Exhibit 10.8
Execution Copy
SUBSCRIPTION AGREEMENT
SUBSCRIPTION AGREEMENT dated as of March 17, 1998 between (i) U.S.
FRANCHISE SYSTEMS, INC., a Delaware corporation (the "Company"), (ii) SEXTANT
TRADING LLC ("Sextant"), and (iii) XXXXXX-XXXXX REAL ESTATE OPPORTUNITY FUND,
L.P., XXXXXX-XXXXX REAL ESTATE OPPORTUNITY FUND II, L.P. and XXXXXX-XXXXX
CAPITAL REAL ESTATE OPPORTUNITY FUND, L.P. (collectively, "Xxxxxx-Xxxxx" and,
together with Sextant, the "Purchasers").
Section 1. SALE AND PURCHASE. Upon the execution of this
Agreement, Sextant and Xxxxxx-Xxxxx severally agree to subscribe for and
purchase, and the Company agrees to issue and sell to such Purchasers, 437,500
and 62,500 shares, respectively, of the Company's Class A Common Stock, $.01 par
value (the "Shares"), for a purchase price of $11.25 per Share in cash.
Concurrently with such purchase, the parties shall execute and deliver a
Registration and Tag-Along Rights Agreement with respect to the Shares.
Section 2. RIGHT TO PURCHASE ADDITIONAL SHARES. For each $10.0
million of funds (up to a maximum of $50.0 million of funds) committed out of
the Initial Commitment (as defined in the Operating Agreement of the Fund) by
Constellation Development Fund LLC and its affiliated entities (collectively,
the "Fund") in hotel development projects on or before the second anniversary
hereof, the Company agrees that Sextant and Xxxxxx-Xxxxx shall have the right to
purchase an additional 87,500 and 12,500 Shares, respectively, at a purchase
price of $11.25 per Share in cash. Such purchase rights shall be exercisable by
either Purchaser in whole or in part at any time during the 18-month period
following completion of the Fund's incremental $10.0 million commitment by
delivery of written notice of exercise to the Company. Closing of each purchase
of additional Shares pursuant to this Section 2 shall occur within 10 days of
delivery of the notice of exercise. The purchase price and number of Shares
acquirable by the Purchasers pursuant to this Section 2 shall be appropriately
adjusted for any future stock splits, stock dividends or similar transactions
affecting the Class A Common Stock.
Section 3. INVESTMENT REPRESENTATIONS. Each Purchaser represents
and warrants to the Company (i) that the Shares will be acquired by such
Purchaser for its own account and not with a view to, or present intention of,
distribution thereof in violation of the Securities Act of 1933, as amended (the
"Securities Act"), and will not be disposed of in contravention of the
Securities Act or this Agreement; (ii) that such Purchaser is able to bear the
economic risk of an investment in the Company for an indefinite period of time
inasmuch as the Shares have not been registered under the Securities Act and,
therefore, cannot be sold unless subsequently registered under the Securities
Act or an exemption from such registration is available; (iii) that such
Purchaser is an "accredited investor" as defined in Regulation D of the
Securities and Exchange Commission; (iv) that such Purchaser has received copies
of the Company's definitive proxy statement dated February 13, 1998 and the
Company's most recent annual, quarterly and current reports on Form 10-K, Form
10-Q and Form 8-K; (v) that such Purchaser has not made its investment in
response to any general solicitation or
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advertisement by the Company; and (vi) that such Purchaser has had an
opportunity to ask questions and receive answers concerning the terms and
conditions of the offering of the Shares and has had full access to such other
information concerning the Company as it has requested.
Section 4. ADDITIONAL REPRESENTATIONS.
(a) The Company hereby represents and warrants to the Purchasers that
(i) the execution, delivery and performance of this Agreement by the Company
does not and will not conflict with, breach, violate or cause a default under
any contract, agreement, instrument, order, judgment or decree to which the
Company is a party or by which it is bound or violate any provision of law,
statute, rule or regulation applicable to the Company; (ii) upon the execution
and delivery of this Agreement by the Purchasers, this Agreement shall be the
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms, (iii) upon issuance of the Shares hereunder against
payment of the purchase price therefor, such Shares will be duly authorized and
validly issued, fully paid and non-assessable, and such issuance shall not
require registration under the Securities Act, and (iv) the Company's reports
and filings pursuant to the Securities Act and the Securities Exchange Act of
1934, taken as a whole, are true and complete in all material respects and do
not omit to state a material fact required to make the statements contained
therein not misleading.
