EXHIBIT 10.24
AGREEMENT OF SALE AND PURCHASE
BETWEEN
FINDLAY EQUITY PARTNERS
AND
HOST FUNDING, INC.
DATED: MAY 1, 1997
COUNTRY HEARTH INN - LIBERTY TOWNSHIP, OHIO
TABLE OF CONTENTS
AGREEMENT OF SALE AND PURCHASE
CLE NO. PAGE
1 DEFINITIONS AND REFERENCES . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 REFERENCES AND INTERPRETATION. . . . . . . . . . . . . . . . . . . . 7
2 SALE AND PURCHASE. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.1 SALE AND PURCHASE. . . . . . . . . . . . . . . . . . . . . . . . . . 7
3 PURCHASE PRICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.1 PURCHASE PRICE . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.2 NOMURA LOAN ASSUMPTION . . . . . . . . . . . . . . . . . . . . . . . 8
3.3 DEPOSIT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.4 ALLOCATION OF PURCHASE PRICE . . . . . . . . . . . . . . . . . . . . 9
4 SURVEY, TITLE COMMITMENT AND TITLE DOCUMENTS . . . . . . . . . . . . . . 10
4.1 SURVEY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.2 TITLE COMMITMENT AND TITLE DOCUMENTS . . . . . . . . . . . . . . . . 10
4.3 SURVEY AND TITLE REVIEW PERIOD . . . . . . . . . . . . . . . . . . . 10
5 DUE DILIGENCE MATERIALS; APPROVAL OF HOTELCONTRACTS; CERTAIN SELLER
AND PURCHASER CONTINGENCIES. . . . . . . . . . . . . . . . . . . . . . . 10
5.1 DUE DILIGENCE DELIVERIES . . . . . . . . . . . . . . . . . . . . . . 10
5.2 APPROVAL OF HOTEL CONTRACTS. . . . . . . . . . . . . . . . . . . . . 11
5.3 CERTAIN SELLER AND PURCHASER CONTINGENCIES . . . . . . . . . . . . . 12
5.4 CONFIDENTIALITY. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6 DUE DILIGENCE PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.1 INVESTIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . 14
7.1 REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . . . . . . . . 14
7.2 DEFINITION OF HAZARDOUS MATERIALS. . . . . . . . . . . . . . . . . . 17
7.3 REPRESENTATIONS AND WARRANTIES OF PURCHASER. . . . . . . . . . . . . 17
7.4 DURATION OF REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . 19
8 CONDITIONS TO SELLER'S OBLIGATIONS . . . . . . . . . . . . . . . . . . . 20
8.1 CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
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9 CONDITIONS TO PURCHASER'S OBLIGATIONS. . . . . . . . . . . . . . . . . . 21
9.1 CONDITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
10 CERTAIN COVENANTS AS TO ACTIONSAND OPERATIONS PENDING CLOSING. . . . . . 22
10.1 COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
11 CLOSING MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
11.1 CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
11.2 CLOSING ESCROW. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
12 CLOSING DELIVERIES; POSSESSION . . . . . . . . . . . . . . . . . . . . . 23
12.1 SELLER'S DELIVERIES . . . . . . . . . . . . . . . . . . . . . . . . 23
12.2 PURCHASER'S DELIVERIES. . . . . . . . . . . . . . . . . . . . . . . 25
12.3 CONCURRENT TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . 25
12.4 FURTHER ASSURANCES. . . . . . . . . . . . . . . . . . . . . . . . . 25
12.5 POSSESSION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
13 ADJUSTMENTS AND PRORATIONS;CLOSING INVENTORY; CLOSING REPORT . . . . . . 25
13.1 ADJUSTMENTS AND PRORATIONS. . . . . . . . . . . . . . . . . . . . . 25
13.2 SUPPLIES; CONSUMABLES; FIXTURES AND TANGIBLE PERSONAL PROPERTY;
CLOSING INVENTORY; CLOSING REPORT . . . . . . . . . . . . . . . . . 27
13.3 MANAGEMENT AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . 28
13.4 POST-CLOSING ADJUSTMENTS AND PAYMENT OF CERTAIN EXPENSES. . . . . . 28
14 CASUALTIES AND TAKINGS . . . . . . . . . . . . . . . . . . . . . . . . . 29
14.1 CASUALTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
14.2 TAKINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
15 EMPLOYEE MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
15.1 EMPLOYEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
16 REMEDIES ON DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . . 30
16.1 SELLER DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . . 30
16.2 PURCHASER DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . 30
17 AGREEMENT NOT TO COMPETE . . . . . . . . . . . . . . . . . . . . . . . . 31
17.1 AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
18 NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
18.1 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
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19 ADDITIONAL COVENANTS; PIGGY-BACK REGISTRATION RIGHTS . . . . . . . . . . 32
19.1 ADDITIONAL COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . 32
19.2 PIGGY-BACK REGISTRATION RIGHTS. . . . . . . . . . . . . . . . . . . 35
EXHIBIT A Legal Description
EXHIBIT B Consumables, Supplies and Fixture and Tangible
Personal Property Inventory
EXHIBIT C Form of Investment Letter Agreement
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AGREEMENT OF SALE AND PURCHASE
THIS AGREEMENT OF SALE AND PURCHASE ("Agreement") is made as of this 1st
day of May, 1997, by and between FINDLAY EQUITY PARTNERS, an Ohio general
partnership ("Seller") and HOST FUNDING, INC., a Maryland corporation or its
permitted assignee as provided herein (sometimes herein, "Purchaser").
R E C I T A L S
A. Seller is the fee owner of the real property legally described in
Exhibit A attached hereto and incorporated herein by reference for all
purposes, which real property has been improved with (i) two (2) hotel
building(s) containing seventy-eight (78) guest rooms; (ii) parking areas;
and (iii) certain other improvements, and which is commonly known as the
Country Hearth Inn located in Liberty Township, ▇▇▇▇▇▇▇ County, Ohio
(collectively, the "Hotel").
B. Seller desires to sell, and Purchaser desires to purchase, the Hotel
upon and subject to the terms and conditions hereinafter set forth.
A G R E E M E N T S
NOW, THEREFORE, in consideration of the foregoing premises and the
respective agreements, covenants and conditions herein contained, and for
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Seller and Purchaser agree as follows:
ARTICLE 1
DEFINITIONS AND REFERENCES
1.1 DEFINITIONS. As used herein, the following terms shall have the
respective meanings indicated below:
AFFILIATE: Any person that, directly or indirectly, controls or is
controlled by or is under common control with such person, or any other
person that owns, beneficially, directly or indirectly, five percent or more
of the outstanding capital stock, shares or equity interests of such person,
or any officer, director, employee, partner or trustee of such person
controlling, controlled by or under common control with such person
(excluding trustees and persons serving in similar capacities who are not
otherwise an Affiliate of such person). The term "person" means and includes
individuals, corporations, general and limited partnerships, stock companies
or associations, joint ventures, associations, companies, trusts, banks,
trust companies, land trusts, business trusts, or other entities and
governments and agencies and political subdivisions thereof. For the
purposes of this definition, "control" (including the correlative meanings of
the terms "controlled by" and "under common control with"), as used with
respect to any person, shall mean the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of
such person, through the ownership of voting securities, partnership
interests or other equity interests.
AGREEMENT: This Agreement of Purchase and Sale, including the
exhibits attached hereto, which is incorporated herein by this reference for
all purposes.
AGREEMENT NOT TO COMPETE: As defined in Section 17.1.
AUBURN CHI CONTRACT: That certain Agreement of Purchase and Sale of
even date herewith between Auburn Equity Partners, an Ohio general
partnership, and Purchaser and relating to the sale by Auburn Equity Partners
to Purchaser of a "Country Heath Inn" hotel property located in Auburn,
Indiana.
BOOKINGS: Contracts for the use or occupancy of guest rooms of the
Hotel.
CASH PORTION OF THE PURCHASE PRICE: As defined in Section 3.1(a).
CLOSING: As defined in Section 11.1.
CLOSING DATE: As defined in Section 11.1.
CLOSING INVENTORY: The Closing Inventory required under the
provisions of Section 13.2.
CLOSING REPORT: The Closing Report required under the provisions of
Section 13.2.
CLOSING STATEMENTS: The Closing Statements to be executed by Seller
and Purchaser incident to the Closing of the transaction contemplated hereby.
CONSUMABLES: All engineering, maintenance, housekeeping and guest
supplies, including soap, cleaning materials and matches, stationery and
printing, and other supplies of all kinds, in each case whether partially
used, unused or held in reserve storage for future use or in connection with
the maintenance and operation of the Hotel, at normal operating levels
customarily maintained for the efficient economic operation of the Hotel as a
"Country Hearth Inn" hotel property, excluding, however, (i) the Supplies,
and (ii) property owned by guests or other persons furnishing services to the
Hotel.
CONSUMABLES, SUPPLIES AND FIXTURES AND TANGIBLE PERSONAL PROPERTY
INVENTORY: The inventory of the levels of the Consumables, Supplies and
Tangible Personal Property located at the Hotel as of October 1, 1996, a copy
of which is attached hereto as Exhibit B and incorporated herein by reference
for all purposes.
CONTINUING OBLIGATIONS: All commitments, promotions and other
obligations to provide free or discounted guest rooms at the Hotel which have
not been satisfied in full as of the Closing Date and which are not included
in the Hotel Contracts.
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CUT-OFF TIME: 11:59 P.M. local time on the day immediately preceding
the Closing Date.
DEPOSIT: As defined in Section 3.3(a).
DUE DILIGENCE PERIOD: As defined in Section 6.1.
EFFECTIVE DATE: The date upon which at least three (3) fully
executed counterparts of this Agreement, together with the Initial Deposit,
are delivered to the Title Company, as acknowledged by the Title Company in
writing in the space hereinafter provided in this Agreement.
EMPLOYEE COSTS: As defined in Section 15.1.
EMPLOYEE INDEMNIFICATION AGREEMENT: As defined in Section 15.1.
ESCROW: The escrow to be created for the purpose of facilitating
the Closing.
ESCROW INSTRUCTIONS: The escrow instructions to be executed and
delivered by the parties hereto (or their respective attorneys) and the Title
Company for closing the transaction contemplated hereby.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended.
EXISTING FRANCHISE AGREEMENT: The current franchise or license
agreement allowing the operation of the Hotel as a "Country Hearth Inn".
EXISTING FRANCHISE AGREEMENT COSTS: The recurring costs and fees
paid to the franchisor or licensor on a monthly basis by Seller pursuant to
the Existing Franchise Agreement, including, without limitation, royalty
fees, system assessment fees, marketing fees, reservation fees and the like,
excluding however non-monthly and/or extraordinary fees and expenses so paid
to franchisor or licensor by Seller.
FINAL DEPOSIT: As defined in Section 3.3(a).
FIXTURES AND TANGIBLE PERSONAL PROPERTY: All fixtures, furniture,
furnishings, fittings, equipment (including laundry equipment), cars, trucks,
machinery, apparatus, signage, appliances, draperies, carpeting and other
articles of personal property used or useable in connection with the use,
operation and maintenance of the Hotel at normal operating levels customarily
maintained for the effective economic operation of the Hotel as a "Country
Hearth Inn" hotel property, including, without limitation, architectural,
engineering and other plans (including "as built" plans) and drawings, the
account and business records relating to the operation of the Hotel,
telephone numbers for the Hotel, service marks and trademarks relating to the
Hotel, all software and data bases (including the disks), ledgers, bank
statements, keys and locks and safe combinations, excluding, however: (i) the
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Consumables; (ii) the Supplies; (iii) equipment and property leased pursuant
to the Hotel Contracts; (iv) property owned by guests or other persons
furnishing services to the Hotel; (v) the Improvements, (vi) property located
at the Hotel and owned by Seller and/or its Affiliates but not used or
necessary for the normal operation of the Hotel, and (vii) funds or cash
equivalents in Hotel operating accounts or any cash, ▇▇▇▇▇ cash or currency
physically located at the Hotel on the Closing Date.
HAZARDOUS MATERIALS: As defined in Section 7.2.
HOST FUNDING FRANCHISE AGREEMENT: As defined in Section 9.1(c).
HOST FUNDING STOCK: As defined in Section 3.1(c).
HOST FUNDING STOCK FAIR MARKET VALUE: The average for the prices
of a share of the Host Funding Stock as reported on the American Stock
Exchange for the fifteen (15) trading days ending with the third business day
preceding the Closing Date.
HOTEL: As defined in Recital A to this Agreement.
HOTEL CONTRACTS: All service, maintenance, purchase order, lease and
other contracts and agreements, including equipment leases, and any
amendments thereto, with respect to the maintenance, operation, provisioning
or equipping of the Hotel and the ownership, operation, use and maintenance
of the Property, as well as written warranties and guaranties relating
thereto, if any, including those relating to heating and cooling equipment
and/or mechanical equipment, but excluding, however, (i) insurance policies,
(ii) the Bookings, and (iii) any of the foregoing which are not transferrable
by Seller and/or Manager, or, which, at Purchaser's option, are not assumed
by Purchaser (or Operator at the direction of Purchaser).
