleanup, removal, containment, remedial or other similar action,
regardless of by whom instituted, and (z) any claim for recovery of any amounts
which would otherwise have been recoverable pursuant to a violation of
subsection 4.1.29, if such representation were read without any qualifications
regarding Sellers' knowledge, (iv) any claims asserted against any Purchaser
Indemnitees under the bulk sales or bulk transfer laws of any state where the
Assets are located or any similar laws now or hereafter in effect, including,
without limitation, claims arising out of Sellers' failure to comply with such
laws, or (v) any claim by an employee at any Hospitality Unit or any Related
Business that arose under federal, state or local statute (including, without
limitation, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of
1991, the Age Discrimination in Employment Act of 1990, the Equal Pay Act, the
Americans with Disabilities Act of 1990, ERISA and all other statutes
regulating the terms and conditions of employment arising from transactions
contemplated by this Agreement), regulation or ordinance, under the common law
or in equity (including any claims for wrongful discharge or otherwise), or
under any policy, agreement, understanding or promise, written or oral, formal
or informal, between Seller and any employee at any Hospitality Unit or any
Related Business arising out of actions, events or omissions that occurred (or,
in the case of omissions, failed to occur) on or prior to the Closing Date.
(b) Notwithstanding any other provision of this
Agreement, from and after the Closing Date, Sellers and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ will
jointly and severally indemnify, defend and hold harmless each Purchaser
Indemnitee, from and against all Environmental Costs incurred by Purchaser
resulting from the breach by Sellers of their respective representations and
warranties set forth in subsection 4.1.29.
(c) For purposes of this Agreement, the term
"Environmental Costs" shall mean the costs of any investigative, enforcement,
cleanup, removal, containment, remedial or other private or governmental or
regulatory action instituted
39
36
or completed by any federal or state governmental authority or third party
(which shall not include any Purchaser Indemnitee or any Affiliate of any
Purchaser Indemnitee, unless such Purchaser Indemnitee or Affiliate of such
Purchaser Indemnitee would have a direct cause of action against any other
Purchaser Indemnitee, absent such affiliation) against any Purchaser Indemnitee
relating to the environment or natural resources.
(d) Indemnity Claims.
(i) Survival. The representations,
warranties and indemnities of Sellers and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ contained herein or
in any certificate or other document delivered pursuant hereto or in connection
herewith shall not be extinguished by the Closing but shall survive the
Closing, subject to the limitations set forth in subsection 6.1.9(d)(ii) hereof
with respect to the time periods within which claims for indemnity must be
asserted, and the covenants and agreements of the Sellers contained herein
shall survive without limitation as to time except as may be otherwise
specified herein.
(ii) Time to Assert Claims. All claims for
indemnification hereunder shall be asserted no later eighteen (18) months after
the Closing Date, except as follows:
(A) claims with respect to Losses arising
out of or related in any way to the matters described in subsections
6.1.9(a)(ii), (iii), (iv) and (v) may be made without limitation, except as
limited by law;
(B) claims with respect to Losses arising
out of or related in any way to (x) any breach of or inaccuracy in the
representations and warranties contained in subsection 4.1.3(a)(ii) hereof
insofar as such representations and warranties relate to any federal, state or
local antitrust law or regulation, (y) any breach of or inaccuracy in the
representations and warranties contained in subsection 4.1.28 hereof shall be
made no later than thirty (30) days after the expiration of the applicable
statute of limitations relative to the liability relating to such
representation or warranty; and
(C) Indemnification claims made pursuant
to subsection 6.1.9(b) shall be made no later than three (3) years from the
Closing Date.
(e) Deductible; Limitation on Recovery.
(i) Purchaser shall make no claim against
Sellers or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ for indemnification under subsection 6.1.9 unless
and until the aggregate amount of such claims exceeds $50,000 (the
"Deductible"), in which event Purchaser may claim indemnification for the
amount of such claims.
40
37
(ii) The aggregate liability of all Sellers
and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ under this Agreement shall be as follows: (x) for all
claims under this Agreement other than those described in clauses (y) and (z)
hereof, an amount not to exceed five percent (5%) of the Purchase Price, (y)
for all claims under subsection 6.1.9(b) an amount not to exceed five percent
(5%) of the Purchase Price, it being understood that the limitations on
recovery in clause (x) and this clause (y) shall be exclusive of each other and
shall not be aggregated, and (z) there shall be no limitation on the amount
recoverable for claims based upon (A)fraud, (B)defects in the state of title to
the Assets purported to be conveyed to the Purchaser at the Closing, (C) any
violation of or failure to comply with any bulk sales or bulk transfer laws
applicable to the Assets or to Sellers, (D)any breach by Sellers of their
respective representations and warranties set forth in subsection 4.1.31 or (E)
any breach of or noncompliance by any Seller of the provisions set forth in the
last two sentences of subsection 5.1.20(b).
(f) Notice of Claim. Purchaser shall notify the
applicable Seller and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, in writing, of any claim for
indemnification, specifying in reasonable detail the nature of the Loss or
Environmental Cost, and, if known, the amount, or an estimate of the amount, of
the liability arising therefrom. Purchaser shall provide to Seller and ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇ as promptly as practicable thereafter such information and
documentation as may be reasonably requested by Seller and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ to
support and verify the claim asserted, so long as such disclosure would not
violate the attorney-client privilege of Purchaser.
