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EXHIBIT 10.4
MASTER AGREEMENT
THIS MASTER AGREEMENT (the "Agreement") is made as of this 4th
day of November, 1996 by and among EQUITY INNS PARTNERSHIP, L.P., a Tennessee
limited partnership ("EIP"), INTERSTATE HOTELS CORPORATION, a Pennsylvania
corporation ("IHC"), EQUITY INNS, INC., a Tennessee corporation ("XXXX"),
CROSSROADS FUTURE COMPANY, L.L.C., a Delaware limited liability company ("New
Lessee") and CROSSROADS/MEMPHIS PARTNERSHIP, L.P., a Delaware limited
partnership (the "Partnership").
WITNESSETH:
WHEREAS, EIP owns the Leased Hotels which have been leased to
Trust Leasing, Inc., a Tennessee corporation ("TLI"), pursuant to the Existing
Leases;
WHEREAS, a wholly-owned subsidiary of XXXX serves as sole
general partner of EIP and an indirect wholly-owned subsidiary of IHC serves as
sole general partner of the Partnership;
WHEREAS, pursuant to the Contribution Agreement, TLI has agreed
to contribute and assign to the Partnership and the Partnership has agreed to
assume all of the Existing Leases with EIP affecting the Leased Hotels, as
amended by the Consolidated Lease Amendment, as described herein;
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be
legally bound, hereby agree as follows:
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I. THE TRANSACTIONS
1.1 Defined Terms. Certain capitalized terms used herein shall
have the meanings given to such terms in Article VII hereof.
1.2 Amendment and Assignment of Existing Leases. (a) At the
Closing, EIP and the Partnership will amend and restate each of the Existing
Leases effective as of the Closing Date pursuant to a Consolidated Lease
Amendment in the form attached hereto as Exhibit A ("Consolidated Lease
Amendment").
(b) At or prior to the Closing Date, EIP and XXXX
will consent to the contribution and assignment of the Existing Leases to the
Partnership, such consent to be in the form attached hereto as Exhibit B.
1.3 REIT Status. (a) Each of IHC, New Lessee and the
Partnership acknowledges the restrictions under the Code and under the amended
and restated charter of XXXX relating to the ownership of equity securities of
XXXX (which may require ownership of XXXX equity securities by IHC, New Lessee,
the Partnership and certain of their Affiliates, including their officers and
directors, to be aggregated for purposes of the foregoing restrictions).
(b) For purposes of this Agreement, the following shall
constitute the "REIT Requirements":
(i) The average of the adjusted tax bases of EIP's
personal property that is leased to the Partnership or New Lessee
under each Lease at the beginning and end of a calendar year cannot
exceed 15% of the average of the
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aggregate adjusted tax bases of all of EIP's property that is leased
to the Partnership or New Lessee under such Lease at the beginning and
end of such calendar year.
(ii) The Partnership and New Lessee cannot sublet the
property that is leased to it by EIP, or enter into any similar
arrangement, on any basis such that the rental or other amounts paid by
the sublessee thereunder would be based, in whole or in part, on either
(x) the net income or profits derived by the business activities of the
sublessee or (y) any other formula such that any portion of the rent
paid by the Partnership or New Lessee to EIP would fail to quality as
"rents from real property" within the meaning of Section 856(d) of the
Code.
(iii) The Partnership and New Lessee cannot sublease
the property leased to it by EIP to, or enter into any similar
arrangement with, any person in which XXXX owns, directly or
indirectly, a 10% or more interest, within the meaning of Section
845(d)(2)(B) of the Code.
(iv) XXXX cannot own, directly or indirectly, a 10%
or more interest in IHC, the Partnership or New Lessee, within the
meaning of Section 856(d)(2)(B) of the Code.
(v) No person can own, directly or indirectly,
capital stock of XXXX that exceeds the "Limit" (as defined in XXXX'
Charter, as amended and restated).
(c) IHC, New Lessee and Partnership agree that during the
period beginning on the Closing and ending on the earlier to occur of (x) the
date no Lease remains in effect, and (y) XXXX
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ceases to be qualified as a real estate investment trust under the Code (the
"Notice Period"), to notify XXXX, and to cause any of their Affiliates which are
direct or indirect wholly-owned Subsidiaries of IHC to notify XXXX, in advance
of any direct purchase by it of equity securities of XXXX, and to use their
reasonable efforts to permit the REIT Requirements to be satisfied, including
but not limited to, providing XXXX with information regarding the ownership of
IHC, the Partnership and New Lessee and their direct or indirect wholly owned
Subsidiaries, if and to the extent the satisfaction of the REIT Requirements is
with the reasonable control of IHC, New Lessee or Partnership, all at the
expense of XXXX. Upon request by XXXX made during the Notice Period and at the
expense of XXXX, IHC, New Lessee and the Partnership agree to cooperate with
XXXX and agree to take reasonable steps requested by XXXX necessary to maintain
the REIT Requirements. Notwithstanding the foregoing, neither IHC nor the
Partnership nor New Lessee shall be obligated to take any action which could
reasonably be expected to materially adversely affect IHC, New Lessee or the
Partnership. Notwithstanding anything to the contrary contained in this
Agreement, in no event shall IHC, New Lessee or the Partnership be liable to
XXXX or EIP for any consequential damages relating to, resulting from or arising
out of a breach or alleged breach of this Section 1.3.
1.4 Financial Reports. (a) During the period beginning on the
Closing and ending on the date no Lease remains in effect, IHC, New Lessee and
the Partnership agree to provide
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to XXXX the following financial reports and information within the specified
time periods at the Partnership's or New Lessee's expense (so as to permit XXXX
to file its required 1934 Act reports and file and have declared effective its
1933 Act registration statements):
(i) Not more than 30 days following the end
of each of the first three calendar quarters of each year, quarterly unaudited
financial statements, including a balance sheet, statement of operations,
statement of shareholders' equity, statement of cash flows, and related
schedules for the Partnership and New Lessee for the most recently ended
calendar quarter, calendar year to date and comparable prior year periods
prepared in conformity with GAAP;
(ii) Not more than 60 days following the end
of each calendar year, audited annual financial statements and schedules for the
Partnership and New Lessee for the most recently ended calendar year prepared in
accordance with GAAP, audited by a national accounting firm;
(iii) During the time periods set forth in
(i) and (ii) above, any historical financial information necessary to re-state
historical financial information of the Partnership or New Lessee to conform to
the presentation of the Partnership's or New Lessee's audited and unaudited
financial statements at any future time; and
(iv) On a timely basis, at EIP's or XXXX'
expense, any other information with respect to the Partnership, New Lessee or
the Leased Hotels necessary to permit XXXX to file
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on a timely basis its audited annual (calendar fiscal year) and unaudited
quarterly financial statements and schedules for EIP (but not separate
financial statements for the Leased Hotels) with the Securities and Exchange
Commission.
