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EXHIBIT 2(i)
SALE AND PURCHASE AGREEMENT
THIS SALE AND PURCHASE AGREEMENT (the "Agreement") is made and
entered into this 16th day of March, 2000, by and between SHOLODGE, INC., a
Tennessee corporation (herein "ShoLodge"), and PRIME HOSPITALITY CORP., a
Delaware corporation (herein "Prime").
W I T N E S S E T H:
WHEREAS, Prime and ShoLodge desire (i) that a wholly-owned
subsidiary of Prime acquire a leasehold interest in (A) twenty (20) Xxxxxx
Suites hotels which are currently leased from HPT Suite Properties Trust, a
Maryland real estate investment trust, to Suite Tenant, Inc., a Tennessee
corporation and a wholly-owned subsidiary of ShoLodge, and (B) seven (7)
existing Xxxxxx Suites hotels currently owned by wholly-owned subsidiaries of
ShoLodge, and (ii) that Prime acquire two (2) sites currently owned by
wholly-owned subsidiaries of ShoLodge for development as AmeriSuites hotels.
NOW, THEREFORE, in consideration of One Hundred Dollars ($100)
paid from Prime to ShoLodge as initial consideration as described herein, the
mutual terms and conditions contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. As used in this Agreement, the
following terms shall have the following meanings:
"Additional Advance Payments" shall have the meaning set forth
in Section 3.2(b).
"Additional Buildings" shall have the meaning set forth in
Section 3.1.
"Additional Equipment" shall have the meaning set forth in
Section 3.1.
"Additional Hotel Operating Assets" shall have the meaning set
forth in Section 3.2.
"Additional Hotel Operating Assets Transfer Documents" shall
have the meaning set forth in Section 3.4
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"Additional Hotel Subsidiaries" means the wholly-owned
subsidiaries of ShoLodge which own the Additional HPT Hotels, identified by site
as follows:
Owner Site
----- ----
Carolina Inns, Inc. Pine Xxxxx Shores, North Carolina
Midwest Inns, Inc. Indianapolis, Indiana
Midwest Inns, Inc. Kansas City, Missouri
Sunshine Inns, Inc. Orlando, Florida
"Additional HPT Hotels" means the Xxxxxx Suites hotels
currently operated on the Additional Land.
"Additional Inventory" shall have the meaning set forth in
Section 3.2(a).
"Additional Land" shall have the meaning set forth in Section
3.1.
"Additional Operating Agreements" shall have the meaning set
forth in Section 3.2(c).
"Additional Property" shall have the meaning set forth in
Section 3.1.
"Additional Property Documents" shall have the meaning set
forth in Section 3.3.
"Advance Payments" means the STI Advance Payments, the
Additional Advance Payments and the Texas Advance Payments.
"Affiliate" means, as applied to any Person, any other Person
who, directly or indirectly, controls, is controlled by, or is under common
control with, such Person. For purposes of this definition, "control" means the
possession, directly or indirectly, of the power to direct the management and
policies of a Person, whether through the ownership of shares, options,
warrants, interests, participations or other equivalents (regardless of how
designated) of or in a Person, whether voting or nonvoting, including common
stock, preferred stock or any other "equity security" (as such term is defined
in Rule 3a11-1 of the General Rules and Regulations promulgated by the
Securities and Exchange Commission under the Securities Exchange Act of 1934, as
amended), by contract or otherwise.
"Agreement" means this Sale and Purchase Agreement.
"Assets" means collectively the STI Assets, the Additional
Property, the Additional Hotel Operating Assets, the Texas Property, the Texas
Hotel Operating Assets and the Development Sites.
"Benefit Plan" shall have the meaning set forth in Section
15.5.
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"Buildings" means the STI Buildings, the Additional Buildings
and the Texas Buildings.
"Closing" shall mean the conference to be held at 10:00 a.m.,
New York, New York time, on the Closing Date, at the offices of Xxxxxxx Xxxx &
Xxxxxxxxx, 787 Seventh Avenue, New York, New York, or at such other time and
place on the Closing Date as the parties may mutually agree to in writing, at
which time the transactions contemplated by this Agreement shall be consummated,
or, if permitted as set forth in Section 17.1, at which time one (1) or more of
the transactions contemplated by this Agreement shall be consummated.
"Closing Date" shall mean the date on which the Closing
occurs, and, if the Closing with respect to all transactions contemplated herein
does not occur on the same date as contemplated in Section 17.1, the term
"Closing Date" with respect to each transaction contemplated herein shall mean
the date of the actual Closing with respect to each such transaction.
"Closing Documents" means all documents to be executed by
Prime, a Prime Subsidiary, ShoLodge or a ShoLodge Subsidiary to consummate the
transactions contemplated in this Agreement, including, without limitation, the
STI Transfer Documents, the Additional Property Documents, the Additional Hotel
Operating Assets Transfer Documents, the Texas Lease, the Texas Hotel Operating
Assets Transfer Documents, the Development Site Transfer Documents, the
Construction Contract and the Reservation Agreement; provided, however, in the
event there is more than one (1) Closing Date as contemplated in Section 17.1,
"Closing Documents" for each such Closing Date means only such of the documents
as described above as are necessary to consummate the transactions contemplated
in this Agreement being closed on such Closing Date.
"Code" means the Internal Revenue Code of 1986, as amended.
"Construction Contract" shall have the meaning set forth in
Section 7.1.
"Development Site Purchase Price" shall have the meaning set
forth in Section 6.2.
"Development Site Subsidiaries" means the wholly-owned
subsidiaries of ShoLodge which own the Development Sites, identified by site as
follows:
Owner Site
----- ----
Delaware Inns, Inc. Mt. Laurel, New Jersey
Virginia Inns, Inc. Fairfax County, Virginia
"Development Site Transfer Documents" shall have the meaning
set forth in Section 5.2.
"Development Sites" shall have the meaning set forth in
Section 5.1.
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"Due Diligence Period" means the thirty (30) day period
commencing on the Effective Date.
"Effective Date" shall mean the date this Agreement is fully
executed by ShoLodge and Prime.
"Encumbrance" means any security interest, pledge, mortgage,
lien (including environmental liens), personal property lease, charge, adverse
claim or restriction of any kind, including encumbrances or imperfections of
title of whatever nature.
"Equipment" means the STI Equipment, the Additional Equipment
and the Texas Equipment.
"ERISA" shall have the meaning set forth in Section 15.5.
"Existing HPT Hotels" means the Xxxxxx Suites hotels currently
operated on the STI Land.
"Financial Information" shall have the meaning set forth in
Section 15.19.
"Hendersonville Restriction" shall have the meaning set forth
in Section 17.6.
"Hotel" and "Hotels" shall mean individually one of the
Existing HPT Hotels or one of the Additional HPT Hotels or one of the Texas
Hotels and collectively the Existing HPT Hotels, the Additional HPT Hotels and
the Texas Hotels.
"HPT" means Hospitality Properties Trust, a Maryland real
estate investment trust, and its successors and assigns.
"HPT Assignment and Security Agreement" means that certain
Assignment and Security Agreement dated as of November 19, 1997 between STI and
Landlord, as amended by that certain Second Amendment to Lease Agreement and
First Amendment to Incidental Documents dated as of June 29, 1999 among HPT,
Landlord, ShoLodge and STI, together with such subsequent amendments,
modifications and supplements thereto as shall have been approved by Prime in
writing prior to execution by STI, such approval not to be unreasonably
withheld, delayed or conditioned.
"HPT Documents" means the HPT Lease and the HPT Incidental
Documents.
"HPT Estoppel Certificate" means the estoppel certificate from
HPT in favor of Prime and the Prime HPT Subsidiary substantially in the form of
Exhibit H attached hereto and incorporated herein by this reference.
"HPT Incidental Documents" means the HPT Lease Guaranty, the
HPT Security Agreement, the HPT Stock Pledge and the HPT Assignment and Security
Agreement.
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"HPT Lease" means that certain Lease Agreement dated as of
November 19, 1997 between Landlord and STI, as amended by that certain First
Amendment to Lease Agreement dated as of March 5, 1999 between Landlord and STI,
by that certain Second Amendment to Lease Agreement and First Amendment to
Incidental Documents dated as of June 29, 1999 among HPT, Landlord, ShoLodge and
STI and by that certain Third Amendment to Lease Agreement dated as of March 3,
2000 between Landlord and STI, together with such subsequent amendments,
modifications and supplements thereto as shall have been approved by Prime in
writing prior to execution by STI, such approval not to be unreasonably
withheld, delayed or conditioned.
"HPT Lease Amendment" shall have the meaning set forth in
Section 11.6.
"HPT Lease Guaranty" means that certain Limited Guaranty
Agreement dated as of November 19, 1997 executed by ShoLodge in favor of HPT and
Landlord, as amended by that certain Second Amendment to Lease Agreement and
First Amendment to Incidental Documents dated as of June 29, 1999 among HPT,
Landlord, ShoLodge and STI, together with such subsequent amendments,
modifications and supplements thereto as shall have been approved by Prime in
writing prior to execution by ShoLodge, such approval not to be unreasonably
withheld, delayed or conditioned.
"HPT Lease Guaranty Deposit" means the "Guaranty Deposit" in
the amount of Fourteen Million and No/100 Dollars ($14,000,000.00) deposited by
ShoLodge with HPT and Landlord to secure the obligations of ShoLodge under the
HPT Lease Guaranty.
"HPT Lease Security Deposit" means the "Retained Funds" in the
amount of Twenty-One Million Two Hundred Eighty Thousand and No/100 Dollars
($21,280,000.00) deposited by STI with Landlord to secure the obligations of STI
under the HPT Lease.
"HPT Real Property" means the STI Land, the STI Buildings, the
Additional Land and the Additional Buildings.
"HPT Security Agreement" means that certain Security Agreement
dated as of November 19, 1997 between STI and Landlord, as amended by that
certain Second Amendment to Lease Agreement and First Amendment to Incidental
Documents dated as of June 29, 1999 among HPT, Landlord, ShoLodge and STI and by
that certain Second Amendment to Security Agreement dated as of March 3, 2000
between Landlord and STI, together with such subsequent amendments,
modifications and supplements thereto as shall have been approved by Prime in
writing prior to execution by STI, such approval not to be unreasonably
withheld, delayed or conditioned.
"HPT Stock Pledge" means that certain Stock Pledge dated as of
November 19, 1997 made by ShoLodge in favor of Landlord, as amended by that
certain Second Amendment to Lease Agreement and First Amendment to Incidental
Documents dated as of June 29, 1999 among HPT, Landlord, ShoLodge and STI,
together with such subsequent amendments, modifications and supplements thereto
as shall have been approved by Prime in writing prior to execution by ShoLodge,
such approval not to be unreasonably withheld, delayed or conditioned.
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"Indemnified Party" shall have the meaning set forth in
Section 19.4.
"Indemnifying Party" shall have the meaning set forth in
Section 19.4.
"Initial Consideration" shall have the meaning set forth in
Section 9.3.
"Inventory" means the STI Inventory, the Additional Inventory
and the Texas Inventory.
"Landlord" means HPT Suite Properties Trust, a Maryland real
estate investment trust, and its successors and assigns.
"Xxxxx" means Xxxxx and Associates, Inc., a Tennessee
corporation and a wholly-owned subsidiary of ShoLodge, and its successors and
assigns.
"Operating Agreements" means the STI Operating Agreements, the
Additional Operating Agreements and the Texas Operating Agreements.
"Permitted Exceptions" means (a) with respect to all Assets,
(i) liens for taxes, assessments and governmental charges with respect to an
Asset not yet due and payable or due and payable but not yet delinquent or as to
which adequate reserves are provided therefor, (ii) those Encumbrances
contemplated in this Agreement, and (iii) such other Encumbrances as shall be
approved or deemed approved by Prime pursuant to Section 12.1; (b) with respect
to the HPT Real Property only, the HPT Lease; (c) with respect to the Additional
Property only, the HPT Lease as amended or a separate lease as contemplated in
Section 3.3 and in Section 3.8, if applicable; (d) with respect to the Texas
Property only, the Texas Lease; (e) with respect to the Hendersonville,
Tennessee Hotel only, the Hendersonville Restriction; and (f) with respect to
the Real Property only, applicable zoning regulations and ordinances provided
the same do not prohibit or impair in any material respect use of such Real
Property as a hotel as currently operated or constructed or, as to the
Development Sites, as proposed to be operated or constructed.
"Person" means natural persons, corporations, limited
liability companies, limited partnerships, general partnerships, limited
liability partnerships, joint ventures, trusts, land trusts, business trusts and
other organizations, irrespective of whether they are legal entities, and
governments and agencies and political subdivisions thereof.
"Post Termination Obligations" shall have the meaning set
forth in Section 14.1.
"Prime" means Prime Hospitality Corp., a Delaware corporation,
and its successors and permitted assigns.
"Prime Subsidiaries" means the Prime HPT Subsidiary and the
Prime Texas Subsidiary.
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"Prime HPT Subsidiary" means the wholly-owned subsidiary of
Prime which acquires the STI Assets and the Additional Hotel Operating Assets
and which leases the Additional Property pursuant to this Agreement, and its
successors and permitted assigns.
"Prime Texas Subsidiary" means the wholly-owned subsidiary of
Prime which acquires the Texas Hotel Operating Assets and which leases the Texas
Property pursuant to this Agreement, and its successors and permitted assigns.
"Purchase Price" shall have the meaning set forth in Section
6.1.
"Real Property" means the STI Land, the STI Buildings, the
Additional Land, the Additional Buildings, the Texas Land, the Texas Buildings
and the Development Sites.
"Reservation Agreement" shall have the meaning set forth in
Section 8.1.
"ShoLodge" means ShoLodge, Inc., a Tennessee corporation, and
its successors and assigns.
"ShoLodge Subsidiaries" means STI, the Additional Hotel
Subsidiaries, Southeast, the Development Site Subsidiaries and Xxxxx.
"Southeast" means Southeast Texas Inns, Inc., a Tennessee
corporation and a wholly-owned subsidiary of ShoLodge, and its successors and
assigns.
"STI" means Suite Tenant, Inc., a Tennessee corporation and a
wholly-owned subsidiary of ShoLodge, and its successors and assigns.
"STI Advance Payments" shall have the meaning set forth in
Section 2.1(c).
"STI Assets" shall have the meaning set forth in Section 2.1.
"STI Buildings" shall have the meaning set forth in Section
2.1(a).
"STI Equipment" shall have the meaning set forth in Section
2.1(a).
"STI Inventory" shall have the meaning set forth in Section
2.1(b).
"STI Operating Agreements" shall have the meaning set forth in
Section 2.1(d).
"STI Land" shall have the meaning set forth in Section 2.1(a).
"STI Leased Property" shall have the meaning set forth in
Section 2.1(a).
"STI Transfer Documents" shall have the meaning set forth in
Section 2.2.
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"Texas Advance Payments" shall have the meaning set forth in
Section 4.2(b).
"Texas Buildings" shall have the meaning set forth in Section
4.1.
"Texas Equipment" shall have the meaning set forth in Section
4.1.
"Texas Hotel Operating Assets" shall have the meaning set
forth in Section 4.2.
"Texas Hotel Operating Assets Transfer Documents" shall have
the meaning set forth in Section 4.4.
"Texas Hotels" means the Xxxxxx Suites hotels currently
operated on the Texas Land.
"Texas Inventory" shall have the meaning set forth in Section
4.2(a).
"Texas Land" shall have the meaning set forth in Section 4.1.
"Texas Lease" shall have the meaning set forth in Section 4.3.
"Texas Operating Agreements" shall have the meaning set forth
in Section 4.2(c).
"Texas Property" shall have the meaning set forth in Section
4.1.
"Texas Real Property" means the Texas Land and the Texas
Buildings.
ARTICLE II
SALE OF EXISTING HPT HOTELS
2.1 Sale of STI Assets. ShoLodge hereby agrees to cause
STI, at the Closing and in the manner specified in Section 2.2 of this
Agreement, to sell, convey, transfer, assign and deliver to the Prime HPT
Subsidiary, and Prime hereby agrees to cause the Prime HPT Subsidiary, at the
Closing and in the manner specified in Section 2.2 of this Agreement, to
purchase from STI, all the following (collectively, the "STI Assets"):
(a) all right, title and interest of STI in and to the
HPT Lease, including, without limitation, the HPT Lease Security Deposit and,
except as limited in the last paragraph of Section 19.3, the "FF&E Reserve"
created pursuant to the HPT Lease, and in and to (i) that certain real property
more particularly described on Exhibit A attached hereto and incorporated herein
by this reference (the "STI Land"); (ii) any and all buildings, structures and
similar improvements erected on, over, upon or under the STI Land on the Closing
Date (the "STI Buildings"); and (iii) all furniture, fixtures and equipment
located thereon or therein on the Closing Date (the "STI Equipment") (the STI
Land, the STI Buildings and the STI Equipment are referred to herein
collectively as the "STI Leased Property");
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(b) all merchandise, inventories, materials and supplies
used or intended for use or held for use in connection with and located on the
Closing Date at the STI Land (collectively, the "STI Inventory");
(c) all reservation and advance booking deposits and
guest security deposits (including interest, if any, accrued thereon) for guests
or future guests of the Existing HPT Hotels existing on the Closing Date (the
"STI Advance Payments");
(d) to the extent assignable, all of STI's right, title
and interest, if any, in and to all service contracts, vendor agreements,
maintenance agreements, utility contracts, cable service agreements, advertising
agreements, equipment leases and similar operating agreements relating to the
Existing HPT Hotels and in effect on the Closing Date (collectively, the "STI
Operating Agreements");
(e) to the extent assignable, all of STI's right, title
and interest, if any, in and to all licenses and permits for the sale and
on-premises consumption of liquor and other alcoholic beverages at the Existing
HPT Hotels in effect on the Closing Date; and
(f) all vehicles owned by STI and located at and used in
connection with the Existing HPT Hotels on the Closing Date.