(g) Defense. If the facts pertaining to a Loss, or
Environmental Cost arise out of the claim of any third party, or if there is
any claim against a third party (other than Purchaser or a Purchaser
Indemnitee) available by virtue of the circumstances of the Loss or
Environmental Cost, Sellers and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ may assume the defense or the
prosecution thereof by prompt written notice to Purchaser and the affected
Purchaser Indemnitee, including the employment of counsel or accountants, at
Sellers' cost and expense; provided, however, the damages assessed against
Purchaser in any action the defense of which has been assumed by Sellers and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, shall not be subject to the monetary limitations set forth in
clause (e). Purchaser and the affected Purchaser Indemnitee shall have the
right to employ counsel separate from counsel employed by Sellers and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ in any such action and to participate therein, but the fees and expenses
of such counsel employed by Purchaser and the affected Purchaser Indemnitee
shall be at their expense. Sellers and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall not be liable for
any settlement of any such claim effected without their prior written consent,
which shall not be unreasonably withheld; provided that if Sellers and ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇ do not assume the defense or prosecution of a claim as provided above
within thirty (30) days after notice thereof from any Purchaser Indemnitee,
Purchaser and the affected Purchaser Indemnitee may settle such claim without
Sellers' and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇'▇ consent. Seller and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall not
agree to a settlement of any claim which provides for any relief other than the
payment of monetary damages or which could have a material precedential
41
38
impact or effect on the business or financial condition of any Purchaser
Indemnitee without Purchaser's and the affected Purchaser Indemnitee's prior
written consent. Whether or not Sellers and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ choose to so
defend or prosecute such claim, all the parties hereto shall cooperate in the
defense or prosecution thereof and shall furnish such records, information and
testimony, and attend such conferences, discovery proceedings, hearings, trials
and appeals, as may be reasonably requested in connection therewith.
(h) Subrogation. To the extent that (x)Purchaser
may pursue an action against any Person other than the Sellers, the Sellers'
Affiliates or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ in respect of any claim arising out of this
Agreement or the transactions contemplated hereby and (y) Purchaser has
indefeasibly recovered, in full, the amount of any Losses or Environmental
Costs arising out of the indemnification obligations set forth in this
subsection 6.1.9, then Sellers and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall be subrogated to any
right Purchaser may have had against any such Person, with respect to such
claim.
(i) Exclusive Remedy. Except for claims based
upon fraud, intentional misconduct, defects in the state of title to the Assets
purported to be conveyed to Purchaser at the Closing, or for equitable or
injunctive relief, the remedies pursuant to this subsection 6.1.9 are the sole
and exclusive remedies of all Purchaser Indemnitees in connection with this
Agreement and the transactions to be consummated pursuant hereto with respect
to any subject matter addressed by this Agreement. For the purpose of the
foregoing sentence, a subject matter shall be deemed to have been addressed by
this Agreement without regard to the fact that a remedy may be limited in any
fashion or may no longer exist due to the specific limitations on recovery
contained in this Agreement. Purchaser expressly acknowledges that this
subsection 6.1.9(f) is intended to limit all forms of remedies, whether in
contract, tort, or any other form of action with respect to the subject matter
addressed by this Agreement. In addition, the parties hereto agree that they
have carefully negotiated all of the representations, warranties, indemnities
and other remedies in this Agreement and except as otherwise expressly set
forth herein, neither party makes or grants to the other any additional
representations, warranties, indemnities or other remedies, whether express or
implied.
6.1.10. Books and Records. Sellers acknowledge that
the Books and Records which identify the list of the Hospitality Units' and the
Related Business' respective customers are valuable trade secrets and are part
of the Intellectual Property purchased by Purchaser pursuant to this Agreement.
Neither Sellers nor any Affiliate of Sellers shall use such customer lists, nor
Sellers' knowledge of the contents of the customer lists, directly to solicit
the Hospitality Units' or the Related Businesses respective customers through
direct mailing, telemarketing, or otherwise. The provisions of this subsection
shall survive the Closing.
42
39
6.1.11. Title to and the Integrity of Certain
Intellectual Property. Sellers acknowledge that hereafter, as between Sellers
and Purchaser, Purchaser is the owner of all right, title and interest in and
to all Intellectual Property listed on Schedule 1.1. (i), including, without
limitation, all other trademarks, service marks, trade dress, logos, trade
names, corporate names and copyrights owned by any Seller and relating to the
Assets. Sellers shall not do or suffer to be done any act or thing which will
in any way adversely affect any rights of Purchaser in and to the Intellectual
Property or any registrations thereof or which, directly or indirectly, will
reduce the value of the Intellectual Property or detract from its reputation or
goodwill. Sellers shall never challenge Purchaser's ownership of or the
validity of the Intellectual Property or any application by Purchaser for
registration thereof or any rights of Purchaser therein. The provisions of this
subsection shall survive the Closing.