(b) If requested by XXXX, and at EIP's or XXXX'
expense, IHC, New Lessee and the Partnership will permit XXXX and EIP and their
independent public accountants, counsel, financial advisors, underwriters,
underwriters' counsel, rating agencies and lenders to continue to have access
(during normal business hours and upon three business days notice) to review
(i) the financial records of the Leased Hotels and perform generally accepted
auditing procedures with respect to the Partnership, New Lessee and the Leased
Hotels and (ii) such other records and documents with respect to each Leased
Hotel as XXXX or EIP may reasonably request.
(c) The Partnership and New Lessee shall use their
reasonable best efforts to cause the independent public accountants preparing
audits of the Partnership and New Lessee to provide XXXX and the Partnership
with all consents of such accountants required for XXXX' or EIP's filings with
the SEC under the 1933 Act and the 1934 Act or to have XXXX' or EIP's
registration statements declared effective by the SEC under the 1933 Act.
(d) IHC, the Partnership and New Lessee shall
continue to provide EIP and XXXX true and accurate daily operating and
financial reports in the form set forth on Schedule 1.4 with respect to each
Leased Hotel.
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1.5 Right of First Offer. Effective as of the Closing, EIP
hereby grants to New Lessee a right of first offer (the "Right of First Offer")
to lease and manage any hotel, motel, inn, resort or similar property which is
acquired or for which a purchase contract has been entered into or for which
development has commenced by EIP or any of its Affiliates during the five (5)
year period following the Closing (subject to Section 1.8 hereof), as follows:
(a) During the term of the Right of First Offer, with
respect to each hotel, motel, inn, resort or similar property proposed to be
acquired by EIP or an Affiliate (an "Acquisition Hotel") or developed by EIP or
a third party and acquired by EIP or an Affiliate (a "Development Hotel") (other
than any hotel proposed to be acquired from IHC or any of its Affiliates), EIP
shall promptly notify New Lessee of such proposed acquisition or development and
submit the following to New Lessee with such a notice ("Notice") (or if not then
available, as soon as EIP obtains the same): (i) such historical financial
(including gross operating profit and net operating income) and operating
information (including ADR, occupancy and REVPAR) with respect to the
Acquisition Hotel or projected financial and operating information (including
related assumptions) for the Development Hotel, if any, as is reasonably
available to EIP, (ii) any market study information obtained or developed by EIP
with respect to the Acquisition Hotel or Development Hotel, (iii) the proposed
base rent and percentage rent terms for the lease of the Acquisition Hotel or
Development
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Hotel (the "Proposed Rent Terms"), (iv) notice of the right of New Lessee to
commence due diligence on such Acquisition Hotel or Development Hotel
simultaneously with EIP's performance of due diligence (provided that New Lessee
agrees, in an appropriate writing or writings, (A) to be bound by such
confidentiality agreements regarding such hotel to which EIP has agreed to be
bound, (B) to indemnify the owner of such hotel, XXXX, EIP, and such other
parties as appropriate, against damage to property or injuries to persons
occurring as the result of a negligent or willful act or omission of the New
Lessee's employees, agents, or consultants while conducting diligence activities
at such hotel), and (C) to agree to be bound by such other agreements,
conditions and limitations regarding such hotel as EIP is bound as a condition
of it conducting due diligence), and (v) copies of all environmental,
structural, engineering, title reports and commitments, surveys and other
reports and studies ("Studies") performed by, on behalf of or at the request of
EIP, and will use its reasonable efforts to obtain letters from any third
parties performing the Studies stating that New Lessee and its Affiliates may
rely upon the Studies as if New Lessee and/or its Affiliates had ordered the
Studies with any additional cost for such letters to be paid for by New Lessee.
In addition, New Lessee will provide to EIP copies of all of the Studies
performed by, on behalf of or at the request of New Lessee and will, at EIP's
request, use its reasonable efforts to obtain from any third parties performing
the Studies letters stating that EIP and its Affiliates may rely on such Studies
as if EIP and/or its
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Affiliates had ordered the Studies with any additional cost for such letters to
be paid for by EIP. IHC and New Lessee agree to advise EIP and XXXX immediately
upon receipt of any Notice, if IHC, New Lessee or any Affiliate thereof, is
reviewing or pursuing the acquisition of the Acquisition Hotel or Development
Hotel which is the subject of the Notice on behalf of themselves or any
Affiliate. Notwithstanding the foregoing, neither EIP nor XXXX shall be required
to provide IHC or New Lessee any lease sensitivity analyses or similar
analytical information prepared by EIP or XXXX with respect to an Acquisition
Hotel or Development Hotel.
(b) New Lessee will perform its own due diligence, at
its own expense, with respect to any Acquisition Hotel or Development Hotel and
EIP and XXXX will make no representations as to the adequacy or accuracy of any
information provided to New Lessee as to any Acquisition Hotel or any
Development Hotel; provided, however, EIP will use its reasonable efforts to
include in the purchase agreement for any Acquisition Hotel or a Development
Hotel developed by someone other than EIP and XXXX an express acknowledgement by
the seller of such Acquisition Hotel or Development Hotel that New Lessee may
rely upon all representations and warranties contained in such purchase
agreement as if New Lessee was the purchaser under such purchase agreement.
(c) New Lessee and IHC (and their Affiliates and
agents) shall maintain in strictest confidence any confidential information
received from EIP in connection with a proposed
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Acquisition Hotel or Development Hotel in accordance with any confidentiality
agreement to which EIP is a party for a period of one year from the date of
receipt of such information and will not use such information (x) other than to
evaluate New Lessee's proposed lease of the Acquisition Hotel or Development
Hotel and will not provide any such information to any other party, including
without limitation, any potential acquiror of the Acquisition Hotel or
Development Hotel, (y) unless required by law or necessary to comply with
federal, state or local regulatory requirements or (z) except as permitted by
clause (x) or (y), for a period of ninety (90) days following disclosure of
such information by EIP to New Lessee or thereafter during the one-year period
described above unless following such 90-day period EIP fails to diligently
pursue the consummation of the acquisition of the Acquisition Hotel or
Development Hotel. Nothing contained herein shall preclude IHC or New Lessee or
any of their Affiliates from acquiring any Acquisition Hotel or Development
Hotel for which EIP has notified New Lessee in writing that EIP is no longer
interested in acquiring.