HOTEL REVENUES. All revenues or sales or income of any kind payable
to Seller and resulting from the ownership or operation of the Property and
the Hotel, as and when collected, including, without limitation to, revenue
and charges payable in connection with the rental of rooms and suites; food
and beverage sales; laundry (including coin operated equipment) and telephone
revenues; vending machine revenues; and rental and other payments from
licensees and concessionaires occupying space or rendering services at the
Hotel (after deduction of all rebates and the reasonable expenses actually
paid or incurred in connection with the adjustments or collection thereof).
IMPOSITIONS: All general and special real estate, personal property
and other ad valorem taxes and assessments assessed or levied against or with
respect to the Property, or any part thereof or any interest therein, and all
sales, occupancy, room, license, permit and other taxes, and all costs and
expenses related thereto, incurred in connection with the operation of the
Hotel.
IMPROVEMENTS: The buildings, structures (surface and sub-surface),
improvements and other constructions and all component parts of those buildings,
structures, improvements and other
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constructions, including such fixtures as shall constitute real property,
located on the Real Property and constituting the Hotel.
INDIANAPOLIS CHI CONTRACT: That certain Agreement of Sale and
Purchase of even date herewith between Indianapolis West Equity Partners, an
Ohio general partnership, and Purchaser and relating to the sale by
Indianapolis West Equity Partners to Purchaser of a "Country Hearth Inn"
hotel property located in ▇▇▇▇▇▇ County, Indiana.
INITIAL DEPOSIT: As defined in Section 3.3(a).
INVESTMENT LETTER AGREEMENT: The form of agreement attached hereto
as Exhibit C and incorporated herein by reference for all purposes.
LEGAL REQUIREMENTS: All laws, statutes, codes, acts, ordinances,
orders, judgments, decrees, injunctions, rules, regulations, permits,
licenses, authorizations, directions and requirements of all governments and
governmental authorities having jurisdiction over the Property, the Hotel and
the operation thereof.
LITIGATION COSTS: As defined in Section 19.1(h).
MANAGER: The Lodge Keeper Group, Inc., an Ohio corporation.
MANAGEMENT AGREEMENT: The management agreement (and/or operating
lease), dated December 11, 1987, as from time to time amended, by and between
Seller and Manager, under which Manager presently manages and/or operates the
Hotel on behalf of Seller.
NOMURA: As defined in Section 3.1(b).
NOMURA ASSUMPTION DOCUMENTS: As defined in Section 3.2(b).
NOMURA ESTOPPEL: As defined in Section 3.2(a).
NOMURA LOAN: As defined in Section 3.1(b).
NOMURA NOTE: As defined in Section 3.1(b).
NOTICES: As defined in Section 18.1.
OPERATOR: As defined in Section 9.1(d), but sometimes otherwise
referred to herein as Buckhead America Corporation.
OPERATING LEASE: As defined in Section 9.1(d).
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PERMITS: All licenses, permits, certificates of occupancy,
authorizations and approvals issued to Seller or Manager and used in or relating
to the ownership, occupancy or operation of the Hotel, excluding, however, (i)
any of the foregoing which are not transferable by Seller or Manager, and (ii)
the Existing Franchise Agreement.
PERMITTED EXCEPTIONS: As defined in Section 4.3.
PIGGY-BACK REGISTRATION: As defined in Section 19.2(a).
PROPERTY: The following items, collectively, as they relate to the
Hotel: (i) the Real Property; (ii) the Improvements, (iii) the Fixtures and
Tangible Personal Property; (iv) the Supplies; (v) the Consumables; (vi) subject
to any contrary provisions hereof, all transferable right, title and interest of
Seller or Manager in, to and under the Hotel Contracts and the Bookings; and
(vii) all transferable right, title and interest of Seller or Manager in, to and
under the Permits.
PURCHASE PRICE: As defined in Section 3.1.
PURCHASER'S DAMAGES: As defined in Section 7.4.
REAL PROPERTY: Title to the real property legally described on
Exhibit A attached hereto and to the Improvements.
RECEIVABLES: The accounts receivable of the Hotel operation
(including, without limitation, credit card receivables) incurred in the
ordinary course of business in accordance with the Hotel's credit policies in
existence as of the Cut-off Time.
SECURITIES ACT: The Securities Act of 1933, as amended.
SUPPLIES: All linen, uniforms, materials or supplies whether in use
or held in reserve storage for future use, in connection with the operation of
the Hotel, at normal operating levels customarily maintained for the efficient
economic operation of the Hotel as a "Country Hearth Inn" hotel property,
excluding, however, (i) the Consumables, and (ii) property owned by guests or
other persons furnishing services to the Hotel.
TITLE COMMITMENT: The commitment for title insurance issued in
accordance with Section 4.2.
TITLE COMPANY: Republic Title of Texas, Inc., as agent for First
American Title Insurance Company.
TITLE POLICY: As defined in Section 12.1(d).
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VIOLATION: Any condition with respect to the Property which
constitutes a material violation of any Legal Requirements.
1.2 REFERENCES AND INTERPRETATION. Except as otherwise specifically
indicated, all references herein to Section and Subsection numbers refer to
Sections and Subsections of this Agreement, and all references herein to an
exhibit refers to the exhibit attached hereto. The words "hereby", "herein",
"hereto", "hereunder", "hereinafter", and words of similar import refer to this
Agreement as a whole and not to any particular Section or Subsection hereof.
Captions used herein are for convenience only and shall not be used to construe
the meaning of any part of this Agreement. Whenever under the terms of this
Agreement the time for performance of a covenant or condition falls upon a
Saturday, Sunday or legal holiday, such time for performance shall be extended
to the next business day; otherwise, all references herein to "days" shall mean
calendar days.
ARTICLE 2
SALE AND PURCHASE
2.1 SALE AND PURCHASE. Seller hereby agrees to sell to Purchaser, and
Purchaser hereby agrees to purchase from Seller, the Property on the terms and
subject to the conditions set forth in this Agreement.
ARTICLE 3
PURCHASE PRICE
3.1 PURCHASE PRICE. The purchase price ("Purchase Price") for the
Property shall be TWO MILLION NINE HUNDRED THIRTY-ONE THOUSAND NINE HUNDRED AND
NO/100 DOLLARS ($2,931,900.00). The Purchase Price shall be payable at Closing
as follows:
(a) Subject to adjustment pursuant to Section 3.2(c) below and
various other applicable provisions of this Agreement requiring adjustment
of same, the sum of ONE HUNDRED THIRTY-ONE THOUSAND EIGHT HUNDRED AND
NO/100 DOLLARS ($131,800.00) in cash or other immediately available funds
(the "Cash Portion of the Purchase Price");
(b) Purchaser's assumption, with limited liability, and otherwise
pursuant to the terms and conditions set forth in Section 3.2 hereof, of a
loan (the "Nomura Loan") evidenced by that certain Promissory Note (the
"Nomura Note") in the original principal sum of $1,711,000.00, dated July
31, 1996, executed by Seller, payable to the order of Continental ▇▇▇▇▇▇▇
Associates, Inc., and thereafter assigned to Nomura Asset Capital
Corporation ("Nomura"); and
(c) Subject to the provisions of Section 7.4 hereof, Purchaser's
delivery or issuance to Seller of the number of shares of the Class A
Common Stock of Host Funding, Inc. (the "Host Funding Stock") having an
aggregate value equal to ONE MILLION ONE
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HUNDRED FIVE THOUSAND NINE HUNDRED AND NO/100 DOLLARS ($1,105,900.00)
determined by the Host Funding Stock Fair Market Value. The Host
Funding Stock will be deemed a "restricted security" under the
Securities Act in that such stock will be delivered or issued to
Seller in a transaction not involving a public offering. Seller
understands that the Host Funding Stock may not be resold without
compliance with the registration requirements of the Securities Act or in
other certain limited circumstances. In this connection, Seller
understands the resale limitations imposed by the Securities Act and is
familiar with SEC Rules 144 and 145, as presently in effect, and the
conditions which must be met in order for Rules 144 and 145 to be available
for resale of "restricted securities". Each certificate representing Host
Funding Stock will contain the appropriate legend relating to restrictions
on sale and transfer under the Securities Act and the Exchange Act.
Notwithstanding the foregoing, Purchaser agrees that Seller may distribute
the Host Funding Stock to Seller's partners without requirement of legal
opinion; provided, however, that (i) each recipient thereof shall have
executed and delivered to Seller and Purchaser an Investment Letter
Agreement with respect thereto and (ii) Purchaser shall determine within
its sole discretion that such transfer will not disqualify Purchaser as a
Real Estate Investment Trust under the Internal Revenue Code of 1986, as
amended.
3.2 NOMURA LOAN ASSUMPTION.
(a) Purchaser's agreement to purchase the Property is expressly
conditioned upon (i) Purchaser obtaining an estoppel statement incident to
the Nomura Loan from Nomura (the "Nomura Estoppel") on or before the
Closing Date, in form and substance reasonably acceptable to Purchaser;
(ii) Seller paying any assumption and/or assumption application fees
required to be paid by Nomura incident to the assumption by Purchaser of
the Nomura Loan; and (iii) Seller paying the legal fees incurred incident
to the rendering of any non-consolidation or other extraordinary legal
opinions required in connection with the assumption by Purchaser of the
Nomura Loan, Seller's responsibility for such fees not to exceed, however,
$15,000.00.
(b) Seller's agreement to sell the Property is expressly conditioned
upon (i) Purchaser executing such documents as are reasonably required by
Nomura incident to Purchaser's assumption of the Nomura Loan (the "Nomura
Assumption Documents"), the Nomura Assumption Documents to, however, be in
form and substance acceptable to Purchaser in its sole discretion, and (ii)
the release of Seller by Nomura from all obligations arising under the
Nomura Loan after the Closing.
(c) As of the Effective Date the approximate principal balance of the
Nomura Note is ONE MILLION SIX HUNDRED NINETY-FOUR THOUSAND TWO HUNDRED AND
NO/100 DOLLARS ($1,694,200.00). The Cash Portion of the Purchase Price
shall be adjusted at the Closing so that when added to the actual principal
balance of the Nomura Note on the Closing Date, together with the aggregate
fair market value of the Host Funding
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Stock, the Purchase Price remains the amount designated by Seller and
Purchaser pursuant to Section 3.1 hereof.
3.3 DEPOSIT.
(a) Within three (3) business days following the mutual execution of
this Agreement by Seller and Purchaser, Purchaser shall initially deposit
with the Title Company the sum of EIGHT THOUSAND FOUR HUNDRED AND NO/100
DOLLARS ($8,400.00) (the "Initial Deposit"), which Initial Deposit shall be
increased to THIRTY-THREE THOUSAND SIX HUNDRED AND NO/100 DOLLARS
($33,600.00) (the "Final Deposit", and, together with the Initial Deposit,
the "Deposit") upon the expiration of the Due Diligence Period if Purchaser
does not elect to terminate this Agreement on or before the expiration of
the Due Diligence Period.
(b) In the event the Initial Deposit is not delivered within the
period provided in Section 3.3(a), then Seller shall have the right to
terminate this Agreement, whereupon this Agreement shall be null and void
and neither party shall have any further rights or obligations hereunder.
The Deposit (together with any interest earned thereon) shall be held and
invested in U.S. Government obligations, certificates of deposit, money
market funds or such other interest-bearing investment as Purchaser shall
determine, and all interest and other earnings thereon shall become a part
of the Deposit. The funds representing the Final Deposit shall also be
deposited in the joint order escrow and shall be governed thereby.
Purchaser shall be responsible to pay for any and all costs related to the
investment of the Deposit. At the Closing, the Deposit shall be paid and
applied against the Cash Portion of the Purchase Price.
3.4 ALLOCATION OF PURCHASE PRICE: The Purchase Price shall be
apportioned and allocated among the Property as follows:
Real Property and Improvements $2,521,434.00
Consumables, Fixtures and Tangible
Personal Property, Supplies and all
other items of Property other than
the Real Property and the Improvements $ 410,466.00
The parties hereto make this allocation pursuant to the applicable sections of
the Internal Revenue Code of 1986, as amended, with the knowledge that it will
be used by both parties for income tax purposes. Each party shall use such
allocation in all reports and returns filed with all taxing authorities and
shall promptly notify the other party of any challenge or inquiry made of such
allocation by any taxing authority and, in that event, shall keep the other
party informed with respect to all developments relating to any such challenge
or inquiry.
9
ARTICLE 4
SURVEY, TITLE COMMITMENT AND TITLE DOCUMENTS
4.1 SURVEY. Purchaser shall, at the sole cost and expense of Purchaser
and within fifteen (15) days after the Effective Date, have prepared and
delivered to Purchaser a current ALTA survey (the "Survey") of the Real
Property and the Improvements, prepared by a surveyor reasonably acceptable
to Purchaser and the Title Company, in accordance with ALTA/ACSM standards
for ALTA surveys and otherwise meeting the requirements of and containing a
certification reasonably acceptable to the Title Company and Purchaser. The
Survey shall also be in a form sufficient to permit the Title Company to
delete and/or issue endorsements for survey-related exceptions.