6.1.12. Commissions, etc. Seller shall pay, on or
prior to the date due, all outstanding commissions and referral fees relating
to any of the Hospitality Units, attributable matters arising prior to the
Closing Date. The provisions of this subsection shall survive the Closing.
6.1.13. Change of ABI Corporate Name. ABI shall after
the Closing, upon Sellers' request, cause its corporate name to be changed to a
name which is dissimilar in all respects from the name "America's Best Inns" or
any name similar thereto and, in any event, to a name which will not be likely
to result in any confusion with or infringement upon (x)any corporate or trade
name hereafter adopted by Purchaser or in respect of the Assets or (y)any of
the Intellectual Property. The provisions of this subsection shall survive the
Closing.
6.2. Covenants of Purchaser. Purchaser covenants as
follows:
6.2.1. Closing Conditions. Purchaser shall use its
reasonable, good faith efforts to obtain satisfaction of Sellers' Closing
Conditions.
6.2.2. Disclosure. Except with the prior written
consent of Sellers, Purchaser shall not disclose to any third party the terms
of this transaction.
6.2.3. Transferred Employees. Purchaser agrees to
hire all of the Seller's Employees who regularly work in the Hospitality Units,
the Franchise Business, the Management Business and the Reservations Business
(the "Transferred Employees"), effective as of the date of Closing, on the same
terms upon which such Sellers' Employees are currently employed by Sellers;
provided that nothing herein shall be deemed to require Purchaser to continue
to employ such Seller's Employee's for a period in excess of ninety (90) days
or such shorter period if such Seller's Employee is dismissed for cause. The
provisions of this subsection shall survive the Closing.
43
40
6.2.4. Insurance Coverages for Transferred Employees.
Purchaser agrees to provide immediate coverage for the Transferred Employees,
effective as of 12:00 a.m. on the date of Closing, under a group health
insurance plan sponsored by the Purchaser. The group health insurance coverage
will provide coverages similar to those provided by the Seller's plans. The
Purchaser agrees to waive all waiting or elimination periods and preexisting
condition limitations of such plan for the Transferred Employees and to
equalize deductibles for the year for the Transferred Employees. The provisions
of this subsection shall survive the Closing.
6.2.5. Sellers' Access to Books and Records. To the
extent Sellers or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ have not retained copies thereof, upon
reasonable prior notice and at reasonable times after the Closing, Purchaser
shall permit ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ or ABI to review the Books and Records conveyed
to Purchaser at the Closing, at ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇'▇ or ABI's sole cost and
expense, it being further understood that Purchaser shall have no liability to
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ or ABI in the event that all or any portion of such Books and
Records shall have been lost or otherwise destroyed, it being understood that
Purchaser shall use reasonable efforts to preserve such Books and Records until
the third anniversary of the Closing. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ or ABI shall not have
access to any of Purchaser's books and records relating to any time period
after the Closing. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ABI agree to keep all such Books and
Records in strict confidence unless it is necessary to disclose or use such
Books and Records in connection with claims made by third parties against
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ or ABI, or as required by law. The provisions of this
subsection shall survive the Closing.
Article 7
Right of First Refusal
If ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, or any entity directly or indirectly
majority owned or directly or indirectly controlled by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
("Offeror") constructs or acquires a hotel or motel property (including,
without limitation, the Hospitality Units described on Schedule 6.1.2(b))
(each, a "First Refusal Property") and if a third party (each, an "Offeree")
offers to purchase such First Refusal Property, then Offeror shall promptly
provide a written notice to Purchaser (each, an "Offer Notice"), attaching a
true, correct and complete copy of any so-called "term sheet" or "letter of
intent" signed by Offeror and such Offeree, setting forth all of the material
economic terms and conditions of the proposed sale of such First Refusal
Property to such Offeree. If Purchaser then desires to purchase such First
Refusal Property, upon substantially the same terms as set forth in the Offer
Notice, then Purchaser shall deliver a written notice (each, a "Negotiation
Notice") to Offeror within fifteen (15) days after Purchaser's receipt of such
Offer Notice and Purchaser and Offeror shall then have an additional period of
time equal to the greater of (a)the amount of time specified in the letter of
intent or term sheet attached to such Offer Notice and (b)forty five (45) days,
in each case, to enter into a mutually acceptable definitive contract of sale
with respect to such First Refusal Property, substantially upon such terms and
to close the
44
41
transactions contemplated thereby, it being understood that the parties shall
negotiate and proceed in good faith in order to agree upon such definitive
contract of sale and to close the transactions contemplated thereby. If Offeror
and Purchaser, negotiating in good faith, are unable to reach agreement on such
definitive contract of sale or to close the transactions contemplated thereby
within such 45-day period, then the parties' obligations to each other under
this Article 7, with respect to the applicable First Refusal Property, shall
terminate and be of no further force or effect and Offeror may sell such First
Refusal Property to Offeree on the terms set forth in the Offer Notice. The
provisions of this Article 7 shall survive the Closing.
Article 8
Closing and Closing Documents
8.1. Closing and Closing Documents. The closing of the
transactions contemplated by this Agreement (the "Closing") shall take place at
the offices of Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, One New York Plaza,
New York, New York, on January 29, 1998, or upon such later date, as the date
of such Closing may be extended in accordance with the terms of this Agreement.