(d) New Lessee shall have twenty-one (21) business
days following receipt of the Notice and all of the information set forth in
Section 1.5(a)(i)-(iv), including the Proposed Rent Terms for any single
Acquisition Hotel or Development Hotel or portfolio of two (2) to four (4)
Acquisition Hotels or Development Hotels proposed to be acquired in a single
transaction, to (A) agree in writing with EIP to the Proposed Rent Terms (in
which event it shall execute a Lease or Leases
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incorporating such terms) or (B) propose to EIP alternative rental terms, reach
an agreement with EIP as to such terms and execute a Lease incorporating such
terms and (c) cause a Subordination Agreement and IHC Guarantees (but without
cross default provisions) to be executed and delivered to EIP with respect
thereto. New Lessee may exercise the Right of First Offer by (i) delivering
written notice of its election to do so to EIP and (ii) executing and delivering
a Lease with respect thereto and (iii) delivering to EIP a Subordination
Agreement and IHC Guarantees (but without cross default provisions) within the
twenty-one (21) business day period as described above. If EIP and New Lessee
fail to agree, after negotiating in good faith, to rent terms and execute a
Lease incorporating such rent terms within the twenty-one (21) business day
period described above, EIP may thereafter lease the Acquisition Hotel or
Development Hotel to an unrelated third party which is not an Affiliate of XXXX
or EIP (an "Alternative Lessee") on terms no more favorable to the Alternative
Lessee than the terms which New Lessee has rejected, subject to the requirement
to again present to New Lessee Proposed Rent Terms as set forth in the last
sentence of this Section. With respect to EIP's proposed acquisition of five (5)
or more Acquisition Hotels or Development Hotels in a single transaction, New
Lessee and EIP shall have twenty-five (25) business days to (A) agree upon the
Proposed Rent Terms, (B) execute Leases for such hotels and (C) cause a
Subordination Agreement and IHC Guarantees (without cross default provisions) to
be executed and delivered to EIP with respect thereto. If EIP
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does not enter into a lease with an Alternative Lessee for any such Acquisition
Hotel or Development Hotel within sixty (60) days after the date on which New
Lessee delivers notice to EIP of its lack of interest in leasing such
Acquisition Hotel or Development Hotel (or if it fails to deliver such notice,
within 60 days after expiration of the 21 business day or 25 business day
periods described above), EIP will be required to again present to New Lessee
Proposed Rent Terms for such Acquisition Hotel or Development Hotel and provide
New Lessee with the opportunity to update its due diligence review of such hotel
and Lessee shall again have the twenty one (21) business day or twenty five (25)
business day time periods described above to agree to such Proposed Rent Terms
and execute a Lease and deliver to EIP an executed Subordination Agreement and
IHC Guarantees (without cross default provisions) with respect thereto before
EIP may lease such Acquisition Hotel or Development Hotel to an Alternative
Lessee.
(e) The lease agreement for all Acquisition Hotels
and Development Hotels leased by New Lessee pursuant to this Section 1.5 shall
be substantially in the form of the Consolidated Lease Amendment, but shall not
be cross-defaulted with the Consolidated Lease Amendment.
(f) Notwithstanding the foregoing, the Right of First
Offer will not apply to: (i) EIP's acquisition of an Acquisition Hotel or
Development Hotel where (x) a seller/developer, as a condition of sale, requires
that the seller/developer, an affiliate or existing management become or
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remain the lessee of the hotel or (y) an Acquisition Hotel is subject to a
hotel lease which cannot be terminated without the payment of liquidated
damages or the imposition of other financial penalties and the New Lessee does
not agree, in its sole discretion, to pay such damages, or (ii) any of the
hotels currently subject to the Promus Agreements.
1.6 Purchase Option in Favor of EIP for IHC Hotels.
(a) Effective as of the Closing, during the five (5)
year period following the Closing ("Development Option Period"), IHC hereby
grants to EIP an option ("Development Option") to purchase all budget, economy,
upper economy or midscale hotels, motels or inns of the brands listed on
Schedule 1.6a (excluding any developments subject to a joint venture or
partnership agreement with parties who are not Affiliates of IHC) which IHC
plans to develop and which IHC notifies EIP prior to the commencement of
construction thereof of its intention to sell after completion of construction
(the "IHC Development Hotels") for a purchase price equal to one hundred five
percent (105%) of IHC's budgeted Development Costs (including appropriate
contingency and development fees), provided that IHC will develop and offer EIP
at least five (5) of the hotels listed on Schedule 1.6 in accordance with the
Development Option. As notification of IHC's intention to sell an IHC
Development Hotel, IHC shall deliver to EIP as soon as available (i) the
proposed Development Cost budget, (ii) any market study information related to
such IHC Development Hotel obtained or developed by IHC, and (iii)
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copies of any Studies related to an IHC Development Hotel obtained or developed
by IHC.
(b) EIP will perform its own due diligence, at its own
expense, with respect to any IHC Development Hotel. EIP will maintain in
strictest confidence any confidential information received from IHC in
connection with an IHC Development Hotel and will not use such information (i)
otherthan to evaluate EIP's proposed acquisition of the IHC Development Hotel or
(ii) unless required by law or necessary to comply with federal, state or local
regulatory requirements.
(c) Within twenty-one (21) business days after
receipt of the information to be delivered under Section 1.6(a) ("Development
Option Period"), EIP may exercise its option to purchase such IHC Development
Hotel and shall provide IHC with written notice stating that it exercises such
option. New Lessee shall have the right to lease any IHC Development Hotel sold
to EIP pursuant to the exercise of the Development Option and EIP shall deliver
to New Lessee prior to or with such written notice the Proposed Rent Terms for
such IHC Development Hotel. New Lessee shall have fifteen (15) business days
following receipt of the Proposed Rent Terms to (i) agree in writing with EIP
to the Proposed Rent Terms and execute a Lease incorporating such terms, or
(ii) to propose alternative rental terms, reach an agreement with EIP as to
such rental terms and execute a Lease containing such terms, (but without
cross-default provisions) and deliver to EIP an executed Subordination
Agreement and IHC Guarantees
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(without cross default provisions) with respect thereto. If EIP does not provide
such notice of exercise within the Development Option Period or if EIP and New
Lessee are unable to agree, after negotiating in good faith, to rent terms and
execute a lease incorporating such rent terms within the Development Option
Period, EIP shall have waived any and all rights with respect to such IHC
Development Hotel under this Section 1.6(c) and IHC may retain or sell such
hotel as it determines in its sole discretion.