4.2 TITLE COMMITMENT AND TITLE DOCUMENTS. Seller shall, at Purchaser's
cost and expense and within fifteen (15) days after the Effective Date, have
prepared and delivered to Purchaser a current commitment (the "Title
Commitment") for the issuance of the Title Policy to Purchaser through the
Title Company, together with legible copies of all documents (the "Title
Documents") constituting exceptions to Seller's title as reflected in the
Title Commitment.
4.3 SURVEY AND TITLE REVIEW PERIOD. Purchaser shall have a period of
ten (10) days (the "Title and Survey Review Period") from its receipt of the
last of the Title Commitment, the Title Documents and the Survey
(collectively, the "Title and Survey Report") to object in writing to Seller
as to any matters therein to which Purchaser objects (the "Objections"). If
Purchaser fails to so object prior to the expiration of the Title and Survey
Review Period, Purchaser shall be deemed to have approved and accepted the
Title and Survey Report, and all matters set forth therein shall be deemed to
be Permitted Exceptions (herein so called). If Purchaser notifies Seller in
writing of any Objections prior to the expiration of the Title and Survey
Review Period, Seller shall then have a period of ten (10) days to cure the
Objections, or to notify Purchaser in writing of any Objections Seller
cannot, or elects not to, cure (the "Cure Notice"). Seller shall have no
obligation to cure any of the Objections; provided, however, Seller shall be
obligated to cure any Objections to any liens or other encumbrances granted
by Seller after the Effective Date. Upon Purchaser's receipt of the Cure
Notice, Purchaser shall have a period of five (5) days to either (i)
terminate this Agreement, and be entitled to the return of the Deposit with
neither party hereto being thereafter obligated to the other, except as to
Purchaser's obligation to return to Seller due diligence materials pursuant
to Section 5.4 hereof, and except as to Purchaser's indemnification liability
set forth in Sections 6.1 and 19.1(d) hereof, or (ii) waive the Objections
and proceed to the Closing with all uncured Objections constituting Permitted
Exceptions.
ARTICLE 5
DUE DILIGENCE MATERIALS; APPROVAL OF HOTEL
CONTRACTS; CERTAIN SELLER AND PURCHASER CONTINGENCIES
5.1 DUE DILIGENCE DELIVERIES. Within ten (10) days after the Effective
Date, Seller shall make available to Purchaser and its authorized
representatives, for review at the offices of Seller, or, at Purchaser's
option, deliver to Purchaser and its authorized representatives true,
complete and
10
legible copies of all information, books, records, contracts, documents, and
agreements as may reasonably be requested by Purchaser relating to the
Property and to the extent Seller is in possession or control of such items,
including, without limitation:
(a) the most recent environmental, engineering and appraisal reports
with respect to the Property;
(b) the Hotel Contracts, provided, Purchaser herein acknowledges its
prior receipt of same;
(c) the Permits, provided, Purchaser herein acknowledges its prior
receipt of same;
(d) all real property and personal property tax statements with
respect to the Property for the years 1994, 1995 and 1996, provided,
Purchaser herein acknowledges its prior receipt of same;
(e) utility invoices relating to the Property from January 1, 1994 to
the present;
(f) the casualty, extended coverage, and general liability insurance
policies relating to the Property, together with a certification from
Seller that no claims have been made thereunder, except as otherwise
disclosed to Purchaser by Seller;
(g) any financial statements prepared by or for Seller or Manager
regarding the Property, including monthly income and expense statements for
the Property from January 1, 1994 to the present, in the form customarily
used by Seller (and accompanying data), and such other financial and
operational data as Purchaser shall reasonably require for the years 1994,
1995, 1996 and 1997, provided, Purchaser herein acknowledges its prior
receipt of same;
(h) a list of the amount and nature of the capital expenditures
incurred with respect to the Property during the twenty-four (24) months
preceding the Effective Date, provided, Purchaser herein acknowledges its
prior receipt of same; and
(i) all documents relating to the Nomura Loan, together with all
correspondence from and to Continental ▇▇▇▇▇▇▇, Nomura and/or its servicer
concerning the Nomura Loan.
5.2 APPROVAL OF HOTEL CONTRACTS. With respect to the Hotel Contracts,
Purchaser agrees to notify Seller within fifteen (15) days after the
Effective Date as to which of the Hotel Contracts (as are otherwis
etransferrable) will be assigned to and assumed by Purchaser (and/or which of
such Hotel Contracts, at the direction of Purchaser, will be assigned to and
assumed by Operator).
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5.3 CERTAIN SELLER AND PURCHASER CONTINGENCIES. Within thirty (30) days
after the Effective Date, Seller and Purchaser shall have received the
following:
(a) Written evidence reasonably satisfactory to Seller and Purchaser
that the Management Agreement will be terminated on or before the Closing
Date, and that the Bookings, the Hotel Contracts and the Permits as are in
the name of Manager will, subject to the terms hereof, be assigned by
Manager to Purchaser (or at the direction of Purchaser, to Operator) at the
Closing;
(b) Written evidence, reasonably satisfactory to Seller and
Purchaser, that Seller and ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇, Inc. have reached an
agreement as to the brokerage commission to be paid to ▇▇▇▇▇▇, ▇▇▇▇ &
▇▇▇▇▇▇▇, Inc. by Seller pursuant to the provisions of Section 19.1(d)
hereof;
(c) Written evidence, reasonably satisfactory to Seller and
Purchaser, that Seller has received the approval of the transaction
contemplated by this Agreement from at least fifty-one percent (51%) of the
partners of Seller (or such larger percentage, if so required) entitled to
vote to approve the transaction contemplated hereby; and
(d) The agreement of Manager, Seller and Purchaser as to the form and
substance of the Employee Indemnification Agreement.
In the event all of such items are not timely received in accordance with the
terms of this Section 5.3, either Seller or Purchaser may, by written notice
to the other within ten (10) days following said thirty (30) day period
either (i) terminate this Agreement, in which event Purchaser shall be
entitled to a return of the Initial Deposit with neither party hereto being
thereafter obligated one to the other hereunder, except as to Purchaser's
obligation to return to Seller due diligence materials pursuant to Section
5.4 hereof, and except as to Purchaser's indemnification liabilities set
forth in Section 6.1 and 19.1(d) hereof, or (ii) waive such matters and
proceed to Closing.
5.4 CONFIDENTIALITY. Notwithstanding anything to the contrary contained
in this Agreement, all information provided by Seller to Purchaser for
Purchaser's evaluation of the Property, including, but not limited to, all of
the items delivered or made available by Seller to Purchaser and its
authorized representatives pursuant to Section 5.1 above, is confidential,
and Purchaser agrees except as provided in Section 5.1 above and herein, not
to reproduce, disseminate, discuss, or in any way distribute or disclose to
any third party any information concerning the Property delivered by Seller
to Purchaser and its authorized representatives. Purchaser agrees to
immediately return to Seller all items previously delivered or made available
to Purchaser and its authorized representatives by Seller pursuant to Section
5.1 above upon the termination of this Agreement for whatever reason.
Notwithstanding the foregoing, Purchaser may distribute or disclose such
information to any potential lender of Purchaser, and to Purchaser's agents,
attorneys, representatives and independent contractors engaged by Purchaser
in connection with the tests, studies, evaluations and inspections undertaken
pursuant to Section 6.1 of this Agreement. Seller agrees not to disclose the
name of Purchaser to any
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third party until after the expiration of the Due Diligence Period, except to
Seller's agents, attorneys, lenders, partners and other parties as necessary
to accomplish the transaction contemplated hereby.
ARTICLE 6
DUE DILIGENCE PERIOD
6.1 INVESTIGATIONS. Notwithstanding anything to the contrary contained
herein, and in consideration of $100 paid by Purchaser to Seller as
independent consideration for this Agreement, Purchaser shall have forty-five
(45) days from and after the Effective Date (if and as extended pursuant to
the provisions hereof, the "Due Diligence Period") within which to conduct
any and all engineering, environmental and economic feasibility studies of
the Property and the competitive market, which Purchaser may, in its sole
discretion, deem necessary to determine whether or not the Property is
suitable for Purchaser's intended use thereof; provided, and notwithstanding
anything contained in this Agreement to the contrary, if Nomura has not
approved the assumption by Purchaser of the Nomura Loan (on terms acceptable
to Purchaser in its sole discretion) prior to the expiration of the initial
forty-five (45) day Due Diligence Period, the Due Diligence Period shall for
all purposes herein be automatically extended until a date which is three (3)
business days after the receipt by Purchaser of such approval from Nomura;
provided further, Seller and Purchaser acknowledge and agree that if such
approval is not obtained by June 20, 1997, this Agreement shall automatically
terminate, the Initial Deposit shall be returned to Purchaser by the Title
Company, and the parties hereto shall thereafter have no further obligations
one to the other hereunder, except as to Purchaser's obligations to return to
Seller due diligence materials pursuant to Section 5.4 hereof, and except as
to Purchaser's indemnification liabilities set forth in Section 6.1 and
19.1(d) hereof. Seller shall and shall cause Manager to exercise all
reasonable efforts (without any out-of-pocket expense to Seller or Manager)
to cooperate fully with Purchaser regarding any investigation Purchaser may
wish to make of the Property or the operations of the Hotel. Purchaser
agrees to exercise (and cause its authorized representatives to exercise) due
care and reasonable prudence in performing such investigations and shall
perform such investigations in a manner as shall not materially interfere
with the operation of the Hotel. If Purchaser notifies Seller in writing on
or before the expiration of the Due Diligence Period that Purchaser does not
desire to consummate the transaction contemplated by this Agreement, for any
reason whatsoever, this Agreement shall terminate, and the Initial Deposit
shall be immediately returned to Purchaser by the Title Company, and the
parties hereto shall thereafter have no further obligation one to the other
hereunder, except as to Purchaser's obligations to return to Seller due
diligence materials pursuant to Section 5.4 hereof, and except as to
Purchaser's indemnification liabilities set forth in Section 6.1 and 19.1(d)
hereof. If Purchaser fails to so terminate this Agreement prior to the
expiration of the Due Diligence Period, Purchaser shall be deemed to have
accepted the Property and shall proceed to Closing pursuant to the terms and
conditions hereof. Unless Purchaser timely terminates this Agreement as
provided in this Section 6.1, or pursuant to Article 4 hereof, the Deposit
shall, except as otherwise specifically set forth in this Agreement, be
non-refundable, and shall be applied as provided in this Agreement, unless
Seller is unable or unwilling to satisfy all conditions stated in this
Agreement to which Purchaser's obligations hereunder are subject, in which
case, the Deposit shall be refunded to Purchaser. Purchaser hereby
indemnifies, holds harmless, and agrees to defend Seller from and
13
against any loss, cost, or expense (including, without limitation, attorney
fees) resulting from any entry by Purchaser, or any employee, agent,
principal of, or independent contractor of, Purchaser, upon the Property in
connection with any tests or evaluations conducted by Purchaser during the
Due Diligence Period, or any lien asserted by any third party as a result
thereof. This provision of the immediately preceding sentence of this
Section 6.1 shall survive the termination of this Agreement or the Closing.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES
7.1 REPRESENTATIONS AND WARRANTIES OF SELLER. In addition to any other
representations specifically made by Seller to Purchaser in this Agreement,
as of the Effective Date, Seller represents and warrants to Purchaser that:
(a) Seller is a general partnership duly formed and validly existing
under the laws of the State of Ohio;
(b) This Agreement and all other documents executed and delivered, or
to be executed and delivered, by Seller in connection with the transaction
contemplated hereby have been, or at the appropriate time will be, duly
executed and delivered and constitute or, upon such execution and delivery
will constitute, the legal, valid and binding obligations of Seller
enforceable in accordance with their respective terms, subject, however, to
general principles of equity and to the effect of any bankruptcy,
reorganization, moratorium, insolvency or other laws affecting the rights
of creditors generally, provided, that Purchaser acknowledges that as of
the Effective Date, Seller must still obtain various partner and lender
approvals to the transaction contemplated hereby and as herein required;
(c) Seller has taken all action required to authorize its execution
of this Agreement and such other documents necessary for the consummation
of the transaction contemplated hereby;
(d) The authorization, execution, delivery and performance of this
Agreement by Seller and the consummation of the transactions contemplated
hereby by Seller, will not, with or without the giving of notice or passage
of time or both, violate, conflict with or result in the breach of any
terms or provisions of or require any notice, filing registration or
further consent, approval or authorization under (i) the partnership
documentation of Seller, (ii) any statutes, laws, rules or regulations of
any governmental body applicable to Seller or the Property, including,
without limitation, the Legal Requirements (iii) any judgment, decree,
writ, injunction, order or award of any arbitrator, court or governmental
authority binding upon Seller or the Property, or (iv) any instrument or
agreement to which Seller or the Property, is or may be bound;
14
(e) Other than transient guests of the Hotel or other than is set
forth herein or disclosed by Seller to Purchaser, there are no leases,
tenancies, occupants or other persons in or entitled to possession of the
Hotel or any portion thereof;
(f) Seller has good and marketable fee simple title to the Real
Property and Improvements, which will be subject to the Permitted
Exceptions;
(g) Seller owns the Fixtures and Tangible Personal Property, the
Consumables and the Supplies free and clear of all liens, claims, charges,
security interests and encumbrances, other than liens created incident to
the Nomura Loan and other than such of said items as are leased from third
parties;
(h) No condemnation or other eminent domain proceedings have been
instituted for which Seller has notice thereof or, to best of Seller's
knowledge, no such proceedings are threatened against the Property;
(i) To the best of Seller's knowledge, the present operation of the
Property is in substantial compliance with all Legal Requirements and
Seller has not received written notice nor does Seller have knowledge of
any Violations affecting the Property;
(j) To the best of Seller's knowledge, the present occupation of the
Property is in substantial compliance with all the Permits and Seller has
no knowledge of any license or permit which is necessary for the continued
operation of the Hotel other than the Permits and the Existing Franchise
Agreement;
(k) Seller has not received written notice, nor does Seller have
knowledge of any pending or threatened zoning change or variance which
would interfere in any material respect with the use, occupation or
operation of the Property as a hotel;
(l) All guest rooms at the Hotel are and will be equipped with
fixtures, furniture, furnishings and equipment, including, without
limitation, the Fixture and Tangible Personal Property, at least at the
levels for same reflected in the Consumables, Supplies and Fixtures and
Tangible Personal Property Inventory;
(m) The Consumables are and will be maintained at least at the levels
for same reflected in the Consumables, Supplies and Fixtures and Tangible
Personal Property Inventory;
(n) The Supplies are and will be maintained at least at the levels
for same reflected in the Consumables, Supplies and Fixtures and Tangible
Personal Property Inventory;
(o) To the best of Seller's knowledge, all items furnished to Seller
pursuant to SECTION 5.1 of this Agreement are in all material respects,
accurate, complete, and true as of
15
the date furnished; provided, Seller has no reason to believe such items
are not in all material respects accurate, complete and true as of the
date furnished;
(p) Seller has received no written notice of any threatened, and
there currently is no pending, litigation which involves or affects the
Property, except to the extent covered by insurance maintained by Seller or
on behalf of Seller;
(q) Other than as set forth herein or disclosed to Purchaser by
Seller, or except as otherwise approved by Purchaser pursuant to SECTION
5.2 hereof, there are and will be no material agreements at the Closing
which Purchaser will be required to assume with respect to the operation of
the Hotel or the Property (unless otherwise agreed to in writing by
Purchaser). The term "material agreements" for the purposes of this
subsection shall mean any agreements requiring an annual expenditure by
Seller in excess of $10,000.00, or which are for a term in excess of one
(1) year;
(r) Seller has granted no rights of first refusal or options to
purchase the Property;
(s) The Existing Franchise Agreement is in full force and effect and
Seller is not in default thereunder;
(t) To the best of Seller's knowledge, and other than as found or
contained in normal and customary materials and supplies used in connection
with the operation of the Hotel, there has been no presence, use,
generation, release, discharge, storage, disposal, or transportation of any
Hazardous Materials on, under, in, about, to, or from the Property (or any
portion thereof), and, from the date hereof through the Closing Date, it
shall not cause or permit the presence, use, generation, release,
discharge, storage, disposal, or transportation of any Hazardous Materials
on, under, in, about, to, or from the Property (or any portion thereof);
(u) All Impositions have been paid in a timely fashion and are
current;
(v) As of the Effective Date, the approximate principal balance of
the Nomura Note is $1,694,201.00; and
(w) Seller is not aware of any material defects, latent or otherwise,
relating to the Improvements.