2.2 Transfer of STI Assets. The sale, conveyance,
transfer, assignment and delivery of the STI Assets hereunder will be effected
by the delivery by STI to the Prime HPT Subsidiary at the Closing of the
Assignment and Assumption of Lease Agreement in the form of Exhibit E attached
hereto and incorporated herein by this reference, the Xxxx of Sale in the form
of Exhibit F attached hereto and incorporated herein by this reference, the
Assignment and Assumption of Contracts in the form of Exhibit G attached hereto
and incorporated herein by this reference and such other instruments of sale,
transfer, assignment and conveyance as STI and the Prime HPT Subsidiary shall
reasonably request in form and substance reasonably satisfactory to STI and the
Prime HPT Subsidiary (which shall include an assumption by the Prime HPT
Subsidiary of all liabilities of STI under the HPT Security Agreement and under
the HPT Assignment and Security Agreement which first accrue after the Closing
Date) (such documents being referred to herein as the "STI Transfer Documents").
The STI Assets shall be transferred free and clear of all Encumbrances, but
subject to the Permitted Exceptions which relate to the STI Assets and to the
STI Operating Agreements. From and after Closing, all liabilities of STI under
the STI Operating Agreements and under the instruments creating the Permitted
Exceptions which relate to the STI Assets and which first accrue after the
Closing Date shall be the responsibility of the Prime HPT Subsidiary.
2.3 HPT Lease Guaranty. As a condition to the transfer
of the STI Assets from STI to the Prime HPT Subsidiary, Prime will assume all
obligations of ShoLodge under the HPT Lease Guaranty which first accrue from and
after the Closing Date. ShoLodge will use its best efforts to obtain from HPT
and/or Landlord the return of the HPT Lease Guaranty Deposit. If ShoLodge is
unable to obtain the return of the HPT Lease Guaranty Deposit from HPT and/or
Landlord, Prime will pay to ShoLodge at Closing the sum of Fourteen Million and
No/100 Dollars
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($14,000,000.00) in cash or other immediately available funds in exchange for
the absolute assignment by ShoLodge to Prime of all right, title and interest of
ShoLodge in and to the HPT Lease Guaranty Deposit, so long as HPT and Landlord
agree or consent to such assignment and so long as the HPT Estoppel Certificate
acknowledges that (i) there are no existing defaults nor events which with the
giving of notice or the passage of time may become defaults by STI under the HPT
Lease nor any cause for HPT or Landlord to offset any obligation of STI under
the HPT Lease against the HPT Lease Guaranty Deposit, and (ii) as of the date of
the HPT Estoppel Certificate, the HPT Lease Security Deposit is Twenty-One
Million Two Hundred Eighty Thousand and No/100 Dollars ($21,280,000.00) and the
HPT Lease Guaranty Deposit is Fourteen Million and No/100 Dollars
($14,000,000.00).
2.4 Further Assurances. ShoLodge covenants that at the
Closing and from time to time after the Closing, it will, upon the reasonable
request of the Prime HPT Subsidiary or Prime, cause STI to execute, acknowledge
and deliver, and to do or cause to be done, executed, acknowledged and
delivered, all such additional documents or actions as may be reasonably
required by the Prime HPT Subsidiary or Prime, in order more effectively to
sell, convey, transfer, assign and deliver to the Prime HPT Subsidiary the STI
Assets in the manner described in Sections 2.1 and 2.2 above, and to carry out
the intention and purposes of this Article II and the transactions contemplated
hereby and to evidence and preserve the ownership by the Prime HPT Subsidiary of
the STI Assets, provided neither ShoLodge nor STI shall incur any liability,
cost or expense not contemplated by this Agreement. The provisions of this
Section 2.4 shall survive the Closing.
2.5 Xxxxxx Suites Name. The Prime HPT Subsidiary shall
be allowed to continue operating each of the Existing HPT Hotels as a "Xxxxxx
Suites" for a period of not more than nine (9) months from the Closing Date, at
which time all Existing HPT Hotels must be converted to another flag at the sole
cost and expense of the Prime HPT Subsidiary. The provisions of this Section 2.5
shall survive the Closing.
ARTICLE III
SALE OF ADDITIONAL HPT HOTELS
3.1 Sale of Additional Property to Landlord. ShoLodge
hereby agrees (i) to cause the Additional Hotel Subsidiaries, at the Closing and
in the manner specified in Section 3.3 of this Agreement, to sell, convey,
transfer, assign and deliver to Landlord all right, title and interest of the
Additional Hotel Subsidiaries in and to (A) that certain real property more
particularly described on Exhibit B attached hereto and incorporated herein by
this reference (the "Additional Land"); (B) any and all buildings, structures
and similar improvements erected on, over, upon or under the Additional Land on
the Closing Date (the "Additional Buildings"); and (C) all furniture, fixtures
and equipment located thereon or therein on the Closing Date (the "Additional
Equipment") (the Additional Land, the Additional Buildings and the Additional
Equipment are referred to herein collectively as the "Additional Property"); and
(ii) to use its best efforts to cause Landlord to lease the Additional Property
to the Prime HPT Subsidiary, and, if Landlord agrees to the same, Prime hereby
agrees to cause the Prime HPT Subsidiary, at the
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Closing and in the manner specified in Section 3.3 of this Agreement, to lease
the Additional Property from Landlord.
3.2 Sale of Additional Hotel Operating Assets. ShoLodge
hereby agrees to cause the Additional Hotel Subsidiaries, at the Closing and in
the manner specified in Section 3.4 of this Agreement, to sell, convey,
transfer, assign and deliver to the Prime HPT Subsidiary, and Prime hereby
agrees to cause the Prime HPT Subsidiary, at the Closing and in the manner
specified in Section 3.4 of this Agreement, to purchase from the Additional
Hotel Subsidiaries, all the following (collectively, the "Additional Hotel
Operating Assets"):
(a) all merchandise, inventories, materials and supplies
used or intended for use or held for use in connection with and located on the
Closing Date at the Additional Land (collectively, the "Additional Inventory");
(b) all reservation and advance booking deposits and
guest deposits (including interest, if any, accrued thereon) for guests or
future guests of the Additional HPT Hotels existing on the Closing Date (the
"Additional Advance Payments");
(c) to the extent assignable, all of the right, title
and interest of the Additional Hotel Subsidiaries, if any, in and to all service
contracts, vendor agreements, maintenance agreements, utility contracts, cable
service agreements, advertising agreements, equipment leases and similar
operating agreements relating to the Additional HPT Hotels and in effect on the
Closing Date (collectively, the "Additional Operating Agreements");
(d) to the extent assignable, all of the right, title
and interest of the Additional Hotel Subsidiaries, if any, in and to licenses
and permits for the sale and on-premises consumption of liquor and other
alcoholic beverages at the Additional HPT Hotels in effect on the Closing Date;
and
(e) all vehicles owned by the Additional Hotel
Subsidiaries and located at and used in connection with the Additional HPT
Hotels on the Closing Date.
Notwithstanding the foregoing, the obligation of the Prime HPT Subsidiary to
accept the transfer of any or all of the Additional Hotel Operating Assets shall
be conditioned upon the lease of the corresponding Additional Property by the
Prime HPT Subsidiary as contemplated in Sections 3.1 and 3.3.
3.3 Transfer of Additional Property. The sale,
conveyance, transfer, assignment and delivery of the Additional Property
hereunder will be effected by the delivery by the Additional Hotel Subsidiaries
to Landlord at the Closing of instruments of sale, transfer, assignment and
conveyance in form and substance reasonably satisfactory to the Additional Hotel
Subsidiaries and Landlord, and the lease of the Additional Property from
Landlord to the Prime HPT Subsidiary shall be effected either by an amendment to
the HPT Lease or by separate lease which contains terms and provisions
reasonably satisfactory to Prime, but Prime shall not have reason to object to
any terms and provisions which are in the HPT Lease unless an objection to
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such terms and provisions is made in accordance with the provisions of Section
12.1; provided, however, the minimum annual rent under such lease with respect
to the Additional Property shall be Four Million Three Hundred Sixty-Five
Thousand and No/100 Dollars ($4,365,000.00), allocated as set forth in Exhibit P
attached hereto and incorporated herein by this reference (such documents being
referred to herein as the "Additional Property Documents"). Notwithstanding the
foregoing, ShoLodge, by written notice to Prime, may adjust the minimum annual
rent for the Additional Property and the allocation thereof by up to ten percent
(10%) of the amount thereof per Hotel as long as (i) the aggregate minimum
annual rent for the Additional Property and the Texas Property does not exceed
Seven Million Four Hundred Twenty-Three Thousand and No/100 Dollars
($7,423,000.00), and (ii) the lease of the Additional Property and the Texas
Property shall have the same initial term and renewal options as provided in the
HPT Lease. The Additional Property shall be transferred to Landlord and leased
by the Prime HPT Subsidiary free and clear of all Encumbrances, but subject to
the Permitted Exceptions which relate to the Additional Property and to the
Additional Operating Agreements. From and after Closing, all liabilities of the
Additional Hotel Subsidiaries under the Additional Operating Agreements and
under the instruments creating the Permitted Exceptions which relate to the
Additional Property and which first accrue after the Closing Date shall be the
responsibility of the Prime HPT Subsidiary.
3.4 Transfer of Additional Hotel Operating Assets. The
sale, conveyance, transfer, assignment and delivery of the Additional Hotel
Operating Assets hereunder will be effected by the delivery by the Additional
Hotel Subsidiaries to the Prime HPT Subsidiary at the Closing of the Xxxx of
Sale in the form of Exhibit F attached hereto and incorporated herein by this
reference, the Assignment and Assumption of Contracts in the form of Exhibit G
attached hereto and incorporated herein by this reference and such other
instruments of sale, transfer, assignment and conveyance as an Additional Hotel
Subsidiary or the Prime HPT Subsidiary shall reasonably request in form and
substance reasonably satisfactory to the Additional Hotel Subsidiaries and the
Prime HPT Subsidiary (such documents being referred to herein as the "Additional
Hotel Operating Assets Transfer Documents"). The Additional Hotel Operating
Assets shall be transferred free and clear of all Encumbrances, but subject to
the Permitted Exceptions which relate to the Additional Hotel Operating Assets
and to the Additional Operating Agreements. From and after Closing, all
liabilities of the Additional Hotel Subsidiaries under the Additional Operating
Agreements and under the instruments creating the Permitted Exceptions which
relate to the Additional Hotel Operating Assets and which first accrue after the
Closing Date shall be the responsibility of the Prime HPT Subsidiary.
3.5 Prime Guaranty. Prime will guarantee all obligations
of the Prime HPT Subsidiary with respect to the lease of the Additional Property
pursuant to an amendment to the HPT Lease Guaranty or a separate instrument
which contains terms and provisions reasonably satisfactory to Prime, but Prime
shall not have reason to object to any terms and provisions which are in the HPT
Lease Guaranty unless an objection to such terms and provisions is made in
accordance with the provisions of Section 12.1; provided, however, that (i) the
liability of Prime thereunder shall be limited to an amount equal to minimum
annual rent for the Additional Property for one (1) year, and (ii) Prime shall
not be required to increase the HPT Lease Guaranty Deposit pursuant to the HPT
Lease Guaranty (as amended in connection with such transaction) or to deposit a
"Guaranty Deposit" in connection with a separate guaranty.
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3.6 Further Assurances. ShoLodge covenants that at the
Closing and from time to time after the Closing, it will, upon the reasonable
request of the Prime HPT Subsidiary or Prime, cause the Additional Hotel
Subsidiaries to execute, acknowledge and deliver, and to do or cause to be done,
executed, acknowledged and delivered, all such additional documents or actions
as may be reasonably required by the Prime HPT Subsidiary or Prime, in order
more effectively to sell, convey, transfer, assign and deliver to the Prime HPT
Subsidiary the Additional Hotel Operating Assets in the manner described in
Sections 3.2 and 3.4 above, and to carry out the intention and purposes of this
Article III and the transactions contemplated hereby and to evidence and
preserve the ownership by the Prime HPT Subsidiary of the Additional Hotel
Operating Assets and the lease by the Prime HPT Subsidiary of the Additional
Property, provided neither ShoLodge nor the Additional Hotel Subsidiaries shall
incur any liability, cost or expense not contemplated by this Agreement. The
provisions of this Section 3.6 shall survive the Closing.
3.7 Xxxxxx Suites Name. The Prime HPT Subsidiary shall
be allowed to continue operating each of the Additional HPT Hotels as a "Xxxxxx
Suites" for a period of not more than nine (9) months from the Closing Date, at
which time all Additional HPT Hotels must be converted to another flag at the
sole cost and expense of the Prime HPT Subsidiary. The provisions of this
Section 3.7 shall survive the Closing.
3.8 Advance HPT Closing. ShoLodge, at its option, may
proceed to close the transfer of the Additional Property from the Additional
Hotel Subsidiaries to Landlord as contemplated in part (i) of Section 3.1 prior
to the Closing. In such event, the Additional Property will be leased from
Landlord to STI either by an amendment to the HPT Lease or by separate lease
identical to the amendment or separate lease contemplated in Section 3.3 (but
with STI as the tenant), and at Closing the interest of STI in the Additional
Property will be transferred to the Prime HPT Subsidiary in the same manner as
the transfer of the STI Leased Assets contemplated in Article II, including,
without limitation, with the same further assurances as set forth in Section
2.4. Without limiting the generality of the foregoing, in such event, ShoLodge
agrees to cause STI to sell, convey, transfer, assign and deliver to the Prime
HPT Subsidiary, and Prime agrees to cause the Prime HPT Subsidiary, at the
Closing, to purchase from STI, all right, title and interest of STI in and to
the HPT Lease (as so amended) or the separate lease, as applicable, including
without limitation, the amount added to the "Retained Funds" under the HPT Lease
if so amended or the "Retained Funds" under such separate lease, as applicable,
and, except as limited in the last paragraph of Section 19.3, the "FF&E Reserve"
created pursuant to the HPT Lease (as so amended) or the separate lease, as
applicable, and in and to the Additional Property, such sale, conveyance,
transfer, assignment and delivery of the Additional Property to be effected by
the delivery by STI to the Prime HPT Subsidiary at the Closing of the Assignment
and Assumption of Lease Agreement in the form of Exhibit E attached hereto and
incorporated herein by this reference. Further, in such event, any guaranty by
ShoLodge of the lease to STI of the Additional Property (whether by virtue of an
amendment to the HPT Lease Guaranty or by separate instrument) shall be treated
like the HPT Lease Guaranty as described in Section 2.3 to the extent any such
guaranty by ShoLodge is consistent with Section 3.5. At least ten (10) days
prior to execution, ShoLodge shall deliver to Prime a copy of the amendment to
the HPT Lease or separate lease and a copy of the amendment to the HPT Lease
Guaranty or separate instrument as contemplated in this Section 3.8 for Prime's
written approval, such approval not to be
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unreasonably withheld, delayed or conditioned. In no event shall ShoLodge or any
ShoLodge Subsidiary execute any such amendment to the HPT Lease or separate
lease without Prime's prior written approval.
3.9 Direct Lease. ShoLodge, at its option, may cause the
Additional Property (or one (1) or more, but less than all, of the Additional
HPT Hotels and the portion of the Additional Land, the Additional Buildings and
the Additional Equipment relating thereto) to be leased to the Prime Texas
Subsidiary by the Additional Hotel Subsidiaries (or the appropriate Additional
Hotel Subsidiary or Subsidiaries, if only a portion of the Additional Property
is so leased) in the same manner as the Texas Property is leased to the Prime
Texas Subsidiary pursuant to Article IV, but with the terms of such lease being
consistent with Section 3.3. In such event, all applicable references to the
Texas Property in this Agreement shall be deemed to include the Additional
Property (or such Additional HPT Hotel or such Additional HPT Hotels and the
portion of the Additional Land, the Additional Buildings and the Additional
Equipment relating thereto), and all applicable references to Southeast in this
Agreement shall be deemed to include the appropriate Additional Hotel Subsidiary
or Subsidiaries.
ARTICLE IV
SALE OF TEXAS HOTELS
4.1 Lease of Texas Property. ShoLodge hereby agrees to
cause Southeast, at the Closing and in the manner specified in Section 4.3 of
this Agreement, to lease to the Prime Texas Subsidiary, and Prime hereby agrees
to cause the Prime Texas Subsidiary, at the Closing and in the manner specified
in Section 4.3 of this Agreement, to lease from Southeast, (A) that certain real
property more particularly described on Exhibit C attached hereto and
incorporated herein by this reference (the "Texas Land"); (B) any and all
buildings, structures and similar improvements erected on, over, upon or under
the Texas Land on the Closing Date (the "Texas Buildings"); and (C) all
furniture, fixtures and equipment located thereon or therein on the Closing Date
(the "Texas Equipment") (the Texas Land, the Texas Buildings and the Texas
Equipment are referred to herein collectively as the "Texas Property").