(d) If a Development Option is properly exercised, EIP
shall, simultaneously with the execution and delivery by EIP and IHC of an
agreement of purchase and sale substantially in the form of Exhibit C attached
hereto ("Sales Agreement"), deposit in escrow with a bank or other financial
institution acceptable to IHC as escrowee an xxxxxxx money deposit in cash in an
amount equal to $100,000 which shall be applied to the purchase price and the
parties shall promptly execute and deliver a Lease in substantially the form of
the Consolidated Lease Amendment (but without cross-default provisions) and IHC
shall cause to be executed and delivered to EIP a Subordination Agreement and
IHC Guarantees (without cross default provisions) with respect thereto, which
shall be effective upon closing under the Sales Agreement.
(e) In the event IHC's actual Development Costs
("Actual Costs") for an IHC Development Hotel exceed the budgeted Development
Costs set forth in the Sales Agreement ("Purchase Costs") for such Hotel, EIP
shall have the right, but not the
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obligation, to purchase such Hotel for a purchase price equal to the sum of (i)
105% of the Purchase Costs and (ii) the amount by which the Actual Costs exceed
the Purchase Costs ("New Cost"). If EIP does not elect to so purchase such IHC
Development Hotel, then IHC shall have the right, but not the obligation, to
sell such IHC Development Hotel to EIP for a purchase price equal to 105% of
the Purchase Costs. If EIP elects to proceed to purchase such IHC Development
Hotel for the New Cost, the parties shall in good faith renegotiate the rent
terms for such Hotel to reflect the increased purchase price prior to the
closing of the purchase and sale of the IHC Development Hotel.
(f) The Right of First Offer described in Section 1.7
hereof shall not apply to any IHC Development Hotel which IHC offers to EIP
under this Section 1.6 and which EIP does not ultimately purchase in accordance
with the provisions of this Section 1.6, for any reason whatsoever.
(g) In the event that during the Development Option
Period, IHC has not offered to EIP at least five (5) IHC Development Hotels,
the Development Option Period will be extended until such time as IHC has
offered to EIP at least five (5) IHC Development Hotels in accordance with the
Development Option.
1.7 Right of First Offer in Favor of EIP for IHC Hotels; Future
Acquisition Opportunities.
(a) Effective as of the Closing and for the five (5)
year period following the Closing, IHC hereby grants to EIP a right of first
offer to acquire all budget, economy, upper
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economy or midscale hotels of the brands listed on Schedule 1.6a which IHC or
any direct or indirect wholly-owned Subsidiary owns as of the Closing or
acquires or develops ("IHC First Offer Hotel") during the five (5) year period
following the Closing. EIP acknowledges that the Holiday Inn Brentwood
(Tennessee) is the only hotel presently owned by IHC or any of its direct or
indirect wholly-owned Subsidiaries that falls within the foregoing
classification and to which the right of first offer shall apply as of the
Closing.
(b) Prior to offering an IHC First Offer Hotel
for sale, IHC shall give EIP written notice ("Sale Notice") of its intent to
sell or market such IHC First Offer Hotel, together with occupancy, ADR and
REVPAR, stating IHC's proposed cash purchase price together with copies of all
financial statements of the IHC First Offer Hotel during IHC's ownership period
therefor. IHC will also provide EIP with such other information in IHC's
possession regarding the IHC First Offer Hotel as EIP reasonably requests. EIP
will perform its own due diligence, at its own expense, with respect to any IHC
First Offer Hotel. EIP will maintain in strictest confidence any confidential
information received from IHC in connection with an IHC First Offer Hotel and
will not use such information (i) other than to evaluate EIP's proposed
acquisition of the IHC First Offer Hotel or (ii) unless required by law or
necessary to comply with any and all federal, state or local regulatory
requirements. Within twenty-one (21) business days after its receipt of the
Sale Notice and any requested historical financial (including gross
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operating profit and net operating income) and operating information (including
ADR, occupancy and REVPAR) reasonably available to IHC and any market study
information reasonably available to IHC, EIP may elect, by delivering written
notice to IHC, to purchase such IHC First Offer Hotel at the price set forth in
the Sale Notice. New Lessee shall have the right to lease any IHC First Offer
Hotel sold to EIP hereunder and EIP shall deliver to New Lessee prior to or
with such written notice the Proposed Rent Terms for such IHC First Offer
Hotel. New Lessee shall have fifteen (15) business days following receipt of
the Proposed Rent Terms to (i) agree in writing with EIP to the Proposed Rent
Terms and execute a Lease incorporating such terms or (ii) to propose
alternative rental terms, reach agreement regarding such terms with EIP and
execute a Lease incorporating such terms, and deliver to EIP an executed a
Subordination Agreement and IHC Guarantees (without cross default provisions).
A failure by EIP to notify IHC of its exercise of the right of first offer
within such twenty-one (21) day period or a failure of EIP and New Lessee to
agree, after negotiating in good faith, upon rent terms and execute a Lease
(without cross-default provisions) incorporating such terms within such period
shall constitute a waiver of any or all of EIP's rights hereunder.
(c) In the event that EIP shall have elected to
purchase the IHC First Offer Hotel in accordance with the provisions of the
preceding subsection (b), EIP shall deposit in escrow with a bank, title
company or other financial institution acceptable to IHC as escrowee an xxxxxxx
money deposit in cash in
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an amount equal to $100,000 which shall be applied to the purchase price,
simultaneously with the execution and delivery by IHC and EIP of a Sales
Agreement for such hotel.
(d) If EIP elects or is deemed to have elected
not to purchase the IHC First Offer Hotel, then at any time within one hundred
ninety-five (195) days from the date of the Sale Notice, IHC may sell such IHC
First Offer Hotel for a purchase price which is equal to or greater than 95% of
the price contained in the Sale Notice. In determining the application of the
95% as stated herein, only the stated purchase price shall be relevant and no
adjustments offered to EIP shall be considered in respect of the other terms or
conditions of a proposed sale. Should IHC desire to sell such IHC First Offer
Hotel at a price which is less than 95% of the price set forth in the Sale
Notice, or should the one hundred ninety five (195) day time period expire, IHC
shall again comply with the requirements set forth in this Section prior to
marketing or soliciting for sale any such IHC First Offer Hotel.
(e) Effective as of the Closing and during the five
(5) year period following the Closing, IHC, the Partnership and their
Affiliates which are direct or indirect wholly-owned Subsidiaries will use
their reasonable efforts but subject to any confidentiality agreements to which
they are a party, to direct to EIP all opportunities presented to them for
acquisitions of budget, economy, upper economy or midscale hotels, motels, or
inns of the brands listed on Schedule 1.6a which they do not
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intend to purchase for their own account, through an Affiliate, or as part of a
joint venture or partnership.