Notwithstanding anything contained in this SECTION 7.1 to the contrary, if
Seller hereafter determines that any of the foregoing representations or
warranties are incorrect or misleading in any material respect, Seller shall
immediately notify Purchaser of same and Purchaser shall within ten (10) days
after receipt of such notice either (i) terminate this Agreement, and be
entitled to a return of the Deposit with neither party hereto being thereafter
obligated one to the other hereunder, except as to Purchaser's obligations to
return to Seller due diligence materials pursuant to SECTION 5.4 hereof, and
16
except as to Purchaser's indemnification liabilities set forth in SECTIONS 6.1
and 19.1(d) hereof, or (ii) waive such matters and proceed to Closing.
7.2 DEFINITION OF HAZARDOUS MATERIALS. As used in this Agreement, the
term "Hazardous Materials" means any hazardous or toxic substances, material
or wastes, including, but not limited to, those substances, materials, and
wastes listed in the United States Department of Transportation Hazardous
Materials Table (49 C.F.R. SECTION 172.101) or by the Environmental
Protection Agency's hazardous substances (40 C.R.R. Part 302) and amendments
thereto, or such substances, materials, constituents, and wastes which are
currently regulated under any applicable local, state, or federal law
including, without limitation: (i) petroleum, gasoline or other petroleum
derivatives, or additives to gasoline or other petroleum derivative; (ii)
asbestos or asbestos-containing materials; (iii) polychlorinated biphenyls;
(iv) designated as a "hazardous substance" pursuant to section 307 of the
Clean Water Act (33 U.S.C. SECTION 1317); (v) defined as "hazardous waste"
pursuant to section 1004 of the Resource Conservation and Recovery Act, 42
U.S.C. SECTION 6903); (vi) defined as a "hazardous substance" pursuant to
section 101 of the Comprehensive Environmental Response, Compensation, and
Liability Act, 2 U.S.C. SECTION 9601 ET SEQ. (42 U.S.C. SECTION 9601); or
(vii) any substance the nature, use, manufacture, or effect of which render
it subject to federal, state, or local regulation, investigation, removal, or
remediation as potentially hazardous or toxic, injurious to human health or
welfare, or injurious to the environment.
7.3 REPRESENTATIONS AND WARRANTIES OF PURCHASER. As of the Effective
Date, Purchaser represents and warrants to Seller that:
(a) Purchaser is a corporation duly formed and validly existing under
the laws of the State of Maryland;
(b) This Agreement and all other documents executed and delivered, or
to be executed and delivered, by Purchaser in connection with the
transaction contemplated hereby have been, or at the appropriate time will
be, duly executed and delivered and constitute or, upon such execution and
delivery will constitute, the legal, valid and binding obligations of
Purchaser enforceable in accordance with their respective terms and
provisions, subject, however, to general principles of equity and to the
effect of any bankruptcy, reorganization, moratorium, insolvency or other
laws affecting the rights of creditors generally;
(c) Purchaser has taken all action required to authorize its
execution of this Agreement and such other documents necessary for the
consummation of the transaction contemplated hereby; and
(d) The authorization, execution, delivery and performance of this
Agreement by Purchaser and the consummation of the transactions
contemplated hereby by Purchaser, will not, with or without the giving of
notice or passage of time or both, violate, conflict with or result in the
breach of any terms or provisions of or require any notice, filing
registration or further consent, approval or authorization under (i) the
certificate of incorporation or by-laws
17
of Purchaser, (ii) any statutes, laws, rules or regulations of any
governmental body applicable to Purchaser, (iii) any judgment, decree,
writ, injunction, order or award of any arbitrator, court or governmental
authority binding upon Purchaser, or (iv) any instrument or agreement
to which Purchaser, is or may be bound;
(e) Purchaser has timely filed all forms, reports and documents with
the Securities and Exchange Commission ("SEC") required to be filed by
Purchaser (collectively, the "SEC Reports"), all of which complied, at the
time filed, in all material respects with all applicable requirements of
the Securities Act and the Exchange Act, as applicable, and the rules and
regulations promulgated thereunder. None of the SEC Reports, at the time
filed, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which
they were made, not misleading;
(f) The consolidated balance sheets and the related consolidated
statements of operations, consolidated cash flow and consolidated
shareholders' equity (including the notes thereto) of Purchaser and its
subsidiaries contained or incorporated by reference in the SEC Reports
comply in all material respects with applicable accounting requirements and
with the published rules and regulations of the SEC with respect thereto,
and present fairly the consolidated financial position of Purchaser and its
subsidiaries as of their respective dates, and the consolidated results of
their operations and their cash flows for the periods presented therein, in
conformity with GAAP applied on a consistent basis, (i) except as otherwise
noted therein, (ii) subject in the case of unaudited financial statements
to normal year-end audit adjustments, (iii) except that the unaudited
financial statements do not contain all of the footnote disclosures
required by GAAP, and (iv) except as otherwise permitted by Form-10Q, the
Securities Act or the Exchange Act; and
(g) The issuance of the shares of Host Funding Stock to Seller
hereunder is not subject to any preemptive rights, rights of first refusal
or other preferential rights that have not been waived, and such shares
when issued and delivered in accordance with the terms of this Agreement
will be validly issued, fully paid and non-assessable and will be free of
any liens or encumbrances whatsoever; provided, however, that such shares
shall be subject to restrictions upon transfer under applicable securities
laws. Except for (i) ▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and (ii) the holders of the Series A
Warrants and Series B Warrants of Purchaser, no holder of the common stock
of Purchaser has registration rights with respect thereto.
Notwithstanding anything contained in this SECTION 7.1 to the contrary,
if Purchaser hereafter determines that any of the foregoing representations
or warranties are incorrect or misleading in any material respect, Purchaser
shall immediately notify Seller of same and Seller shall within ten (10)
days after receipt of such notice either (i) terminate this Agreement, in
which event Purchaser shall be entitled to a return of the Deposit with
neither party hereto being thereafter obligated one to the other hereunder,
except as to Purchaser's obligation to return to Seller due diligence
materials
18
pursuant to SECTION 5.4 hereof, and except as to Purchaser's indemnification
liabilities set forth in SECTION 6.1 and 19.1(d) hereof, or (ii) waive such
matters and proceed to Closing.
7.4 DURATION OF REPRESENTATIONS AND WARRANTIES. Except as otherwise
expressly provided herein, all representations and warranties of Seller
contained in this Agreement and in any document or instrument delivered by
Seller in connection herewith shall survive the Closing for a period of one
(1) year following the Closing. Any claim or claims by Purchaser which, if
successful, would result in Purchaser's Damages (as hereinafter defined)
arising from the inaccuracy of a representation or a breach of warranty of
Seller, shall be effective and valid only if Purchaser notifies Seller of
such claim or claims on or before the date which is one (1) year following
the Closing and commences an action, suit or proceeding against Seller with
respect to such claim or claims not later than sixty (60) days after the end
of such one (1) year period. Notwithstanding anything contained in this
SECTION 7.4 to the contrary, Purchaser's Damages shall be limited as follows:
(i) Seller shall have no liability for any Purchaser's Damages unless and
until Purchaser's Damages shall exceed the sum of FIFTY THOUSAND AND NO/100
DOLLARS ($50,000.00) in the aggregate, and (ii) Seller's liability with
respect to Purchaser's Damages shall in no event exceed the sum of TWO
HUNDRED NINETY-THREE THOUSAND ONE HUNDRED NINETY AND NO/100 DOLLARS
($293,190.00) in the aggregate, it being understood that Seller shall be
released from all liability for any Purchaser's Damages which exceed said
amount. In order to secure Purchaser from an occurrence of any claim or
claims giving rise to Purchaser's Damages, a portion of the Host Funding
Stock equal to the number of shares of Host Funding Stock having an aggregate
value equal to $293,190.00 (as determined by the Host Funding Stock Fair
Market Value) shall be held back in trust for Purchaser by Seller for a
period of one (1) year following the Closing, and such portion of the Host
Funding Stock shall be appropriately legended to reflect the agreements set
forth in this SECTION 7.4; provided, that in the event no claim or claims
giving rise to Purchaser's Damages occur within said one (1) year period,
Seller shall thereafter hold such portion of the Host Funding Stock free of
any such security obligations or responsibilities set forth in this SECTION
7.4. "Purchaser's Damages," as used herein, shall mean all loss, liability,
damage and expense suffered or incurred by Purchaser following the Closing
Date which results from a misrepresentation or breach of warranty by Seller
set forth in this Agreement, or in any document or instrument delivered by
Seller in connection herewith, which is not waived in writing by Purchaser.
For the purposes of this Agreement, Purchaser's Damages shall be computed net
of (i) any insurance proceeds acknowledged by the insurer at the time of such
computation to be payable with respect thereto to Purchaser and (ii) any
amounts recovered by Purchaser from any third parties, which reduce the
damages that would otherwise be sustained; provided, however, that (x) in all
cases the timing of the receipt or realization of insurance proceeds or
recoveries from third parties shall be taken into account in determining the
amount of reduction of damages and (y) in the event Purchaser shall receive
or realize insurance proceeds or recoveries from third parties after such
determination of damages (which were not included in such determination), the
amount thereof shall promptly be remitted by Purchaser to Seller. All
representations and warranties contained in this Article 7, as modified by
the provisions of the last paragraphs of SECTIONS 7.1 and 7.3 hereof, shall
be deemed restated or updated on and as of the Closing Date, but, except as
set forth in this SECTION 7.4, shall not survive the Closing.