4.2 Sale of Texas Hotel Operating Assets. ShoLodge
hereby agrees to cause Southeast, at the Closing and in the manner specified in
Section 4.4 of this Agreement, to sell, convey, transfer, assign and deliver to
the Prime Texas Subsidiary, and Prime hereby agrees to cause the Prime Texas
Subsidiary, at the Closing and in the manner specified in Section 4.4 of this
Agreement, to purchase from Southeast, all the following (collectively, the
"Texas Hotel Operating Assets"):
(a) all merchandise, inventories, materials and supplies
used or intended for use or held for use in connection with and located on the
Closing Date at the Texas Land (collectively, the "Texas Inventory");
(b) all reservation and advance booking deposits and
guest deposits (including interest, if any, accrued thereon) for guests or
future guests of the Texas Hotels existing on the Closing Date (the "Texas
Advance Payments");
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(c) to the extent assignable, all of the right, title
and interest of Southeast, if any, in and to all service contracts, vendor
agreements, maintenance agreements, utility contracts, cable service agreements,
advertising agreements, equipment leases and similar operating agreements
relating to the Texas Hotels and in effect on the Closing Date (collectively,
the "Texas Operating Agreements");
(d) to the extent assignable, all of the right, title
and interest of Southeast, if any, in and to licenses and permits for the sale
and on-premises consumption of liquor and other alcoholic beverages at the Texas
Hotels in effect on the Closing Date; and
(e) all vehicles owned by Southeast and located at and
used in connection with the Texas Hotels on the Closing Date.
Notwithstanding the foregoing, the obligation of the Prime Texas Subsidiary to
accept the transfer of any or all of the Texas Hotel Operating Assets shall be
conditioned upon the lease of the Texas Property by the Prime Texas Subsidiary
as contemplated in Sections 4.1 and 4.3.
4.3 Lease of Texas Property. The lease of the Texas
Property from Southeast to the Prime Texas Subsidiary shall be effected by lease
(the "Texas Lease") which contains terms and provisions reasonably satisfactory
to Prime, but Prime shall not have reason to object to any terms and provisions
which are in the HPT Lease unless an objection to such terms and provisions is
made in accordance with the provisions of Section 12.1; provided, however, (i)
the Prime Texas Subsidiary shall be deemed to have deposited "Retained Funds" in
an amount equal to the same multiple of the minimum annual rent under such lease
with respect to the Texas Property as is required by Landlord with respect to
the Additional Property pursuant to an amendment to the HPT Lease or a separate
lease as contemplated in Section 3.3, and (ii) the minimum annual rent under
such lease with respect to the Texas Property shall be Three Million Fifty-Eight
Thousand and No/100 Dollars ($3,058,000.00), allocated as set forth in Exhibit P
attached hereto and incorporated herein by this reference. Notwithstanding the
foregoing, ShoLodge, by written notice to Prime, may adjust the minimum annual
rent for the Texas Property and the allocation thereof by up to ten percent
(10%) of the amount thereof per Hotel as long as (i) the aggregate minimum
annual rent for the Additional Property and the Texas Property does not exceed
Seven Million Four Hundred Twenty-Three Thousand and No/100 Dollars
($7,423,000.00), and (ii) the lease of the Additional Property and the Texas
Property shall have the same initial term and renewal options as provided in the
HPT Lease. The obligations of the Prime Texas Subsidiary under the Texas Lease
shall be secured by a security interest in the personal property located at the
Texas Real Property and in the "FF&E Reserve" created pursuant to the Texas
Lease and by a pledge of the stock of the Prime Texas Subsidiary pursuant to
documents which contain terms and provisions reasonably satisfactory to Prime,
but Prime shall not have reason to object to any terms and provisions which are
in the HPT Security Agreement, the HPT Assignment and Security Agreement or the
HPT Stock Pledge unless an objection to such terms and provisions is made in
accordance with the provisions of Section 12.1. The Texas Property shall be
leased by the Prime Texas Subsidiary free and clear of all Encumbrances, but
subject to the Permitted Exceptions which relate to the Texas Property and to
the Texas Operating Agreements. From and after Closing, all liabilities of
Southeast under the Texas Operating Agreements and under the
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instruments creating the Permitted Exceptions which relate to the Texas Property
and which first accrue after the Closing Date shall be the responsibility of the
Prime Texas Subsidiary. The obligation of Southeast to deliver the "Retained
Funds" upon the expiration of the Texas Lease pursuant to the terms thereof
shall be guaranteed by ShoLodge pursuant to an instrument in form and substance
reasonably satisfactory to Prime and ShoLodge, but such undertaking by ShoLodge
shall terminate upon the transfer of the Texas Property to HPT or an Affiliate
of HPT or to another Person whose financial condition is equivalent to or better
than that of HPT on the date of such transfer, provided that such transferee has
assumed the obligation of Southeast to deliver the "Retained Funds" upon the
expiration of the Texas Lease.
4.4 Transfer of Texas Hotel Operating Assets. The sale,
conveyance, transfer, assignment and delivery of the Texas Hotel Operating
Assets hereunder will be effected by the delivery by Southeast to the Prime
Texas Subsidiary at the Closing of the Xxxx of Sale in the form of Exhibit F
attached hereto and incorporated herein by this reference, the Assignment and
Assumption of Contracts in the form of Exhibit G attached hereto and
incorporated herein by this reference and such other instruments of sale,
transfer, assignment and conveyance as Southeast or the Prime Texas Subsidiary
shall reasonably request in form and substance reasonably satisfactory to
Southeast and the Prime Texas Subsidiary (such documents being referred to
herein as the "Texas Hotel Operating Assets Transfer Documents"). The Texas
Hotel Operating Assets shall be transferred free and clear of all Encumbrances,
but subject to the Permitted Exceptions which relate to the Texas Hotel
Operating Assets and to the Texas Operating Agreements. From and after Closing,
all liabilities of Southeast under the Texas Operating Agreements and under the
instruments creating the Permitted Exceptions which relate to the Texas Hotel
Operating Assets and which first accrue after the Closing Date shall be the
responsibility of the Prime Texas Subsidiary.
4.5 Prime Guaranty. Prime will guarantee all obligations
of the Prime Texas Subsidiary with respect to the lease of the Texas Property
pursuant to an instrument which contains terms and provisions reasonably
satisfactory to Prime, but Prime shall not have reason to object to any terms
and provisions which are in the HPT Lease Guaranty unless an objection to such
terms and provisions is made in accordance with the provisions of Section 12.1;
provided, however, that (i) the liability of Prime thereunder shall be limited
to an amount equal to minimum annual rent for the Texas Property for one (1)
year, and (ii) Prime shall not be required to deposit a "Guaranty Deposit" in
connection with such guaranty.
4.6 Further Assurances. ShoLodge covenants that at the
Closing and from time to time after the Closing, it will, upon the reasonable
request of the Prime Texas Subsidiary or Prime, cause Southeast to execute,
acknowledge and deliver, and to do or cause to be done, executed, acknowledged
and delivered, all such additional documents or actions as may be reasonably
required by the Prime Texas Subsidiary or Prime, in order more effectively to
sell, convey, transfer, assign and deliver to the Prime Texas Subsidiary the
Texas Hotel Operating Assets in the manner described in Sections 4.2 and 4.4
above, and to carry out the intention and purposes of this Article IV and the
transactions contemplated hereby and to evidence and preserve the ownership by
the Prime Texas Subsidiary of the Texas Hotel Operating Assets and the lease by
the Prime Texas Subsidiary of the Texas Property, provided neither ShoLodge nor
Southeast
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shall incur any liability, cost or expense not contemplated by this Agreement.
The provisions of this Section 4.6 shall survive the Closing.
4.7 Xxxxxx Suites Name. The Prime Texas Subsidiary shall
be allowed to continue operating each of the Texas Hotels as a "Xxxxxx Suites"
for a period of not more than nine (9) months from the Closing Date, at which
time all Texas Hotels must be converted to another flag at the sole cost and
expense of the Prime Texas Subsidiary. The provisions of this Section 4.7 shall
survive the Closing.
4.8 AmeriSuites Name. In the event that the Texas Lease
is terminated prior to the expiration of the term thereof due to a breach or
default by the Prime Texas Subsidiary, Prime and Southeast shall enter into a
license or franchise agreement whereby Southeast is given the right to operate
the Texas Hotels as "AmeriSuites" hotels, which agreement shall be the standard
license or franchise agreement, if any, then used, or most recently used if a
standard license or franchise agreement is not then being used, by Prime to
franchise "AmeriSuites" hotels, but with (i) a minimum term of ten (10) years,
(ii) a royalty equal to one-half (1/2) of the standard royalty for "AmeriSuites"
franchisees (provided Southeast shall pay full marketing and reservation fees),
and (iii) no "initial" fee or "license" fee due upon signing such agreement. The
provisions of this Section 4.8 shall survive the Closing.
4.9 HPT Lease. ShoLodge, at its option, may cause the
Texas Property (or one (1) or more, but less than all, of the Texas Hotels and
the portion of the Texas Land, the Texas Buildings and the Texas Equipment
relating thereto) to be leased to the Prime HPT Subsidiary by Landlord as if the
Texas Property (or the portion thereof) were Additional Property, but with the
terms of such lease being consistent with Section 4.3. In such event, all
applicable references to the Additional Property in this Agreement shall be
deemed to include the Texas Property (or such Texas Hotel or Texas Hotels and
the portion of the Texas Land, the Texas Buildings and the Texas Equipment
relating thereto), and all applicable references to the Additional Hotel
Subsidiaries in this Agreement shall be deemed to include Southeast. The failure
of Landlord to lease the Texas Property (or portion thereof) to the Prime HPT
Subsidiary, however, shall not constitute a condition precedent to the
obligation of ShoLodge to close pursuant to Section 10.6.
ARTICLE V
SALE OF DEVELOPMENT SITES
5.1 Sale of Development Sites. ShoLodge hereby agrees to
cause the Development Site Subsidiaries, at the Closing and in the manner
specified in Section 5.2 of this Agreement, to sell, convey, transfer, assign
and deliver to Prime, and Prime hereby agrees, at the Closing and in the manner
specified in Section 5.2 of this Agreement, to purchase from the Development
Site Subsidiaries, all right, title and interest of the Development Site
Subsidiaries in and to that certain real property more particularly described on
Exhibit D attached hereto and incorporated herein by this reference (the
"Development Sites").
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5.2 Transfer of Development Sites. The sale, conveyance,
transfer, assignment and delivery of the Development Sites hereunder will be
effected by the delivery by the Development Site Subsidiaries to Prime at the
Closing of a special warranty deed for each site in the form of Exhibit I
attached hereto and incorporated herein by this reference as to the Mt. Laurel,
New Jersey site and in the form of Exhibit J attached hereto and incorporated
herein by this reference as to the Fairfax County, Virginia site (such deeds
being referred to herein as the "Development Site Transfer Documents"). The
Development Sites shall be transferred free and clear of all Encumbrances, but
subject to the Permitted Exceptions which relate to the Development Sites. From
and after Closing, all liabilities of the Development Site Subsidiaries under
the instruments creating the Permitted Exceptions which relate to the
Development Sites and which first accrue after the Closing Date shall be the
responsibility of Prime.
ARTICLE VI
CONSIDERATION
6.1 Purchase Price. The total purchase price for the STI
Assets, the Additional Hotel Operating Assets, the Texas Hotel Operating Assets
and, if applicable, the interest of STI in the Additional Property and the
interest of Southeast in the Texas Property shall be Two Million and No/100
Dollars ($2,000,000.00) (the "Purchase Price"). Prime shall pay or cause a Prime
Subsidiary, as applicable, to pay the Purchase Price on the Closing Date as
follows:
(a) Three Hundred Fifty-Two Thousand Eight Hundred Eighty
and No/100 Dollars ($352,880.00) in cash or other
immediately available funds, to an account or
accounts designated by ShoLodge prior to Closing; and
(b) One Million Six Hundred Forty-Seven Thousand One
Hundred Twenty and No/100 Dollars ($1,647,120.00) by
the delivery to ShoLodge or to such other Person as
designated by ShoLodge of ShoLodge debt securities
which are held currently by Prime or an Affiliate of
Prime as follows:
(1) Two Hundred Thirty-Eight Thousand and No/100
Dollars ($238,000.00) face value of 9 3/4%
senior subordinated notes at 68% of face
value;
(2) Four Hundred Sixty-One Thousand and No/100
Dollars ($461,000.00) face value of 9.55%
senior subordinated notes at 68% of face
value; and
(3) One Million Eight Hundred Sixty Thousand and
No/100 Dollars ($1,860,000.00) face value of
7 1/2% convertible subordinated debentures
at 63% of face value.
The Purchase Price shall be allocated among the STI Assets, the Additional
Property Operating Assets, the Texas Property Operating Assets and, if
applicable, the interest of STI in the
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Additional Property and the interest of Southeast in the Texas Property, as set
forth on Exhibit N attached hereto and made a part hereof.
6.2 Development Site Purchase Price. The total purchase
price for the Development Sites shall be Three Million Three Hundred Nineteen
Thousand Nine Hundred Thirty and No/100 Dollars ($3,319,930.00) (the
"Development Site Purchase Price"), which amount shall be payable by Prime to
the Development Site Subsidiaries in cash or other immediately available funds
at Closing, One Million Six Hundred Ninety-Seven Thousand Five Hundred Five and
No/100 Dollars ($1,697,505.00) for the Mt. Laurel, New Jersey site and One
Million Six Hundred Twenty-Two Thousand Four Hundred Twenty-Five and No/100
Dollars ($1,622,425.00) for the Fairfax County, Virginia site.
ARTICLE VII
CONSTRUCTION CONTRACT
7.1 Construction Contract. At the Closing, Prime shall
enter into, and ShoLodge shall cause Xxxxx to enter into, an agreement (the
"Construction Contract") in form and substance reasonably satisfactory to Prime
and Xxxxx whereby Xxxxx will agree to construct for Prime, and Prime will engage
Xxxxx to construct, an AmeriSuites hotel on each Development Site. The
Construction Contract shall provide for a fixed price of Seventy-Six Thousand
Five Hundred and No/100 Dollars ($76,500.00) per room (including land, building
and furniture, fixtures and equipment). The parties acknowledge that the fixed
price set forth in the preceding sentence includes the cost of acquisition of
the Development Sites, and, thus, the Development Site Purchase Price shall be
deducted from the fixed price otherwise payable to Xxxxx during the course of
construction (as it will already have been paid to the Development Site
Subsidiaries at Closing). Disbursements to Xxxxx of the fixed price less the
Development Site Purchase Price will be paid by Prime monthly during
construction based upon the percentage of completion, subject to retainage of
ten percent (10%). The Construction Contract shall further provide that Xxxxx
shall construct on each Development Site a hotel building in accordance with the
plans and specifications which have been filed by ShoLodge, Xxxxx or the
applicable Development Site Subsidiary with the local building code officials,
but with finishes and signage in accordance with the plans and specifications
described on Exhibit K attached hereto and incorporated herein by this
reference, all in accordance with all applicable laws, regulations, statutes and
orders. The parties acknowledge that the Construction Contract shall contain a
scheduled completion date, together with delay damages, among other terms, which
terms shall be negotiated during the Due Diligence Period. The provisions of
this Section 7.1 shall survive the Closing, but any conflict between the terms
of this Section 7.1 and the terms of the Construction Contract shall be governed
by the Construction Contract.
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ARTICLE VIII
RESERVATION AGREEMENT
8.1 Reservation Agreement. At the Closing, Prime and
ShoLodge shall enter into an agreement (the "Reservation Agreement") in form and
substance reasonably satisfactory to Prime and ShoLodge whereby ShoLodge will
agree to provide to Prime, and Prime will engage ShoLodge to provide, exclusive
reservation services for all proprietary brand hotels owned, operated or
franchised by Prime or any Affiliate of Prime (including the Xxxxxx Suites
hotels acquired by a Prime Subsidiary as contemplated herein, but such Xxxxxx
Suites hotels may be removed from the ShoLodge reservation system upon
conversion to the AmeriSuites brand in Prime's sole discretion if the
Reservation Agreement has not then become effective as described in subparagraph
(d) below). The Reservation Agreement, among other provisions, will contain the
following terms:
(a) The term of the Reservation Agreement will be for
five (5) years from the date the Reservation
Agreement becomes effective as described in
subparagraph (d) below and ShoLodge begins providing
reservation services thereunder for all or all but an
insignificant number of such proprietary brand hotels
owned, operated or franchised by Prime or any
Affiliate of Prime, but Prime will have a right to
terminate the Reservation Agreement without penalty
at any time upon one hundred twenty (120) days prior
written notice to ShoLodge, such notice not to be
given earlier than the date two (2) years after the
Reservation Agreement becomes effective as described
in subparagraph (d) below and ShoLodge begins
providing reservation services thereunder for all or
all but an insignificant number of such proprietary
brand hotels owned, operated or franchised by Prime
or any Affiliate of Prime; provided, however, in the
event any of the Hotels are removed from the ShoLodge
reservation system, such two (2) year period during
which notice of termination may not be given shall be
extended for a period equal to the shorter of (i) the
time one (1) or more of the Xxxxxx Suites hotels
acquired by a Prime Subsidiary as contemplated herein
is not on the ShoLodge reservation system, or (ii)
three (3) months.
(b) The Reservation Agreement will provide that Prime
will pay a monthly fee to ShoLodge in the amount of
one percent (1%) of gross room revenues and will pay
customary pass through costs such as commissions and
global distribution system fees.
(c) The Reservation Agreement will provide that Prime
will have the right of first offer and the right of
first refusal with respect to any proposed sale by
ShoLodge of the reservation system during the term of
the Reservation Agreement.
