EXHIBIT 10.1 EXECUTION COPY
LEASEHOLD ACQUISITION AGREEMENT
THIS LEASEHOLD ACQUISITION AGREEMENT (the "Agreement") is made and
entered into as of this 28th day of June, 2002, by and among CapStar Winston
Company, LLC ("CapStar"), Meristar Management Company, LLC (the "Manager"),
Winston Hotels, Inc. ("Winston"), XXXX Limited Partnership ("XXXX"), Evanston
Hotel Associates, LLC ("Evanston"), Xxxxx Landing Hotel Associates, LLC ("Xxxxx
Landing" and, together with XXXX and Evanston, the "Lessors") and Xxxxxxx
Hospitality Services Inc. ("Xxxxxxx"). The Agreement is effective as of July 1,
2002 (the "Effective Date").
WITNESSETH:
WHEREAS, CapStar has entered into lease agreements with the Lessors
with respect to the forty-seven (47) hotels described in Exhibit A (the
"Hotels") (as such agreements may have been amended or modified, each a "Lease
Agreement" and collectively, the "Lease Agreements"); and
WHEREAS, the parties desire to provide for the purchase and assignment
of the Lease Agreements subject to the terms and conditions described herein;
and
WHEREAS, thirty-nine (39) of the Hotels described in Exhibit A are
managed by Meristar Management Company, LLC, an affiliate of CapStar; and
WHEREAS, seven (7) of the Hotels (the "IMIC Hotels") are managed by the
Interstate Management and Investment Corporation ("IMIC") and one (1) Hotel (the
"Hilton Hotel") is managed by the Hilton Corporation ("Hilton"); and
WHEREAS, the parties desire to set forth other agreements and covenants
as set forth herein;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
expressly acknowledged, the parties do hereby agree as follows:
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter set forth, the parties hereto do hereby
agree as follows:
1. Assignment and Assumption of Lease Agreements and Leasehold Assets.
(a) CapStar hereby conveys, sells, transfers, assigns and
delivers to Xxxxxxx as of the Effective Date the Lease Agreements and, as
contemplated by Section 1(b) hereof, the Leasehold Assets (as hereinafter
defined). Xxxxxxx hereby assumes as of the Effective Date the Lease Agreements
and the Leasehold Assets and, subject to the provisions of Section 3 hereof,
all liabilities and/or obligations of CapStar arising under the Lease Agreements
and/or the Leasehold Assets to the extent (i) such liabilities and/or
obligations arise or are incurred with respect to periods from and after the
Effective Date or (ii) to the extent Xxxxxxx or Xxxxxxx receives a credit
therefor on the Estimated Settlement Statement or Actual Settlement Statement
(as defined in Section 6 hereof), such liabilities and/or obligations are paid
or performed or remain to be paid or performed from and after the Effective Date
but first arose or were incurred with respect to periods prior to the Effective
Date.
(b) Upon the terms and subject to the conditions set forth in
this Agreement, CapStar hereby conveys, sells, transfers, assigns and delivers
to Xxxxxxx as of 12:01 AM on the Effective Date (the "Cut-off Time"), and
Xxxxxxx hereby assumes and accepts from CapStar as of the Cut-off Time, all
right, title and interest of CapStar in and to the following assets, properties,
rights (contractual or otherwise) of CapStar relating to the Lease Agreements
and/or the Hotels (collectively, the "Leasehold Assets"):
(i) All expendable supplies, including, but not
limited to, all china, glassware, linens, towels, washcloths, bedding,
napkins, tablecloths, silverware, kitchen and bar small goods, paper
goods, guest supplies, cleaning and maintenance supplies, office
supplies, operating supplies, printing, stationery and uniforms owned
by CapStar or the Manager and located at the Hotels or held in storage
for use at the Hotels (the "Expendables");
(ii) All fixtures, furniture, furnishings, fittings,
equipment, machinery, apparatus, appliances, computer hardware and
equipment, software, reservations terminals, vehicles, building
materials, telephones and other communications equipment, copiers,
facsimile machines, postal machines, televisions, signs, vacuum
cleaners, video equipment and other articles of personal property owned
by CapStar or the Manager and located at the Hotels or held in storage
for use at the Hotels, excluding therefrom (A) all property owned by
any hotel franchisor or by any tenant under a Space Lease (as defined
in Section 2(b)(ix) hereof) and (B) the property listed on Exhibit B
(the "Furnishings");
(iii) All opened and unopened food and beverages
(alcoholic and non-alcoholic) owned by CapStar or the Manager and
located at the Hotels or held in storage for use at the Hotels
("Consumables");
(iv) All service and equipment contracts, employment
agreements, union contracts, purchase orders, equipment leases, and
other contracts or agreements relating to the ownership, operation,
maintenance, provisioning or equipping of the Hotels, together with all
assignable related written warranties and guaranties (individually and
collectively, "Contracts"). The parties acknowledge and agree that the
Contracts may be subject to the terms of certain master agreements
pursuant to which goods are provided and/or services rendered to
properties owned, leased or managed by CapStar, the Manager and/or
their respective affiliates, but that any and all right, title or
interest which CapStar or the Manager or their respective affiliates
may have in such master agreements are not included within the
definition of Contracts and are not being assigned or assumed under
this Agreement;
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(v) All goodwill, trade names and logos (if any, and
used solely in connection with the Hotels, and only to the extent of
CapStar's or the Manager's interest therein, if any), the Hotels'
websites and web addresses, if any, and the Hotels' telephone numbers;
(vi) All contracts or reservations for the use or
occupancy of guest rooms, meeting rooms and/or banquet facilities of
the Hotels, and (except to the extent Xxxxxxx has received a credit
therefor on the Estimated Settlement Statement or the Actual Settlement
Statement) all advance deposits with respect thereto.
(vii) All books of original financial entry, books of
account and other records with respect to the Hotels only, and all
guest lists, customer files, group files, sales records, sales
literature, brochures and other written marketing materials used in
conducting the business and operations of the Hotels, to the extent in
the possession of CapStar or the Manager, in such form as they exist on
the Effective Date and to the extent not consolidated with items
relating to other hotels owned, leased or managed by CapStar, the
Manager or their respective affiliates (but the parties hereto
acknowledge and agree that such books, records, lists, files, records
and other items shall be with respect to the Hotels, and the guests and
customers of the Hotels, only and not books, records, lists, files,
records and other items of CapStar, the Manager and/or their affiliates
which relate to hotels other than the Hotels);
(viii) All governmental licenses, permits,
certificates, authorizations and approvals, to the extent transferable,
used in or relating to the ownership, leasing, occupancy or operations
of the Hotels including, without limitation, those necessary for the
sale and on-premises consumption of liquor and other alcoholic
beverages, to the extent held by CapStar or the Manager (individually
and collectively, the "Permits");
(ix) All leases, subleases and other agreements for
the use of space at the Hotels, including, but not limited to,
agreements for the use of rooftop space of the Hotels for
communications (individually and collectively, the "Space Leases").