The actual date of the Closing is herein referred to as the "Closing Date".
8.2. Deeds and Other Instruments of Conveyance. At the
Closing, Sellers shall execute, acknowledge and deliver the following:
(a) a separate limited warranty deed for each of the
Hospitality Units, containing a covenant against grantor's acts, in form
reasonably acceptable to Purchaser, and in any event, in proper form for
recording in the jurisdiction where such Hospitality Unit is located, except
that with respect to Hospitality Units which are subject to Sellers' Leases,
each such deed shall convey only the Improvements;
(b) a ▇▇▇▇ of sale with respect to Sellers' Personal
Property, which shall be in a form reasonably acceptable to Purchaser;
(c) separate assignments of each of Sellers' Leases,
which assignments shall contain a surviving limited warranty of title and an
express assignment of Sellers' right, title and interest in, to and under any
option to purchase the Leased Land and any Improvements thereon under any
Sellers' Lease, and containing a covenant against assignor's acts, shall be in
proper form for recording in the jurisdiction where such Hospitality Unit is
located, shall otherwise comply with any applicable requirements of Sellers'
Leases and shall be in a form reasonably acceptable to Purchaser;
(d) an instrument, in form and substance reasonably
satisfactory to Purchaser assigning to Purchaser all unexpired assignable
warranties
45
42
and guarantees with respect to Hospitality Units (the "Warranties"), which
instrument shall also irrevocably appoint Purchaser as attorney-in-fact for the
purpose of exercising the rights of Sellers under such warranties;
(e) an instrument assigning to Purchaser all of the
Intellectual Property, which instrument shall contain a surviving general
warranty of title and shall be in a form reasonably acceptable to Purchaser;
(f) an instrument, in form and substance reasonably
satisfactory to Purchaser assigning to Purchaser all of the following relating
to Hospitality Units and the Related Businesses: (i) all Service Agreements,
transferable Insurance Policies, Third Party Contracts and Intercompany
Contracts, other than those transferable Insurance Policies and Intercompany
Contracts, if any, which Purchaser at or prior to Closing elects not to accept
an assignment of, (ii) all Leases, (iii) all Permits, to the extent
transferable, and (iv) all Bookings;
(g) Form 1099-S, as required by the Internal Revenue
Service;
(h) Form 8594, as required by the Internal Revenue
Service;
(i) all federal and state and local transfer tax
returns in respect of the Assets;
(j) to the extent permissible in the applicable
jurisdiction, separate instruments, in form and substance reasonably
satisfactory to Purchaser and in proper form for recording in the appropriate
jurisdiction, assigning to Purchaser or Purchaser's designee and at Purchaser's
expense, the mortgages and promissory notes relating to such mortgages as
Purchaser shall have requested in accordance with this Agreement; and
(k) such other instruments as Purchaser or the Title
Insurer shall reasonably request in order to vest title to the Assets in
Purchaser.
8.3. Notices to Vendors. Sellers and Purchaser shall, at
the Closing send to each vendor supplying goods and/or services to the
Hospitality Units or the Related Businesses pursuant to a Service Agreement
which is actually assumed by Purchaser a written notice stating:
(a) that the applicable Service Agreement has been
assigned to and assumed by Purchaser; and
(b) requesting that all services previously performed
by such vendor for the applicable Seller be performed by such vendor for
Purchaser, in accordance with such Service Contract.
46
43
8.4. Security Deposits. At the Closing, Sellers shall
deliver to Purchaser all of the security deposits and advance rentals together
with interest thereon theretofore deposited or paid by Tenants, against written
receipt by Purchaser. Sellers and Purchaser shall take all steps and execute
such documents, if any, as are necessary to comply with the laws of the States
in which the Hospitality Units are located and the terms of the applicable
Leases as then in effect relating to the holding, and transfer of the security
deposits under the Leases.
8.5. FIRPTA. At Closing, Sellers shall deliver to Purchaser
affidavits with respect to the matters represented in subsection 4.1.27 in form
and substance satisfactory to Purchaser and such other affidavits or materials
as may be required under the Code to permit Purchaser to file such affidavits.
8.6. Title Affidavits, etc. At Closing, Sellers shall
execute or cause to be executed and delivered such affidavits and other
documents and instruments, and shall make such deposits with Title Insurer as
shall be requested by Title Insurer (x) to remove the exception in the title
policies relating to Hospitality Units for "rights of parties in possession"
and (y) to evidence Sellers' authority to convey the Hospitality Assets, or (z)
to remove any exceptions to title which Sellers are obligated to remove
pursuant to this Agreement.
