EXHIBIT 10.1
ALLIANCE AGREEMENT
THIS ALLIANCE AGREEMENT, dated as of January 20, 1998, between U.S.
FRANCHISE SYSTEMS, INC. ("USFS"), and EQUITY INNS PARTNERSHIP, L.P.
("Equity"), recites and provides as follows:
RECITALS
A. USFS franchises, and may own and operate hotels under the
trade name "Hawthorn Suites."
B. USFS occasionally contracts with unrelated third party
developers (a "Developer") to develop and construct a Hawthorn
Suites Hotel.
C. Equity owns hotels of various brand names.
D. USFS and Equity desire to enter into an alliance whereby USFS
would sell (or cause Developers to sell) to and, in some
sales, lease back from Equity various Hawthorn Suites hotels,
upon the terms and conditions set forth herein.
AGREEMENT
NOW, THEREFORE, for and in consideration of the mutual provisions of
this Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Right of First Offer.
(a) During the period from the date hereof and through and
including December 31, 2000 (the "Alliance Period"), U.S.
Franchise Systems, for itself and any wholly owned
subsidiary (collectively, the "U.S. Franchise Group"),
hereby grants Equity a right of first offer (the "RFO")
to purchase any and all "Hawthorn Suites or Hawthorn
Suites LTD Hotels" located in New York, New Jersey,
Connecticut, Rhode Island, Massachusetts, Maine, New
Hampshire, Vermont, Pennsylvania, Maryland, Delaware,
Illinois, Ohio, Michigan, Wisconsin, Minnesota,
Washington D.C., Virginia, Georgia, and Indiana in which
the U.S. Franchise Group has at least 51% of the
ownership interest (a "Hotel"). In addition, U.S.
Franchise Group will use its best efforts to cause
entities with which it has licensed the right to
build, own, and operate Hawthorn Suites, Hawthorn Suites
LTD, or any additional Hawthorn branded hotels in the
previously mentioned states, to offer to Equity a first
opportunity to purchase their hotels. However, Equity
recognizes the U.S. Franchise Group can not cause any
such sales to occur.
(b) If any member of the "U.S. Franchise Group" desires to
sell one or more Hotels, then before agreeing to sell or
offering for sale such Hotel to any third party, the U.S.
Franchise Group agrees to cause the Seller to deliver to
Equity a notice (an "Offer") setting forth the price and
all material terms and conditions upon which the Seller,
in its sole discretion, would be willing to sell the
Hotel, together with copies of all available due
diligence materials with respect to the Hotel in the U.S.
Franchise Group's possession or control (the "Due
Diligence Materials"), including, without limitation,
occupancy, ADR and REVPAR information, financial
statements, title policies, title documents, surveys,
environmental audits, zoning reports, incoming expense
statements, appraisals, operating agreements, PIPs, star
reports, budgets, litigation reports and similar
materials.
(c) Within 15 days following the receipt of the Offer,
Equity shall by notice to Seller either (i) accept the
Offer or (ii) reject the Offer.
(d) In the event Equity elects to reject the Offer, the
Seller shall be free to offer to sell the Hotel to any
and all third parties upon the same terms and conditions
as set forth in the Offer free and clear of the RFO
during a period of six months following the date Equity
received the Offer, including all of the available Due
Diligence materials (the "Sales Period"). Failure of the
Seller to sell the hotel during the Sales Period, or the
desire of the Seller to sell the hotel during the Sales
Period at terms materially differing from the terms of
the Offer shall require the Seller to comply with the
terms of the RFO.
(e) In the event Equity accepts the Offer in a timely
manner, then Seller and Equity shall, within 30 days
thereafter, execute and deliver a purchase agreement
with respect to the applicable Hotel, which purchase
agreement shall incorporate the provisions of the Offer
in the form of purchase agreement previously agreed to
by U.S. Franchise and Equity reasonably in good faith
(the "Purchase Agreement").
2. Purchase Option. During the Alliance Period, USFS agrees
that the U.S. Franchise Group shall offer to sell to
Equity in accordance with the RFO not fewer than 12
hotels during each calendar year of 1998, 1999 and
2000 (the "Option"). In order for an Offer to be
counted towards the fulfillment of the
requirements of an Option, all of the available due
diligence materials in U.S. Franchise Group's control
or possession, price, deposit, rent (in the event of
leaseback) franchise payments and the like must be
provided to Equity and be reasonable in Equity's
reasonable discretion. In the event that a total of 30
hotels have not been Offered in accordance with the
Option by December 31, 2000, then this agreement
shall survive until such time as a total of 36 hotels
have been Offered under the Option.
3. Leaseback. In the event where any Offer includes, as a
term thereof, the right of a member of the U.S. Franchise
Group to lease back the applicable Hotel from Purchaser
as a condition to the sale, reference to the sale of such
Hotel shall be deemed also to include such agreement
to lease. Unless expressly required in the applicable
Offer, Equity shall not be obligated to lease back any
Hotel purchased by Equity to any member of the U.S.
Franchise Group.
4. Franchise. Where a Hotel purchased by Equity is not
leased back to a member of the U.S. Franchise Group,
or such leaseback expires or is terminated, then, so
long as Equity, an affiliate of Equity or their purchaser
is the owner of such Hotel, U.S. Franchise (or the
applicable member of the U.S. Franchise Group) shall not
unreasonably withhold, delay nor condition the issuance
of a "Hawthorn Suites" (or applicable brand) franchise
agreement from Equity, Equity's tenant or other operator
upon such franchise terms previously granted with respect
to such Hotel.
5. Notices. Any and all notices or other communications
required or permitted under this Agreement shall be
deemed given if and in writing and same delivered by
certified mail or reputable overnight commercial carrier
addressed to the recipient of the notice or other
communication, postage prepaid and received or certified
with return receipt required (if by mail), or with all
freight charges prepaid (if by overnight commercial
carrier), and shall be deemed received on the date after
appropriate mailing or on the subsequent business day.
All such notices shall be addressed,
If to Equity, to:
Equity Inns Partnership, L.P.
0000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxx 00000
Attn: Xx. Xxxxxxx X. XxXxxxx, Xx., CEO
with a copy to:
Hunton & Xxxxxxxx
0000 Xxxxxxxx Xxxxx, Xxxxx 0000
XxXxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Best, Esquire
and if to the U.S. Franchise Group, to:
U.S. Franchise Systems, Inc.
00 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
6. Governing Law. This Agreement shall be interpreted,
construed, applied and enforced in accordance with the
laws of the State of Tennessee, without regard to choice
of law principles.
7. Amendments and Waivers. This Agreement may not be
amended, nor shall any waiver, change, modification,
consent or discharge be affected except by written
instrument executed by the party against whom enforcement
is sought.
8. Successors and Assigns. This Agreement shall inure to
the benefit of and bind the parties hereto and their
successors and assigns.
[SIGNATURE PAGE]
ALLIANCE AGREEMENT
EQUITY INNS PARTNERSHIP, L.P.
By: Equity Inns Trust, as its general
partner
By: /s/ Xxxxx X. Xxxxxx
-----------------------
Name: Xxxxx X. Xxxxxx
Title: President & COO
[SIGNATURE PAGE]
ALLIANCE AGREEMENT
U.S. FRANCHISE SYSTEMS, INC.
By: /s/ Xxx Xxxxx
-----------------
Name: Xxx Xxxxx
Title: VP Franchise Ops