19
ARTICLE 8
CONDITIONS TO SELLER'S OBLIGATIONS
8.1 CONDITIONS. Seller's obligation to close hereunder shall, in
addition to any and all other applicable conditions set forth in this
Agreement, be subject to the satisfaction of each of the following
conditions, any one or more of which may be waived by Seller in writing:
(a) PURCHASER'S COMPLIANCE WITH OBLIGATIONS. Purchaser shall have
complied in all material respects with all obligations and covenants
required by this Agreement to be complied with by Purchaser as of the
Closing Date.
(b) TRUTH OF PURCHASER'S REPRESENTATIONS AND WARRANTIES. Subject to
the last paragraph of SECTION 7.3 hereof, the representations and
warranties of Purchaser contained in SECTION 7.3 shall have been true in
all material respects when made, and shall be true in all material respects
on the Closing Date.
(c) NOMURA ASSUMPTION DOCUMENTS. Purchaser shall have executed the
Nomura Assumption Documents and Seller shall have been released by Nomura
from any obligations arising under the Nomura Loan after the Closing.
(d) NOMURA ESTOPPEL. Purchaser shall have received the Nomura
Estoppel in form and substance reasonably acceptable to Seller and
Purchaser.
(e) CLOSING INVENTORY. Seller shall have received a Closing
Inventory reasonably acceptable to Seller.
(f) CLOSING REPORT. Seller shall have received a Closing Report
reasonably acceptable to Seller.
(g) OPERATING LEASE. Prior to expiration of the Due Diligence
Period, Purchaser shall have furnished written evidence to Seller that the
Operating Lease has been executed by Purchaser and Operator.
(h) HOST FUNDING FRANCHISE AGREEMENT. Prior to the expiration of the
Due Diligence Period, Seller shall have received written evidence that the
form and content of the Host Funding Franchise Agreement has been agreed
upon by Purchaser and Buckhead America Corporation, and that same is ready
for execution, subject only to Purchaser paying the costs and expenses
required for its issuance.
(i) EXISTING FRANCHISE AGREEMENT. Prior to the expiration of the Due
Diligence Period, Seller and Purchaser shall have received written evidence
that the Existing Franchise Agreement will be terminated at Closing, and
that Buckhead America Corporation will incident thereto release Seller from
any further obligations thereunder without the necessity
20
of Seller paying any fees or penalties, if applicable, for early termination
of the Existing Franchise Agreement.
(j) EMPLOYEE INDEMNIFICATION AGREEMENT. Seller shall have received
the Employee Indemnification Agreement in form and content reasonably
acceptable to Seller.
ARTICLE 9
CONDITIONS TO PURCHASER'S OBLIGATIONS
9.1 CONDITIONS. Purchaser's obligations to close hereunder, in addition
to any and all other applicable conditions set forth in this Agreement, shall
be subject to the satisfaction of each of the following conditions, any one
or more of which may be waived by Purchaser in writing:
(a) SELLER'S COMPLIANCE WITH OBLIGATIONS. Seller shall have complied
in all material respects with all obligations and covenants required by
this Agreement to be complied with by Seller as of the Closing Date.
(b) TRUTH OF SELLER'S REPRESENTATIONS AND WARRANTIES. Subject to the
last paragraph of SECTION 7.1 hereof, the representations and warranties of
Seller contained in SECTION 7.1 shall have been true in all material
respects when made, and shall be true in all material respects on the
Closing Date.
(c) HOST FUNDING FRANCHISE AGREEMENT. Purchaser and Buckhead America
Corporation shall, on or before the Closing Date, have executed, at no cost
or expense (including, without limitation, application fees, initial fees,
affiliation fees or relicensing fees) to Seller, a franchise or license
agreement (the "Host Funding Franchise Agreement") for the operation of the
Hotel as a Country Hearth Inn, in form and substance acceptable to
Purchaser in its sole discretion.
(d) OPERATING LEASE. Buckhead America Corporation ("Operator") and
Purchaser shall, on or before the expiration of the Due Diligence Period,
have executed an Operating Lease (the "Operating Lease"), in form and
substance acceptable to Purchaser in its sole discretion, reflecting
therein the agreement of Operator to lease and operate the Hotel on behalf
of Purchaser.
(e) CLOSING INVENTORY. Purchaser shall have received a Closing
Inventory reasonably acceptable to Purchaser.
(f) CLOSING REPORT. Purchaser shall have received a Closing Report
reasonably acceptable to Purchaser.
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(g) EMPLOYEE INDEMNIFICATION AGREEMENT. Purchaser shall have
received the Employee Indemnification Agreement in form and content
reasonably acceptable to Purchaser.
(h) INVESTMENT LETTER AGREEMENT. Purchaser shall have received an
Investment Letter Agreement from each recipient of Host Funding Stock on
the Closing Date.
(i) NOMURA ESTOPPEL. Purchaser shall have received the Nomura
Estoppel in form and substance reasonably acceptable to Seller and
Purchaser.
ARTICLE 10
CERTAIN COVENANTS AS TO ACTIONS
AND OPERATIONS PENDING CLOSING
10.1 COVENANTS. Seller hereby covenants to Purchaser and agrees as follows:
(a) Prior to the Closing, Seller shall continue to maintain, operate
and manage (or shall cause Manager to maintain, operate and manage) the
Property and the Hotel in the same manner that Seller and/or Manager have
heretofore maintained and operated the Property and the Hotel;
(b) Except as otherwise set forth herein, including, without
limitation, SECTION 13.4 hereof, Seller will use its best efforts to at the
Closing pay all expenses, accrued or otherwise, and of any type or kind
whatsoever, through the Closing Date with regard to the Property and the
Hotel;
(c) Prior to the Closing, Seller, or Manager on behalf of Seller,
shall (i) make all necessary repairs and replacements which are required to
maintain the Property in the same physical and operating condition (normal
wear and tear excepted and except for repairs or replacements resulting
from fire, other casualty, condemnation or a taking by eminent domain, as
to which Article 14 shall apply), and (ii) maintain the Supplies, the
Consumables and the Fixtures and Tangible Personal Property in good
condition and at least at the levels for such items reflected in the
Consumables, Supplies and Fixtures and Tangible Personal Property
Inventory.
(d) Prior to the Closing, neither Seller nor Manager shall, without
the prior written consent of Purchaser, enter into any Bookings at the
Hotel which are not substantially in accordance with Seller's past booking
practices at the Hotel in a single transaction;
(e) Prior to the Closing, Seller shall (and shall cause Manager to)
use all reasonable efforts to cooperate and assist Purchaser in obtaining
assignments of and/or the issuance of any new permits, licenses or
approvals necessary for the consummation of
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the transaction contemplated hereby and the continuation after the Closing
of the normal operation of the Hotel in a manner consistent with its
present use;
(f) Prior to the Closing, Seller shall use all reasonable efforts (at
no cost or expense to Seller) to cooperate and assist Purchaser in
obtaining the Host Funding Franchise Agreement;
(g) Prior to or at Closing, Seller will cancel or terminate the
Management Agreement, and any other consulting or similar type agreements
with regard to the Property or the Hotel; and
(h) Seller will not, during the pendency of this Agreement, place any
new encumbrances on the Property or modify the Existing Franchise Agreement
or modify or enter into any other or new documents material to the
operation of the Property as a "Country Hearth Inn", without the prior
written consent of Purchaser.
ARTICLE 11
CLOSING MATTERS
11.1 CLOSING. The closing of thetransaction contemplated hereby (the
"Closing") shall take place at the office of the Title Company or in
Columbus, Ohio at the offices of Seller on the date (the "Closing Date") that
is no more than thirty (30) days following the expiration of the Due
Diligence Period.
11.2 CLOSING ESCROW. The transaction contemplated hereby shall be closed
by means of an escrow, with the concurrent delivery of the documents of
title, transfer of interests, delivery of the Title Policy and payment,
assumption and/or delivery of the applicable components of the Purchase
Price. Seller and Purchaser shall each pay fifty percent (50%) of any
charges of the Title Company for such escrow closing. This Agreement shall
not be merged into the Escrow Instructions, but the Escrow Instructions shall
be deemed auxiliary to this Agreement, and, as between the parties hereto,
the provisions of this Agreement shall govern and control.
ARTICLE 12
CLOSING DELIVERIES; POSSESSION
12.1 SELLER'S DELIVERIES. At the Closing, Seller shall deliver, or cause
to be delivered, to Purchaser the following:
(a) A recordable general warranty deed from Seller to Purchaser
conveying the Real Property and the Improvements, subject only to the
Permitted Exceptions;
(b) A ▇▇▇▇ of Sale transferring to Purchaser all of Seller's right,
title and interest in and to the Fixtures and Tangible Personal Property,
the Consumables and the Supplies;
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(c) An assignment conveying and transferring to Purchaser, and
Purchaser's assumption of, all of Seller's right, title and interest in, to
and under any and all the Bookings, the Hotel Contracts and the Permits (to
the extent transferrable and to the extent Purchaser agrees, at its option,
to assume all or portions of the Hotel Contracts pursuant to Section 5.2
hereof); provided, at Purchaser's direction, all or portions of the
Bookings, the Permits and the Hotel Contracts will be assigned to
Operator, provided further, if any of the Bookings, the Hotel Contracts or
the Permits are in the name of the Manager, Seller shall cause Manager to
make such assignments;
(d) An ALTA Owner's Title Insurance Policy (the "Title Policy"),
issued in favor of Purchaser by the Title Company, in the amount equal to
that portion of the Purchase Price allocable to the Real Property and the
Improvements, insuring Purchaser's fee simple title to the Real Property
and the Improvements, subject only to the Permitted Exceptions and
otherwise in conformity with the Title Commitment;
(e) A certification in a form to be provided or approved by
Purchaser, signed by Seller under penalties of perjury, containing the
following: (i) Seller's U.S. Taxpayer Identification Number; (ii) the
business address of Seller; and (iii) a statement that Seller is not a
foreign person within the meaning of Sections 1445 and 7701 of the IRC;
(f) A counterpart of the Closing Statement, executed by Seller;
(g) A copy of a letter addressed to and accepted by Manager
terminating the Management Agreement and, as applicable, letters
terminating any other consulting or similar type agreements with regard to
the Property and the Hotel as of the Closing Date;
(h) IRS Form 1099 and any State, County or local transfer
declarations required by any governmental authority having jurisdiction
over the Property;
(i) A list, certified by Manager, of all Continuing Obligations, the
Hotel Contracts and the Permits as of the Closing Date;
(j) A certificate executed by Seller (or Manager) and reflecting
therein that Seller has paid or caused to be paid, in a timely fashion, all
Impositions, and that same are current;
(k) The Agreement Not to Compete;
(l) The Nomura Estoppel;
(m) All guest lists, ledgers, software and data bases, and other
documents, correspondence and memoranda and plans, engineering drawings and
specifications included (to the extent located at the Hotel, such items
shall not be physically delivered to Purchaser at the Closing unless
Purchaser otherwise requests same); and
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(n) An Investment Letter Agreement from each recipient of Host
Funding Stock on the Closing Date.
12.2 PURCHASER'S DELIVERIES. At the Closing, Purchaser shall deliver, or
cause to be delivered, to Seller the following:
(a) The Cash Portion of the Purchase Price;
(b) The Nomura Assumption Documents;
(c) Subject to the provisions of Section 7.4 hereof, the Host Funding
Stock;
(d) An assumption of all obligations of Seller by Purchaser or
Operator (if so directed by Purchaser) arising from and after the Closing
Date under the items assigned to Purchaser or Operator (if so directed by
Purchaser) pursuant to Section 12.1(c) hereof; and
(e) A counterpart of the Closing Statements, executed by Purchaser.
12.3 CONCURRENT TRANSACTIONS. All documents or other deliveries required
to be delivered by Purchaser or Seller at the Closing, and all transactions
required to be consummated concurrently with the Closing, shall be deemed to
have been delivered and to have been consummated simultaneously with all
other transactions and all other deliveries, and no delivery shall be deemed
to have been made, and no transaction shall be deemed to have been
consummated, until all deliveries required to be made by Purchaser and Seller
shall have been made, and all transactions contemplated hereby shall have
been consummated, except to the extent that such delivery or transaction may
be waived by the party to be benefited thereby.
12.4 FURTHER ASSURANCES. Seller and Purchaser will, at the Closing, or
at any time or from time to time thereafter, upon request of either party,
execute such additional instruments, documents or certificates as either
party, or the Title Company deems reasonably necessary, including, without
limitation, State, County, or local transfer declarations, in order to
convey, assign and transfer the Property to Purchaser and otherwise to carry
out the purposes and intent of this Agreement.
12.5 POSSESSION. Possession of the Property shall be delivered to
Purchaser at the Closing, subject to the Permitted Exceptions.