8.7. Escrow Closing. Unless the Title Insurer is willing at
the Closing to delete all exceptions (printed or otherwise) in its title
policies relating to matters affecting title arising between the Closing Date
and the actual recordation of the deeds, assignments of Sellers' Leases, deeds
of trust, mortgages, financing statements and other instruments to be recorded,
there shall be an escrow closing pursuant to which all payments, checks and
other documents shall be held in escrow by the Title Company under an escrow
agreement satisfactory to Purchaser and Sellers, pending (i) prompt recordation
of such deeds, assignments, deeds of trust, mortgages, financing statements and
other instruments and (ii) written certification by the Title Insurer that
there has been no change in the state of title between the Closing Date and
said recordation
8.8. Additional Deliveries at Closing. At the Closing,
Sellers shall deliver to Purchaser all of the following relating to Hospitality
Units or the Related Businesses, (i) executed counterparts of the Service
Agreements; (ii) executed counterparts of the Leases; (iii) the original
Permits; (iv) all Books and Records and all other correspondence, files and
records relating to the construction, operation, leasing, repair and
maintenance of such Hospitality Units (including all of the same in the
possession of any managing agent of such Hospitality Units) and with respect to
the operation of the Related Businesses; (v) copies of all structural,
mechanical or engineering reports relating to such Hospitality Units that are
in the possession of Sellers and which have not previously been delivered to
Purchaser; (vi) keys, codes, passcards and combinations to the Improvements;
(vii) copies of all Warranties; (viii)
47
44
existing as-built plans and specifications for the Improvements, in Sellers'
possession, (ix)executed counterparts of all Third Party Contracts and all
Intercompany Contracts.
8.9. Apportionments. (a) The following shall be
apportioned between Sellers and Purchaser and shall be prorated as of midnight
of the day preceding the Closing:
(i) real estate and personal property
taxes, sewer rents and charges and other state, county and municipal taxes,
charges and assessments affecting Hospitality Units or any portion thereof or
any Related Business or any portion thereof, on the basis of the fiscal year
for which the same are levied, imposed or assessed. If the rate or amount of
any such taxes, rents, charges, or assessments shall not be fixed prior to the
Closing, the adjustments thereof at the Closing shall be upon the basis of the
rate for the preceding fiscal year applied to the latest assessed valuation (or
other applicable basis of valuation), except for real estate and personal
property taxes which will be calculated on the same basis and then increased by
two percent (2%);
(ii) charges for water, electricity, gas,
oil, steam, telephone and other utilities at Hospitality Units. If the
consumption of any of the foregoing is measured by meters, Purchaser shall
furnish a current reading of each meter, or, if the bills for any of the
foregoing have not been issued prior to the Closing, the charges therefor shall
be adjusted at the Closing on the basis of the charges for the prior period for
which bills were issued and shall be further adjusted when the bills for the
current period are issued. Sellers shall cooperate with Purchaser to effect the
transfer of utility accounts from Sellers to Purchaser without any interruption
in service;
(iii) charges under Service Agreements, Third
Party Contracts and Intercompany Contracts which Purchaser has assumed pursuant
to this Agreement;
(iv) wages, salaries, vacation pay, sick
leave, bonus and other employee benefits for those of Sellers' employees hired
by Purchaser in connection with the operation and maintenance of Hospitality
Units or the operation of the Related Businesses; and
(v) if Purchaser shall elect to accept any
transferable Insurance Policies maintained by Sellers with respect to
Hospitality Units or the Related Businesses, the premiums payable thereon.
(b) The gross revenue, including all taxes,
produced by any of Hospitality Units or the Related Businesses prior to
midnight of the day preceding the Closing shall be and remain the property of
Sellers; all other gross revenue shall become the property of Purchaser.
Purchaser will honor, for Purchaser's account, all
48
45
reservations confirmed by Sellers prior to the Closing for dates subsequent
thereto, at Sellers' advertised rates. All deposits and down payments received
by Sellers prior to the Closing on confirmed reservations for the day of
Closing or days subsequent thereto will be paid over to Purchaser, at Closing.
Any deposits or down payments, received by Sellers on or after the Closing on
confirmed reservations for dates subsequent to the date of Closing, will be
paid over to Purchaser immediately upon receipt.
If, as a result of the above apportionments, a net amount is
due to Purchaser, such net amount shall be paid to Purchaser at Closing, or at
Purchaser's election, credited against the portion of the purchase price
payable at the Closing. If the net apportionments are in favor of Seller, the
purchase price shall be increased by the net amount thereof. The provisions of
this Section 8.9 shall survive the Closing.
8.10. Tax Reduction Proceedings. If tax reduction proceedings
have been commenced with respect to any of Hospitality Units, Sellers shall so
advise the Purchasers in writing prior to the Closing Date, and any refunds or
savings in the payment of taxes resulting from such tax reduction proceedings
applicable to the period prior to the Closing Date shall belong to and be the
property of Seller and any refunds or savings in the payment of taxes
applicable to the period from and after the Closing Date shall belong to and be
the property of Purchaser. All attorney's fees and other expenses incurred in
obtaining such refunds or savings shall be apportioned between Purchaser and
Seller in proportion to the gross amount of such refunds or savings payable to
Purchaser and Seller, respectively. All such tax reduction proceedings shall be
prosecuted with due diligence, and Purchaser shall be allowed to participate
with counsel of Purchaser's choice in any such proceedings which relate to a
tax year occurring in whole or in part after the Closing Date. Any such tax
reduction proceedings for the tax year in which the Closing Date occurs shall
not be settled without the prior written consent of Purchaser. The provisions
of this Section 8.10 shall survive the Closing.