Xxxxxxx understands and agrees that rents received under any
communications leases may be net of commissions due to third party
brokers;
(x) All accounts receivable and guest ledger
receivables, but only to the extent CapStar has received a credit
therefor on the Estimated Settlement Statement or the Actual Settlement
Statement
(xi) All xxxxx cash funds at the Hotels and cash in
house banks, but only to the extent CapStar has received a credit
therefor on the Estimated Settlement Statement or the Actual Settlement
Statement
(xii) All of CapStar's rights and obligations in, to
and under the franchise agreements and licenses for the Hotels; and
(xiii) All of CapStar's rights and obligations in, to
and under the
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management agreements for the IMIC and Hilton Hotels (individually and
collectively, the "Third Party Management Agreements"); and
(xiv) All other expense items, including, without
limitation, operating expenses, trade accounts, accounts payable,
utility charges, taxes and other matters, for which Xxxxxxx receives a
credit on the Estimated Settlement Statement or the Actual Settlement
Statement.
The parties to this Agreement acknowledge and agree that (i) the Leasehold
Assets do not include any computer software which is proprietary to CapStar, the
Manager and/or their affiliates, and (ii) to the extent any Leasehold Assets are
subject to, used by or licensed to CapStar or the Manager under any license or
franchise agreement, including without limitation a hotel franchise agreement,
or are subject to any Contract, such transfer to and use by any New Lessee of
such Leasehold Assets shall be subject to (A) the terms and conditions of such
license, franchise agreement, or Contract and (B) all rights in such Leasehold
Assets held by the licensor or franchisor under such license or franchise
agreement, or the contract party under such Contract.
(c) Neither CapStar nor the Manager shall have any obligation
to obtain any consents which may be required with respect to the assignment of
any Contracts, Permits or Space Leases; provided, however, that CapStar and the
Manager shall cooperate with Xxxxxxx in obtaining any consent required in
connection with transferable Permits and further provided that if any consent
required under any Contract, Permit or Space Lease is not obtained and, as a
result, Xxxxxxx is prevented from obtaining the benefits of such Contract,
Permit or Space Lease, CapStar and the Manager shall cooperate with Xxxxxxx in
any reasonable and lawful arrangement designed to provide for Xxxxxxx the
benefits of such Contract, Permit or Space Lease. Xxxxxxx shall reimburse
CapStar and/or the Manager for any reasonable out-of pocket expenses that they
incur in connection with any such cooperation. Xxxxxxx and the Lessors shall
jointly and severally indemnify, defend and hold CapStar and the Manager
harmless from and against any cost, expense, loss, claim or other obligation or
liability, including without limitation reasonable attorneys' fees and expenses,
arising in connection with such arrangement. The parties acknowledge and agree
that the provisions of this Section 1(c) shall not apply to hotel franchise
agreements or liquor licenses, which are dealt with pursuant to Section 6(d) and
(f) of this Agreement.
(d) Xxxxxxx and the Lessors agree that the premises demised
under the Lease Agreements and the Leasehold Assets shall be assigned, and
Xxxxxxx shall assume the premises demised under the Lease Agreements and the
Leasehold Assets, on the Effective Date as is, where is, with all faults with no
right of set-off or reduction in the Purchase Price (except as provided for in
this Agreement), and that such assignment and assumption shall be, except as
provided for in this Agreement, without representation or warranty of any kind,
whether express, implied, statutory or otherwise, and Capstar and Manager hereby
disclaim and renounce any such representation or warranty. Xxxxxxx and the
Lessors specifically acknowledge that, except as provided for in this Agreement,
Xxxxxxx and Lessors are not relying and shall not rely on any representations or
warranties of any kind whatsoever, whether express, implied, statutory or
otherwise, from Capstar or Manager as to any matters ("Matters") concerning the
Lease
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Agreements and/or the Leasehold Assets, including without limitation (A) the
condition of the premises demised under the Lease Agreements and/or the
Leasehold Assets, (B) whether the furnishings are in working order; (C) the
livability or suitability for occupancy of any structure and the quality of its
construction; (D) the amount, condition or fitness of any personal property,
including without limitation Expendables, Furnishings, Consumables and other
inventory; or (E) whether the improvements are structurally sound or in good
condition, or in compliance with applicable governmental statutes, codes or
ordinances. Notwithstanding anything to the contrary in this Agreement, Lessors
and Xxxxxxx hereby release and discharge Capstar and (except to the extent
Manager has indemnified Xxxxxxx with respect thereto under the New Management
Agreements) Manager with respect to all such Matters.
(e) Xxxxxxx, XXXX and Winston Hotels, Inc. acknowledge and
agree that the parties hereto intended that Winston SPE LLC ("Winston SPE")
would be included as a party to this Agreement as one of the Lessors and one of
the Winston Parties and that Winston SPE's consent is required to assign the
Leases under which Winston SPE is a Lessor pursuant to this Agreement. Winston
SPE is not a party to this Agreement only because Winston SPE's managing member,
Winston Manager Corporation, a Virginia corporation and a wholly-owned
subsidiary of Winston Hotels, Inc. ("Winston Manager Corporation"), which is the
only entity authorized under Winston SPE's operating agreement to enter into
binding agreements on Winston SPE's behalf, is not, as of the date of this
Agreement, validly existing and in good standing as a corporation in the State
of Virginia with the State Corporation Commission of Virginia. Winston Hotels,
Inc. hereby covenants and undertakes to take all steps necessary to cause
Winston Manager Corporation, as the managing member of Winston SPE, (i) to
become reinstated as a corporation in good standing in Virginia as soon as
reasonably possible after the date of this Agreement and (ii) once such
reinstatement has been accomplished, to execute and deliver, as the managing
member of Winston SPE, a signature page counterpart to this Agreement, or such
other document, agreement or instrument acceptable to Capstar, to Capstar and
Manager indicating that Winston SPE is a Lessor and one of the Winston Parties
for all purposes of this Agreement, and has become a party to this Agreement, as
of the Effective Date, consents to the assignment of the Leases under which
Winston SPE is the Lessor to Xxxxxxx pursuant to this Agreement, and is bound by
all of the terms and conditions of this Agreement applicable to the Lessors or
the Winston Parties. Winston Hotels, Inc. hereby agrees to indemnify, defend and
hold harmless the MeriStar Indemnified Parties (as defined in Section 3(a)
below) from and against any and all Obligations (as defined in Section 3(a)
below) that are incurred by any of the MeriStar Indemnified Parties as a result
of (i) the failure of Winston SPE to become a party to this Agreement as a
Lessor and a Winston Party on the date hereof and (ii) the failure of Winston
Hotels, Inc. to perform its obligations under this Section 1(e).