(d) The Reservation Agreement shall not become effective
until the day after (i) ShoLodge has notified Prime
that its reservation system complies with
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the software and hardware requirements set forth on
Exhibit Q hereto and incorporated herein by this
reference and (ii) Prime has confirmed in writing
that the ShoLodge reservation system does so comply,
provided that Prime shall have no more than a ninety
(90) day period following ShoLodge's notice to test
the system and confirm such compliance with whatever
tests Prime desires, in Prime's reasonable
discretion.
(e) The effective date of the Reservation Agreement must
occur within four hundred forty-five (445) days after
the date of execution of the Reservation Agreement by
ShoLodge and Prime or Prime shall have the option to
terminate the Reservation Agreement effective upon
written notice thereof to ShoLodge.
(f) The Reservation Agreement shall contain performance
standards together with termination rights related
thereto.
(g) The Reservation Agreement will provide that Prime
shall have the exclusive right to use the Xxxxxx
Suites 1-800 number (1-800-74-SUITE) for the one (1)
year period commencing on the initial Closing Date
under this Agreement, after which time the right of
Prime to use such 1-800 number shall terminate;
provided, however, during such one (1) year period,
Prime shall cause all calls received on such 1-800
number which relate to a Hotel then operated by
ShoLodge or an Affiliate of ShoLodge to be forwarded
to the ShoLodge reservation system. ShoLodge shall
reimburse to Prime the actual out of pocket cost to
Prime to transfer such calls to the ShoLodge
reservation system, not to exceed One Dollar ($1.00)
per transferred call.
8.2 Termination Fee. Prime shall pay any required
termination fees to cancel its current agreement for reservation services.
8.3 Survival. The provisions of Article VIII shall
survive the Closing, but any conflict between the terms of Article VIII and the
terms of the Reservation Agreement shall be governed by the Reservation
Agreement.
ARTICLE IX
PRICE ADJUSTMENTS; INITIAL CONSIDERATION
9.1 Closing Adjustments.
(a) The cash portion of the Purchase Price described in
Section 6.1(a) and the Development Site Purchase Price, as applicable, shall be
increased, by:
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(i) any cash on hand at the Hotels when a Prime
Subsidiary takes possession (any such cash shall be counted by representatives
of ShoLodge and Prime on the Closing Date);
(ii) any revenue generated by the operation of
the Hotels through and including the night before the Closing Date arising from
accounts receivable with respect to guests of the Hotels then in occupancy which
in the normal course of business would be received after the Closing (the amount
of such revenue to be determined by representatives of ShoLodge and Prime on the
Closing Date);
(iii) amounts paid prior to Closing for any ad
valorem real estate taxes and assessments relating to the Real Property on
account of any period from and after 12:01 a.m. of the Closing Date;
(iv) personal property taxes, gross receipts
taxes, sales taxes, excise taxes, hotel occupancy taxes or other similar taxes
(but excluding income and franchise taxes), if any, relating to the Assets paid
prior to Closing on account of any period from and after 12:01 a.m. of the
Closing Date;
(v) amounts paid prior to Closing under any
Operating Agreement, the HPT Lease (including, if applicable, as amended, or
pursuant to the separate lease contemplated in Section 3.8) or any instrument
creating a Permitted Exception on account of any period from and after 12:01
a.m. of the Closing Date;
(vi) accrued but unpaid interest earnings on the
HPT Lease Guaranty Deposit for any period prior to 12:01 a.m. of the Closing
Date (if such HPT Lease Guaranty Deposit is not returned from HPT and/or
Landlord to ShoLodge or STI);
(vii) any utility deposits relating to the Assets
which are transferred and remain on deposit after Closing for the benefit of a
Prime Subsidiary or Prime, as applicable; and
(viii) any other charges or fees customarily
prorated by a credit to the seller in the jurisdiction in which the Real
Property is situated, on customary terms.
(b) The cash portion of the Purchase Price described in
Section 6.1(a) and the Development Site Purchase Price, as applicable, shall be
decreased, by:
(i) any Advance Payments retained by STI, an
Additional Hotel Subsidiary, or Southeast, as applicable;
(ii) unpaid ad valorem real estate taxes and
assessments relating to the Real Property on account of any period prior to
12:01 a.m. of the Closing Date;
(iii) unpaid personal property taxes, gross
receipts taxes, sales taxes, excise taxes, hotel occupancy taxes or other
similar taxes (but excluding income and franchise
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taxes), if any, relating to the Assets payable on account of any period prior to
12:01 a.m. of the Closing Date;
(iv) unpaid amounts payable under any Operating
Agreement (ShoLodge shall use its best efforts to cause all amounts due under
the Operating Agreements to be paid to the Closing Date), the HPT Lease
(including, if applicable, as amended, or pursuant to the separate lease
contemplated in Section 3.8) or any instrument creating a Permitted Exception on
account of any period prior to 12:01 a.m. of the Closing Date (for this purpose
"Additional Rent" (as defined in the HPT Lease) shall be calculated based on the
"Total Hotel Sales" (as defined in the HPT Lease) for the current year to the
Closing Date compared to "Base Total Hotel Sales" (as defined in the HPT Lease)
for the similar period of the applicable "Base Year" (as defined in the HPT
Lease)); and
(v) unpaid rates, rents and charges for sewer,
water, gas, electricity, telephone and other utility services provided to the
Hotels for any period prior to 12:01 a.m. of the Closing Date (ShoLodge shall
use commercially reasonable efforts to cause meters to be read as of the Closing
Date);
(vi) accrued but unpaid benefits due to employees
of the Hotels who are hired by Prime or a Prime Subsidiary, as applicable, which
are not paid by STI, ShoLodge or an Affiliate of ShoLodge directly to such
employees upon termination of employment; and
(vii) any other charges or fees customarily
prorated by a charge to the seller in the jurisdiction in which the Real
Property is situated, on customary terms.
(c) The intent of the foregoing is to credit or charge,
as the case may be, STI, the Additional Hotel Subsidiaries, Southeast or the
Development Subsidiaries, as applicable, with all revenues and expenses
respecting the Assets which are attributable to operations before the Closing
Date and to credit or charge, as the case may be, Prime or a Prime Subsidiary,
as applicable, with all such revenues and expenses attributable to operations on
and after the Closing Date. At Closing, STI, the Additional Hotel Subsidiaries
and Southeast, as applicable, shall provide the Prime HPT Subsidiary and the
Prime Texas Subsidiary, as applicable, with a list setting forth advance guest
bookings, conventions, meetings and any other booking commitments for the period
from and after the Closing Date.
9.2 Post-Closing Adjustments. If at any time following
the Closing Date, the calculation of an item listed in Section 9.1 above shall
prove to be incorrect or an item is discovered which should have been included
in the adjustments but which was omitted therefrom, the Person in whose favor
the error or omission was made shall pay the sum necessary to correct such error
or omission to the Person entitled to such payment promptly following receipt of
proof of such error or omission from such Person entitled to such payment,
provided that such proof is delivered to the Person from whom payment is
requested within thirty (30) days of the Closing Date. The adjustment of
"Additional Rent" pursuant to Section 9.1(b)(iv), however, shall be final and
shall not be further adjusted regardless of the actual amount of "Additional
Rent" for the year in which the Closing Date occurs.
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If the amount of real estate taxes or assessments for the
current year is not known on the Closing Date, then the taxes or assessments
shall be apportioned on the basis of the taxes assessed for the preceding year
or some reasonable assessment agreed by the parties if a Hotel is in its first
year of operation. Notwithstanding the foregoing thirty (30) day limitation, the
amounts as computed shall be adjusted when the final tax assessment and tax
rates are determined.
Subject to the limitations set forth herein, the provisions of
this Section 9.2 shall survive the Closing.
9.3 Initial Consideration. On the date of execution of
this Agreement by Prime, Prime will deliver to ShoLodge a check in the amount of
One Hundred and No/100 Dollars ($100.00) as initial consideration for any option
granted in this Agreement (the "Initial Consideration"). The Initial
Consideration is non-refundable and shall be retained by ShoLodge regardless of
whether or not this Agreement is terminated pursuant to a right to do so
hereunder.
ARTICLE X
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SHOLODGE
Each and every obligation of ShoLodge and the ShoLodge
Subsidiaries to be performed hereunder shall be subject to the satisfaction,
prior to or on the date on which performance is due, of the following express
conditions precedent:
10.1 Compliance with Agreement. Prime and the Prime
Subsidiaries shall have performed and complied in all respects with all of their
obligations under this Agreement which are to have been performed or complied
with by Prime or the Prime Subsidiaries, as applicable, as of such date.
10.2 Representations and Warranties. The representations
and warranties made by Prime in this Agreement shall have been true and correct
in all material respects and such representations and warranties shall be true
and correct in all material respects as of the Closing Date with the same force
and effect as though such representations and warranties had been made on the
Closing Date.
10.3 Proceedings and Instruments Satisfactory. All
proceedings, corporate or other, to be taken by Prime or a Prime Subsidiary, as
applicable, in connection with the performance of this Agreement and all Closing
Documents to be executed by Prime and/or a Prime Subsidiary shall be complete to
the reasonable satisfaction of ShoLodge and ShoLodge's attorneys, and Prime and
the Prime Subsidiaries, as applicable, shall have made available to ShoLodge for
examination the originals or true and correct copies of all documents relating
to such proceedings which ShoLodge may reasonably request in connection with the
transactions contemplated by this Agreement.
10.4 Deliveries at Closing. Prime and the Prime
Subsidiaries, as applicable, shall have delivered or caused to be delivered to
ShoLodge the Closing Documents to be executed by
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Prime and/or a Prime Subsidiary, each properly executed, acknowledged or
notarized, if appropriate, and dated as of the Closing Date or such other date
as the parties shall agree, including, without limitation, the Construction
Contract (in form and substance reasonably satisfactory to Xxxxx and including,
without limitation, those provisions set forth in Section 7.1) and the
Reservation Agreement (in form and substance reasonably satisfactory to ShoLodge
and including, without limitation, those provisions set forth in Section 8.1).
10.5 Other Documents. Prime and the Prime Subsidiaries,
as applicable, shall have delivered to ShoLodge or caused to be delivered to
ShoLodge such certificates and documents of officers of Prime and the Prime
Subsidiaries, as applicable, and public officials as shall be reasonably
requested by ShoLodge's counsel to establish the existence and good standing of
Prime and the Prime Subsidiaries, as applicable, and the due authorization and
enforceability of this Agreement and the Closing Documents to be executed by
Prime and/or a Prime Subsidiary, and the authorization of the transactions and
performance contemplated hereby and thereby by Prime and the Prime Subsidiaries.
10.6 HPT Closing. All transactions with HPT and Landlord
as contemplated in this Agreement, including, without limitation, the agreement
or consent of Landlord and HPT to the assignment by STI to the Prime HPT
Subsidiary of all of STI's right, title and interest in and to the HPT Lease,
the amendment of the HPT Lease and related documents to reflect the transfer of
the STI Leased Property and, if applicable, the Additional Property (as
contemplated in Section 3.8) from STI to the Prime HPT Subsidiary and the change
of the brand from "Xxxxxx Suites" to "AmeriSuites", the release by Landlord of
STI of and from any liability under the HPT Lease and related documents
(including, without limitation, any separate lease as contemplated in Section
3.8), the substitution of a pledge of the stock of the Prime HPT Subsidiary for
the existing pledge of the stock of STI to Landlord, the release by HPT and
Landlord of ShoLodge of and from any liabilities under the HPT Lease Guaranty
and, if applicable, any separate guaranty (as contemplated in Section 3.8), if
applicable, the agreement or consent of HPT and Landlord to the absolute
assignment by ShoLodge to Prime of all of ShoLodge's right, title and interest
in and to the HPT Lease Guaranty Deposit, the transfer and conveyance of the
Additional Property from the Additional Hotel Subsidiaries to Landlord and, if
applicable, the removal of any Hotel from the HPT Lease or a separate lease (as
contemplated in Section 3.8) to accomplish a partial termination of this
Agreement pursuant to Section 13.3 or Section 13.4 (with minimum annual rent
reduced by the applicable amount set forth in Exhibit C to the HPT Lease or set
forth in Exhibit P attached hereto and incorporated herein by this reference, as
applicable), shall have closed pursuant to documents in form and substance
reasonably satisfactory to ShoLodge. Further, the HPT Estoppel Certificate shall
acknowledge that (i) there are no existing defaults nor events which with the
giving of notice or the passage of time may become defaults by STI under the HPT
Lease nor any cause for HPT or Landlord to offset any obligation of STI under
the HPT Lease against the HPT Lease Guaranty Deposit, and (ii) as of the date of
the HPT Estoppel Certificate the HPT Lease Security Deposit is Twenty-One
Million Two Hundred Eighty Thousand and No/100 Dollars ($21,280,000.00) and the
HPT Lease Guaranty Deposit is Fourteen Million and No/100 Dollars
($14,000,000.00).
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10.7 Opinions of Counsel. ShoLodge shall have received a
written opinion from counsel to Prime regarding the organization and authority
of Prime and the Prime Subsidiaries, the due execution and delivery of this
Agreement and the Closing Documents by Prime and the Prime Subsidiaries, as
applicable, and such other matters with respect to the transactions contemplated
by this Agreement as ShoLodge may reasonably require, which opinion may have
customary and reasonable assumptions and qualifications.
In the event that the conditions to the performance by
ShoLodge and the ShoLodge Subsidiaries have not occurred by the Closing Date,
ShoLodge may terminate this Agreement by delivering written notice to Prime.
Thereafter, Prime and ShoLodge shall be released and relieved of all further
obligations, liabilities and claims hereunder, other than the performance by
each party of its Post Termination Obligations, and, as to a failure or refusal
by Prime to perform Prime's obligations hereunder, other than the right of
ShoLodge to pursue a suit for damages as described in Section 19.5(b)(i).
ARTICLE XI
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PRIME
Each and every obligation of Prime and the Prime Subsidiaries
to be performed hereunder shall be subject to the satisfaction prior to or on
the Closing Date of the following express conditions precedent:
11.1 Compliance with Agreement. ShoLodge and the ShoLodge
Subsidiaries shall have performed and complied in all respects with all of their
obligations under this Agreement which are to have been performed or complied
with by ShoLodge or the ShoLodge Subsidiaries, as applicable, prior to or on
such Closing Date.
11.2 Representations and Warranties. The representations
and warranties made by ShoLodge in this Agreement shall have been true and
correct in all material respects and such representations and warranties shall
be true and correct in all material respects as of the Closing Date with the
same force and effect as though such representations and warranties had been
made on the Closing Date.
11.3 Proceedings and Instruments Satisfactory. All
proceedings, corporate or other, to be taken by ShoLodge or a ShoLodge
Subsidiary, as applicable, in connection with the performance of this Agreement
and all Closing Documents to be executed by ShoLodge and/or a ShoLodge
Subsidiary shall be complete to the reasonable satisfaction of Prime and Prime's
attorneys, and ShoLodge and the ShoLodge Subsidiaries, as applicable, shall have
made available to Prime for examination the originals or true and correct copies
of all documents relating to such proceedings which Prime may reasonably request
in connection with the transactions contemplated by this Agreement.
11.4 Deliveries at Closing. ShoLodge and the ShoLodge
Subsidiaries, as applicable, shall have delivered or caused to be delivered to
Prime the Closing Documents to be
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executed by ShoLodge and/or a ShoLodge Subsidiary, each properly executed,
acknowledged or notarized, if appropriate, and dated as of the Closing Date or
such other date as the parties shall agree, including, without limitation, the
Construction Contract (in form and substance reasonably satisfactory to Prime
and including, without limitation, those provisions set forth in Section 7.1)
and the Reservation Agreement (in form and substance reasonably satisfactory to
Prime and including, without limitation, those provisions set forth in Section
8.1.
11.5 Other Documents. ShoLodge and the ShoLodge
Subsidiaries, as applicable, shall have delivered to Prime or caused to be
delivered to Prime such certificates and documents of officers of ShoLodge and
the ShoLodge Subsidiaries, as applicable, and public officials as shall be
reasonably requested by counsel to Prime to establish the existence and good
standing of ShoLodge and the ShoLodge Subsidiaries, as applicable, and the due
authorization and enforceability of this Agreement and the Closing Documents to
be executed by ShoLodge and/or a ShoLodge Subsidiary, and the authorization of
the transactions and performance contemplated hereby and thereby by ShoLodge and
the ShoLodge Subsidiaries, as applicable.