8.11. Purchaser's Closing Documents. At the Closing,
Purchaser shall execute, acknowledge and deliver the following:
(a) together with Sellers, the Form 1099-S described
in Section 8.2(g);
(b) Form 8594, as required by the Internal Revenue
Service; and
(c) such instruments of assumption, in form and
substance reasonably satisfactory to Purchaser, in respect of all items being
assigned to Purchaser at Closing, pursuant to this Agreement or the other
Transaction Documents, for which such assumption by Purchaser is required by
the terms of any of the documents, agreements or instruments being so assigned
to Purchaser.
49
46
Article 9
Termination Prior to Closing
9.1. Termination of Agreement. Except as otherwise
specifically provided herein, this Agreement may be terminated at any time
prior to the Closing:
(a) By mutual written consent of Purchaser and
Sellers (which right shall be exercised on behalf of Sellers by ABI);
(b) By the Sellers in writing, without liability
(which right shall be exercised on behalf of Sellers by ABI), if Purchaser
shall (i) fail to perform in any material respect its agreements contained
herein required to be performed by it on the Closing Date, or (ii) materially
breach any of its representations, warranties or covenants contained herein,
which failure or breach is not cured within ten (10) days after the Sellers
have notified Purchaser of their intent to terminate this Agreement pursuant to
this clause (b);
(c) By Purchaser in writing, without liability, if
Sellers shall (i)fail to perform in any material respect their agreements
contained herein required to be performed by them on or prior to the Closing
Date, or (ii) materially breach any of their representations, warranties or
covenants contained herein, which failure or breach is not cured within ten
(10) days after Purchaser has notified the Sellers of its intent to terminate
this Agreement pursuant to this clause (c);
(d) By either the Sellers or Purchaser in writing,
without liability (which right shall be exercised on behalf of Seller by ABI),
if there shall be any order, writ, injunction or decree of any court or
governmental or regulatory agency binding on Purchaser or Sellers, which
prohibits or restrains Purchaser or Sellers from consummating the transactions
contemplated hereby, provided that Purchaser and Sellers shall have used their
reasonable, good faith efforts to have any such order, writ, injunction or
decree lifted and the same shall not have been lifted within 30 days after
entry, by any such court or governmental or regulatory agency; or
(e) By either Sellers or Purchaser, in writing (which
right shall be exercised on behalf of Sellers by ABI) and without liability, if
for any reason (other than the breach of this Agreement by the party attempting
to terminate the Agreement pursuant to this subsection 9.1(e)) the Closing has
not occurred by (x) January 29, 1998, or (y) such later date as is provided for
pursuant to any other express provision of this Agreement, or (z) such later
date as is otherwise agreed to by the parties in writing. A purported
termination of this Agreement by a party whose breach has resulted in the
Closing not occurring by the date provided for above shall not be a valid
termination pursuant to this subsection 9.1(e), and shall not relieve such
party of any liability for such invalid termination.
50
47
9.2. Termination of Obligations. Termination of this
Agreement pursuant to this Article 9 shall terminate all obligations of the
parties hereunder, except for the obligations expressly intended to survive
such termination; provided, however, that termination pursuant to clauses (b),
(c) or (e) of subsection 9.1 hereof shall not relieve a defaulting or breaching
party from any liability to the other party hereto.
Article 10
Brokerage
Seller agrees to pay any brokerage commission or other fees
or compensation due to the Broker (as hereinafter defined) in connection with
this Agreement and the transactions contemplated hereby. Purchaser and Sellers
represent to each other that they dealt with no broker or finder in connection
with this Agreement and the transactions contemplated thereby other ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. (the "Broker"), and had no contact or dealings regarding
this Agreement and the transactions contemplated hereby with any other broker
or person who can claim a right to a commission or finder's fee. The parties
hereto agree to indemnify and hold the other harmless from any loss, liability,
cost and expense, including reasonable attorneys' fees, arising by reason of
the incorrectness of its representation hereinabove set forth. The provisions
of this Article 10 shall survive the Closing or sooner termination of this
Agreement.
Article 11
Closing Costs
Purchaser shall pay the costs of its legal counsel, its
auditors, its engineers, title insurance premiums and survey costs, any deed
recording taxes not constituting transfer taxes and any mortgage recording
taxes in respect of mortgages filed in respect of the Hospitality Units on the
Closing Date. Except as otherwise set forth in the immediately preceding
sentence, Sellers shall pay at or prior to the Closing all other closing costs
not payable by Purchaser, including cost of its legal counsel; any transfer,
stamp, sales and other taxes and charges imposed upon or relating to the sale
of the Assets or any of the instruments to be delivered at the Closing.
Article 12
Condemnation
(a) If, at any time prior to or on the Closing Date, any
part of any Hospitality Unit shall be taken, or by written notice to Sellers,
threatened to be taken, or there shall be a taking or by written notice to
Sellers, threatened taking of any property which adversely affects the ingress
or egress to Hospitality Units, in the exercise of the power of eminent domain
by any sovereign, municipality or other public or private authority, Sellers
shall give Purchaser notice of such taking or
51
48
threatened taking within five (5) business days after it become aware thereof.