(f) Xxxxxxx, XXXX and Xxxxxxx Hotels, Inc. acknowledge and
agree that the parties hereto intended that Evanston Hotel Associates, LLC
("Evanston") would be included as a party to this Agreement as one of the
Lessors and that Evanston's consent is required to assign the Lease under which
Evanston is a Lessor pursuant to this Agreement. Evanston has not executed this
Agreement on the date hereof only because the individual authorized to execute
the Agreement on behalf of Evanston unable at this time to execute the
Agreement. Winston Hotels, Inc. hereby covenants and undertakes to use its best
efforts to cause Evanston to execute and
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deliver a signature page counterpart to this Agreement, or such other document,
agreement or instrument acceptable to Capstar, to Capstar and Manager indicating
that Evanston is a Lessor for all purposes of this Agreement, and has become a
party to this Agreement, as of the Effective Date, consents to the assignment of
the Lease under which Evanston is the Lessor to Xxxxxxx pursuant to this
Agreement, and is bound by all of the terms and conditions of this Agreement
applicable to the Lessors. Winston Hotels, Inc. hereby agrees to indemnify,
defend and hold harmless the MeriStar Indemnified Parties (as defined in Section
3(a) below) from and against any and all Obligations (as defined in Section 3(a)
below) that are incurred by any of the MeriStar Indemnified Parties as a result
of (i) the failure of Evanston to become a party to this Agreement as a Lessor
on the date hereof and (ii) the failure of Winston Hotels, Inc. to perform its
obligations under this Section 1(f).
(g) The parties executing and delivering this Agreement on the
date hereof acknowledge and agree that, notwithstanding the fact that Winston
SPE and Evanston have not executed and delivered this Agreement on the date
hereof, this Agreement is a binding and enforceable agreement with respect to
all parties who have executed and delivered the Agreement on the date hereof.
2. Management Agreements. Xxxxxxx and the Manager are simultaneously
herewith entering into management agreements (the "New Management Agreements")
with respect to all of the Hotels, other than the Third Party Management
Agreements. The New Management Agreements will be substantially in the form
attached hereto as Exhibit C and will supersede and replace in all respects the
existing management agreements with respect to the Hotels (other than the Third
Party Management Agreements), which are listed on Exhibit D hereto. The
commencement date of the Management Agreements shall be the Effective Date,
which existing management agreements are hereby terminated as of the Effective
Date.
3. Indemnification.
(a) Xxxxxxx and the Lessors (the "Winston Parties") hereby
jointly and severally agree to indemnify, defend and hold harmless CapStar,
Manager and their respective affiliates (the "MeriStar Indemnified Parties")
from and against:
(i) any and all costs, expenses, debts, liabilities,
obligations, actions, causes of action, suits and claims relating to
the Lease Agreements, the Leasehold Assets and/or the Hotels
(collectively, "Obligations") that are incurred, or arise out of or
relate to the occurrence of any act, action, omission, or event on or
after the Effective Date (except to the extent Xxxxxxx is indemnified
for such Obligations by Manager under the New Management Agreements or
pursuant to CapStar's indemnity obligation under Section 3(b)(iii)
hereof), or which are otherwise assumed by Xxxxxxx pursuant to Section
1 hereof or credited to Xxxxxxx pursuant to the Estimated Settlement
Statement or Actual Settlement Statement;
(ii) any and all Obligations that are incurred, or
arise out of or relate to the occurrence of any act, action, omission,
or event before the Effective Date and that meet one or more of the
following conditions: (A) such Obligation results from the fraud
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of the Lessors, (B) such Obligation is asserted against any MeriStar
Indemnified Party by a bona fide third party and is an Obligation
against which Lessor indemnified CapStar under the applicable Lease
Agreement; or (C) such Obligation is assumed by Xxxxxxx pursuant to
Section 1 above or (to the extent of such credit) credited to Xxxxxxx
pursuant to the Estimated Settlement Statement or Actual Settlement
Statement;
(iii) mathematical calculation errors in the
Estimated Settlement Statement or Actual Settlement Statement that
adversely affect any MeriStar Indemnified Party;
(iv) any and all Obligations arising under the
franchise agreements for the Hotels or the Third Party Management
Agreements (A) which arise in connection with the transactions provided
for in this Agreement (including without limitation (x) any default
under any such agreement by a MeriStar Indemnified Party arising out of
the performance of the transactions provided for in this Agreement, (y)
any failure by any party to obtain consents required under such
agreements in connection with the transactions set forth in this
Agreement and/or (z) any failure by the Winston Parties to pay any and
all transfer fees (whether such transfer fees were the obligation of
any MeriStar Indemnified Party or any Winston Party (including without
limitation affiliates of any Winston Party) under such agreements)
arising under such agreements in connection with the transactions
provided for in this Agreement), (B) which are the obligation of the
Winston Parties, or with respect to which the Winston Parties have
provided an indemnity, pursuant to Section 6(f) below, and/or (C) from
and after the Effective Date (except to the extent that Xxxxxxx is
indemnified by the Manager for such Obligations under the New
Management Agreements); and
(v) any and all Obligations arising with respect to
the transactions set forth in this Agreement under any of the terms of
any agreement evidencing or securing any loan obligation of any Winston
Party or affiliate thereof relating to the Lease Agreements, the
Leasehold Assets or the Hotels, including without limitation any
failure by any party to obtain any consents to the transactions set
forth in this Agreement required under any such agreement (including
without limitation any failure of a MeriStar Indemnified Party to
comply with the provisions of any subordination agreement entered into
by a MeriStar Indemnified Party and such lender which relate to the
transactions set forth in this Agreement).
The provisions of this Section 3(a) shall survive the Effective Date;
provided, however, that the provisions of Section 3(a)(iii) shall survive only
until February 28, 2003.
(b) CapStar and, by its signature below, MeriStar Hotels &
Resorts, Inc. ("MHR") hereby jointly and severally agrees to indemnify, defend
and hold harmless the Winston Parties and their respective affiliates (the
"Winston Indemnified Parties") from and against:
(i) any and all Obligations that are incurred, or
arise out of or relate to the occurrence of any act, action, omission,
or event before the Effective Date and that
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meet one or more of the following conditions: (A) such Obligation
results from the fraud of CapStar, (B) such Obligation is asserted
against any Winston Indemnified Party by any bona fide third party
(including without limitation any employee or former employee of
CapStar or Manager) and is an Obligation against which CapStar
indemnified the applicable Lessor under the applicable Lease Agreement;
or (C) such Obligation is retained by CapStar pursuant to Section 1
hereof or is (to the extent of such credit) credited to CapStar
pursuant to the Estimated Settlement Statement or Actual Settlement
Statement;
(ii) mathematical calculation errors in the Estimated
Settlement Statement or Actual Settlement Statement that adversely
affect the Winston Parties; and
(iii) any and all Obligations arising in connection
with the assumption and/or termination of any material Contract that
was entered into by CapStar or the Manager and assumed by Xxxxxxx, but
only if such Contract meets all of the following conditions: (A) such
Contract is not listed on Schedule A hereto (a "Scheduled Contract"),
(B) such Contract contains terms and conditions that are not similar to
the terms and conditions of any Scheduled Contract, and (C) such
Contract is not a contract which a reasonably prudent owner, lessee or
operator of hotels similar to the Hotels would have entered into given
such facts and circumstances as applied when such Contract was
executed.