11.6 HPT Closing. All transactions with HPT and Landlord
as contemplated in this Agreement, including, without limitation, the agreement
or consent of Landlord and HPT to the assignment by STI to the Prime HPT
Subsidiary of all of STI's right, title and interest in and to the HPT Lease,
the amendment of the HPT Lease and related documents (i) to acknowledge the
assignment of STI's interest in the HPT Lease and the STI Leased Property and,
if applicable, the Additional Property (as contemplated in Section 3.8) from STI
to the Prime HPT Subsidiary, (ii) to add the Additional Properties to the
properties leased from Landlord to STI (and the Prime HPT Subsidiary) by the HPT
Lease, if applicable, (iii) to remove any Hotel from the HPT Lease to accomplish
a partial termination of this Agreement pursuant to Section 13.3 or Section 13.4
(with minimum annual rent reduced by the applicable amount set forth in Exhibit
C to the HPT Lease or set forth in Exhibit P attached hereto and incorporated
herein by this reference, as applicable), (iv) to reflect the change of the
brand from "Xxxxxx Suites" to "AmeriSuites", and (v) to make such other
modifications as Prime or the Prime HPT Subsidiary reasonably may request
consistent with the provisions of this Agreement prior to the expiration of the
Due Diligence Period (such amendment being referred to herein as the "HPT Lease
Amendment"), the substitution of a pledge of the stock of the Prime HPT
Subsidiary for the existing pledge of the stock of STI to Landlord, the transfer
and conveyance of the Additional Property from the Additional Hotel Subsidiaries
to Landlord, if applicable, and, if applicable, the lease by separate document
of the Additional Property from Landlord to the Prime HPT Subsidiary, shall have
closed pursuant to documents in form and substance reasonably satisfactory to
Prime. Further, Prime shall have received the executed HPT Estoppel Certificate
which acknowledges that (i) there are no existing defaults nor events which with
the giving of notice or the passage of time may become defaults by STI under the
HPT Lease nor any cause for HPT or Landlord to offset any obligation of STI
under the HPT Lease against the HPT Lease Guaranty Deposit, and (ii) as of the
date of the HPT Estoppel Certificate the HPT Lease Security Deposit is
Twenty-One Million Two Hundred Eighty Thousand and No/100 Dollars
($21,280,000.00) and the HPT Lease Guaranty Deposit is Fourteen Million and
No/100 Dollars ($14,000,000.00).
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11.7 Condition of Assets.
(a) All of the Assets shall be in substantially
the same physical condition (including, without limitation, with respect to the
environmental condition of the Assets) as on the last day of the Due Diligence
Period, ordinary wear and tear excepted;
(b) No material default or event which with the
giving of notice and/or the lapse of time could constitute a material default
shall have occurred and be continuing under any Operating Agreement; and
(c) All material licenses, permits and other
authorizations necessary for the current use, occupancy and operation of the
Assets shall be in full force and effect in all material respects, including,
without limitation, any licenses and permits for the sale and on-premises
consumption of liquor and other alcoholic beverages.
11.8 Opinions of Counsel. Prime shall have received a
written opinion from counsel to ShoLodge regarding the organization and
authority of ShoLodge and the ShoLodge Subsidiaries, the due execution and
delivery of this Agreement and the Closing Documents by ShoLodge and the
ShoLodge Subsidiaries, as applicable, and such other matters with respect to the
transactions contemplated by this Agreement as Prime may reasonably require,
which opinion may have customary and reasonable assumptions and qualifications.
11.9 Security Deposit. Any addition to the HPT Lease
Security Deposit or any "Retained Funds" required to be deposited pursuant to a
separate lease, as applicable, with respect to the lease of the Additional
Property from Landlord to STI or the Prime HPT Subsidiary, as applicable, shall
be deposited by ShoLodge or a ShoLodge Affiliate with Landlord on or prior to
the Closing Date.
11.10 Resolution of Prime Objections. ShoLodge shall have
completed, to the reasonable satisfaction of Prime, the resolution of
"unacceptable items" identified pursuant to Sections 12.1 and 12.2 of this
Agreement which ShoLodge undertakes to resolve pursuant to such sections.
11.11 Title Policies for Development Sites. A title company
reasonably satisfactory to Prime shall be prepared, subject only to payment of
the applicable premium, endorsement and related fees and delivery of related
conveyance documents in recordable form, to issue title insurance policies
insuring Prime concerning the Development Sites, subject only to the Permitted
Exceptions.
In the event that the conditions to the performance by Prime
and the Prime Subsidiaries have not occurred by the Closing Date, Prime may
terminate this Agreement by delivering written notice to ShoLodge. Thereafter,
Prime and ShoLodge shall be released and relieved of all further obligations,
liabilities and claims hereunder, other than the performance by each party of
its Post Termination Obligations and, as to a failure or refusal by ShoLodge to
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perform ShoLodge's obligations hereunder, other than the right of Prime to
pursue a suit for damages as described in Section 19.5(a)(i).
Further, the obligation of Prime to acquire each Development
Site pursuant to Article V shall be subject to the receipt by Prime prior to or
on the Closing Date for such Development Site of evidence reasonably
satisfactory to Prime that all building permits necessary for the construction
of an AmeriSuites hotel thereon as contemplated in Article VII have been
obtained. In the event that such condition has not been satisfied as to a
Development Site on or before the scheduled (or last possible) Closing Date for
such Development Site, Prime shall have the right to terminate this Agreement as
to such Development Site only by giving written notice to ShoLodge at any time
thereafter, so long as ShoLodge has not satisfied such condition prior to
receipt of Prime's termination notice. In the event Prime timely elects to
terminate this Agreement pursuant to the preceding sentence with respect to a
Development Site, the Development Site Purchase Price shall be reduced by the
portion of the Development Site Purchase Price applicable to such Development
Site as set forth in Section 6.2 and thereafter ShoLodge and Prime shall be
released and relieved of all further obligations, liabilities and claims
hereunder with respect to such Development Site other than the performance by
each party of its Post Termination Obligations with respect to such Development
Site. Such termination shall not affect the rights and obligations of the
parties hereto with respect to the other Assets.
ARTICLE XII
DUE DILIGENCE
12.1 Title Policies; Surveys and Environmental Studies;
HPT Documents; Operating Agreements; Operating Permits and Licenses. Prior to
the execution of this Agreement, ShoLodge has delivered to Prime a copy of a
title policy (and all exceptions described therein), survey and environmental
study for each parcel constituting a part of the Real Property, a copy of the
HPT Documents, a copy of all Operating Agreements described on Exhibit L
attached hereto and incorporated herein by this reference and a copy of all
certificates of occupancy and operating permits and licenses relating to the
Hotels. In the event that any matter shown on such title policies, surveys or
environmental studies or any provision of the HPT Documents or any of the
Operating Agreements described on Exhibit L or any matter concerning the Hotels
as revealed by an examination of the certificates of occupancy and the operating
permits and licenses (or lack thereof) is not acceptable to Prime, in Prime's
sole judgment, Prime shall deliver written notice to ShoLodge on or prior to the
last day of the Due Diligence Period specifying in detail all such unacceptable
items; provided, however, that with respect to any of the foregoing items which
have not been delivered to Prime prior to the execution of this Agreement, the
deadline for Prime to deliver such written notice to ShoLodge shall end on the
later of (i) the last day of the Due Diligence Period or (ii) the date ten (10)
days after delivery of such item to Prime. Unless ShoLodge undertakes to resolve
such unacceptable items in a manner acceptable to Prime within five (5) days of
receipt of such notice, Prime may, by delivering written notice to ShoLodge
within five (5) days after the deadline for ShoLodge to undertake to resolve
such unacceptable items, terminate this Agreement, whereupon Prime and ShoLodge
shall be released and relieved of all further obligations, liabilities and
claims hereunder, other than the performance by each party of its Post
Termination Obligations. In the event that the Agreement is not terminated
pursuant to this Section 12.1, Prime shall be deemed to have approved all
exceptions to title as reflected on
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the title policies, the condition of the Real Property as reflected by the
surveys and environmental studies, all provisions of the HPT Documents and the
Operating Agreements described on Exhibit L and all matters which would be
revealed by an examination of the operating permits and licenses (but subject to
ShoLodge completing the resolution of the unacceptable items which ShoLodge has
undertaken to resolve).
12.2 Property Inspections. Beginning on the Effective
Date, Prime shall have the right to undertake a complete physical examination
and inspection of the Assets and to perform or have performed such engineering
and environmental tests as deemed necessary or appropriate by Prime. ShoLodge
will provide to Prime and its officers and other representatives, during normal
business hours, and with prior notice to ShoLodge, free and full access to the
Hotels and the other Assets to conduct such examinations and inspections and
will cooperate fully with any examination or inspection made by Prime, its
officers or representatives. All examinations and inspections shall be conducted
at such times and in such a manner as to minimize the disruption to the business
being conducted on the Real Property. ShoLodge shall also request that HPT
forward to Prime a copy of all examinations and inspections which HPT obtained
with respect to the Existing HPT Hotels or hereafter obtains with respect to the
Additional HPT Hotels. Should Prime discover any physical condition of the
Assets (including, without limitation, any environmental condition) which is not
acceptable to Prime and which is not eligible to be repaired with funds in the
"FF&E Reserve" established under the HPT Lease or the Texas Lease or a similar
fund created under a separate lease contemplated in Section 3.3 and in Section
3.8, as applicable, Prime shall deliver written notice to ShoLodge on or prior
to the last day of the Due Diligence Period specifying in detail all such
unacceptable items; provided, however, that with respect to any of the foregoing
examinations and inspections obtained by HPT with respect to the Existing HPT
Hotels or the Additional HPT Hotels, the deadline for Prime to deliver such
written notice to ShoLodge shall end on the later of (i) the last day of the Due
Diligence Period or (ii) the date ten (10) days after delivery of such item to
Prime or (iii) thirty (30) days after receipt by Prime of written notice from
HPT or ShoLodge that any such examinations and inspections obtained by HPT will
not be provided to Prime. Unless ShoLodge undertakes to repair such unacceptable
items in a manner acceptable to Prime within five (5) days of receipt of such
notice, Prime may, by delivering written notice to ShoLodge within five (5) days
after the deadline for ShoLodge to undertake to repair such unacceptable items,
terminate this Agreement, whereupon Prime and ShoLodge shall be released and
relieved of all further obligations, liabilities and claims hereunder, other
than the performance by each party of its Post Termination Obligations. In the
event that the Agreement is not terminated pursuant to this Section 12.2, Prime
shall be deemed to have approved the physical condition of the Assets as in
existence on the last day of the Due Diligence Period (but subject to ShoLodge
completing the repair of the unacceptable items which ShoLodge has undertaken to
repair).
12.3 Confidentiality. All materials delivered to Prime
and all results, information and reports generated from Prime's examinations and
inspections of the Assets shall be held in strict confidence and no copies of
such materials, results, information or reports shall be given to anyone (other
than employees, agents, attorneys and accountants of Prime who shall also agree
to keep such results, information and reports confidential) without the prior
written approval of ShoLodge. The provisions of this Section 12.3 shall survive
any termination of this Agreement.
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ARTICLE XIII
CERTAIN MATTERS PENDING THE CLOSING
13.1 Notice of Adverse Changes. Pending the Closing Date,
ShoLodge shall give to Prime prompt notice of the occurrence of any of the
following:
(a) the commencement or threat of commencement
of any proceeding at law or in equity or before any agency or administrative or
regulatory body or authority which could have a material adverse effect on any
of the Hotels or the operation of any of the Hotels;
(b) any notice of breach, default, claimed
default or termination of the HPT Lease or any Operating Agreement;
(c) any violation by STI, an Additional Hotel
Subsidiary or Southeast, as applicable, or notice of any alleged violation by
STI, an Additional Hotel Subsidiary or Southeast, as applicable, of any federal,
state or local law, statute, ordinance, rule or regulation, but only as relates
to the operation of the Hotels; or
(d) any material change in any condition with
respect to any of the Assets or any event or circumstance which makes any
representation or warranty of ShoLodge to Prime under this Agreement untrue or
misleading in any material respect (Prime agreeing, on learning of any such fact
or condition, promptly to notify ShoLodge thereof).
13.2 Operations Pending Closing. Pending the Closing Date,
STI, the Additional Hotel Subsidiaries and Southeast, as applicable, shall,
unless otherwise approved in writing by Prime:
(a) operate the Hotels in the ordinary course
of business of a first class hotel operation and in accordance with past
practices consistently applied so as to keep the Hotels in first class
condition, reasonable wear and tear excepted, and so as to maintain a first
class hotel operation and the reasonable goodwill of all tenants of the Hotels
and all employees, guests and other customers of the Hotels;
(b) maintain the Equipment in good operating
condition and repair and replace with equipment of similar value which is in
good operating condition or repair any of the Equipment which shall be worn out,
lost, stolen or destroyed (which maintenance, repair and replacement as to the
STI Equipment and, if applicable, the Additional Equipment may be made from
funds in the "FF&E Reserve" created pursuant to the HPT Lease or any separate
lease as contemplated in Section 3.8);
(c) not sell, lease, mortgage, pledge or
otherwise dispose of any of the Assets or any portion thereof, except for
dispositions contemplated in this Agreement and dispositions in the ordinary
course of business;
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(d) with respect to the personnel employed at
the Hotels, (i) not increase or otherwise change the rate or nature of the
compensation (including wages, salaries and bonuses) which is paid or payable to
any such employee other than in the ordinary course of business, and (ii) use
reasonable efforts to keep available to the applicable Prime Subsidiary the
services of the present employees at the Hotels (except those dismissed for
cause or those who voluntarily discontinue their employment);
(e) not (i) enter into or become obligated
under any Operating Agreement except for normal contracts entered into in the
ordinary course of business which can be terminated upon not more than thirty
(30) days notice without penalty and, if the party thereto delivering goods or
performing services is an Affiliate of ShoLodge, which contain fair market
terms, or (ii) in any manner change, modify, extend or renew any existing
Operating Agreement unless such Operating Agreement can be terminated upon not
more than thirty (30) days notice without penalty and, if the party thereto
delivering goods or performing services is an Affiliate of ShoLodge, unless such
changes, modifications, extensions or renewals are at fair market terms;
(f) maintain the Inventory in good condition
and in amount in accordance with past practices consistently applied (but as to
bath towels, hand towels, wash cloths, bath mats, sheets and pillow cases not
less than two (2) "turns" (as such term is used in the hotel industry) and as to
other linen items such as blankets, pillows and bed spreads, not less than one
(1) "turn" plus appropriate spare inventory of such other linen items);
(g) maintain in full force and effect policies
of liability and casualty insurance of the same type, character and coverage as
the policies currently carried with respect to the Assets and as required under
the HPT Lease or any separate lease as contemplated in Section 3.8;
(h) not in any manner change, modify, extend,
renew or terminate the HPT Lease, except as required by the terms thereof or
except as expressly permitted by this Agreement;
(i) maintain its books of account and records
relating to the Assets in accordance with sound accounting principles;
(j) use and operate the Hotels in compliance in
all material respects with applicable laws, statutes, rules and regulations and
the requirements of any mortgage, lease, Operating Agreement, Permitted
Exception and insurance policy affecting the Hotels or any Assets;
(k) pay or cause to be paid prior to delinquency
all ad valorem, occupancy and sales taxes due and payable with respect to any
Asset or the operation of the Hotels or establish or cause to be established
adequate reserves therefor;
(l) except as otherwise permitted hereby, not
take any action or fail to take action the result of which would have a material
adverse effect on an Asset or on the ability
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of the applicable Prime Subsidiary to operate the Hotels as first class hotels
after the Closing Date or which would cause any of the representations and
warranties contained in Article XV hereof to be untrue in any material respect
as of Closing;
(m) maintain the Buildings (including, but not
limited to, the mechanical systems, plumbing, electrical, wiring, appliances,
fixtures, heating, air conditioning and ventilating equipment, elevators,
boilers, equipment, roofs, structural members and furnaces) in substantially the
same condition as they are as of the last day of the Due Diligence Period,
reasonable wear and tear excepted (which maintenance as to the STI Buildings
and, if applicable, the Additional Buildings, may be made from funds in the
"FF&E Reserve" created pursuant to the HPT Lease or any separate lease as
contemplated in Section 3.8);
(n) not materially diminish the quality or
quantity of maintenance and upkeep services heretofore provided to the Assets;
(o) continue to use reasonable efforts to take
guest room reservations and to book functions and meetings and otherwise to
promote the business of the Hotels in accordance with current practices and at
current rates; provided, however, no such bookings shall be for more than six
(6) months in advance without the consent of Prime;
(p) promptly deliver to Prime upon Prime's
request such reports showing the revenue and expenses of the Hotels and all
departments thereof, together with such periodic information with respect to
room reservations and other bookings, as ShoLodge customarily keeps or receives
internally for its own use; and
(q) keep, observe and perform all its
obligations in all material respects under the HPT Lease, the Operating
Agreements and all material licenses, permits and other authorizations necessary
for the current use, occupancy and operation of the Assets, including, without
limitation, any licenses and permits for the sale and on-premises consumption of
liquor and other alcoholic beverages, consistent with ShoLodge's past practice.
13.3 Destruction of Assets. If prior to the Closing Date,
any Hotel suffers loss or damage on account of fire, flood, earthquake,
accident, act of war, civil commotion or other similar cause or event occurring
after the Effective Date such that STI has the right to terminate the HPT Lease
as to such Hotel or would have such right if such Hotel were leased by STI
pursuant to the HPT Lease and ShoLodge has not repaired such damage prior to the
Closing Date, Prime shall have the right to terminate this Agreement as to such
damaged Hotel (and the Assets related thereto) only by giving written notice to
ShoLodge on or prior to the Closing Date, in which event (i) the Purchase Price
shall be reduced by the applicable amount as reflected on Exhibit O attached
hereto and incorporated herein by this reference, (such reduction to come first
from the cash portion of the Purchase Price described in Section 6.1(a) and then
from the ShoLodge debt securities described in Section 6.1(b)) and Exhibit N
shall be appropriately modified, and (ii) if applicable, the "minimum annual
rent" described in Section 3.3 and in Section 4.3 shall be reduced by the
applicable amount as specified on Exhibit P attached hereto and incorporated
herein by this reference (as adjusted, if applicable, pursuant to Section 3.3
and
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Section 4.3). If Prime fails to terminate this Agreement as to a damaged Hotel
(and the Assets related thereto) by giving timely written notice of termination
as provided herein or if a Hotel is damaged but the damage is such that Prime
does not have an option to terminate this Agreement as to such damaged Hotel
(and the Assets related thereto), Prime shall consummate the transactions
contemplated hereunder (including, without limitation, as contemplated herein
with respect to such damaged Hotel (and the Assets related thereto)), in which
event the applicable Prime Subsidiary, except as otherwise provided in the HPT
Lease (or a separate lease contemplated in Section 3.8, if applicable), shall be
entitled to all insurance or other proceeds payable by reason of such loss or
damage to such damaged Hotel in excess of the amount spent by ShoLodge or a
ShoLodge Subsidiary to repair such damage (insurance or other proceeds in such
amount being payable to ShoLodge or such ShoLodge Subsidiary), and, in addition,
there shall be a reduction in the Purchase Price by the amount by which any
deductibles under the policies of insurance covering such loss or damage exceed
the amount spent by ShoLodge or a ShoLodge Subsidiary to repair such damage
which is not reimbursed from insurance or other proceeds. ShoLodge shall not
permit STI to terminate the HPT Lease or the separate lease contemplated in
Section 3.8 due to any casualty without the prior written approval of Prime,
such written approval not to be unreasonably withheld, delayed or conditioned.