1.8 Termination. (a) The Right of First Offer granted pursuant
to Section 1.5 may be terminated by EIP: (i) subject to the satisfaction of the
requirements set forth in Article XLII of the Leases, upon termination of XXXX'
status as a real estate investment trust for federal income tax purposes; or
(ii) in the event of a Default by the Partnership or New Lessee hereunder or
under the Leases; or (iii) in the event of a Default under the IHC Guarantees.
(b) The purchase option and right of first offer granted
pursuant to Sections 1.6 and 1.7 hereof may be terminated by the Partnership or
New Lessee in the event of a Default by EIP or XXXX hereunder or under the
Leases.
(c) For purposes hereof, a Default shall be (i) a failure to
comply with any material provision of this Agreement for a period of thirty (30)
days after notification by a nondefaulting party of such failure to comply, or
(ii) an Event of Default as defined in the Leases or the IHC Guarantees.
1.9 Expenses of Transaction. Except as otherwise provided
herein, each party hereto shall bear its own costs and expenses incurred in
connection with entering into this Agreement and consummating the transactions
contemplated herein including without limitation, all fees of counsel,
accountants and consultants; provided, however, that notwithstanding anything
contained herein to the contrary, EIP and/or XXXX shall be solely responsible
for any and all costs or expenses associated with any
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property improvement program imposed and/or required as a result of the
transactions contemplated herein and in the Contribution Agreement.
1.10 Closing. Subject to the fulfillment or waiver of the
conditions precedent specified in Sections 4.1, 4.2 and 4.3, the consummation of
the transactions contemplated hereby (the "Closing") will take place on November
13, 1996 or such other date as agreed to by the parties (the "Closing Date").
The Closing will take place at 10:00 a.m., E.S.T. on the Closing Date at the
offices of Xxxxx, Day, Xxxxxx & Xxxxx at 000 Xxxxx Xxxxxx, Xxxxxxxxxx,
Xxxxxxxxxxxx.
1.11 Non-Public Information. To the extent that, EIP or
XXXX, on the one hand, or IHC, the Partnership or New Lessee on the other hand,
obtains information or becomes aware of material information concerning the
other that has not been disclosed in a public announcement or filing under the
1933 Act or 1934 Act, each party agrees that it shall not improperly disclose
or unlawfully utilize such information or otherwise act unlawfully with respect
thereto.
II. REPRESENTATIONS AND WARRANTIES.
2.1 Representations and Warranties of EIP and XXXX. As used
herein, the term "to the knowledge of" or similiar phrase, shall mean actual
knowledge of an executive officer of XXXX or the general partner of EIP based
solely on a written notice or notification to XXXX or EIP from a third party
and does not include any knowledge any such officer may have obtained in
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any other capacity. EIP and XXXX each hereby represents and warrants to the
Partnership, New Lessee and IHC as follows:
2.1.1 Organizational Matters. (a) EIP is a limited partnership
duly organized, validly existing and in good standing under the laws of the
State of Tennessee and has the requisite partnership power and authority to
own, lease or otherwise hold the assets owned, leased or otherwise held by it
and to carry on its business as presently conducted by it. EIP is duly
qualified to do business as a foreign limited partnership under the laws of the
jurisdictions where such qualification is necessary or required to operate its
assets and/or conduct its business.
(b) Equity Inns Trust, a Maryland real estate investment
trust ("General Partner") and a wholly owned subsidiary of XXXX is the sole
general partner of EIP. XXXX is a corporation and General Partner is a Maryland
real estate investment trust, duly organized, validly existing and in good
standing under the laws of the State of Tennessee and the State of Maryland,
respectively and have the requisite corporate and trust power and authority to
own, lease or otherwise hold the assets owned, leased or otherwise held by them
and to carry on their respective business as presently conducted by them. XXXX
is duly qualified to do business as a foreign corporation under the laws of the
jurisdictions where such qualification is necessary or required to operate its
assets and/or conduct its business. The General Partner is duly qualified to do
business as a foreign trust where such qualification is necessary or required
to operate its assets and/or conduct its business.
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2.1.2 Authorization and Effect of Agreement. Each of XXXX and
EIP has the requisite corporate or partnership power and authority to execute
and deliver this Agreement, and EIP has the requisite partnership power to
execute and deliver the Consolidated Lease Amendment and each Lease and to
perform the transactions contemplated hereby and thereby to be performed by
each of them. The execution and delivery by EIP and XXXX of this Agreement and
the execution and delivery by EIP of the Consolidated Lease Amendment and the
performance by EIP and XXXX of the transactions contemplated hereby and thereby
to be performed by it have been duly authorized by all necessary action on the
part of EIP and XXXX. This Agreement has been duly executed and delivered by
EIP and XXXX, and the Consolidated Lease Amendment will be duly executed and
delivered by EIP and, assuming the due execution and delivery of this Agreement
and the Consolidated Lease Amendment by the Partnership, New Lessee and IHC,
constitute (or as to the Consolidated Lease Amendment, will contitute) valid
and binding agreements of EIP and XXXX enforceable in accordance with their
respective terms.
2.1.3 No Restrictions. The execution and delivery of this
Agreement by EIP and XXXX and execution and delivery of the Consolidated Lease
Amendment by EIP and the performance by EIP and XXXX of the transactions
contemplated hereby and thereby to be performed by each of them will not
violate any law, rule, regulation, judgment, order or decree applicable to EIP
or XXXX or conflict with, or result in any violation of, or constitute a
default (with or without notice or lapse of time, or both) under,
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or give rise to a right of termination, cancellation or acceleration of any
obligation or to the loss of a material benefit under, any provision of the
partnership agreement of EIP or the charter or bylaws of XXXX or any material
agreement, contract, lease, or other instrument or obligation to which EIP or
XXXX is a party or by which its assets are bound (subject to obtaining the
consents described on Schedule 2.1.3). Except as set forth on Schedule 2.1.3,
no material consent, approval, order or authorization of, notice to or
registration, declaration or filing with, any Governmental Authority or other
entity, domestic or foreign or other third party is required to be obtained or
made by or with respect to EIP or XXXX in connection with the execution and
delivery of this Agreement or the Consolidated Lease Amendment by EIP or the
performance by EIP or XXXX of the transactions contemplated hereby or thereby
to be performed by it.
2.1.4 No Brokerage or Finder's Fees. Neither EIP nor XXXX has
incurred any liability to any broker, finder or agent for any brokerage fees,
finder's fees or commissions with respect to the transactions contemplated by
this Agreement.