The provisions of this Section 3(b) shall survive the Effective Date;
provided, however, that the provisions of Sections 3(a)(ii) and 3(a)(iii) shall
survive only until February 28, 2003.
4. Consent and Releases. Winston and the Lessors hereby consent to
CapStar's assignment and transfer, and Xxxxxxx'x assumption and acceptance, of
the Lease Agreements and the Leasehold Assets. Except for the indemnification
obligations provided for in Section 3 of this Agreement, the Winston Parties,
the Lessors and their respective affiliates, on the one hand, and CapStar and
its affiliates, on the other hand, hereby unconditionally release each other,
effective as of the Effective Date, of and from all obligations, liabilities,
and claims between the parties arising under the Lease Agreements with respect
to all periods prior to and/or from and after the Effective Date. The parties
agree that the foregoing release by the Winston Parties, the Lessors and their
respective affiliates of CapStar and its affiliates includes a release of any
claims relating to each Amendment to Management Agreement, executed by CapStar
and IMIC June 20, 2000, and effective July 1, 2000.
5. Consideration. In consideration of and in exchange for the transfer
by CapStar of the Lease Agreements and the Leasehold Assets to Xxxxxxx pursuant
to Section 1 hereof and the other terms and conditions hereof, Xxxxxxx agrees to
make a cash payment to CapStar on the Closing Date by wire transfer of FIFTEEN
MILLION DOLLARS AND no/100s ($15,000,000.00) (the "Purchase Price"), plus
interest on $14,245,000 at an annual rate of 10% calculated from April 1 to June
30, 2002. In consideration of the agreement of the Manager to enter into the New
Management Agreements, Xxxxxxx agrees to make a cash payment to the Manager on
the Closing Date by wire transfer of TWO MILLION DOLLARS AND no/100s
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($2,000,000) (the "Management Payment"), plus interest on the Management Payment
amount at an annual rate of 10% calculated from April 1 to June 30, 2002.
6. Transition Rules. On or as of the date of this Agreement, the
following transition rules will apply with respect to the operation of each
Hotel:
(a) Preliminary and Estimated Settlement Statements. Using the
pro ration methodology set forth in Exhibit E hereto, Xxxxxxx and CapStar will,
by no later than July 31, 2002, agree on an estimated settlement statement (the
"Estimated Settlement Statement") that prorates the operating revenues and
expenses and working capital of each Hotel between the parties as of the Cut-Off
Time. Attached hereto as Exhibit E-1 is a preliminary settlement statement that
the parties have generated and agreed upon using the same pro ration methodology
set forth in Exhibit E, based on the operating revenues and expenses and working
capital of the Hotels as of March 31, 2002 (the "Preliminary Settlement
Statement"). In the event of any inconsistency between the methodology for the
pro rations set forth in Exhibit E and the methodology used to calculate the
Preliminary Settlement Statement, the methodology used to calculate the
Preliminary Settlement Statement shall govern. The parties agree that the net
payment owing from one party to the other on the Preliminary Settlement
Statement shall be credited to the appropriate party at the time the Purchase
Price and Management Fee are paid.
(b) Settlement Statement True-Up. The parties agree that any
net difference between the Preliminary Settlement Statement and the Estimated
Settlement Statement will be credited to the party benefiting from such net
difference and the other party will pay such amount to such benefiting party in
cash on July 31, 2002. On or before February 28, 2003, the parties hereto will
agree on an actual settlement statement (the "Actual Settlement Statement") with
respect to the Cut-Off Time using the same methodology used in the calculation
of the Preliminary Settlement Statement and the Estimated Settlement Statement,
except that such Actual Settlement Statement will be based on actual financial
information available at that time with respect to operating revenues and
expenses and working capital of each Hotel as of the Cut-Off Time. The parties
agree that any net difference between the Actual Settlement Statement and the
Estimated Settlement Statement will be credited to the party benefiting from
such net difference and the other party will pay such amount to such benefiting
party in cash on February 28, 2003. In no event, however, will the amount
payable by the Winston Parties, on the one hand, or CapStar and/or the Manager,
on the other hand, under this Section 6(b) exceed $250,000 (excluding
mathematical errors in calculation for which the parties have each indemnified
the other under Section 3 above).
(c) Leakage and Lease Payments.
(i) The parties agree that the Lessors or Xxxxxxx are
entitled to receive, and the Preliminary Settlement Statement will
reflect, a minimum of $400,000 in Leakage (as defined below) from the
Hotels for the quarter ended on the Cut-Off Time payable by CapStar to
the Lessors or Xxxxxxx. Leakage is defined as gross operating profit,
as customarily defined in the hotel industry, less (A) a deemed
management fee of 2% of gross income at the Hotels (excluding the
Hotels managed by IMIC and Hilton), (B) management fees paid or payable
under the applicable Third Party Management
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Agreements, (C) rent paid or payable to the Lessors under the Leases,
and (D) certain taxes, insurance and other expenses customarily
reflected on CapStar's income statement.
(ii) Capstar agrees to make the payments to the
Lessors required under the Leases for the month ended June 30, 2002 on
July 10, 2002, and for the quarter ended June 30, 2002, on July 15,
2002.
(d) Intentionally Deleted.
(e) Employees. Because a CapStar affiliate, the Manager, will
continue to manage and operate each of the Hotels (other than the Third Party
Hotels), Xxxxxxx will not be responsible or liable for any employee severance
payments or costs, or any other employee-related costs and expenses arising out
of or resulting from the transactions provided for under this Agreement, except
to the extent such costs and expenses are caused by the actions of Xxxxxxx. Each
party agrees not to take any action that would cause a violation under the
Worker Adjustment Retraining and Notification Act.
(f) Franchise Agreements.
(i) The Winston Parties shall proceed promptly and in
good faith to give all notices required under each existing franchise
agreement with respect to the transactions contemplated hereby, and
Xxxxxxx shall use its good faith reasonable efforts to obtain a new
license agreement from the existing franchisor under each such
franchise agreement, or to assume such existing franchise agreement
from CapStar, in accordance with all applicable provisions of the
applicable franchise agreements. In connection therewith, and subject
to the terms and conditions set forth herein, CapStar shall exercise
its good faith efforts, at no cost or expense to CapStar, to assist
Xxxxxxx in obtaining an assignment of each such existing franchise
agreement for each Hotel (or a termination of such existing franchise
agreement and the obtaining of a replacement franchise agreement with
the same brand) in favor of Xxxxxxx, including without limitation
executing any customary termination agreements or assignment agreements
reasonably required by the franchisors and reasonably agreed to by
CapStar. CapStar shall have no obligation with respect to any property
improvement plan or other work requirement imposed by any franchisor as
a condition to the termination or assignment to Xxxxxxx of any existing
franchise agreement.