In the event of a casualty to an Existing HPT Hotel or to an Additional HPT
Hotel such that Prime elects to terminate this Agreement as to such Hotel,
ShoLodge agrees that, at Prime's request, ShoLodge shall cause STI to terminate
the HPT Lease or the separate lease contemplated in Section 3.8 with respect to
such Hotel pursuant to the provisions thereof. Further, prior to commencing the
repair of any damage following a casualty event which would cost more than Two
Hundred Fifty Thousand and No/100 Dollars ($250,000.00) in the aggregate to
repair, ShoLodge shall cause STI to obtain the prior written consent of Prime,
not to be unreasonably withheld, conditioned or delayed, to such repair.
In the event Prime timely elects to terminate this Agreement
pursuant to the preceding paragraph with respect to a damaged Hotel (and the
Assets related thereto), thereafter, ShoLodge and Prime shall be released and
relieved of all further obligations, liabilities and claims hereunder with
respect to such damaged Hotel (and the Assets related thereto), other than the
performance by each party of its Post Termination Obligations with respect to
such damaged Hotel (and the Assets related thereto). Such termination shall not
affect the rights and obligations of the parties hereto with respect to the
other Assets.
13.4 Condemnation. In the event of any actual or
threatened taking pursuant to the power of eminent domain of all or any portion
of any HPT Real Property or the Texas Real Property such that STI has the right
to terminate the HPT Lease as to such HPT Real Property or would have such right
if such HPT Real Property or such Texas Real Property were leased by STI
pursuant to the HPT Lease or any Development Site such that the taking would
materially adversely affect the operation of the hotel to be constructed on such
property, as applicable, or any proposed sale in lieu thereof, ShoLodge shall
give written notice thereof to Prime promptly after ShoLodge learns or receives
notice thereof, and Prime shall have the right to terminate this Agreement as to
such HPT Real Property or such Texas Real Property (and the Assets related
thereto) or as to such Development Site, as applicable, only by giving written
notice to ShoLodge on or prior to the date ten (10) days after receipt of such
written notice from ShoLodge, in which
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event (i) if applicable, the Purchase Price shall be reduced by the applicable
amount as reflected on Exhibit O attached hereto and incorporated herein by this
reference (such reduction to come first from the cash portion of the Purchase
Price described in Section 6.1(a) and then from the ShoLodge debt securities
described in Section 6.1(b)) and Exhibit N shall be appropriately modified, (ii)
if applicable, the Development Site Purchase Price shall be reduced by the
portion of the Development Site Purchase Price applicable to such Development
Site as set forth in Section 6.2, and (iii) if applicable, the "minimum annual
rent" in Section 3.3 and in Section 4.3 shall be reduced by the applicable
amount as specified on Exhibit P attached hereto and incorporated herein by this
reference (as adjusted, if applicable, pursuant to Section 3.3 and Section 4.3).
If Prime fails to terminate this Agreement as to any such HPT Real Property or
any such Texas Real Property (and the Assets related thereto) or as to any such
Development Site, as applicable, by giving timely written notice of termination
as provided herein or if the taking or threatened taking of such HPT Real
Property, Texas Real Property or Development Site, as applicable, is such that
Prime does not have an option to terminate this Agreement as to such HPT Real
Property or such Texas Real Property (and the Assets related thereto) or as to
such Development Site, as applicable, Prime shall consummate the transactions
contemplated hereunder (including, without limitation, as contemplated herein
with respect to such HPT Real Property or such Texas Real Property (and the
Assets related thereto) or such Development Site, as applicable), in which event
the applicable Prime Subsidiary or Prime, as applicable, except as otherwise
provided in the HPT Lease (or a separate lease contemplated in Section 3.8 if
applicable), shall be entitled to all proceeds, awards and other payments
arising out of such condemnation or sale (actual or threatened), but there shall
be no reduction in the Purchase Price. ShoLodge shall not permit STI to
terminate the HPT Lease or the separate lease contemplated in Section 3.8 due to
any taking pursuant to the power of eminent domain without the prior written
approval of Prime, such written approval of Prime not to be unreasonably
withheld, delayed or conditioned. In the event of a taking with respect to any
HPT Real Property, ShoLodge agrees that, at Prime's request, ShoLodge shall
cause STI to terminate the HPT Lease or the separate lease contemplated in
Section 3.8 with respect to such HPT Real Property pursuant to the provisions
thereof.
In the event Prime timely elects to terminate this Agreement
pursuant to the preceding paragraph with respect to any HPT Real Property or any
Texas Real Property (and the Assets related thereto) or a Development Site, as
applicable, thereafter, ShoLodge and Prime shall be released and relieved of all
further obligations, liabilities and claims hereunder with respect to such HPT
Real Property or such Texas Real Property (and the Assets related thereto), or
such Development Site, as applicable, other than the performance by each party
of its Post Termination Obligations with respect to such HPT Real Property or
such Texas Real Property (and the Assets related thereto) or such Development
Site, as applicable. Such termination shall not affect the rights and
obligations of the parties hereto with respect to the other Assets.
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ARTICLE XIV
POST TERMINATION OBLIGATIONS
14.1 Post Termination Obligations. All costs and expenses
related to Prime's examination and inspection of the Assets shall be paid for by
Prime, and Prime agrees to indemnify and hold ShoLodge and the ShoLodge
Subsidiaries harmless from and against all such costs and expenses. Prime shall
not permit any liens to attach to the Assets by reason of the exercise of
Prime's inspection rights hereunder. Prime agrees that if this Agreement is
terminated for any reason, Prime will: (i) restore the Assets to the condition
which existed prior to any inspections, tests or other activities of Prime
(casualty, condemnation, ordinary wear and tear and acts or omissions of
ShoLodge or its Affiliates excepted); (ii) indemnify and hold ShoLodge and the
ShoLodge Subsidiaries harmless from and against any and all liens by
contractors, subcontractors, materialmen or laborers performing work or tests
for Prime and from and against any and all claims for damages by third parties
for damage to property or personal injuries to the extent arising out of or
attributable to the conduct of such work and tests and/or any other activities
of Prime or Prime's employees or agents; (iii) pay or reimburse ShoLodge and the
ShoLodge Subsidiaries for the payment of any expenses (including reasonable
attorney fees and court costs) incurred in connection with any of the foregoing;
and (iv) deliver to ShoLodge copies of all studies, reports, surveys, tests and
other materials of any kind or nature generated for or by Prime in connection
with Prime's inspection of the Assets. The foregoing obligations of Prime,
together with Prime's obligation to maintain the confidentiality of certain
matters as specified in Section 12.3, the obligation of each party to maintain
the confidentiality of certain matters as specified in Section 20.1 and the
obligation of each party with respect to costs and expenses set forth in Section
17.5, are referred to herein collectively as the "Post Termination Obligations."
Notwithstanding any provision herein to the contrary, it is agreed and
understood that a termination of this Agreement under any right granted
hereunder shall terminate all obligations of ShoLodge and Prime under this
Agreement except that such termination shall not terminate the provisions in
this Agreement relating to the Post Termination Obligations and except that any
termination due to the failure or refusal of a party to perform its obligations
hereunder shall not terminate the right of the other party hereto to pursue a
suit to recover damages in accordance with the provisions of Section 19.5(a)(i)
or Section 19.5(b)(i), as applicable. The Post Termination Obligations shall
survive any termination of this Agreement, and the right to pursue a suit to
recover damages in accordance with the provisions of Section 19.5(a)(i) and
Section 19.5(b)(i) shall survive any termination due to the failure or refusal
of a party to perform its obligations hereunder. Further, the obligations of
Prime set forth in (ii) and (iii) of the third sentence of this Section 14.1
shall survive the Closing.
ARTICLE XV
REPRESENTATIONS AND WARRANTIES OF SHOLODGE
ShoLodge hereby represents and warrants to Prime and to the
Prime Subsidiaries, as follows:
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15.1 Organization. ShoLodge is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Tennessee and has the corporate power and authority to enter into and to perform
this Agreement and the Closing Documents to which ShoLodge is a party. Each
ShoLodge Subsidiary is a corporation duly organized, validly existing and in
good standing under the laws of the State of Tennessee and has the corporate
power and authority to perform its obligations as contemplated in this Agreement
and to enter into and to perform the Closing Documents to which each such
ShoLodge Subsidiary is a party. ShoLodge and each ShoLodge Subsidiary have duly
qualified to transact business in each jurisdiction in which the nature of the
business conducted by it requires such qualification, except where failure to do
so could not reasonably be expected to have a material adverse effect.
15.2 Authorization. The execution and delivery of this
Agreement by ShoLodge, the execution and delivery of all Closing Documents to be
executed by ShoLodge, and the consummation by ShoLodge of the transactions
contemplated hereby and thereby have been duly authorized by the Board of
Directors of ShoLodge. The execution and delivery of all Closing Documents to be
executed by a ShoLodge Subsidiary, as applicable, and the consummation by each
ShoLodge Subsidiary, as applicable, of the transactions contemplated hereby and
thereby have been duly authorized by each such corporation's Board of Directors.
Neither the entering into this Agreement and the Closing Documents to be
executed by ShoLodge or a ShoLodge Subsidiary, as applicable, nor the
consummation of the transactions contemplated herein or therein will cause a
violation, default or breach by ShoLodge or a ShoLodge Subsidiary, as
applicable, of, or conflict with, any contracts, agreements or instruments to
which ShoLodge or a ShoLodge Subsidiary, as applicable, is a party or by which
ShoLodge or a ShoLodge Subsidiary, as applicable, is bound.
15.3 Valid and Binding Agreement. This Agreement
constitutes, and each of the Closing Documents to be executed by ShoLodge or a
ShoLodge Subsidiary, as applicable, will constitute upon execution by all
parties thereto, a valid and binding agreement of ShoLodge and the ShoLodge
Subsidiaries who are parties thereto, as applicable, enforceable in accordance
with its terms, subject as to enforceability to bankruptcy, insolvency and
similar laws affecting creditors' rights generally and to the availability of
equitable remedies.
15.4 No Violation. Neither the execution and delivery of
this Agreement, the execution and delivery of the Closing Documents to be
executed by ShoLodge or a ShoLodge Subsidiary, as applicable, nor the
consummation by ShoLodge and the ShoLodge Subsidiaries, as applicable, of the
transactions contemplated hereby or thereby violates or conflicts with any such
corporation's Charter or Bylaws or any agreement or other restriction of any
kind to which any such corporation is as a party or by which any such
corporation is bound.
15.5 Employment Issues. The employees at the Hotels are
not represented by any union and, to the knowledge of ShoLodge, have not been
solicited with respect to organization or representation by any labor
organization or similar body. There are no employment agreements or other labor
agreements with respect to any employees at the Hotels. Except as set forth on
Exhibit M attached hereto and incorporated herein by this reference, there is
not any "employee benefit plan" as defined in Section 3(3) of the Employment
Retirement Income Security Act of 1974,
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as amended ("ERISA"), nor any stock purchase plan, practice or arrangement, nor
any other material benefits, practice or arrangement relating to employees at
the Hotels (each such plan, practice or arrangement being referred to as a
"Benefit Plan"). ShoLodge is not currently required to contribute to any
multi-employer plans (as defined within the meaning of Section 3(37) of ERISA)
for the benefit of the employees of any Hotel, nor has ShoLodge been required to
contribute to any multi-employer plans (as defined within the meaning of Section
3(37) of ERISA) for the benefit of the employees at the Hotels, nor has ShoLodge
been required to contribute to any multi-employer plan for the benefit of the
employees at the Hotels within the last five (5) years. With respect to each
Benefit Plan set forth on Exhibit M, if any, ShoLodge has furnished Prime, to
the extent applicable to each Benefit Plan (i) complete and accurate copies of
the Benefit Plan, including all amendments, (ii) the most recent determination
letter from the Internal Revenue Service, (iii) the most recent actuarial
reports, and (iv) all reports of the Benefit Plan required by ERISA and the
regulations thereunder. The execution and delivery of this Agreement by ShoLodge
and the consummation of the transactions contemplated hereunder (x) do not
constitute a prohibited transaction within the meaning of Section 406 of ERISA
or Section 4975 of the Code, and (y) will not result in any obligation or
liability of Prime or ShoLodge to the Pension Benefit Guaranty Corporation in
respect of any Benefit Plan.
15.6 Site Disclosure.
(a) To the knowledge of ShoLodge, there is no pending or
threatened condemnation or similar proceeding affecting the Real Property or any
portion thereof, and to the knowledge of ShoLodge, no such action is presently
contemplated.
(b) To the knowledge of ShoLodge (i) all necessary
permits and licenses required for the operation of the Hotels have been
obtained, and (ii) no zoning, building or other federal, state or municipal law,
ordinance, regulation or restriction is violated by the continued operation of
the Hotels in the manner now being operated. No notice of zoning or building
code violations resulting from the improvements on the HPT Real Property or the
Texas Real Property or the continued operation of the Hotels thereon has been
received by ShoLodge.
(c) To the knowledge of ShoLodge and except as disclosed
in any environmental studies obtained by Prime or provided by ShoLodge to Prime,
(i) the Hotels have been operated in compliance with all environmental
regulations, and (ii) no pollutants or other toxic or hazardous substances,
including any solid, liquid, gaseous or thermal irritant or contaminant, such as
smoke, vapor, soot, fumes, alkalis, acids, chemicals or wastes, have been
stored, discharged, released, generated or allowed to escape at or from the Real
Property in violation of any environmental regulations, (iii) no underground
storage tanks are located on the Real Property or have been removed or filled,
and (iv) no investigation, administrative order, consent order or agreement,
litigation or settlement with respect to any of the foregoing is proposed,
threatened, anticipated or in existence with respect to the Real Property.
ShoLodge has not received any notice of any such investigation, administrative
order, consent order or agreement, litigation or settlement.
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(d) To the knowledge of ShoLodge, there are no
structural, electrical, mechanical, plumbing or other defects in any of the
Hotels which could have a material adverse effect on the operation of such
Hotel.
15.7 Operating Agreements. Attached hereto as Exhibit L
is a schedule of all Operating Agreements in effect as of the Effective Date.
There are no material management, service, supply or maintenance contracts or
equipment leases or similar contracts or agreements in effect as of the
Effective Date with respect to the Assets other than the Operating Agreements
listed on Schedule L attached hereto and incorporated herein by this reference.
The copies of the Operating Agreements previously provided or made available to
Prime are true and complete copies of said Operating Agreements and, to
ShoLodge's knowledge, are valid and in full force and effect and no party has
breached any material condition or provision thereof. To ShoLodge's knowledge,
ShoLodge or the applicable ShoLodge Subsidiary has performed all of its material
obligations under each of the Operating Agreements. To ShoLodge's knowledge no
fact or circumstance has occurred which, by itself or with the passage of time
or the giving of notice or both, would constitute a default in any material
respect under any of the Operating Agreements. To ShoLodge's knowledge, all
other parties to the Operating Agreements have performed all of their
obligations thereunder in all material respects and are not in default
thereunder in any material respect. Except as set forth on Exhibit L or
disclosed to Prime, ShoLodge has received no notice of any intention of any of
the parties to any of the Operating Agreements to cancel the same, nor has
ShoLodge or the applicable ShoLodge Subsidiary canceled any of same.
15.8 Equipment. To the knowledge of ShoLodge, each item of
Equipment is in good operating condition and repair.
15.9 Brokers Fees. No brokers, finders or similar agents
acting on behalf of ShoLodge are entitled to any brokerage commission, finder's
fee or any similar compensation in connection with this Agreement or the
transactions contemplated hereby.
15.10 Litigation. ShoLodge has not received any written
notice of and, to ShoLodge's knowledge, no action or proceeding is pending or
threatened and no investigation looking toward such an action or proceeding has
begun, which (a) questions the validity of this Agreement or the HPT Lease or
any action taken or to be taken pursuant hereto, (b) will result in any material
adverse change in the business, operation, affairs or condition of any of the
Hotels, (c) will result in or subject any Asset to a material liability, or (d)
involves condemnation or eminent domain proceedings against any part of the
Assets.
15.11 Booking Agreements. All bookings of guest rooms and
meeting rooms which will be binding on a Prime Subsidiary subsequent to the
Closing Date were entered into in the ordinary course of business consistent
with past practice.