ARTICLE 13
ADJUSTMENTS AND PRORATIONS;
CLOSING INVENTORY; CLOSING REPORT
13.1 ADJUSTMENTS AND PRORATIONS. In addition to the Purchase Price
payable pursuant to Article 3 of this Agreement and the increases, decreases
and adjustments to the Cash Portion of the Purchase Price provided for
elsewhere in this Agreement, Purchaser and Seller shall, on an accrual
25
basis, also make the adjustments thereto provided for in this Article 13,
which (except as otherwise expressly provided) are to be apportioned with
respect to the Property as of the Cut-off Time (such that the period
preceding the Closing Date shall be for the account of Seller and the period
from and after the Closing Date shall be for the account of Purchaser) and,
to the extent possible, settled at Closing:
(a) HOTEL REVENUES AND RECEIVABLES. All Hotel Revenues and the
Receivables shall be prorated as of the Cut-off Time; provided, however,
that Hotel Revenues and the Receivables with respect to Hotel Revenues
arising from the letting of Hotel guest rooms for the night immediately
preceding the Closing Date shall be shared equally by Seller and Purchaser.
Purchaser shall not be obligated to pay Seller for any of the Receivables.
Following the Closing, Seller shall have the right to collect the
Receivables. Purchaser shall have no obligation to pursue collection of
the Receivables, but, if Purchaser should receive any payment on account of
any of the Receivables at any time following the Closing, Purchaser shall
promptly remit such payment to Seller. If Seller should receive any
payment on account of any Hotel Revenue relating to periods of time after
the Closing, Seller shall promptly remit such payment to Purchaser.
Purchaser will, subject to the provisions of Section 13.1(b) below, honor,
for its account, the terms and rates of all the Bookings entered into by
Seller or Manager prior to the Closing Date, but confirmed for periods of
time after the Closing Date. Any down payments on such confirmed Bookings
and other advance payments made with respect to Bookings for dates on or
after the Closing Date will be credited to Purchaser at the Closing.
(b) CONTINUING OBLIGATIONS. Purchaser shall receive a credit in an
amount equal to the projected cost to be incurred by Purchaser in
fulfilling the Continuing Obligations.
(c) IMPOSITIONS. All Impositions shall be prorated as of the Cut-off
Time. If the amount of any such item is not ascertainable on the Closing
Date, the credit therefor shall be based on the most recent available bills
or statements; provided, that with respect to real property ad valorem
taxes, if such amount is not ascertainable on the Closing Date, the parties
will reasonably estimate the amount of same based on their examination of
available millage rates and exemptions as such items relate to the portion
of the Purchase Price allocable to the Real Property and the Improvements;
provided further, such amount shall after the Closing be adjusted upon
receipt of the actual bills or statements only in the event Seller is due a
credit adjustment with regard to same. Further, in the case of real and
personal property AD VALOREM taxes, Seller shall pay all such taxes
assessed by the respective jurisdictions for all fiscal periods prior to
the fiscal period in which the Closing occurs; such taxes assessed for the
fiscal period in which the Closing occurs shall be prorated as of the
Cut-off Time.
(d) UTILITY CONTRACTS AND COSTS. All utility costs including,
without limitation, water, sewer charges and rents, telephone, steam,
electricity, gas, lighting and other utility services shall be prorated as
of the Cut-off Time on the basis of the most recently issued bills
therefor, with a subsequent adjustment of such utilities promptly after the
issuance of bills for
26
the period which includes the Closing Date. At the Closing (i) Seller
shall (if transferrable) assign to Purchaser (or, at Purchaser's option, to
Operator) all deposits, if any, made by Seller as security or otherwise
under any public utility service contracts which shall remain on deposit
for the benefit of Purchaser (or, at Purchaser's option, Operator)
subsequent to the Closing and (ii) Seller shall receive a credit in an
amount equal to such deposits.
(e) EXISTING FRANCHISE AGREEMENT COSTS. All Existing Franchise
Agreement Costs shall be prorated as of the Cut-off Time.
(f) HOTEL CONTRACTS. Any amounts prepaid or payable under any Hotel
Contracts shall be prorated as of the Cut-off Time, provided any Hotel
Contract Purchaser elects not to assume shall be terminated by Seller as of
the Closing Date and Seller will be responsible for the payment of any sums
due under such Hotel Contracts through such termination date and the
Closing Date.
(g) EXPENSES. All prepaid expenses, outstanding due bills and other
accounts payable relating to the operation of the Hotel (excluding those
relating to the Hotel Contracts) shall be prorated as of the Cut-off Time,
it being understood that all such expenses, bills and accounts payable
relating to purchases of goods and services delivered or provided prior to
the Closing Date shall be payable by Seller and all such expenses, bills
and accounts payable relating to purchases of goods and services delivered
or provided on or after the Closing Date shall be payable by Purchaser;
provided such expenses, bills and accounts payable have been incurred in
accordance with the requirements of Section 10.1(a) hereof.
(h) NOMURA LOAN. Interest payable on the Nomura Note for the month
in which the Closing occurs shall be prorated as of the Cut-off Time. If
such interest is payable in advance, Seller shall receive a credit
adjustment for the interest so paid; provided, if said interest is payable
in arrears, Purchaser shall receive a credit adjustment for same.
Additionally, Seller shall receive a credit adjustment equal to all sums
held by Nomura in Tax, Insurance and Replacement/Property Reserve Accounts
or Funds incident to the Nomura Loan (unless returned to Seller by Nomura);
provided, Seller will receive no credit adjustments for sums held by Nomura
pursuant to the "Capital Improvements Agreement" executed by Seller
incident to the Nomura Loan and requiring Seller to undertake and complete
certain capital improvements items on or before July 31, 1997, for the
purposes hereof, Seller agreeing to at its sole cost and expense complete
or cause to be completed said capital improvements items (and Seller shall
be entitled to receive any refunds under said Capital Improvements
Agreement upon completion of such items).
13.2 SUPPLIES; CONSUMABLES; FIXTURES AND TANGIBLE PERSONAL PROPERTY;
CLOSING INVENTORY; CLOSING REPORT. Manager, under the supervision of the
respective agents of Seller and Purchaser, shall, prior to the Closing and at
times so as to not unreasonably interfere with Hotel operations (i) conduct
an inventory of the Supplies, the Consumables, and the Fixtures and Tangible
Personal Property located at the Hotel as of the Cut-off Time (the "Closing
Inventory"), and (ii) conduct such
27
other inventories, examinations and audits of the Hotel and the Property, and
the books and records of the Hotel and the Property, as necessary to prepare
a report reflecting the adjustments and prorations to be made and calculated
pursuant to this Article 13, including any adjustments contemplated by this
Section 13.2 (the "Closing Report"). In the event the Closing Inventory
shall reflect that the Supplies, the Consumables and/or the Fixtures and
Tangible Personal Property are at levels which are less than the levels for
any of such items as reflected on the Consumables, Supplies and Fixtures and
Tangible Personal Property Inventory, Purchaser shall be entitled to a credit
equal to the cost which would be incurred by Purchaser to cause the Supplies,
the Consumables, and/or the Fixtures and Tangible Personal Property, as
applicable, to be increased to levels for same as reflected Consumables,
Supplies and Fixtures and Tangible Personal Property Inventory (determined
based on the then cost of the item or items in question charged in the
ordinary course of business of the Hotel). In the event the Closing
Inventory shall reflect that the Supplies, the Consumables and/or the
Fixtures and Tangible Personal Property, as applicable, are at levels above
those reflected for any of such items in the Consumables, Supplies and
Fixtures and Tangible Personal Property Inventory, as applicable, Seller
shall be entitled to a credit equal to the cost of those items which are at
levels above those reflected in the Consumables, Supplies and Fixtures and
Tangible Personal Property Inventory (determined based on the then cost of
the item or items in question charged in the ordinary course of business of
the Hotel). Except as expressly provided in this Section 13.2 with respect
to the Supplies, the Consumables, or the Fixtures and Tangible Personal
Property, the parties acknowledge and agree that there will be no other
adjustments or prorations made with respect to the Supplies, the Consumables
or the Fixtures and Tangible Personal Property.
13.3 MANAGEMENT AGREEMENT. There shall be no adjustment for management
fees and reimbursements (if any) due Manager under the Management Agreement
through the Closing Date; provided, that any such fees and reimbursements
shall be the sole responsibility of Seller, and Seller hereby indemnifies and
holds Purchaser safe and harmless from the payment of same.
13.4 POST-CLOSING ADJUSTMENTS AND PAYMENT OF CERTAIN EXPENSES. Within
the thirty (30) day period following the Closing, Seller and Purchaser, or
their respective agents, shall reasonably determine if any of the adjustments
or prorations made pursuant to this Article 13 were in error, or, as
applicable, require further adjustment or proration. In the event any
adjustments or prorations made pursuant to this Article 13 are found to be
erroneous, or, by the terms hereof, require further adjustment or proration,
such errors or post-Closing adjustments or prorations shall be corrected or
further adjusted and prorated as soon as practicable after the Closing, and
if at all possible, within thirty (30) days after the Closing. Further, and
within such thirty (30) day period following the Closing, Seller shall pay
all expenses, accrued or otherwise, and of any type or kind whatsoever, prior
to the Cut-off Time with regard to the Property and the Hotel and which were
not susceptible of payment at the Closing pursuant to the provisions of
Section 10.1(b) hereof. The provisions of this Article 13 shall survive the
Closing.
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ARTICLE 14
CASUALTIES AND TAKINGS
14.1 CASUALTIES. In the event that, subsequent to the Effective Date and
prior to the Closing, any portion of the Property shall be damaged or
destroyed by fire or other casualty in excess of FIFTY THOUSAND AND NO/100
DOLLARS ($50,000.00), Purchaser may, at its option, either (a) terminate this
Agreement by written notice thereof to Seller within ten (10) days after
Seller notifies Purchaser of the casualty, at which ▇▇▇▇ ▇▇▇▇▇▇ shall direct
the Title Company to promptly return the Deposit to Purchaser, with neither
party hereto being thereafter obligated to the other, except as to
Purchaser's obligation to return to Seller due diligence materials pursuant
to Section 5.4 hereof, and except for Purchaser's indemnification liabilities
set forth in Sections 6.1 and 19.1(d) hereof, or (b) proceed to the Closing,
in which event Seller shall, at Purchaser's option, deliver to Purchaser at
the Closing any insurance proceeds received by Seller attributable to the
Property from such casualty or allow Purchaser at the Closing a credit
against the Purchase Price in the amount of such agreed upon insurance
proceeds. In the event that such damage is an amount less than FIFTY THOUSAND
AND NO/100 DOLLARS ($50,000.00), Purchaser shall proceed to the Closing,
provided that Purchaser may, at its option, (i) pay the full balance of the
Purchase Price, in which event Purchaser shall be entitled to any insurance
proceeds received attributable to the Property from such casualty or (ii)
reduce the Purchase Price in an amount equal to the fair market value of the
cost to repair the damages (as mutually agreed upon by Seller and Purchaser),
in which event Seller shall be entitled to any insurance proceeds
attributable to the Property from such casualty.
14.2 TAKINGS. In the event of the institution of any proceeding for the
taking or condemnation of a substantial portion of the Property prior to the
Closing, Purchaser may, at its option, either (a) terminate this Agreement by
written notice thereof to Seller within ten (10) days after Seller notifies
Purchaser of the proceedings for condemnation or taking, at which ▇▇▇▇ ▇▇▇▇▇▇
shall direct the Title Company to promptly return the Deposit to Purchaser,
with neither party hereto being thereafter obligated to the other, except as
to Purchaser's obligation to return to Seller due diligence materials
pursuant to Section 5.4 hereof, and except for Purchaser's indemnification
liabilities set forth in Sections 6.1 and 19.1(d) hereof, or (b) proceed to
the Closing, in which event Seller shall assign and/or deliver to Purchaser
at Closing any claims with regard to same and any proceeds received by Seller
attributable to the Property from such condemnation or eminent domain
proceeding. As used in this Section 14.2, the taking of a "substantial
portion" of the Property shall mean (i) a taking in excess of FIFTY THOUSAND
AND NO/100 DOLLARS ($50,000.00) of the fair market value of the Property or
(ii) a taking which materially affects the value of the Property as used for
the operation of the Hotel.
ARTICLE 15
EMPLOYEE MATTERS
15.1 EMPLOYEES. Seller and Purchaser acknowledge and agree that any
employees and personnel associated with the operation of the Property or the
Hotel are, and unless otherwise terminated, will remain the employees of
Manager after the Closing, and shall not be and shall not be
29
deemed to be the employees or personnel of Seller or Purchaser. Seller and
Purchaser further acknowledge and agree that from and after the Closing,
neither Seller nor Purchaser shall be liable or responsible for any costs,
expenses, salaries, employee benefit or incentive plans (including, without
limitation, "ERISA" plans), employment agreements, exit payments (including,
without limitation, final payroll or accrued vacation time) or the like
payable, accruing or otherwise due to any such employees or personnel of
Manager (collectively, the "Employee Costs"). Seller and Purchaser also
agree to at the Closing require Manager and/or Operator, as applicable, to
deliver to Seller and Purchaser an indemnification agreement (the "Employee
Indemnification Agreement") indemnifying Seller and Purchaser as to the
Employee Costs.