(ii) If Xxxxxxx determines, in its sole discretion,
that assignment or replacement of some or all of the franchise
agreements is too costly, CapStar agrees to continue as the franchisee
under such franchise agreements, in which event the Winston Parties
will indemnify CapStar as provided in Section 3(a)(iv) above.
Notwithstanding the foregoing or anything else to the contrary set
forth in this Agreement, CapStar shall have no obligation to remain as
franchisee under any franchise agreement with respect to any Hotel from
and after the earlier to occur of (a) the termination of the New
Management Agreement with respect to such Hotel by either party to such
New Management Agreement, or (b) any default under such franchise
agreement asserted by the franchisor thereunder which has not been
cured in the time permitted by the
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franchisor, so long as such default was not caused by the failure of
CapStar to operate the Hotels prior to the Effective Date in material
compliance with its obligations under the Lease Agreements. In the
event that CapStar elects to terminate or surrender any franchise
agreement pursuant to the foregoing sentence, the Winston Parties shall
be jointly and severally responsible for any and all damages
(liquidated or otherwise), termination fees or other amounts imposed by
the applicable franchisor in connection with such termination or
surrender, and shall jointly and severally indemnify, defend and hold
CapStar harmless from and against any and all costs, expenses, debts,
liabilities, obligations, actions, causes of action, suits and claims
relating to or in connection with such termination or surrender.
(iii) The Winston Parties jointly and severally agree
to pay all change of ownership fees, inspection fees, termination fees,
product improvement plan costs and/or other fees and costs imposed by
the franchisors under the franchise licenses relating to the Hotels and
incurred in connection with this Section 6(f) and all other fees and
expenses imposed on CapStar, Manager or any of their respective
affiliates by such franchisors under the franchise licenses relating to
the Hotels in connection with any other matter undertaken by CapStar,
Manager and their respective affiliates. In addition, the Winston
Parties jointly and severally agree to reimburse CapStar and Manager
for any reasonable out-of-pocket costs incurred by CapStar or Manager
in connection with the assignment or replacement of the franchise
agreements pursuant to this Section 6(f). Notwithstanding the
foregoing, CapStar will be responsible for all franchise fees and other
payments to the franchisors accruing under the franchise agreements
through the Cut-Off Time, to the extent the same is the responsibility
of CapStar under the Lease Agreements prior to the Effective Date,
except as otherwise expressly provided in the Estimated Settlement
Statement or Actual Settlement Statement.
(g) Contracts. All of the Contracts assumed by Xxxxxxx
pursuant to this Agreement (other than the Management Agreements) will be with
counterparties that are unaffiliated with CapStar or the Manager.
(h) Liquor License Transfer. CapStar or the Manager, as
applicable, will take such action, at the cost and expense of Xxxxxxx and to the
extent permitted by law, as may be necessary or appropriate to ensure that any
existing alcoholic beverage licenses held by CapStar, the Manager or their
agents in connection with their operation of the Hotels (the "Liquor Licenses")
remain in full force and effect and available for the benefit of the Hotels. If
and to the extent that any transfer or reissuance of any Liquor License is
required, CapStar or the Manager, as applicable, and Xxxxxxx shall each
cooperate with the other in effecting such transfer or reissuance. Without
limiting the generality of the foregoing, if CapStar and Xxxxxxx are unable to
obtain any necessary transfer or reissuance of any Liquor License prior to the
Effective Date with respect to a particular Hotel, then, as of the Effective
Date, CapStar or the Manager, as applicable, and Xxxxxxx shall, to the extent
permitted by law, enter into an interim agreement (the "Interim Agreement")
whereby CapStar will continue to operate the liquor concessions at the affected
Hotel on behalf of Xxxxxxx pending the transfer or reissuance of the Liquor
License. In that event, except to the extent provided under any New Management
Agreement, Xxxxxxx shall
-11-
indemnify, defend, and hold harmless CapStar from and against any and all
claims, liabilities, costs, and expenses (including, without limitation,
reasonable attorneys' fees and costs) arising in connection with such operation.
(i) Consents. Xxxxxxx shall be responsible for obtaining any
and all consents to the transactions set forth in this Agreement required from
IMIC or Hilton under the Third Party Management Agreements. The Third Party
Management Agreement with Hilton shall be deemed to be a franchise agreement for
the purposes of Section 6(f) and Section 3(a) as well as a Third Party
Management Agreement.
(j) Guarantee. As of the Effective Date, Winston and the other
Winston Parties hereby unconditionally release the existing $20,000,000
Guarantee of Leases, dated as of November 17, 1997, provided by MeriStar
Hospitality Corporation (as successor-in-interest to CapStar Hotel Company) of
CapStar's obligations under the Lease Agreements, which Guarantee of Leases is
hereby terminated and of no further force or effect.
(k) Pre-Effective Date Reservations and Agreements. Xxxxxxx
and the Manager will honor the terms and rates of all room reservations, room
allocations, and banquet facility and service agreements relating to the Hotels
that are confirmed or entered into by CapStar in the ordinary and normal course
of business prior to the Effective Date and that are to be honored or performed
on or subsequent to the Effective Date.
(l) Guest Property. All baggage and other property belonging
to guests of a Hotel ("Guest Property") that is in the care, possession, or
control (including, without limitation, checked baggage and property left in
safe deposit boxes) of CapStar on the day prior to the Date of this Agreement
shall continue in the care, possession, or control of CapStar or shall be
transitioned to the Manager, IMIC, or Hilton, as appropriate. CapStar shall be
responsible for, and shall indemnify and hold Xxxxxxx and its affiliates
harmless from and against any claim for, Guest Property placed in the care,
possession, or control of CapStar, the Manager, or any of their affiliates
before the Date of this Agreement.
(m) Holiday Inn Select, Dallas, Texas and Linen Inventory. The
parties hereby agree to cooperate with each other in good faith in order to
determine by no later than July 31, 2002, the cost to correct all damages caused
by Manager's failure to maintain thirty (30) rooms in the Holiday Inn Select,
Dallas, Texas Hotel in rentable condition consistent with the condition of other
rentable rooms at such Hotel, as distinguished from damages resulting from any
failure on the part of the Lessor of such Hotel to provide sufficient funds for
required capital expenditures in such rooms at such Hotel. In addition, by no
later than July 31, 2002, the parties will undertake a complete inventory of the
linens at all Hotels as of the date of this Agreement, in order to determine
whether the weighted average of the linen inventory at the Hotels, based on the
number of rooms at the Hotels, is at least 2.25 linen turns as of the date of
this Agreement. CapStar and Manager jointly and severally agree to reimburse the
Lessors, in a cash payment on July 31, 2002, the aggregate amount of such
damages caused by Manager and any linen shortfall at the Hotels below a weighted
average, based on the number of rooms at the Hotels, of 2.25 turns as of the
date of this Agreement, subject to an aggregate cap of $150,000 on CapStar's and
Manager's payment obligations under this Section 6(k).