15.12 HPT Documents. The copy of the HPT Documents
previously provided or made available to Prime is a full and complete copy of
the HPT Documents and, to ShoLodge's knowledge, the HPT Documents are valid and
in full force and effect and no party has breached any material condition or
provision thereof, including, without limitation, as to STI, the provisions
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of Section 9.1 of the HPT Lease concerning required insurance. To ShoLodge's
knowledge, STI has performed all of its material obligations under the HPT
Lease. To ShoLodge's knowledge no fact or circumstance has occurred which, by
itself or with the passage of time or the giving of notice or both, would
constitute a default in any material respect under the HPT Lease. To ShoLodge's
knowledge, Landlord has performed all of its obligations under the HPT Lease in
all material respects and is not in default thereunder in any material respect.
STI has not prepaid rent or additional rent or any other items under the HPT
Lease for more than one (1) month in advance.
15.13 Not A Foreign Person. Neither ShoLodge nor any
ShoLodge Subsidiary is a "foreign person" within the meaning of Section 1445 of
the Code.
15.14 Insurance. ShoLodge has not received any written
notice from any insurance carrier of defects or inadequacies in any Asset which,
if uncorrected, would result in a termination of insurance coverage or a
material increase in the premiums charged therefor.
15.15 Adjacent Land. No land or facilities adjacent to any
of the Hotels is used in the operation of the Hotels except for access, parking
and utility easements as reflected in the title documents previously provided by
ShoLodge to Prime.
15.16 Trademarks. ShoLodge has received no written notice
that the use of the "Xxxxxx Suites" trademark or tradename is in violation of
any trademark or tradename owned by any other Person, except for claims resolved
in favor of ShoLodge by final order.
15.17 Compliance with Laws. To ShoLodge's knowledge, each
Asset is in compliance in all material respects with all laws of governmental
authorities which are applicable to the Asset or the use or operation of such
Asset.
15.18 Taxes. In connection with the ownership and operation
of each Asset, to ShoLodge's knowledge, ShoLodge or a ShoLodge Subsidiary, as
applicable, has filed or will timely file all required federal, state and local
income, withholding, unemployment, FICA, excise, franchise, gross receipts,
property, sales, resort, use, occupancy and other tax returns either when due or
not later than the end of applicable extension periods. All taxes which have
become due and payable or may become due and payable prior to or after the
Closing on account of the Assets or the operation of the Hotels prior to the
Closing Date have been paid or will be paid when due, except liens for real
estate taxes which are not delinquent or which are being contested in good faith
or as to which adequate reserves are provided therefor (and none of such taxes
shall be assumed by Prime except to the extent the Purchase Price or the
Development Site Purchase Price is decreased for such taxes pursuant to Section
9.1(b)). After the Closing and except as contemplated to the contrary in the
preceding sentence, there shall be no liens on any of the Assets by reason of
any taxes payable on or before the Closing Date or pertaining to periods ending
on or before the Closing Date. To ShoLodge's knowledge, other than the amounts
disclosed by tax bills, no taxes or special assessments of any kind (special,
bond or otherwise) are or have been levied with respect to any of the Assets, or
any portion thereof, which are outstanding or unpaid,
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other than amounts not yet due and payable or, if due and payable, not yet
delinquent or as to which adequate reserves are provided therefor.
15.19 Financial Information. All of ShoLodge's financial
information, including, without limitation, all books and records and financial
statements previously furnished to Prime ("Financial Information") is to
ShoLodge's knowledge true and correct in all material respects and presents
accurately the results of the operations of the Hotels for the periods indicated
and has been prepared in accordance with generally accepted accounting
principles. Since the date of the last financial statement included in
ShoLodge's Financial Information, there has been no material adverse change in
the financial condition or in the operations of the Hotels.
15.20 Leases. There are no leases, subleases, licenses or
other lettings of space within a Hotel that will remain in existence after the
Closing Date other than (i) the rights of guests in occupancy and the holders of
reservations for future occupancy of guest rooms or meeting rooms, (ii) the
rights set forth in the Operating Agreements, and (iii) the rights of the owner
of record of any license or permit for the sale and on-premises consumption of
liquor and other alcoholic beverages (which license shall remain in effect to
the extent contemplated in Section 18.1).
15.21 HTP Lease Security Deposit/HPT Lease Guaranty
Deposit. The amount of the HPT Lease Security Deposit is Twenty-One Million Two
Hundred Eighty Thousand and No/100 Dollars ($21,280,000.00). The amount of the
HPT Lease Guaranty Deposit is Fourteen Million and No/100 Dollars
($14,000,000.00).
When used herein the words "to the knowledge of ShoLodge" or
words of similar effect mean the actual knowledge of the current officers of
ShoLodge, without independent inquiry.
Prime acknowledges that Prime has not entered into this
Agreement based upon any representation, warranty, agreement, statement or
expression of opinion by ShoLodge or by any Person acting or allegedly acting
for or on behalf of ShoLodge as to the Assets or the condition of the Assets
(other than any warranty of title set out in the Closing Documents and other
than the representations and warranties specifically set forth in Article XV
hereof). Prime agrees that the Assets to be sold or leased to Prime or a Prime
Subsidiary hereunder are to be sold or leased to and accepted by Prime or a
Prime Subsidiary at Closing, AS IS, WHERE IS, WITH ALL FAULTS, IF ANY, AND
WITHOUT ANY REPRESENTATIONS OR WARRANTIES WHATSOEVER, EXPRESS OR IMPLIED (other
than (i) any warranty of title set out in the Closing Documents, (ii) the
representations and warranties specifically set forth in Article XV hereof, and
(iii) the obligation of ShoLodge to complete the "unacceptable items" identified
pursuant to Sections 12.1 and 12.2 of this Agreement which ShoLodge undertakes
to resolve pursuant to such sections).
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ARTICLE XVI
REPRESENTATIONS AND WARRANTIES OF PRIME
Prime hereby represents and warrants to ShoLodge and to the
ShoLodge Subsidiaries, as follows:
16.1 Organization. Prime is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has the corporate power and authority to enter into and to perform this
Agreement and the Closing Documents to which Prime is a party. Each Prime
Subsidiary is, or prior to Closing will be, a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has, or will have prior to Closing, the corporate power and authority to
perform its obligations as contemplated in this Agreement and to enter into and
to perform the Closing Documents to which each such Prime Subsidiary is a party.
Prime and each Prime Subsidiary have, or prior to Closing will have, duly
qualified to transact business in each jurisdiction in which the nature of the
business conducted by it requires such qualification, except where failure to do
so could not reasonably be expected to have a material adverse effect.
16.2 Authorization. The execution and delivery of this
Agreement by Prime, the execution of all Closing Documents to be executed by
Prime and the consummation by Prime of the transactions contemplated hereby and
thereby have been duly authorized by the Board of Directors of Prime. The
execution and delivery of all Closing Documents to be executed by a Prime
Subsidiary, as applicable, and the consummation by each Prime Subsidiary, as
applicable, of the transactions contemplated hereby and thereby have been, or
prior to Closing will be, duly authorized by such corporation's Board of
Directors. Neither the entering into this Agreement and the other Closing
Documents to be executed by Prime or a Prime Subsidiary, as applicable, nor the
consummation of the transactions contemplated herein or therein will cause a
violation, default or breach by Prime or a Prime Subsidiary, as applicable, of,
or conflict with, any contracts, agreements or instruments to which Prime or a
Prime Subsidiary, as applicable, is a party or by which Prime or a Prime
Subsidiary, as applicable, is bound.
16.3 Valid and Binding Agreement. This Agreement
constitutes, and each of the Closing Documents to be executed by Prime or a
Prime Subsidiary, as applicable, will constitute upon execution by all parties
thereto, a valid and binding agreement of Prime and the Prime Subsidiaries who
are parties thereto, as applicable, enforceable in accordance with its terms,
subject as to enforceability to bankruptcy, insolvency and similar laws
affecting creditors' rights generally and to the availability of equitable
remedies.
16.4 No Violation. Neither the execution and delivery of
this Agreement, the execution and delivery of the Closing Documents to be
executed by Prime or a Prime Subsidiary, as applicable, nor the consummation by
Prime and the Prime Subsidiaries, as applicable, of the transactions
contemplated hereby or thereby violates or conflicts with either such
corporation's Charter or Bylaws or any agreement or other restriction of any
kind to which either such corporation is as a party or by which either such
corporation is bound.
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16.5 Brokers Fees. No brokers, finders or similar agents
acting on behalf of Prime are entitled to any brokerage commission, finder's fee
or any similar compensation in connection with this Agreement or the
transactions contemplated hereby.
ARTICLE XVII
CLOSING
17.1 Closing. The Closing shall occur on such date as the
parties hereto may agree upon in writing for the closing of the transactions
contemplated hereby; provided, however, that such date shall not be later than
the date thirty (30) days after the last day of the Due Diligence Period;
provided, further, that if on such date the conditions precedent to Closing set
forth in Sections 10.6 and 11.6 have not been satisfied, ShoLodge, by written
notice to Prime, may postpone the Closing while ShoLodge diligently and
continuously attempts to satisfy such conditions precedent, such postponed
Closing to occur no later than the earlier of (i) the date one hundred five
(105) days after the last day of the Due Diligence Period, and (ii) the date
fifteen (15) days after such conditions precedent are satisfied; and provided,
further, that if on such date the condition precedent to Closing with respect to
one (1) or both of the Development Sites set forth in the last paragraph of
Article XI has not been satisfied, ShoLodge, by written notice to Prime, may
postpone the Closing as to such Development Site or Development Sites, as
applicable, while ShoLodge diligently and continuously attempts to satisfy such
condition precedent, such postponed Closing to occur no later than the earlier
of (i) the date one hundred eighty (180) days after the last day of the Due
Diligence Period, and (ii) the date fifteen (15) days after such condition
precedent is satisfied. Notwithstanding the foregoing or any other provision to
the contrary set forth in this Agreement, upon the receipt by ShoLodge from
Prime of (i) ten (10) days advance written notice, and (ii) the written waiver
by Prime of any right to terminate this Agreement pursuant to Section 12.1 or
Section 12.2, Prime, at Prime's option, may proceed to close all (but not less
than all) of the transactions contemplated herein other than the transaction
with respect to the Additional HPT Hotels as contemplated in Article III and
other than the transfer of one (1) or both of the Development Sites the Closing
of which has been postponed as described herein. In the event the transactions
contemplated by this Agreement are closed on more than one (1) date as
contemplated in this Section 17.1, the provisions of this Agreement shall be
interpreted to accommodate such separate Closings, and the provisions of this
Agreement relating to the transactions which have not closed shall remain in
effect following any Closing.
17.2 Closing Date Deliveries. At the Closing on the
Closing Date:
(a) ShoLodge shall deliver, or cause to be delivered, to
Prime, a Prime Subsidiary or Landlord, as applicable: (1) the Closing Documents
to be signed by ShoLodge and/or a ShoLodge Subsidiary, as applicable, properly
executed by ShoLodge and/or the ShoLodge Subsidiaries, as applicable, (2) a
certificate of existence or similar document from the Secretary of State of the
State of Tennessee or from such other appropriate official in Tennessee
evidencing the due organization, valid existence and good standing of ShoLodge
and the ShoLodge Subsidiaries under the laws of the State of Tennessee, (3)
resolutions of ShoLodge and the ShoLodge Subsidiaries authorizing the
transactions contemplated hereby, certified by the Secretary
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of ShoLodge and the ShoLodge Subsidiaries, (4) the HPT Estoppel Certificate, (5)
the HPT Lease Amendment, (6) title records for any vehicles transferred pursuant
to this Agreement, and (7) such other documents as Prime shall reasonably
request.
(b) Prime shall deliver, or cause to be delivered, to
ShoLodge, a ShoLodge Subsidiary or Landlord, as applicable: (1) the Closing
Documents to be signed by Prime and/or a Prime Subsidiary, as applicable,
properly executed by Prime and/or the Prime Subsidiaries, as applicable, (2) a
certificate of existence or similar document from the Secretary of State of the
State of Delaware or from such other appropriate official in Delaware evidencing
the due organization, valid existence and good standing of Prime and the Prime
Subsidiaries under the laws of the State of Delaware, (3) resolutions of Prime
and the Prime Subsidiaries authorizing the transactions contemplated hereby,
certified by the Secretary of Prime and the Prime Subsidiaries, and (4) such
other documents as ShoLodge shall reasonably request.
17.3 Possession. Possession of all tangible Assets will be
delivered by ShoLodge and the ShoLodge Subsidiaries, as applicable, to Prime or
a Prime Subsidiary, as applicable, on the Closing Date, and ShoLodge and the
ShoLodge Subsidiaries, as applicable, shall relinquish their use of or claims to
any and all intangible Assets on the Closing Date.
17.4 Employment Matters. At Closing, all employees working
at the Hotels shall be terminated by ShoLodge or a ShoLodge Subsidiary, as
applicable, and ShoLodge or such ShoLodge Subsidiary, as applicable, shall pay
all salaries and wages and, to the extent possible, all accrued but unsatisfied
benefits of such employees with regard to all periods of time prior to the
Closing Date. ShoLodge shall defend, indemnify and hold Prime and the Prime
Subsidiaries, as applicable, harmless from and against any and all loss, expense
(including, without limitation, reasonable attorneys' fees and court costs
arising from the enforcement of this indemnity), damage and liability arising
from the termination of any employees on the Closing Date, including, without
limitation, any claim, damage, penalty or fees, including reasonable attorneys'
fees, arising out of the failure of ShoLodge or a ShoLodge Subsidiary, as
applicable, to comply with all provisions of the Worker Adjustment and
Retraining Act, as amended, except to the extent any of the foregoing is caused
by the failure of Prime or a Prime Subsidiary, as applicable, to rehire such
employees pursuant to the next succeeding sentence and except to the extent the
Purchase Price is decreased for accrued but unpaid benefits due to such
terminated employees pursuant to Section 9.1(b)(vi). Immediately following the
termination of all employees working at the Hotels as contemplated herein, Prime
shall hire, or shall cause a Prime Subsidiary to hire, all such employees other
than the general manager, the assistant general manager and the director of
sales at each Hotel. Prior to the execution of this Agreement, ShoLodge has
provided to Prime a schedule of all employees working at the Hotels by
classification, seniority, rate of pay and accrued benefits. Prime may, during
normal business hours and with prior notice to ShoLodge during the Due Diligence
Period, interview the general managers, assistant general managers and directors
of sales to determine if Prime wants to employ such employees. The provisions of
this Section 17.4 shall survive the Closing.
17.5 Closing Costs and Expenses. Prime shall pay or cause
to be paid the premium for any title policy insuring Prime or a Prime
Subsidiary, as applicable, as to the Real
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Property. All costs of recording the transfer and assignment documents to Prime
or a Prime Subsidiary, as applicable, contemplated herein, including, without
limitation, any and all real estate transfer taxes, shall be paid in accordance
with local custom. Except as set forth in the preceding sentence, each party
shall be responsible for the payment of its own attorney's fees, copying
expenses and other costs and expenses incurred in connection with the
negotiation of this Agreement and the consummation of the transactions
contemplated hereunder. The provisions of this Section 17.5 shall survive the
Closing and any termination of this Agreement.
17.6 Hendersonville Restriction. At or prior to Closing,
ShoLodge shall cause to be recorded against the Hendersonville, Tennessee Hotel
restrictions and covenants (i) requiring the lessee under the HPT Lease during
the term thereof (including extensions and renewals) and thereafter the owner of
such property (A) to secure the approval (not to be unreasonably withheld,
delayed or conditioned) of the owner of the adjacent property on which
ShoLodge's corporate offices are located of any change, alteration, repair,
repainting or similar activity which affects the exterior of such Hotel or the
premises on which such Hotel is located except in an insignificant manner and
(B) to maintain such Hotel and such premises in a neat and attractive manner
consistent with the standard for AmeriSuites hotels, and (ii) providing for
common lawncare and maintenance of landscaping of such properties and the
adjacent bank property with the cost to be shared based on the square footage of
each property compared to the total square footage of all such property (the
"Hendersonville Restriction"). At least ten (10) days prior to recordation,
ShoLodge shall deliver to Prime a copy of the proposed Hendersonville
Restriction for Prime's written approval, such approval not to be unreasonably
withheld, delayed or conditioned. In no event shall the Hendersonville
Restriction be recorded without Prime's prior written approval. The portion of
the Hendersonville Restriction described in part (ii) of the first sentence of
this Section 17.6 shall be mutually restrictive as to all real property covered
thereby. The provisions of this Section 17.6 shall survive the Closing, but any
conflict between the terms of this Section 17.6 and the terms of the
Hendersonville Restriction shall be governed by the Hendersonville Restriction.