2.1.5 Litigation; Decrees. To the knowledge of EIP and XXXX
there are no lawsuits, claims, administrative or other proceedings pending or
threatened which seek to enjoin or otherwise affect the transactions
contemplated by this Agreement, or the Consolidated Lease Amendment or relate to
the conduct of the Current Hotels or against or affecting EIP or XXXX or the
Current Hotels which, if determined adversely, would have a
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material adverse effect on the Current Hotels. Neither EIP nor XXXX is in
default under any judgment, order or decree of any Governmental Authority
applicable to the ownership, of the Current Hotels.
2.1.6 Existing Leases. Each Existing Lease is a valid and
binding obligation of EIP and is in full force and effect. EIP has performed
all obligations required to be performed by it under the Existing Leases and is
not (with or without the lapse of time or the giving of notice, or both) in
breach or default in any respect thereunder. EIP has made available to IHC
true, correct and complete copies of each Existing Lease.
2.2 Representations and Warranties of IHC, New Lessee and
Partnership. IHC, New Lessee and the Partnership hereby represent and warrant
to EIP and XXXX as follows:
2.2.1 Organization. (a) IHC and New Lessee are a corporation
and a limited liability company, respectively, duly organized, validly existing
and in good standing under the laws of the Commonwealth of Pennsylvania and the
State of Delaware, respectively, and have the requisite corporate or company
power as applicable and authority to own, lease or otherwise hold their
properties and assets and to carry on their business as presently conducted and
as proposed to be conducted under the Consolidated Lease Amendment.
(b) Partnership is a limited partnership duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the requisite partnership power and authority to own, lease or
otherwise hold its properties and
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assets and to carry on its business as presently conducted. A wholly owned
subsidiary of IHC owns all of the outstanding equity interests of the sole
general partner of the Partnership and at the Closing, the Partnership and the
sole general partner will be qualified to do business and will be in good
standing as a foreign limited partnership or foreign limited liability company,
respectively, in each state in which a Leased Hotel is located. The New Lessee
is an indirect, wholly owned subsidiary of IHC. IHC is a wholly-owned subsidary
of Company.
2.2.2 Authorization and Effect of Agreement. IHC, New Lessee
and the Partnership have the requisite corporate or partnership power, as
applicable, and authority to execute and deliver this Agreement, the
Partnership has the requisite partnership power to execute and deliver the
Consolidated Lease Amendment and New Lessee has the requisite company power to
execute and deliver the Leases and to perform the transactions contemplated
hereby and thereby to be performed by each of them. The execution and delivery
by IHC, New Lessee and the Partnership of this Agreement and the execution and
delivery by the Partnership of the Consolidated Lease Amendment and the
performance by IHC, New Lessee and the Partnership of the transactions
contemplated hereby and thereby to be performed by it have been duly authorized
by all necessary action on the part of IHC, New Lessee and the Partnership.
This Agreement has been duly executed and delivered by IHC, New Lessee and the
Partnership and the Consolidated Lease Amendment will be duly executed and
delivered by the Partnership and, assuming the due
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execution and delivery of this Agreement and the Consolidated Lease Amendment by
XXXX and EIP, constitute (or as to the Consolidated Lease Amendment, will
constitute) valid and binding agreements of IHC, New Lessee and the Partnership,
enforceable in accordance with their respective terms.
2.2.3 No Restrictions. The execution and delivery of this
Agreement and the Consolidated Lease Amendment by IHC, New Lessee and the
Partnership and the performance by IHC, New Lessee and the Partnership of the
transactions contemplated hereby to be performed by each of them will not
violate any law, rule, regulation, judgment, order or decree applicable to IHC,
New Lessee or Partnership or conflict with, or result in any violation of, or
constitute a default (with or without notice or lapse of time, or both) under,
or give rise to a right of termination, cancellation or acceleration of any
obligation or to the loss of a material benefit under, any provision of the
articles of incorporation or bylaws of Company or IHC or the certificate of
limited partnership and partnership agreement of the Partnership or any
material agreement, contract, lease or other instrument to which Company, IHC,
New Lessee or the Partnership is a party or by which any of their assets are
bound. Except as set forth on Schedule 2.2.3, no material consent, approval,
order or authorization of, or registration, declaration or filing with, any
Governmental Authority or other entity domestic or foreign or other third party
is required to be obtained or made by or with respect to IHC, New Lessee or the
Partnership in connection with the execution and delivery of this
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Agreement or the Consolidated Lease Amendment by IHC, New Lessee or the
Partnership or the performance by IHC, New Lessee or the Partnership of the
transactions contemplated hereby or thereby to be performed by each of them.
2.2.4 No Brokerage or Finder's Fees. Neither IHC nor the
Partnership nor New Lessee has incurred any liability to any broker, finder or
agent for any brokerage fees, finder's fees or commissions with respect to the
transactions contemplated by this Agreement.
2.2.5 Leases. The execution and delivery of the Consolidated
Lease Amendment and the performance by the Partnership of the transactions
contemplated thereby to be performed by the Partnership have been duly
authorized by all necessary action on the part of the Partnership. Upon
execution and delivery of the Consolidated Lease Amendment by the Partnership
and EIP, the Consolidated Lease Amendment will constitute a valid and binding
obligation of the Partnership, enforceable in accordance with its terms.
2.2.6 IHC Guarantees. The execution and delivery of the IHC
Guarantees (as defined in Section 4.3.3 below) have been authorized by all
necessary action on the part of IHC and Company and, upon execution and delivery
of the IHC Guarantees by Company and IHC, each of the IHC Guarantees will
constitute a valid and binding obligation of Company and IHC, respectively,
enforceable in accordance with their respective terms.
2.2.7 Real Property. IHC, the Partnership and New Lessee
have had access to such deeds, title policies,
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environmental reports, structural or other engineering reports and surveys with
respect to the Current Hotels as IHC, the Partnership or New Lessee has deemed
necessary to its review.
2.2.8 Litigation; Decrees. To the knowledge of IHC, New Lessee
or the Partnership, there are no lawsuits, claims, administrative or other
proceedings pending or threatened which seek to enjoin or otherwise affect the
transactions contemplated by this Agreement, the Contribution Agreement or the
Consolidated Lease Amendment.
III. COVENANTS PENDING CLOSING
3.1 Investigation by IHC. Prior to the Closing, upon reasonable
notice from IHC to EIP given in accordance with this Agreement, EIP and XXXX
will afford to the officers, attorneys, accountants or other authorized
representatives of IHC reasonable access during normal business hours to the
facilities and the books and records of EIP and XXXX relating to the Existing
Leases and/or Current Hotels so as to afford IHC full opportunity to make such
review, examination and investigation of the Existing Leases and/or Current
Hotels as IHC reasonably may desire to make (including, without limitation,
environmental audits of the Current Hotels). IHC will be permitted to make
extracts from or to make copies of such books and records as may be necessary.