-12-
7. Representations and Warranties of CapStar. CapStar hereby make the
following representations and warranties to Xxxxxxx:
(a) Due Organization. CapStar is duly organized, validly
existing and in good standing under the laws of the State of its organization
and is duly qualified and in good standing to conduct business as a foreign
limited liability company in each jurisdiction where it is required to be so
qualified, except where the failure to be so qualified would not have a material
adverse effect on the business, operations or condition (financial or otherwise)
of CapStar and its affiliates, taken as a whole, or the enforceability of this
Agreement..
(b) Due Execution. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated herein by
CapStar has been duly authorized by all necessary corporate action. The
Agreement constitutes a valid and binding agreement of CapStar, enforceable in
accordance with its terms.
(c) No Conflicts. The execution and delivery of this Agreement
by CapStar and the consummation by CapStar of the transactions contemplated
hereby will not, (A) violate any judgment, order, injunction, decree, regulation
or ruling of any court or governmental entity or (B) conflict with, result in a
breach of, or constitute a default under the certificate of formation or
operating agreement of CapStar, any note or other evidence of indebtedness, any
mortgage, deed of trust or indenture, or any lease or other material agreement
or instrument to which CapStar or any of its affiliates is a party or by which
CapStar or any of its affiliates may be bound.
(d) Litigation. There are no legal actions, suits or similar
proceedings pending and served, or, to CapStar's knowledge, threatened against
CapStar or the Hotels which if adversely determined would adversely affect
CapStar's ability to consummate the transactions contemplated hereby.
(e) Bankruptcy. CapStar has not (A) commenced a voluntary
case, or had entered against it a petition, for relief under any federal
bankruptcy act or similar petition, order or decree under any federal or state
law or statute relative to bankruptcy, insolvency or other relief for debtors,
(B) caused, suffered or consented to the appointment of a receiver, trustee,
administrator, conservator, liquidator or similar official in any federal, state
or foreign judicial or non-judicial proceedings, to hold, administer and/or
liquidate all or substantially all of its property, or (C) made an assignment
for the benefit of creditors as an alternative to commencing a petition of
bankruptcy.
8. Representations and Warranties Regarding the Winston Parties. The
Winston Parties jointly and severally hereby make the following representations
and warranties to CapStar and Manager:
(a) Due Organization. Each of the Winston Parties is duly
organized, validly existing and in good standing under the laws of the State of
its respective organization and is duly qualified and in good standing to
conduct business as a foreign limited liability company, corporation or limited
partnership in each state in which it is required to be so qualified, except
-13-
where the failure to be so qualified would not have a material adverse effect on
the business, operations or condition (financial or otherwise) of the Winston
Parties, taken as a whole, or the enforceability of this Agreement.
(b) Due Execution. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated herein by
the Winston Parties has been duly authorized by all necessary corporate action.
The Agreement constitutes a valid and binding agreement of each of the Winston
Parties, enforceable in accordance with its terms.
(c) No Conflicts. The execution and delivery of this Agreement
by each of the Winston Parties and the consummation by each of the Winston
Parties of the transactions contemplated hereby will not, (A) violate any
judgment, order, injunction, decree, regulation or ruling of any court or
governmental entity or (B) conflict with, result in a breach of, or constitute a
default under the certificate of formation or operating agreement, articles of
incorporation or partnership, as applicable, of each of the Winston Parties, any
note or other evidence of indebtedness, any mortgage, deed of trust or
indenture, or any lease or other material agreement or instrument to which any
Winston Party or any of its affiliates is a party or by which any Winston party
or any of its affiliates may be bound.
(d) Litigation. There are no legal actions, suits or similar
proceedings pending and served, or, to the Winston Parties' knowledge,
threatened against any Winston Party or the Hotels which if adversely determined
would adversely affect the Winston Parties' ability to consummate the
transactions contemplated hereby.
(e) Bankruptcy. No Winston Party has (A) commenced a voluntary
case, or had entered against it a petition, for relief under any federal
bankruptcy act or similar petition, order or decree under any federal or state
law or statute relative to bankruptcy, insolvency or other relief for debtors,
(B) caused, suffered or consented to the appointment of a receiver, trustee,
administrator, conservator, liquidator or similar official in any federal, state
or foreign judicial or non-judicial proceedings, to hold, administer and/or
liquidate all or substantially all of its property, or (C) made an assignment
for the benefit of creditors as an alternative to commencing a petition of
bankruptcy.
9. Transfer Taxes. To the extent that any state or local taxes are
imposed on the transfer of the Leasehold Assets hereunder, Xxxxxxx shall bear
the expense of such taxes.
10. Public Announcements; Confidentiality.
(a) Public Announcements. Neither party nor any of its
affiliates shall issue or make any reports, statements or releases to the public
or generally to its employees, customers, suppliers or other persons with
respect to this Agreement or the transactions contemplated hereby without giving
the other three (3) business days to comment on such report, statement or
release.
(b) Confidentiality. Each party hereto shall keep
confidential, and shall cause
-14-
its directors, officers, employees, agents, representatives and advisors to keep
confidential, any information from time to time received by it from any other
party regarding such other party or its business affairs with respect to Hotels
and/or the transactions contemplated under this Agreement; provided, however,
that nothing herein shall restrict the disclosure of any such information to the
extent required by statute, rule (including New York Stock Exchange rules and
the rules and regulations of the Securities and Exchange Commission), regulation
or judicial process, to its professional advisors and agents, to lenders or
prospective lenders, to investors or prospective investors, to any third party
with whom a party enters into discussions regarding a merger, a sale of all or
substantially all of such party's assets or capital stock, or another type of
business combination transaction (provided such party agrees to be bound by a
customary confidentiality agreement with respect to such information), or the
disclosure of any such information which is generally available to the public,
or in connection with litigation.
11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which,
together, shall be deemed one and the same agreement.
12. Notices. Any notice required or permitted to be given hereunder
shall be in writing and shall be deemed to be delivered when delivered by hand
or sent by registered or certified mail (return receipt requested and postage
prepaid) or by reputable overnight courier service and addressed as follows:
(a) If to CapStar, Manager, MeriStar Hospitality Corporation
or MHR, to:
c/o MeriStar Hotels & Resorts, Inc.