(b) Each Purchaser hereby represents and warrants to the Company that
(i) the execution, delivery and performance of this Agreement by such Purchaser
does not and will not conflict with, breach, violate or cause a default under
any contract, agreement, instrument, order, judgment or decree to which such
Purchaser is a party or by which it is bound or violate any provision of law,
statute, rule or regulation applicable to such Purchaser; and (ii) upon the
execution and delivery of this Agreement by the Company, this Agreement shall be
the valid and binding obligation of such Purchaser, enforceable against such
Purchaser in accordance with its terms.
Section 5. USE OF PROCEEDS. The Company shall use the proceeds of
the sale of Shares hereunder to fund a portion of its commitment to the Fund.
Section 6. TRANSFER RESTRICTIONS. The Company may require, as a
condition to any transfer of Shares, that the transferring Purchaser deliver an
opinion of counsel (in form and substance reasonably acceptable to the Company)
to the effect that such transfer complies with applicable securities laws. Each
Purchaser consents to the placement of an appropriate restrictive legend on the
certificates representing the Shares reflecting such restrictions.
Section 7. AMENDMENTS AND WAIVERS. Any provision of this
Agreement may be amended or waived only with the prior written consent of each
of the parties hereto.
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Section 8. NOTICES. All notices, demands or other communications
to be given or delivered under or by reason of the provisions of this Agreement
will be in writing and will be deemed to have been given when delivered
personally, when delivered via a nationally recognized overnight courier or when
sent via facsimile (with written confirmation). Such notices, demands and other
communications will be sent to the address indicated below:
To the Company:
U.S. Franchise Systems, Inc.
00 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attn: Xxxx Xxxxxxx
Facsimile: (000) 000-0000
To the Purchasers:
Sextant Trading LLC
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxxx
Facsimile: (212) ) 319-4557
Xxxxxx-Xxxxx Funds
000 Xxxx Xxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxx Xxxxx
Facsimile: ______________
or such other address or to the attention of such other person as the recipient
party shall
have specified by prior written notice to the other parties.
Section 9. SEVERABILITY. Whenever possible, each provision of
this Agreement will be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law or
rule in any jurisdiction, such invalidity, illegality or unenforceability will
not affect any other provision or any other jurisdiction, but this Agreement
will be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.
Section 10. ENTIRE AGREEMENT. This Agreement shall embody the
complete agreement and understanding between the parties with respect to the
subject matter hereof and supersede and preempt any prior understandings,
agreements or representations by or between the parties, written or oral, which
may have related to the subject matter hereof in any way.
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Section 11. COUNTERPARTS. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument.
Section 12. GOVERNING LAW. ALL QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY AND INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED BY
THE INTERNAL LAW (AND NOT THE LAW OF CONFLICTS) OF DELAWARE.
Section 13. REMEDIES. The parties hereto agree and acknowledge
that money damages may not be an adequate remedy for any breach of the
provisions of this Agreement and that any party may in its sole discretion apply
to any court of law or equity of competent jurisdiction for specific performance
and/or injunctive relief in order to enforce or prevent any violations of the
provisions of this Agreement. The exercise of such remedies shall not prevent
such party from recovering damages by reason of any breach of any provision of
this Agreement or exercising all other rights at law or in equity existing in
its favor.
Section 14. FEES AND EXPENSES. The Fund shall pay the reasonable
out-of-pocket expenses of the Purchasers (including reasonable attorneys' fees)
incurred in connection with the preparation and negotiation of this Agreement
and the related Registration and Tag-Along Rights Agreement and the consummation
of the transactions contemplated thereby, which expenses shall not exceed $5,000
in the aggregate.
* * * * *
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IN WITNESS WHEREOF, the parties have executed this Subscription
Agreement as of the date set forth above.
U.S. FRANCHISE SYSTEMS, INC.
By: /s/ Xxxx Xxxxxxx
----------------------------------
Its: Executive Vice President and
Chief Financial Officer
SEXTANT TRADING LLC
By: /s/ Xxxxx Xxxxxxxx
----------------------------------
Its:
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XXXXXX-XXXXX REAL ESTATE
OPPORTUNITY FUND, L.P.
By: IL PARTNERS, L.P., its General Partner
By: L&A Management, Inc.,
its General Partner
By: /s/ Xxxx X. Xxxxx
------------------------------
Xxxx X. Xxxxx, President
XXXXXX-XXXXX REAL ESTATE
OPPORTUNITY FUND II, L.P.
By: IL PARTNERS, L.P., its General Partner
By: L&A Management, Inc., its
General Partner
By: /s/ Xxxx X. Xxxxx
------------------------------
Xxxx X. Xxxxx, President
XXXXXX-XXXXX CAPITAL REAL ESTATE
OPPORTUNITY FUND, L.P.
By: IL PARTNERS, L.P., its General Partner
By: L&A Management, Inc., its
General Partner
By: /s/ Xxxx X. Xxxxx
------------------------------
Xxxx X. Xxxxx, President
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