In such event, Purchaser may, within ten (10) days after Purchaser has received
Sellers' notice, or within such shorter time necessary for Purchaser to deliver
such notice to Sellers prior to the expiration of the Review Period, terminate
this Agreement by written notice to Sellers, whereupon all further rights,
obligations and liabilities under this Agreement between Sellers and Purchaser
shall end, other than with respect to the rights and obligations hereunder
expressly intended to survive.
(b) If a taking or threatened taking described in paragraph
(a) has occurred, but this Agreement shall not have been terminated in
accordance with paragraph (a), then this Agreement shall remain in full force
and effect, and if such taking affects any of Hospitality Units, at the Closing
Sellers shall pay to Purchaser any award in connection with such taking
received by Sellers and shall assign to Purchaser, without recourse, any right
Sellers may have to receive such an award. Sellers shall reasonably cooperate
with Purchaser in connection with the collection by Purchaser of any such award
after the Closing Date. The provisions of this clause (b) shall survive the
Closing.
(c) For purposes of this Article, the term "taking" shall
include temporary as well as permanent takings.
(d) The provisions of this Article 12 are expressly intended
to supersede any laws to the contrary governing the terms of such Article 12.
Article 13
Insurance; Destruction or Damage
(a) If any Hospitality Unit shall be in any way damaged or
destroyed by fire or any other casualty prior to the Closing, then, Purchaser
may, at Purchaser's option, within ten (10) days after Purchaser has received
notice of such fire or other casualty, or within such shorter time necessary
for Purchaser to deliver such notice to Sellers prior to the expiration of the
Review Period, terminate this Agreement by written notice to Sellers, whereupon
all further rights, obligations and liabilities under this Agreement between
Purchasers and Sellers shall end, except for those obligations and liabilities
expressly intended to survive.
(b) If pursuant to the provisions of clause(a) above, this
Agreement shall not have terminated by reason of any such fire or casualty,
then, at the Closing, (i) Sellers shall assign to Purchaser, all of Sellers'
right to receive the proceeds of any Insurance Policies covering such damage or
destruction, together with all of Sellers' rights to adjust and/or settle any
claims under such Insurance Policies with respect to such damage or destruction
and (ii) the Purchase Price shall be reduced by any deductible payable under
such Insurance Policies. Sellers shall reasonably cooperate with Purchaser in
connection with the collection of the proceeds by Purchaser under
52
49
such Insurance Policies or the adjustment and/or settlement of any claims
thereunder, after the Closing.
(c) The provisions of clause (b) shall survive the Closing.
(d) The provisions of this Article 13 are expressly
intended to supersede any laws to the contrary governing the terms of such
Article 13.
Article 14
Miscellaneous
14.1. Governing Law. This Agreement and the rights and
obligations of the parties hereunder shall be interpreted, construed and
enforced in accordance with the laws of the State of Illinois.
14.2. Entire Agreement. This Agreement and the Exhibits and
Schedules hereto constitute the entire agreement between the parties hereto
with respect to the subject matter hereof. No variations, modifications, or
changes herein or hereof shall be binding upon any party hereto unless set
forth in a document duly executed by or on behalf of such party.
14.3. Waiver. No failure by either party to insist upon the
strict performance of any covenant, duty, agreement or term condition of this
Agreement or to exercise any right or remedy consequent upon a breach thereof
shall constitute a waiver of any such breach or of such or any other covenant,
duty, agreement, term or condition.
14.4. Severability. If any provision of this Agreement or the
application thereof to any person or circumstances shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the
application of such provisions to other persons or circumstances shall not be
affected thereby and shall be enforced to the greatest extent permitted by law.
14.5. Exhibits and Schedules. All Exhibits and Schedules
referred to in this Agreement are hereby incorporated in this Agreement by
reference.
14.6. Further Assurances. In addition to the obligations
required to be performed hereunder by Sellers at the Closing, Sellers agree
from time to time, to perform such other acts, and to execute, acknowledge and
deliver subsequent to the Closing such other instruments, documents and other
materials, as Purchaser may reasonably request in order to effectuate the
consummation of the transactions contemplated herein and to vest title to the
Related Assets in Purchaser.
14.7. Headings. Article and Section headings are inserted
only for the purpose of convenient reference and in no way define, limit or
prescribe the scope or
53
50
intent of this Agreement or any part thereof and shall not be considered in
interpreting or construing this Agreement.
14.8. No Third-Party Beneficiaries. Other than as expressly
set forth in this Agreement, the provisions of this Agreement are for the sole
benefit of the parties to this Agreement and shall not give rise to any rights
by or on behalf of anyone other than such parties.
14.9. Assignment. (a) Purchaser shall upon written notice to
Sellers and upon Sellers' prior written consent (which consent, if granted by
Sellers, shall be granted by ABI on the Sellers' behalf), have the right to
assign, in whole or in part, any of its right, title or interest in this
Agreement or any of the other Transaction Documents to any Person or entity;
provided, however, that Sellers' consent shall not be required in connection
with Purchaser's assignment, in whole or in part, of any of its right, title or
interest in this Agreement or any of the other Transaction Documents to USFS,
or to any Person or entity which is an Affiliate of USFS. Sellers and Purchaser
hereby agree that an assignment by Purchaser in compliance with this Section
14.9 shall release the then Purchaser from all of its obligations and
liabilities hereunder and from and after such an assignment, all references to
Purchaser herein shall be deemed to mean such permitted assignee. Sellers agree
to execute a confirmation of such release, in form and substance reasonably
satisfactory to Sellers and Purchaser, provided that failure of Sellers to
execute same shall not impair the validity of the release.