ARTICLE 16
REMEDIES ON DEFAULT
16.1 SELLER DEFAULT. If this Agreement is terminated by Purchaser
pursuant to any one or more Sections hereof which entitle Purchaser to
terminate this Agreement, Purchaser shall be entitled to the return of the
Deposit (including the interest earned thereon). If the sale contracted for
herein is not consummated due to a failure on the part of Seller in the
performance of any of its obligations hereunder ("Seller Default"), then
Purchaser shall either (i) terminate this Agreement and accept the return of
the Deposit or (ii) ▇▇▇ for specific performance, as its sole and exclusive
remedies, Purchaser hereby waiving the right to bring a suit for damages, and
waives all other remedies at law or in equity.
16.2 PURCHASER DEFAULT. If the sale contracted for herein is not
consummated due to Purchaser's failure to perform any of its obligations
hereunder ("Purchaser Default") other than a Seller Default, then the Deposit
shall be paid to Seller by the Title Company as liquidated damages for such
Purchaser Default as Seller's sole and exclusive remedy; provided , that
notwithstanding anything contained herein to the contrary, the payment of the
Deposit to Seller shall not relieve Purchaser from (i) its indemnification
obligations pursuant to Sections 6.1 and 19.(d) hereof, or (ii) its
obligation to return to Seller due diligence materials as set forth in
Section 5.4 hereof. The parties agree that the amount of liquidated damages
described in the preceding sentences, as applicable, is a reasonable sum
considering all of the circumstances existing as of the date hereof,
including the relationship of such sum to the amount of harm to Seller that
reasonably could be anticipated, Seller's anticipated use of the proceeds of
sale and the fact that actual damages would be impossible to determine.
PURCHASER AND SELLER AGREE THAT BASED UPON THE CIRCUMSTANCES NOW
EXISTING, KNOWN AND UNKNOWN, IT WOULD BE IMPRACTICAL OR EXTREMELY DIFFICULT
TO ESTABLISH SELLER'S DAMAGE BY REASON OF PURCHASER'S DEFAULT, EXCEPT AS
OTHERWISE SET FORTH IN THE IMMEDIATELY PRECEDING PARAGRAPH OF THIS SECTION
16.2. SELLER AND PURCHASER ACKNOWLEDGE AND AGREE THAT THE APPLICABLE
FOREGOING AMOUNT OF LIQUIDATED DAMAGES IS REASONABLE AS LIQUIDATED DAMAGES
AND SHALL BE SELLER'S SOLE AND EXCLUSIVE REMEDY IN LIEU OF ANY OTHER RELIEF,
RIGHT OR REMEDY, AT LAW OR IN EQUITY, TO WHICH SELLER MIGHT OTHERWISE BE
30
ENTITLED BY REASON OF PURCHASER'S DEFAULT, EXCEPT AS OTHERWISE SET FORTH IN
THE IMMEDIATELY PRECEDING PARAGRAPH OF THIS SECTION 16.2. SELLER AND
PURCHASER ACKNOWLEDGE THAT THEY HAVE READ AND UNDERSTAND THE PROVISIONS OF
THIS SECTION 16.2 AND BY THEIR INITIALS IMMEDIATELY BELOW AGREE TO BE BOUND
BY ITS TERMS.
Seller's Initials:__________ Purchaser's Initials:__________
ARTICLE 17
AGREEMENT NOT TO COMPETE
17.1 AGREEMENT. Seller and Purchaser shall at Closing enter into an
Agreement Not to Compete (the "Agreement Not to Compete") providing that
Seller nor Investment Resources, Inc. (nor Investments Resources Capital
Corp.) may manage, operate or own an interest in any hotel or motel property
within a five (5) mile radius of any portions of the Property for a period of
five (5) years after Closing. The Agreement Not to Compete will be in form
and substance mutually agreed to by Seller and Purchaser prior to the
expiration of the Due Diligence Period.
ARTICLE 18
NOTICES
18.1 NOTICES. All notices, demands, or other communications of any type
(herein collectively referred to as "Notices") given by Seller to Purchaser
or by Purchaser to Seller, whether required by this Agreement or in any way
related to the transaction contracted for herein, shall be void and of no
effect unless given in accordance with the provisions of this Section 18.1.
All Notices shall be in writing and delivered to the person to whom the
notice is directed, either (a) by telephonic facsimile communication, (b) by
Federal Express or other guaranteed overnight delivery service, or (c) by
United States Mail, as a registered or certified item, return receipt
requested. Any of the Notices may be delivered by the parties hereto or by
their respective attorneys. Any notice delivered by telephonic facsimile
communication or Federal Express or other guaranteed overnight delivery
service shall be deemed effective one (1) day after being transmitted to the
applicable telephone facsimile numbers set forth below, if such Notices are
sent by telephonic facsimile communication, or when delivered to the
addresses set forth below if sent by Federal Express or other guaranteed
overnight delivery service. Notices delivered by registered or certified mail
shall be deemed effective three (3) days after being deposited in a post
office or other depository under the care or custody of the United States
Postal Service, enclosed in a wrapper with proper postage affixed, with
return receipt requested addressed to the party to be so notified as follows:
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If intended for Seller, to: FINDLAY EQUITY PARTNERS
c/o Investment Resources, Inc., Managing Partner
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
If intended for Purchaser to: Host Funding, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, President
With a copy to: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
ARTICLE 19
ADDITIONAL COVENANTS; PIGGY-BACK
REGISTRATION RIGHTS
19.1 ADDITIONAL COVENANTS. In addition, the parties agree as follows:
(a) SELLER EXPENSES. Seller shall be responsible for the payment of
(i) those costs, expenses and fees relating to the assumption of the Nomura
Loan by Purchaser and as set forth in Section 3.2(a) hereof, (ii) except as
set forth in 19.1(b)(ii), fifty percent (50%) of the title insurance
premium with regard to the Title Policy (to be calculated upon that portion
of the Purchase Price allocable to the Real Property and the Improvements),
(iii) documentary and/or transfer taxes, and mortgage and/or deed of trust
related taxes and charges, provided that any transfer taxes shall be
calculated on that portion of the Purchase Price allocated to the Real
Estate and the Improvements, unless otherwise required by any applicable
Legal Requirement, (iv) fifty percent (50%) of all escrow fees, and (v)
the registration expenses of the holders of the Host Funding Stock as set
forth in Section 19.2(d) hereof. Additionally, the fees and expenses of
Seller's designated representatives, accountants and attorneys shall be
borne by Seller.
(b) PURCHASER EXPENSES. Purchaser shall be responsible for the
payment of (i) those costs, expenses and fees relating to the assumption of
the Nomura Loan by Purchaser, other than those costs, expenses and fees
relating to same and required to be paid by Seller
32
pursuant to Section 3.2(a) hereof, (ii) fifty percent (50%) of the title
insurance premium with regard to the Title Policy (to be calculated on that
portion of the Purchase Price allocable to the Real Property and the
Improvements), provided, Purchaser shall pay all costs for extended
coverage and endorsements requested by Purchaser, (iii) the cost of the
Survey, (iv) the cost of any environmental studies undertaken by Purchaser,
(v) all costs and expenses related to Purchaser's due diligence inspections
and investigations pursuant hereto (except for such costs related thereto
and as are paid by Seller pursuant to Section 19.1(a) above), (vi) all
costs, expenses and fees relating to the obtaining by Purchaser of the Host
Funding Franchise Agreement, and (vii) fifty percent (50%) of all escrow
fees. Additionally, the fees and expenses of Purchaser's designated
representatives, accountants and attorneys shall be borne by Purchaser.
(c) MISCELLANEOUS EXPENSES. All costs and expenses not otherwise
required to be paid by Seller or Purchaser pursuant to the terms hereof
shall be borne by Seller and Purchaser in the manner in which such costs
and expenses are customarily allocated between the parties at the closing
of a real estate hotel or motel property in the Liberty Township, Ohio
area.
(d) BROKERAGE. Seller hereby represents and warrants to Purchaser
that Seller has not dealt with any broker or finder with respect to the
transaction contemplated hereby, other than ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇, Inc.
("Seller's Broker"). Seller agrees to pay any and all brokerage
commissions to which Seller's Broker shall be entitled in connection with
this transaction pursuant to written agreement between Seller and Seller's
Broker and agrees to indemnify Purchaser for any claim for brokerage
commission or finder's fee in connection with this transaction asserted by
Seller's Broker. Purchaser hereby represents and warrants to Seller that
Purchaser has not dealt with any broker or finder with respect to the
transaction contemplated hereby, other than HMR Capital, LLC ("Purchaser's
Broker"). Purchaser agrees to pay any and all brokerage commissions to
which Purchaser's Broker shall be entitled in connection with this
transaction and agrees to indemnify Seller for any claim for brokerage
commission or finder's fee in connection with this transaction asserted by
Purchaser's Broker. Seller and Purchaser each represent and warrant to the
other that it has not authorized any broker, agent or finder to act on its
behalf (other than as set forth in this Section 19.1(d)), nor does it have
any knowledge of any other broker, agent or finder purporting to act on its
behalf in respect of this transaction, and Seller and Purchaser each hereby
covenant and agree to indemnify, defend and hold harmless the other from
and against any cost, expense, claim, liability or damage (including,
without limitation, reasonable attorneys' fees and court costs) resulting
from any breach of the representation and warranty contained herein.
(e) BOOKS AND RECORDS. The transfer of the Property contemplated
hereby does not include the books and records of Seller pertaining to the
business of the Hotel; provided, Seller agrees to maintain and preserve
all books and records, files and correspondence pertaining to the business
of the Hotel, and not to destroy or dispose of the same, for at least five
(5) years following the Closing Date. Additionally, Seller agrees (i) to
provide Purchaser
33
and its representatives access to such books, records, files and
correspondence at all reasonable times upon at least five (5) days prior
written notice (and Purchaser and its representatives shall have the right
to copy any of such books, records, files and/or correspondence as deemed
reasonable necessary by Purchaser incident to the ownership or on-going
operation of the Hotel), and (ii) to cooperate and assist Purchaser
incident to any audit of the books and records required of Purchaser for
periods of time prior to the Closing, including, without limitation,
becoming the "engaging party" (at no cost or expense to Seller) if
necessary to facilitate any such audits.
(f) PUBLICITY. All notice to third parties and all other publicity
concerning the transactions contemplated hereby shall be jointly planned
and coordinated by and between Purchaser and Seller. Neither of the
parties shall act unilaterally in this regard without the prior written
approval of the other; however, such approval shall not be unreasonably
withheld or delayed.
(g) ASSIGNMENT. Except for an assignment of this Agreement by
Purchaser to an Affiliate of Purchaser, neither Seller nor Purchaser shall
have the right to assign its interest in this Agreement without the prior
written consent of the other party, which consent may be given or withheld
in the sole discretion of the party whose consent is requested; provided,
however, the party assigning its interest in this Agreement shall remain
liable for any and all of its obligations hereunder.
(h) LITIGATION COSTS. In the event of any action or proceeding at
law or in equity between Seller and Purchaser to enforce any provision of
this Agreement or to protect or establish any right or remedy of either
party hereunder, the unsuccessful party to such litigation shall pay to the
prevailing party all costs and expenses, including reasonable attorneys'
fees incurred therein by such prevailing party (collectively, "Litigation
Costs"), and if such prevailing party shall recover judgment in any such
action or proceeding, such Litigation Costs shall be included in and as a
part of such judgment.
(i) INTEGRATION/CHOICE OF LAW. This Agreement (including all
exhibits hereto) contains the entire agreement between the parties with
respect to the subject matter hereof, supersedes all prior understandings,
including, without limitation, that certain letter of intent, dated March
10, 1997, with respect thereto, and may not be amended, supplemented or
terminated, nor shall any obligation hereunder or condition hereof be
deemed waived, except by a written instrument to such effect signed by the
party to be charged or as otherwise expressly provided in this Agreement.
This Agreement shall be governed by and construed in accordance with the
laws of the State of Indiana.
(j) EXECUTION. This Agreement may be executed in any number of
counterparts, each of which shall constitute an original but all of which,
taken together, shall constitute but one and the same instrument. This
Agreement may be executed and delivered by facsimile
34
transmission of signature pages, following which executed original
counterparts shall be exchanged in the ordinary course of business.
(k) IMPORTANCE OF TIME. Time is of the essence of this Agreement.
(l) FURTHER CONDITIONS TO CLOSINGS. The obligations of Seller and
Purchaser to close this Agreement are conditioned upon the simultaneous
closing of this Agreement, the Auburn CHI Contract and the Indianapolis CHI
Contract, and neither party shall be obligated to close the purchase of the
Property pursuant to this Agreement if closing does not simultaneously
occur with the closing of the Auburn CHI Contract and the Indianapolis CHI
Contract.