3.2 No Announcement/Confidentiality. Upon execution of this
Agreement, XXXX, EIP, Partnership, New Lessee and IHC agree to make a mutually
agreed upon press releases. Prior to the Closing Date, no party shall publish
or permit any of its Affiliates to publish any other press release or similar
public
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announcement with respect to the transactions contemplated by this Agreement
without prior written consent of all of the other parties, other than as the
person making such disclosure may determine in good faith to be required by
law, rule, regulation, judicial or administrative process (in which case the
disclosing party shall use reasonable efforts to give notice to all of the
other parties prior to making such disclosure and, if reasonably practicable in
the circumstances, give such other parties the opportunity to review and
comment upon the proposed disclosure).
3.3 Regulatory Filings. Each of the parties will use its
reasonable best efforts to obtain, and to cooperate with the other in obtaining,
all authorizations, consents, orders and approvals of Governmental Authorities
that may be or become necessary in connection with the consummation of the
transactions contemplated by this Agreement including, without limitation,
filings required under the HSR Act and to take all reasonable actions to avoid
the entry of any order or decree by any Governmental Authority prohibiting the
consummation of the transactions contemplated hereby.
3.4 Operation of the Business. Prior to the Closing, EIP will:
(a) Use best efforts to keep the Existing Leases
intact and not take or permit to be taken or do or suffer to be done anything
other than in the ordinary course of EIP's business as presently conducted, and
use reasonable best efforts to maintain the goodwill associated with the
Current Hotels; and
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(b) Except as provided in Section 1.2, terminate,
amend or modify any of the Existing Leases.
3.5 Satisfaction of Conditions. Without limiting the generality
or effect of any provision of Article IV, prior to the Closing, each of the
parties hereto will use reasonable efforts with due diligence and in good faith
to satisfy promptly all conditions required hereby to be satisfied by such party
in order to expedite the consummation of the transactions contemplated hereby.
3.6 No Solicitation. Prior to the Closing, neither EIP nor
XXXX, nor its respective employees, officers, agents or representatives shall
directly or indirectly (a) solicit, initiate or encourage any inquiries,
proposals or offers from any person relating to any lease or purchase of any of
the Current Hotels, or (b) with respect to any effort or attempt by any other
person to do or seek any of the foregoing (i) participate in any discussions or
negotiations, (ii) furnish to any other person any confidential information with
respect to the Current Hotels, or (iii) otherwise cooperate in any way with, or
assist or participate in, or facilitate or encourage any such effort.
IV. THE CLOSING
4.1 Conditions Precedent to Obligations of Parties. The
obligations of each of EIP, XXXX, IHC, New Lessee and the Partnership under
this Agreement to consummate the transactions contemplated hereby will be
subject to the satisfaction, at or prior to Closing, of the conditions that (a)
each governmental approval, liquor license and other approvals, consents or
waivers
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identified on Schedule 2.1.3 or Schedule 2.2.3 as being a condition of the
Closing shall have been obtained (or in the case of liquor licenses,
consummation of an arrangement deemed acceptable by IHC in its sole discretion
under the applicable liquor laws allowing the continuation of liquor service
pending the approval of the license transfer application) including, without
limitation, under the HSR Act, (b) there shall not have been entered a
preliminary or permanent injunction, temporary restraining order or other
judicial or administrative order or decree in any domestic jurisdiction, the
effect of which prohibits the Closing, and (c) all conditions to the closing
under that certain Contribution Agreement dated as of October 4, 1996 by and
among TLI, Trust Management, Inc., Xxxxxxx X. XxXxxxx Xx. and the Partnership
("Contribution Agreement") shall have been satisfied other than the obligations
hereunder and (d) approval of XXXX' line of credit lender shall have been
obtained and (e) approval of the Franchisors shall have been obtained and (f)
the approval of Credit Lyonnais shall have been obtained and (g) the approval of
Xxxxxxx Xxxxx & Co. shall have been obtained. Any of the foregoing conditions
may be waived, (i) insofar as it is a condition to the obligations of the
Partnership or IHC, by IHC at its option and (ii) insofar as it is a condition
to the obligations of EIP or XXXX, by EIP at its option.
4.2 Additional Conditions Precedent to Obligations of the
Partnership, New Lessee and IHC. The obligations of the Partnership, New Lessee
and IHC under this Agreement to
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consummate the transactions contemplated hereby will be subject to the
satisfaction, at or prior to the Closing, of all of the following conditions,
any one or more of which may be waived at the option of the Partnership, New
Lessee and IHC:
4.2.1 No Material Misrepresentation or Breach. There shall
have been no material breach by EIP or XXXX in the performance of any of their
covenants herein to be performed by them in whole or in part prior to the
Closing, and the representations and warranties of EIP and XXXX contained in
this Agreement shall be true and correct in all respects as of the Closing
Date, except for representations or warranties made as of a specified date,
which shall be true and correct in all respects as of the specified date, and
EIP and XXXX shall have delivered to the Partnership, New Lessee and IHC a
certificate certifying each of the foregoing, dated the Closing Date and signed
by its president and chief financial officer on its behalf.
4.2.2 Closing Documents. There shall have been delivered to
the Partnership, New Lessee and IHC by EIP and XXXX the following documents as
executed by EIP, XXXX and the other parties thereto:
(a) Incumbency and Specimen Signature Certificate of
EIP and XXXX;
(b) Resolutions of the Board of Directors of XXXX
authorizing the execution and delivery of this Agreement and the consummation
of the transactions contemplated by it, certified by the Secretary of XXXX;
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(c) Certificate of (i) the Secretary of State of the
State of Tennessee (with respect to EIP and XXXX) and (ii) the Department of
Assessments and Taxation of the State of Maryland (with respect to the General
Partner), dated as of a date no more than ten (10) days prior to Closing, to
the effect that EIP, XXXX and the General Partner, as the case may be, is
validly existing and in good standing in such jurisdiction;
(d) True and correct copies of the organizational
documents of EIP and XXXX certified by the Secretaries of the general partners
of EIP and XXXX;
(e) The opinion of Hunton & Xxxxxxxx, counsel for EIP
and XXXX, to cover the matters set forth in Exhibit D, attached hereto;
(f) The Consolidated Lease Amendment; and
(g) The consents provided in Section 1.2(b), consents
from ground lessors for applicable Hotels , if such consent is, in the
Partnership's and EIP's reasonable judgment, required for the Partnership to
become lessee of the Current Hotels without default, penalty, change in terms
or charges and evidence that any other required consents have been obtained.