ARTICLE XVIII
POST CLOSING ITEMS
18.1 Operating Permits. Prime or a Prime Subsidiary, as
applicable, shall apply for new or modified operating permits and licenses,
including, without limitation, liquor licenses, if applicable, to reflect Prime
or a Prime Subsidiary, as applicable, as the new operator of the Hotels as soon
as possible after Closing. ShoLodge and the ShoLodge Subsidiaries, as
applicable, shall cooperate with Prime or a Prime Subsidiary, as applicable, in
its efforts to obtain new operating permits and licenses for the Hotels or
modifications to existing operating permits and licenses or, to the extent
permitted by applicable law, to maintain the existing operating permits and
licenses in effect until such time as the new or modified operating permits and
licenses may be obtained. Until such time as such new or modified operating
permits and licenses are obtained, ShoLodge and the ShoLodge Subsidiaries, as
applicable, to the extent permitted by applicable law, shall take all steps
reasonably necessary to enable the current operating permits and licenses, if
any, to be used in the operation of the Hotels and to permit the continued
operation of the Hotels,
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including, without limitation, the uninterrupted sale and serving of alcoholic
beverages at the Hotels, if applicable. All costs and expenses incurred by
ShoLodge or a ShoLodge Subsidiary in connection with the foregoing shall be paid
by Prime or a Prime Subsidiary, as applicable, and Prime and the Prime
Subsidiaries shall defend, indemnify and hold ShoLodge and the ShoLodge
Subsidiaries harmless from and against any and all loss, expense (including,
without limitation, reasonable attorney's fees and court costs arising from the
enforcement of this indemnity), damage and liability arising from the foregoing,
and Prime and the Prime Subsidiaries shall cause ShoLodge and the ShoLodge
Subsidiaries, as applicable, to be named as additional insureds under their
liability insurance policies for the Hotels including, without limitation, under
their liquor liability or "dram shop" coverage with respect to the sale,
distribution or consumption of alcoholic beverages. Evidence of such insurance
shall be provided to ShoLodge at Closing, and such insurance must contain a
provision to the effect that it may not be canceled or modified without thirty
(30) days advance written notice from the insurer to ShoLodge (until such time
as the new or modified operating permits and licenses are received). The
provisions of this Section 18.1 shall survive the Closing.
18.2 Radius Restriction. For a twenty (20) year period
commencing on the Closing Date, neither ShoLodge nor any ShoLodge Affiliate
shall own, operate or franchise any all-suites hotel substantially similar in
nature and kind to the AmeriSuites hotels to be operated by Prime or a Prime
Subsidiary, as applicable, as contemplated in this Agreement anywhere within a
certain designated area of each Hotel, such area being as to the Existing HPT
Hotels and the Additional HPT Hotels the applicable "Restricted Trade Area" as
set forth in Exhibit B to the HPT Lease or the comparable provision of any
separate lease contemplated in Section 3.3 and in Section 3.8, as applicable,
and being as to the Texas Hotels a three (3) mile radius of each such Texas
Hotel. The foregoing, however, shall not limit ShoLodge or any ShoLodge
Affiliate from (i) developing or constructing any all-suites hotel substantially
similar in nature and kind to the AmeriSuites hotels contemplated herein within
such restricted area as long as such hotel is both (A) operated by someone other
than ShoLodge or a ShoLodge Affiliate, and (B) owned by someone other than
ShoLodge or a ShoLodge Affiliate, or (ii) owning, operating or franchising (A)
any "Shoney's" brand all-suites hotel within such restricted area, or (B) any
other hotel within such restricted area as long as such other hotel is not an
all-suites hotel substantially similar in nature and kind to the AmeriSuites
hotels contemplated herein. The provisions of this Section 18.2 shall survive
the Closing. Prime shall have the right to any remedies available to it at law
or in equity, including without limitation, injunction, in the event ShoLodge or
any ShoLodge Affiliate violates the covenant set forth in this Section 18.2.
ARTICLE XIX
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATIONS; REMEDIES
19.1 Survival of Representations. All representations and
warranties made by any party in this Agreement shall be true and correct in all
material respects as of Closing and, subject to the limitations described in
Section 19.6 below, shall survive the Closing hereunder.
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19.2 Indemnification by Prime. Prime hereby indemnifies
and holds ShoLodge and the ShoLodge Subsidiaries harmless from and against, and
agrees to promptly defend ShoLodge and the ShoLodge Subsidiaries from and
reimburse ShoLodge and the ShoLodge Subsidiaries for, any and all losses,
damages, costs, expenses, liabilities, obligations, suits, actions, proceedings
(formal or informal), investigations, settlements and claims of any kind
(including, without limitation, reasonable attorney fees and other legal costs
and expenses) which ShoLodge or the ShoLodge Subsidiaries may at any time suffer
or incur, or become subject to, as a result of or in connection with:
(a) the representations and warranties made by Prime in
this Agreement having been untrue or incorrect in any material respect;
(b) any failure by Prime to carry out, perform, satisfy
and discharge any of the covenants, agreements, undertakings, liabilities or
obligations of Prime under this Agreement; and
(c) except to the extent the Purchase Price or the
Development Site Purchase Price has been increased pursuant to Section 9.1(a)
for the obligation in question, the operation of the Hotels on and after the
Closing Date, including, without limitation, the following:
(i) any obligation arising out of an accident,
injury, death or damage whatsoever caused to any Person or
loss of property occurring on or after the Closing Date in or
about the Assets or any part thereof; and
(ii) any obligation arising out of any actions or
omissions of Prime or a Prime Subsidiary or its or their
agents, representatives, employees or contractors relating to
the Assets on or after the Closing Date.
19.3 ShoLodge's Indemnity. ShoLodge hereby indemnifies and
holds Prime and the Prime Subsidiaries harmless from and against, and agrees
promptly to defend Prime and the Prime Subsidiaries from and reimburse Prime and
the Prime Subsidiaries for, any and all losses, damages, costs, expenses,
liabilities, obligations, suits, actions, proceedings (formal or informal),
investigations, settlements and claims of any kind (including, without
limitation, reasonable attorney fees and other legal costs and expenses) which
Prime or the Prime Subsidiaries may at any time suffer or incur, or become
subject to, as a result of or in connection with:
(a) the representations and warranties made by ShoLodge
in this Agreement having been untrue or incorrect in any material respect;
(b) any failure by ShoLodge to carry out, perform,
satisfy and discharge any of the covenants, agreements, undertakings,
liabilities or obligations of ShoLodge under this Agreement;
(c) except to the extent the Purchase Price or the
Development Site Purchase Price has been decreased pursuant to Section 9.1(b)
for the obligation in question, the operation of the Hotels prior to the Closing
Date, including, without limitation, the following:
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(i) any obligation arising out of an accident,
injury, death or damage whatsoever caused to any Person or
loss of property occurring prior to the Closing Date in or
about the Assets or any part thereof;
(ii) any obligation arising out of any actions or
omissions of ShoLodge or a ShoLodge Subsidiary or its or their
agents, representatives, employees or contractors relating to
the Assets prior to the Closing Date; and
(iii) accounts payable with respect to goods or
services provided to or for the Hotels prior to the Closing
Date; and
(d) any failure of ShoLodge or any ShoLodge Subsidiary to
comply with any bulk sales law or like statute in connection with the
transactions contemplated herein.
Notwithstanding the foregoing, ShoLodge shall have no
obligation to indemnify Prime or the Prime Subsidiaries with respect to any
representation or warranty concerning the condition of the STI Assets, the
Additional Property or the Texas Property or any portion thereof to the extent
such condition can be corrected (by maintenance, repair or replacement) pursuant
to the terms of the HPT Lease or the Texas Lease with funds in the "FF&E
Reserve" created pursuant to the HPT Lease (or a similar fund created under a
separate lease contemplated in Section 3.3 and in Section 3.8) or the Texas
Lease, as applicable.
19.4 Notification of Claims.
(a) A party or parties entitled to be indemnified
pursuant to Section 19.2 or 19.3 hereof or otherwise pursuant to this Agreement
(the "Indemnified Party") shall notify the party or parties liable for such
indemnification (the "Indemnifying Party") in writing of any claim or demand
which the Indemnified Party has determined has given or could give rise to a
right of indemnification under this Agreement. Subject to the Indemnifying
Party's right to defend in good faith third party claims as hereinafter
provided, the Indemnifying Party shall satisfy its obligations under this
Article XIX or otherwise pursuant to this Agreement within thirty (30) days
after the receipt of written notice thereof from the Indemnified Party.
(b) If the Indemnified Party shall notify the
Indemnifying Party of any claim or demand pursuant to Section 19.4(a), and if
such claim or demand relates to a claim or demand asserted by a third party
against the Indemnified Party which the Indemnified Party asserts is a claim or
demand for which the Indemnifying Party must indemnify or hold harmless the
Indemnified Party under Section 19.2 or 19.3 hereof or otherwise pursuant to
this Agreement, the Indemnifying Party shall have the right to employ counsel to
defend any such claim or demand asserted against the Indemnified Party. The
Indemnified Party shall have the right to cooperate at its expense in the
defense of any such claim or demand. The Indemnifying Party shall notify the
Indemnified Party in writing, within thirty (30) days after the date of the
notice of claim given by the Indemnified Party to the Indemnifying Party under
Section 19.4(a) of its election to defend in good faith any such third party
claim or demand. So long as the Indemnifying Party is defending in good faith
any such claim or demand asserted by a third party against the Indemnified
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Party, the Indemnified Party shall not settle or compromise such claim or
demand. The Indemnified Party shall make available to the Indemnifying Party or
its agents all records and other materials in the Indemnified Party's possession
reasonably required by the Indemnifying Party for its use in contesting any
third party claim or demand. Whether or not the Indemnifying Party elects to
defend any such claim or demand, the Indemnified Party shall have no obligation
to do so.
19.5 Remedies.
(a) If ShoLodge fails or refuses to timely perform
ShoLodge's obligations hereunder, Prime shall have only the following options:
(i) to terminate this Agreement as provided in Article XI and thereupon this
Agreement shall terminate, and Prime and ShoLodge shall be relieved and released
of any further obligations, claims and liabilities hereunder, except for the
performance by each party of its Post Termination Obligations which shall remain
enforceable, and except that Prime may pursue a suit against ShoLodge for
damages resulting from any failure or refusal of ShoLodge to perform ShoLodge's
obligations hereunder prior to such termination, or (ii) to pursue any and all
remedies available to Prime at law or in equity, including, without limitation,
a suit for specific performance.
(b) If Prime fails or refuses to timely perform Prime's
obligations hereunder, ShoLodge shall have only the following options: (i) to
terminate this Agreement as provided in Article X and thereupon this Agreement
shall terminate, and Prime and ShoLodge shall be relieved and released of any
further obligations, claims and liabilities hereunder, except for the
performance by each party of its Post Termination Obligations which shall remain
enforceable and except that ShoLodge may pursue a suit against Prime for damages
resulting from any failure or refusal of Prime to perform Prime's obligations
hereunder prior to such termination, or (ii) to pursue any and all remedies
available to ShoLodge at law or in equity, including, without limitation, a suit
for specific performance.
(c) Notwithstanding anything to the contrary expressed or
implied in this Agreement, the sole and exclusive remedy of Prime and the Prime
Subsidiaries for any breach of any representation or warranty of ShoLodge
contained in this Agreement shall be as follows: (i) prior to Closing, to
terminate this Agreement pursuant to Article XI; and (ii) on and after Closing,
to obtain indemnification from ShoLodge pursuant to this Article XIX. Prime and
the Prime Subsidiaries shall have no other right or remedy with respect to the
breach of any representation or warranty of ShoLodge contained in this Agreement
at law or in equity.
19.6 Limitations. Notwithstanding the foregoing, unless
notice of any claim for any indemnification obligation of ShoLodge for any
breach of any representation or warranty of ShoLodge contained in this Agreement
has been given to ShoLodge within twelve (12) months after the Closing, no claim
may be asserted against, and no action, suit or proceeding may be brought
against, ShoLodge. Further, notwithstanding anything contained herein to the
contrary, neither Prime nor the Prime Subsidiaries shall have the right to
recover damages against ShoLodge for the breach of any representation or
warranty of ShoLodge contained herein as to which Prime or a Prime Subsidiary
had knowledge prior to or at Closing, and neither ShoLodge nor any
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ShoLodge Subsidiary shall have the right to recover damages against Prime for
the breach of any representations or warranty of Prime contained herein as to
which ShoLodge or any ShoLodge Subsidiary had knowledge prior to or at Closing.
19.7 Survival. The provisions of this Article XIX shall
survive the Closing of the transactions contemplated by this Agreement, and the
provisions of Section 19.4 shall survive the termination of this Agreement and
apply with respect to indemnification obligations constituting a part of the
Post Termination Obligations. Further, the provisions of Section 19.5(a)(i) and
Section 19.5(b)(i) concerning a suit for damages shall survive the termination
of this Agreement pursuant to Section 19.5.
ARTICLE XX
MISCELLANEOUS
20.1 Confidentiality. Each of the parties hereto agrees
and undertakes to retain in confidence and to require its respective employees,
consultants and agents to retain in confidence, all information obtained in
connection with this Agreement and the transactions and disclosures contemplated
hereby which information is not generally ascertainable from public sources.
Except as required by law, each of the parties further agrees not to make any
disclosure to non-parties, or any public announcements, regarding this Agreement
or the transactions contemplated hereby without the prior consent of the other
party hereto. It is understood and agreed, however, that this section will not
be construed as an obligation to refrain from business activities in the future
that are similar to the business in which the parties hereto are now engaged.
The provisions of this Section 20.1 shall survive the Closing and any
termination of this Agreement.
20.2 Parties in Interest. Except as otherwise expressly
provided herein, all the terms and provisions of this Agreement shall be binding
upon, shall inure to the benefit of, and shall be enforceable by the respective
heirs, beneficiaries, personal and legal representatives, successors, and
assigns of the parties hereto. Notwithstanding the foregoing, Prime shall not
assign its rights under this Agreement without the prior written approval of
ShoLodge, and any attempted assignment without such approval shall be null and
void.
20.3 Entire Agreement; Amendments. This Agreement,
including the exhibits and other documents and writings referred to herein or
delivered pursuant hereto, which form a part hereof, contains the entire
understanding of the parties with respect to this subject matter. There are no
restrictions, agreements, promises, warranties, covenants, or undertakings other
than those expressly set forth herein or therein. This Agreement supersedes all
prior agreements and understandings between the parties with respect to its
subject matter. This Agreement may be amended only by a written instrument duly
executed by the parties or their respective successors or permitted assigns. Any
condition to a party's obligations hereunder may be waived by such party in
writing.
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20.4 Headings. The section and paragraph headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
20.5 Notices. Any notice, request or other communication
to be given by any party hereunder shall be in writing and shall be deemed
effective three (3) business days after deposit in the United States Registered
or Certified Mail, postage prepaid, return receipt requested, or one (1)
business day after delivery to an overnight courier service for next business
day delivery or upon delivery in person, or upon sending via telecopy with a
copy deposited in the United States first class mail, addressed to such party as
follows:
20.6 If to ShoLodge, then to:
ShoLodge, Inc.
000 Xxxxx Xxxxx Xxxxx
Xxxxxxxxxxxxxx, XX 00000
Attn: Xxxx Xxxxx
Telecopy: (000)000-0000
and with a copy to:
Boult, Cummings, Xxxxxxx & Xxxxx, PLC
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxxx, Esq.
Telecopy: (000)000-0000
20.7 If to Prime, then to:
Prime Hospitality Corp.
000 Xxxxx 00 Xxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx
Telecopy: (000) 000-0000
and with a copy to:
Prime Law Department
000 Xxxxx 00 Xxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxxxx, Esq.
Telecopy: (000)000-0000
or to such other address as any party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall only be
effective upon receipt.
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20.8 Counterparts. This Agreement may be executed
simultaneously in several counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
20.9 Severability. If any provision, clause or part of
this Agreement or the application thereof under certain circumstances is held
invalid, the remainder of this Agreement or the application of such provision,
clause or part under other circumstances shall not be affected thereby.
20.10 Time of Essence. Time is of the essence in this
Agreement, and all dates and time periods specified herein shall be strictly
observed.
20.11 Enforcement Expenses. The prevailing party in any
action commenced due to the breach hereof shall be entitled to recover its
costs, expenses and reasonable attorney's fees incurred in the enforcement of
this Agreement.
20.12 Survival. The provisions of this Agreement which by
their terms survive or must survive in order to accomplish the purpose of such
provisions shall survive the termination of this Agreement.
20.13 Governing Laws. This Agreement shall be construed
and enforced in accordance with the laws of the State of Delaware.
20.14 Representation by Counsel. The parties acknowledge
that each party to this Agreement has been represented by counsel and such
counsel have participated in the negotiation and preparation of this Agreement.
This Agreement shall be construed without regard to any presumption or rule
requiring that it be construed or constructed against the party who has drafted
or caused the Agreement to be drafted.
20.15 Notice by Counsel. Anything contained in this
Agreement to the contrary notwithstanding, all notices pursuant to this
Agreement, whether from ShoLodge to Prime or from Prime to ShoLodge, will be
effective if executed by and sent by the attorney of the party sending such
notice. Prime and ShoLodge hereby agree that if a notice is given hereunder by
counsel, such counsel may communicate directly in writing with all principals,
as may be required to comply with the notice provisions of this Agreement.
20.16 No Recording. ShoLodge and Prime hereby acknowledge
that neither this Agreement nor any memorandum, affidavit or other instrument
evidencing this Agreement or relating hereto (other than the closing documents
contemplated hereunder) shall ever be recorded in the real property records
where any of the Real Property is located.
20.17 Exclusive Contract. Beginning on the Effective Date
and continuing until the termination of this Agreement, unless ShoLodge obtains
the prior approval of Prime, ShoLodge shall not enter into an agreement to sell,
lease or otherwise transfer and convey the Assets or any portion thereof to
anyone other than Prime or a Prime Subsidiary; provided,
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however, that the foregoing shall not apply to the sale of such portion of the
Assets as would be sold in the ordinary course of business notwithstanding the
transactions contemplated herein or to the sale of such portion of the Assets to
Landlord as is contemplated herein.
(signatures on following page)
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly signed, all as of the date first above written.
SHOLODGE, INC.
By: [SIG]
---------------------
Date: 3-15-00 Title: President
--------------------- ---------------------
PRIME HOSPITALITY CORP.
By: [SIG]
---------------------
Xxxxxxx Vieari
Date: 3/16/00 Title: Sr. V.P.
--------------------- ---------------------
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