(m) RULE 144. Purchaser covenants that it will file the reports
required to be filed by it under the Securities Act and the Exchange Act
and the rules and regulations adopted by the Securities and Exchange
Commission (the "Commission") thereunder, and it will take such other
action as any holder of Host Funding Stock may reasonably request, all to
the extent required from time to time to enable such holder to sell Host
Funding Stock without registration under the Securities Act within the
limitation of the exemptions provided by (i) Rule 144 under the Securities
Act, as may be amended from time to time, or (ii) any similar rule or
regulation hereunder adopted by the Commission.
(n) TIME FOR ACCEPTANCE. This Agreement is being presented to Seller
and constitutes an offer by Purchaser to purchase the Property from Seller
upon the terms and conditions stated herein, which offer must be accepted
by Seller's execution of at least three (3) counterparts hereof and
returning all three originals to Purchaser on or before May 2, 1997. If
Purchaser fails to deliver the three (3) counterpart originals of this
Agreement to Seller, by the above date, this Agreement shall be of no force
or effect and neither party shall have any obligation one to the other.
19.2 PIGGY-BACK REGISTRATION RIGHTS
(a) If Purchaser proposes to file a registration statement under the
Securities Act with respect to an offering by Purchaser for its own account
or for the account of any other person of any class of equity security,
including any security convertible into or exchangeable for any equity
security (other than a registration statement on Form S-8 (or any successor
form) or filed in connection with an exchange offer or an offering of
securities solely to Purchaser's existing stockholders), then Purchaser
shall in each case give written notice of such proposed filing to the
holders of the Host Funding Stock at least twenty (20) days before the
anticipated filing date, and such notice shall offer such holders the
opportunity to register such number of shares of Host Funding Stock as each
such holder may request (a "Piggy-Back Registration"). Purchaser shall use
reasonable diligence to cause the managing underwriter or underwriters of a
proposed underwritten offering to permit the holders of Host Funding Stock
requested to be included in the registration for such offering to include
such
35
securities in such offering on the same terms and conditions as any
similar securities of Purchaser included therein. Notwithstanding the
foregoing, if the managing underwriter or underwriters of such offering
delivers a written opinion to the holders of Host Funding Stock that the
total amount of securities which they or Purchaser and any other persons
intend to include in such offering is sufficiently large to materially and
adversely affect the success of such offering, then the amount of Host
Funding Stock to be offered for the accounts of holders of Host Funding
Stock shall be reduced, in the sole opinion of the managing underwriter, to
a total amount of securities to be included in such offering to the amount
recommended by such managing underwriter; PROVIDED, that the reduction
imposed upon holders of Host Funding Stock will not be greater, on a
fractional basis, than the reduction imposed upon other persons whose
piggy-back registration rights are PARI PASSU with those granted hereby
with respect to the amount of securities requested for inclusion in such
registration.
(b) Notwithstanding anything to the contrary contained in this
Agreement, Purchaser shall not be required to include Host Funding Stock in
any registration statement if the proposed registration is (i) a
registration of a stock option or other employee incentive compensation
plan or of securities issued or issuable pursuant to any such plan, (ii) a
registration of securities issued or issuable pursuant to a stockholder
reinvestment plan or other similar plan, (iii) a registration of securities
issued in exchange for any securities or any assets of, or in connection
with a merger or consolidation with, an unaffiliated company, or (iv) a
registration of securities pursuant to a "rights" or other similar plan
designed to protect Purchaser's stockholders from a coercive or other
attempt to take control of Purchaser.
(c) Purchaser may withdraw any registration statement and abandon any
proposed offering initiated by Purchaser without the consent of any holder
of Host Funding Stock, notwithstanding the request of any such holder to
participate therein in accordance with this Section 19.2, if Purchaser
determines, in good faith in its sole discretion, that such action is in
the best interests of Purchaser and its stockholders (for this purpose, the
interest of the holders of Host Funding Stock shall not be considered).
(d) With respect to any Piggy-Back Registration requested by the
holders with respect to Host Funding Stock, Purchaser shall bear all
registration expenses except for the following registration expenses (and
the following registration expenses shall be borne pro rata by the holders
of Host Funding Stock registered thereby): (i) Commission and securities
exchange registration and filing fees, (ii) fees and expenses of compliance
with securities or blue sky laws (including fees and disbursements of
counsel in connection with blue sky qualifications of such shares), (iii)
rating agency fees, (iv) printing expenses, (v) messenger and delivery
expenses, (vi) fees and expenses incurred in connection with the listing of
such shares to be registered on each securities exchange in which similar
securities issued by Purchaser are then listed, (vii) underwriting fees,
discounts and commissions, and (vii) any out-of-pocket expenses of the
holders of such shares including any travel costs and counsel fees;
PROVIDED, HOWEVER, that the foregoing registration expenses to be paid by
such holders
36
shall be deemed to include, on an item-by-item basis (an "item" being any
of the numbered expenses above), only that certain portion of the total
registration expenses of such Piggy-Back Registration relating to such item
that is determined by multiplying (x) the total registration expenses of
such Piggy-Back Registration relating to such item by (y) a fraction the
numerator of which is the total proceeds realized by the holders of the
Host Funding Stock as a result of the offering relating to such Piggy-Back
Registration and the denominator of which is the total proceeds realized by
all selling stockholders (including such holders of Host Funding Stock) and
Purchaser in such offering.
(e) In connection with any registration statement in which a holder
of Host Funding Stock is participating, each such holder will furnish to
Purchaser in writing such information with respect to the name and address
of such holder and the amount of Host Funding Stock held by such holder and
such other information as Purchaser shall reasonably request for use in
connection with any such registration statement or prospectus, and agrees
to indemnify, to the extent permitted by law, Purchaser, its directors and
officers, and each person who controls Purchaser (within the meaning of the
Securities Act) against any losses, claims, damages, liabilities and
expenses resulting from any untrue statement of a material fact or any
omission of a material fact required to be stated in the registration
statement or prospectus or any amendment thereof or supplement thereto or
necessary to make the statements therein not misleading, to the extent, but
only to the extent, that such untrue statement or omission is based upon
any information with respect to such holder so furnished in writing by such
holder specifically for inclusion in any prospectus or registration
statement.
(f) No holder of Host Funding Stock may participate in any Piggy-Back
Registration unless such holder (a) agrees to sell the Host Funding Stock
on the terms of and on the basis provided in any underwriting arrangements
approved by the persons entitled to approve such arrangements (which shall
be Purchaser in the case of an offering of securities by Purchaser), and
(b) completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
(g) The provisions of this Section 19.2 shall apply, to the full
extent set forth herein, with respect to the Host Funding Stock, to any and
all shares of equity capital of Purchaser or any successor or assign of
Purchaser (whether by merger, consolidation, sale of assets, or otherwise)
which may be issued in respect of, in exchange for, or in substitution of
the Host Funding Stock, in each case as the amounts of such securities
outstanding are approximately adjusted for any equity dividends, splits,
reverse splits, combinations, recapitalizations, and the like occurring
after the date of this Agreement.
37
IN WITNESS WHEREOF, the parties hereto have executed or cause this
Agreement to be executed, all as of the day and year first above written.
SELLER:
FINDLAY EQUITY PARTNERS, an Ohio general
partnership
By: Investment Resources, Inc., an Ohio
corporation, Managing Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
Title: President
------------------------------
PURCHASER:
HOST FUNDING, INC., a Maryland corporation
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, President
This Agreement and the Initial Deposit have been received by the Title
Company this 5th day of May, 1997, which shall be the Effective Date.
REPUBLIC TITLE OF TEXAS, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
----------------------------------
Title: Vice President
----------------------------------
Address: ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
38
EXHIBIT C
FORM OF INVESTMENT LETTER AGREEMENT
INVESTMENT LETTER AGREEMENT
Host Funding, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Gentlemen:
The undersigned acknowledges that pursuant to the terms of that certain
Agreement of Sale and Purchase dated effective as of May 1, 1997 (the
"Purchase Agreement"), by and between ___________________ and Host Funding,
Inc., a real estate investment trust incorporated under the laws of the State
of Maryland ("Host Funding"), the undersigned is acquiring from Host Funding
_______ shares of the Class A Common Stock, $0.01 par value, of Host Funding
(the "Shares"). In the event of conflict between the provisions of this
Agreement and the Purchase Agreement, the provisions of the Purchase
Agreement shall govern.
1. ACCEPTANCE OF SHARES. Subject to the terms and conditions of this
Agreement, the undersigned hereby accepts ownership of the Shares.
2. ACKNOWLEDGMENTS, REPRESENTATIONS AND COVENANTS. The undersigned
acknowledges that the undersigned is acquiring the Shares in a transaction
not involving a public offering and without being furnished any offering
literature or prospectus. The undersigned further acknowledges, represents,
warrants and covenants as follows:
(a) if the undersigned is an individual, he or she is a United States
citizen at least 21 years of age and a bona fide resident and domiciliary
(not a temporary or transient resident) of the state set forth on the
signature page hereof, and has no present intention of becoming a resident
of any other state or jurisdiction; if the undersigned is an entity, its
principal place of business is within the state set forth on the signature
page hereof;
(b) the undersigned understands that the Shares have not been
registered under the Securities Act of 1933; the undersigned represents and
warrants that the Shares are being acquired by the undersigned solely for
the undersigned's own account, for investment purposes only, and are not
being received with a view to, or in connection with, any resale,
distribution, subdivision or fractionalization thereof; the undersigned
further represents and warrants that the undersigned has no agreement or
other arrangement, formal or informal, with any person to sell, transfer or
pledge any part of the Shares which would guarantee to the undersigned any
profit or against any loss with respect to such Shares; the undersigned
further represents and warrants that the undersigned has no plans to enter
into any such agreement or arrangement;
1
(c) The undersigned understands that Host Funding will make notations
in the appropriate records of the corporation of the restrictions on the
transferability of the Shares and may stamp or affix to the certificate
representing such Shares the legend attached hereto as Exhibit "A";
(d) the undersigned understands that no federal or state agency has
passed on or made any recommendation or endorsement relating to the Shares;
(e) the undersigned agrees that the Shares received by the
undersigned may not be resold or otherwise transferred unless such Shares
are registered under the Act and any applicable state securities laws or an
exemption from such registration is available;
(f) the undersigned (i) is a sophisticated investor, (ii) has had
prior experience with investments similar to the Shares, (iii) has
knowledge and experience in financial and business matters such that the
undersigned is capable of evaluating the merits and risks of the Shares and
of making an informed investment decision, and (iv) is able to bear the
economic risk of the undersigned's investment in the Shares; and
(g) the undersigned has received and reviewed a copy of Host
Funding's most recent Annual Report on Form 10-K and has been given the
opportunity to discuss the financial condition and operations of Host
Funding with the officers of Host Funding.
The undersigned recognizes that the transfer of the Shares to the undersigned
is based upon the representations and warranties contained herein, and the
undersigned agrees to indemnify Host Funding and its officers, directors,
agents and representatives and to hold each of them harmless against any
liabilities, costs or expenses (including reasonable attorneys' fees) arising
by reason of or in connection with any misrepresentation or any breach of
such representations or warranties by the undersigned, or arising as a result
of the sale or distribution of any Shares by the undersigned in violation of
the Act, or other applicable law.
The undersigned agrees that the foregoing acknowledgments, representations
and covenants shall survive the receipt by the undersigned of the Shares, as
well as any investigation made by the party relying on the same.
3. FURTHER ASSURANCES - REVOCATION. The undersigned agrees to execute
any and all further instruments and documents necessary or advisable in
connection with the receipt of the Shares by the undersigned, including
(without limitation), all instruments and documents that may be necessary,
desirable or appropriate in connection with any applicable state and federal
securities laws. Further, the undersigned agrees that the undersigned may not
cancel, terminate or revoke this Agreement, which shall survive the death or
disability of the undersigned and shall be binding upon the undersigned's
heirs, executors, administrators, successors and assigns.
2
MISCELLANEOUS.
(a) All notices or other communications given or made hereunder shall
be in writing and shall be delivered by hand or mailed by registered or
certified mail, return receipt requested, postage prepaid, to the
undersigned or to Host Funding at the respective addresses set forth
herein.
(b) This Agreement shall be governed by and construed in accordance
with the laws of the State of Maryland applicable to contracts made and
wholly performed in that state.
(c) This Agreement constitutes the entire agreement among the parties
hereto with respect to the subject matter hereof, and may be amended only
by a writing executed by the party to be bound thereby.
IN WITNESS WHEREOF, the undersigned has executed this Investment Letter
Agreement as of this _____ day of ________________, 1997.
SIGNATURE
PLEASE TYPE OR PRINT: If signing on behalf of an entity:
Title:
NAME Name of Entity:
STREET ADDRESS
CITY, STATE AND ZIP CODE
SOCIAL SECURITY OR TAXPAYER IDENTIFICATION
NUMBER
3
ACCEPTED as of _________________, 1997
HOST FUNDING, INC.
By:______________________________________
Bona ▇. ▇▇▇▇▇, Secretary
4