0000 Xxxxxxxxx Xxx., X.X.
Xxxxxxxxxx, X.X. 00000
Attention: General Counsel
Tel: (000) 000-0000
Fax: (000) 000-0000
(b) If to any of the Winston Parties, to:
c/o Winston Hotels, Inc.
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xx. Xxxxxx X. Xxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
13. Successors. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective subsidiaries, affiliates,
successors, and assigns.
14. Entire Agreement; Amendment. This Agreement constitutes the entire
agreement of the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings among the parties with
respect to the matters set forth herein. No amendment or
-15-
modification of this Agreement, or of any of the provisions hereof, shall be
binding upon any party unless made in writing and signed by both CapStar and
Xxxxxxx.
15. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of North Carolina, without regard to its
conflicts of laws provisions.
[SIGNATURES APPEAR ON FOLLOWING PAGES]
-16-
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
XXXXXXX HOSPITALITY SERVICES INC.
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxx
---------------------------------------
Title: Executive Vice President
--------------------------------------
CAPSTAR WINSTON COMPANY, LLC
By: /s/ Xxxxx Xxxxxxx
-----------------------------------------
Name: Xxxxx Xxxxxxx
---------------------------------------
Title:
--------------------------------------
MERISTAR MANAGEMENT COMPANY, LLC
By: MeriStar H & R Operating Company, L.P.,
member
By: MeriStar Hotels & Resorts. Inc.,
general partner
By: /s/ Xxxxx Xxxxxxx
------------------------------------
Name: Xxxxx Xxxxxxx
----------------------------------
Title:
---------------------------------
MERISTAR HOTELS & RESORTS, INC.
(for purposes of Section 3(b) only)
By: /s/ Xxxxx Xxxxxxx
-----------------------------------------
Name: Xxxxx Xxxxxxx
---------------------------------------
Title:
--------------------------------------
XXXX LIMITED PARTNERSHIP, L.P.
By: Winston Hotels, Inc., its general partner
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxx
---------------------------------------
Title: Executive Vice President
--------------------------------------
WINSTON HOTELS, INC.
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxx
---------------------------------------
Title: Executive Vice President
--------------------------------------
EVANSTON HOTEL ASSOCIATES, LLC
By: Regent Hotel Development II, LLC, its
managing member
By: Regent Partners, Inc., its sole member
By:
--------------------------------------
Name:
Title:
XXXXX LANDING ASSOCIATES, LLC
By: Xxxxx Landing Investment, L.L.C., its
managing member
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Managing Member
EXHIBIT A
HOTELS
--------------------------------------------------------------------------------
NO. HOTEL NAME ROOMS MGMT STATE
--------------------------------------------------------------------------------
1 Comfort Inn Augusta 123 Meristar GA
2 Comfort Inn Fayetteville 176 Meristar NC
3 Comfort Inn Greenville 190 Meristar SC
4 Comfort Inn Wilmington 146 Meristar NC
5 Comfort Suites Orlando 215 Meristar FL
6 Courtyard by Marriott Xxx Arbor 160 Meristar MI
7 Courtyard by Marriott Houston 198 Meristar TX
8 Courtyard by Marriott Wilmington 128 Meristar NC
9 Courtyard by Marriott Winston Salem 122 Meristar NC
00 Xxxxxxxxx Xxx Xxx Xxxxx 000 Xxxxxxxx XX
00 Xxxxxxx Xxx & Xxxxxx Xxxxxxxx 136 Meristar GA
00 Xxxxxxx Xxx Xxxxx 00 Xxxxxxxx XX
00 Xxxxxxx Xxx Xxxxxxxxx 127 Meristar GA
14 Hampton Inn Cary 130 Meristar NC
00 Xxxxxxx Xxx Xxxxxxxxx 000 Xxxxxxxx XX
00 Xxxxxxx Xxx Xxxxxx 137 Meristar NC
17 Hampton Inn Jacksonville 120 Meristar NC
18 Hampton Inn Perimeter 131 Meristar GA
19 Hampton Inn Ponte Vedra 118 Meristar FL
00 Xxxxxxx Xxx Xxxxxxxx Xxxxx 126 Meristar NC
00 Xxxxxxx Xxx Xxxxxxxxx 000 Xxxxxxxx XX
00 Xxxxxxx Xxx Xxxx Xxxxxxxxxxx 126 Meristar MA
00 Xxxxxxx Xxx Xxxxx Xxxxxx 156 Meristar NY
00 Xxxxxxx Xxx Xxxxxxxxxx 118 Meristar NC
25 Hilton Garden Inn Albany Airport 155 Meristar NY
26 Hilton Garden Inn at RDU 155 Meristar NC
00 Xxxxxx Xxxxxx Xxx Xxxxxxx Xxxxxxx 164 Meristar GA
28 Hilton Garden Inn Evanston 178 Meristar IL
29 Holiday Inn at Xxxxxx Xxxxx 000 Xxxxxxxx XX
30 Holiday Inn Express Abingdon 81 Meristar VA
31 Holiday Inn Express Clearwater 127 Meristar FL
32 Holiday Inn Select Garland 243 Meristar TX
00 Xxxxxxxx Xxxxxx Xxxxxxxxxx 000 Xxxxxxxx XX
00 Xxxxxxxx Xxxxxx Xxxx 000 Xxxxxxxx XX
00 Xxxxxxxx Xxxxxx Xxxxxx 00 Xxxxxxxx XX
00 Xxxxxxxx Xxxxxx Xxxx Xxxx 000 Xxxxxxxx XX
00 Xxxxxxxx Xxxxxx Xxxxxxx 000 Xxxxxxxx XX
00 Xxxxxxxx Xxxxxx Xxxxxxx 000 Xxxxxxxx XX
00 Xxxxxxxxx Xxx Xxxxxxx 000 Xxxxxxxx XX
40 Comfort Inn Charleston 128 IMIC SC
41 Quality Suites Charleston 168 IMIC SC
42 Comfort Inn Chester 123 IMIC VA
43 Hampton Inn Xxxxxxx 66 IMIC VA
44 Comfort Inn Durham 138 IMIC NC
45 Hampton Inn Hilton Head 125 IMIC SC
46 Hampton Inn Raleigh 141 IMIC NC
00 Xxxxxxxx Xxxxxx Xxxxxxxxx 00 Xxxxxx XX
EXHIBIT B
EXCLUDED PROPERTY
EXHIBIT C
FORM OF NEW MANAGEMENT AGREEMENT
EXHIBIT D
SCHEDULE OF MANAGEMENT AGREEMENTS
MASTER MANAGEMENT AGREEMENT, DATED AS OF AUGUST 3, 1998, AS AMENDED, BY AND
BETWEEN CAPSTAR WINSTON COMPANY, LLC AND MERISTAR MANAGEMENT COMPANY, LLC.