(b) Sellers and Purchaser agree that upon delivery of
prior written notice to Sellers by Purchaser, Sellers shall convey, at the
Closing, all or such portion of the Assets as Purchaser shall designate in such
notice to the assignee or designee of Purchaser described in such notice, in
Purchaser's sole discretion.
14.10. Notices. Any notice or other communication that is
required or permitted to be given under the terms of this Agreement (each a
"Notice") shall be in writing and shall be deemed to have been duly given (a)
upon being deposited in the mail, postage prepaid for registered or certified
mail, return receipt requested, or (b) when personally delivered against
written receipt, or when delivered by overnight courier, in each case, to the
parties hereto at the following addresses or at such other address as any party
hereto shall hereafter specify by 10 days prior Notice given and received in
the manner provided in this Section 14.10 to the other parties described in
this Section.
54
51
If to Sellers:
c/o America's Best Inns, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
with a copy to:
Long, ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ LLP
One Peachtree Center
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Associates, Ltd.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
If to Purchaser:
Best Acquisition, Inc.
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
with a copy to:
▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
A Notice shall be deemed to have been duly received (a) if
mailed, on the date set forth on the return receipt or (b) if personally
delivered or sent by overnight courier on the date of such delivery. The
inability to make delivery because
55
52
of change of address of which no Notice was given, or rejection or refusal to
accept any Notice offered for delivery shall be deemed to be receipt of the
Notice as of the date of such inability to deliver or rejection or refusal to
accept. Any Notice may be given by counsel for the party giving same. Any
Notice to be given to Sellers or by Sellers shall be given by or to ABI, as
applicable, on behalf of Sellers.
14.11. Successors and Assigns. This Agreement and each of the
rights, obligations, representations, warranties, indemnities and covenants
contained herein and in the other Transaction Documents shall be binding on,
and the benefits thereof shall inure to, the successors and assigns of the
parties hereto, including such parties' successors in title. The parties hereto
acknowledge and agree that Purchaser will be transferring its interests in some
or all of the Assets to an entity or entities which constitute Purchaser's
successor hereunder; such successors are hereby deemed third party
beneficiaries of Purchaser and all representations, warranties, covenants and
indemnities set forth in this Agreement and the other Transaction Documents
shall be binding upon and shall insure to such successors' benefit.
14.12. Attorneys' and Other Professionals' Fees. If either
party to this Agreement shall institute any action or proceeding against the
other party to enforce its rights and remedies hereunder, the prevailing party
shall be entitled to recover from the other party reasonable attorneys' fees
and expenses. As used herein, "prevailing party" shall mean, in the case of
claimant, one who is successful in obtaining substantially all of the relief
sought, and in the case of a defendant or respondent, one who is successful in
denying substantially all of the relief sought. Otherwise each party hereto
shall pay the fees and disbursements of its own attorneys, accountants,
investment advisers and other professionals.
14.13. Liability Joint and Several. The liability of Sellers
and ▇▇▇▇▇▇ ▇▇▇▇▇▇ (with respect to his indemnification obligations hereunder)
under this Agreement shall be joint and several.
14.14. Plural and Singular. As used in the Agreement, unless
the context otherwise requires, the plural shall be construed to include the
singular and the singular shall be construed to include the plural. Without
limiting the foregoing, unless the context otherwise requires, the term
"Sellers" shall be construed to mean each and all of Sellers.
56
53
IN WITNESS WHEREOF, this Agreement has been executed by the
parties hereto on the date set forth above.
SELLERS:
AMERICA'S BEST INNS, INC.
By:
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
▇▇▇▇▇▇ MANAGEMENT
COMPANY, INC.
By:
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
CARBONDALE HOSPITALITY
PARTNERS
By: America's Best Inns, Inc., its
general partner
By:
-----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
PADUCAH JOINT VENTURE
By: America's Best Inns, Inc.,
a general partner
By:
-----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
FORT ▇▇▇▇▇ JOINT VENTURE
57
54
By: America's Best Inns, Inc., a
general partner
By:
--------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
JOHNSTON, IOWA JOINT VENTURE
By: America's Best Inns, Inc., a
general partner
By:
--------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
SPRINGFIELD JOINT VENTURE
By: America's Best Inns, Inc., a
general partner
By:
--------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
▇▇▇▇▇▇▇▇ JOINT VENTURE
By: America's Best Inns, Inc., a
general partner
By:
--------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
LIBERTYVILLE JOINT VENTURE
By: America's Best Inns, Inc., a
general partner
By:
--------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
58
55
NASHVILLE JOINT VENTURE
By: America's Best Inns, Inc., a
general partner
By:
----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
▇▇▇▇▇▇▇ BEST SUITES, L.L.C.
By: America's Best Inns, Inc., its
managing member
By:
----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
-------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
PURCHASER:
BEST ACQUISITION, INC.
By:
----------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇
President