EXHIBIT E
PRO RATION METHODOLOGY FOR OPERATIONAL SETTLEMENT
On or before the Closing Date, CapStar and Xxxxxxx shall prepare, or
cause to be prepared, a balance sheet as of the Effective Date pursuant to which
CapStar will be credited for all assets and Xxxxxxx will be credited for all
liabilities. Specifically:
1. Final Night's Room Revenue. The final night's room revenue (the
night immediately preceding the Effective Date) and applicable occupancy taxes
(revenue from rooms occupied on the night immediately preceding the Effective
Date), including telephone and similar charges, shall be credited to CapStar.
2. Advance Deposits. Any advance deposits or payments made to CapStar
on confirmed reservations for dates on or after the Effective Date will be
credited and transferred to Xxxxxxx.
3. Licensing and Permit Fees. Amounts paid or payable as fees for the
year or other fiscal period during which the Effective Date occurs for
governmental licenses and permits which are assigned by CapStar to Xxxxxxx shall
be prorated on a daily basis (but any amounts refundable under any permit or
license which is not assigned shall remain the property of CapStar).
4. Contracts. All payments and receipts under any of the Contracts
assumed by Xxxxxxx which cover a period subsequent to the Effective Date shall
be prorated on a daily basis through the Cut-Off Time, and any security deposits
held by CapStar with respect to any such Contract shall be charged and
transferred to Xxxxxxx at the Effective Date (subject to the terms and
conditions of the Contract pursuant to which such deposit is held) and CapStar
shall be given a credit at the Effective Date for any security deposit held by a
third party pursuant to any such Contract assigned to Xxxxxxx at the Effective
Date.
5. Deposits. Except for utility and telephone deposits of CapStar for
which CapStar will either be reimbursed or receive a credit, all prepayments for
yellow page advertising and other deposits or similar payments made by CapStar
for periods subsequent to the Effective Date will be prorated on a daily basis.
6. Utility and Telephone Charges. All utility and telephone charges
will be prorated on a daily basis for periods up to and including the Effective
Date, and all accounts therefor will be terminated as to CapStar and established
as to Xxxxxxx as of the Effective Date, and in connection therewith CapStar
agrees to fill out the customary forms required by the telephone company to
assign the existing phone numbers to Xxxxxxx. Final readings and final xxxxxxxx
for utilities (including telephone) will be made, if possible, as of the Cutoff
Time, in which event no proration will be made with respect to utility bills.
CapStar will be entitled to all deposits made by CapStar and presently in effect
with utility providers if such deposits are in the name of CapStar, and Xxxxxxx
will be obligated to make its own arrangements for deposits with the utility
providers. To the extent that utility bills cannot be rendered as of the
Effective Date, such
charges for the period through the Cut-Off Time shall be prorated as of the
Cut-Off Time based upon the most recent available bills and readjusted on the
basis of the actual bills as and when received.
7. Vending Machines. CapStar's only right with respect to any vending
machines within a Hotel is to receive commissions on sales therefrom, and such
vending machines may be emptied and receipts therefrom recorded by the owner
thereof, it being understood that CapStar is entitled to receive from the owner
thereof all commissions with respect thereto which are unpaid as of the
Effective Date. Xxxxxxx shall be entitled to all commissions thereon from and
after the Effective Date.
8. Accounts Receivable. Notwithstanding anything to the contrary
contained herein, the Estimated Settlement Statement and Actual Settlement
Statement shall reflect as a credit to CapStar an amount equal to all guest
ledger accounts receivable at the Hotels less the allowance for doubtful
accounts balance as of the Effective Date.
9. Accounts Payable. Notwithstanding anything to the contrary contained
herein, the Estimated Settlement Statement and Actual Settlement Statement shall
reflect as a credit to Xxxxxxx an amount equal to all accounts payable and
accrued liabilities as of the Effective Date with respect to goods and services
delivered to a Hotel prior to the Effective Date.
10. Impositions. Notwithstanding anything to the contrary contained
herein, the Estimated Settlement Statement and Actual Settlement Statement shall
reflect as a credit to Xxxxxxx an amount equal to all Impositions (other than
Impositions that are the Lessors' responsibility under the Lease Agreements), if
any, payable or accrued with respect to all of the Hotels as of the Effective
Date.
11. Subleases. All rentals under any subleases (including fixed rents
and charges in respect of electricity, operating expenses and taxes) shall be
prorated as of the Cut-Off Time if, as and when collected. Xxxxxxx shall receive
a credit for the prorated amounts (as of the Cutoff Time) of all rents and other
payments under any subleases at the Hotels previously paid to or collected by
CapStar and attributable to any period following the Cutoff Time. After the
Cutoff Time, CapStar will cause to be paid or turned over to Xxxxxxx all rents
and other payments under the subleases, if any, received by CapStar and
attributable to the period after the Cutoff Time. Delinquent rents will not be
prorated. Xxxxxxx agrees to use good faith collection procedures with respect to
the collection of any delinquent rents but Xxxxxxx shall have no liability for
the failure to collect any such amounts and will not be required to conduct
lock-outs or take any other legal action to enforce collection of any such
amounts owed to CapStar from any sub-lessee. To the extent any sum collected by
Xxxxxxx from a sublessee from and after the Cut-Off Time indicates to what
invoice or period such sum is to be applied, such sum will be applied to such
invoice or period. All other sums collected by CapStar from and after the
Effective Date from each sub-lessee will be applied first to current amounts
owed by such sub-lessee, and then, to prior delinquencies owed by such
sub-lessee to CapStar.
12. Franchise Fees. CapStar shall be responsible for the payment of all
franchise and other fees, if any, under the Franchise Agreements with respect to
the period up to the Cutoff
Time, to the extent the same were the responsibility of CapStar under the Lease
Agreements, and Xxxxxxx shall be responsible for the payment of all franchise
and other fees, if any, under the Franchise Agreements with respect to the
period after the Cutoff Time.
13. Employees. All wages and fringe benefits of Hotel employees shall
be prorated as of the Cut-Off Time.
14. House Banks. All cash on hand in house banks on the morning of the
Effective Date shall become the property of Xxxxxxx and the amount thereof shall
be credited to CapStar.
Any reference to proration on a "daily basis" means that
CapStar shall receive a credit for any expenditures made by CapStar which are to
be prorated hereunder calculated by multiplying such expenditure by a fraction
the numerator of which is the number of days within the period for which the
payment was made beginning on the Effective Date and the denominator of which is
the number of days within the period for which such payment was made; and
Xxxxxxx shall receive a credit for expenditures made or to be made by Xxxxxxx
which are to be prorated hereunder, calculated by multiplying such expenditure
by a fraction the numerator of which is the number of days within the period
prior to the Effective Date, and the denominator of which is the number of days
within the period for which such payment was made.
EXHIBIT E-1
PRELIMINARY SETTLEMENT STATEMENT
SCHEDULE A
SCHEDULED CONTRACTS