4.3 Additional Conditions Precedent to Obligations of EIP and
XXXX. The obligations of EIP and XXXX under this Agreement to consummate the
transactions contemplated hereby will be subject to the satisfaction, at or
prior to the Closing, of all the following conditions, any one or more of which
may be waived at the option of EIP and XXXX.
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4.3.1 No Material Misrepresentation or Breach. There shall
have been no material breach by the Partnership, New Lessee or IHC in the
performance of any of their covenants herein to be performed by them in whole
or in part prior to the Closing, and the representations and warranties of the
Partnership, New Lessee and IHC contained or referred to in this Agreement
shall be true and correct in all respects as of the Closing Date, except for
representations or warranties made as of a specified date, which shall be true
and correct in all respects as of the specified date, and the Partnership, New
Lessee and IHC shall have delivered to EIP and XXXX a certificate certifying
each of the foregoing, dated the Closing Date and signed by its president and
chief financial officer on its behalf.
4.3.2 Closing Documents. There shall have been delivered to
EIP and XXXX by the Partnership, New Lessee and IHC the following documents as
executed by IHC, the Partnership, New Lessee and the other parties thereto:
(a) Incumbency and Specimen Signature Certificate of
Partnership, New Lessee and IHC;
(b) Certificates of the Secretary of State of the
State of Delaware and the Commonwealth of Pennsylvania, respectively, to the
effect that the Partnership, New Lessee, Company and IHC are validly existing
and in good standing and certificates from various state authorities to the
effect the Partnership is in good standing as a foreign jurisdiction in each
state listed in Schedule 4.3.2 dated as of a date not more than ten (10) days
prior to Closing;
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(c) Resolutions of the Board of Directors of New
Lessee, Company, IHC and the general partner of the Partnership authorizing the
execution and delivery of this Agreement, the execution and delivery by Company
and IHC of the IHC Guarantees and the consummation of the transactions
contemplated herein and therein.
(d) True and correct copies of the organizational
documents of IHC, New Lessee and the Partnership certified by the Secretaries
of New Lessee, IHC and the general partner of Partnership;
(e) The opinion of Xxxxx, Day, Xxxxxx & Xxxxx, counsel
for the Partnership, New Lessee and IHC, to cover the matters set forth in
Exhibit E attached hereto; and
(f) The Consolidated Lease Amendment.
4.3.3 Guarantees. At the Closing, IHC shall have caused
Company to have executed and delivered to EIP and IHC shall have executed and
delivered to EIP a Guaranty Agreement in the form of Exhibit F attached hereto
(collectively "IHC Guarantees"). At any time prior to or after the Closing, if
requested by EIP or XXXX, IHC shall execute and deliver and IHC shall cause
Company to execute and deliver one or more separate guarantees in the form of
Exhibit F evidencing the guarantee of any single Lease or group of Leases for
any Leased Hotels.
4.3.4 Promus Agreements. The Partnership or an Affiliate
reasonably acceptable to EIP and Promus Hotels Corp. ("Promus"), shall have
assumed all of the duties and obligations of TLI arising after the Closing Date
under (a) the Development
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Agreement dated May 31, 1996 among XXXX, EIP, TLI and Promus and (b) any
Management Agreements entered into between TLI and Promus (collectively, the
"Promus Agreements") and Promus shall have consented in writing to the
assumption of such obligations under the Promus Agreements.
4.3.5 Subordination Agreement. At the Closing, IHC shall have
caused Crossroads Hospitality Company, L.L.C. to have executed and delivered to
EIP and XXXX a Subordination Agreement substantially in the form of Exhibit G
attached hereto ("Subordination Agreement").
4.4 Termination. Notwithstanding anything contained in this
Agreement to the contrary, this Agreement may be terminated at any time prior
to the Closing:
(a) By the mutual written consent of Partnership, New
Lessee, IHC, XXXX and EIP;
(b) By any of the Partnership, New Lessee, IHC, XXXX
or EIP by notice to the other parties hereto if the Closing shall not have
occurred on or before December 1, 1996, provided that the party (or an Affiliate
thereof) so terminating is not in default of its obligations hereunder; or
(c) By either the Partnership, IHC, New Lessee, XXXX
or EIP if there shall have been entered a final, nonappealable order or
injunction of any Governmental Authority restraining or prohibiting the
consummation of the transactions contemplated hereby or any material part
thereof. In the event of termination of this Agreement under this Section 4.4
each party hereto will pay all of its own fees and
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expenses. There will be no further liability hereunder on the part of any party
hereto if this Agreement is so terminated, except by reason of a material
breach of any covenant contained in this Agreement.
V. SURVIVAL AND INDEMNIFICATION.
5.1 Survival; Definitions. (a) Each of the representations and
warranties contained in Article II, will survive the Closing and remain in full
force and effect until June 30, 1998. Any claim for indemnification with
respect to any of such matters which is not asserted by notice given as herein
provided within such specified period of survival may not be pursued. Any claim
for an Indemnifiable Loss asserted within such period of survival as herein
provided will be timely made for purposes hereof.
(b) Unless a specified period is set forth in this
Agreement (in which event such specified period will control), the covenants
contained herein will survive the Closing and remain in effect indefinitely.
5.2 Indemnification. (a) Subject to Section 5.1, EIP and XXXX
will indemnify, defend and hold harmless the Partnership, New Lessee, IHC and
its Affiliates and their respective directors, officers, partners, employees,
agents and representatives from and against any and all Indemnifiable Losses
relating to, resulting from or arising out of:
(i) Any breach by EIP or XXXX of any of the
representations or warranties of EIP or XXXX
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contained in this Agreement or in any Sales
Agreement;
(ii) Any breach by EIP or XXXX of any
covenant of EIP or XXXX contained in this Agreement;
(iii) Any Third Party Claim relating to or
arising out of the ownership (but not the operation
or management) of the Current Hotels on or prior to
the Closing Date;
(iv) The 1934 Act reports or the 1933 Act
registration statements of XXXX or EIP, other than
Indemnifiable Losses arising out of inaccurate
information provided to EIP or XXXX by Partnership or
New Lessee; and/or
(v) Any and all violations of the ADA other
than those caused by the Partnership's, IHC's or the
New Lessee's negligence or willful misconduct.
(b) Subject to Section 5.1, the Partnership, New
Lessee and IHC will indemnify, defend and hold harmless EIP and XXXX and their
respective Affiliates, directors, officers, partners, employees, agents and
representatives from and against any and all Indemnifiable Losses relating to,
resulting from or arising out of any of the following:
(i) Any breach by the Partnership, New
Lessee or IHC of any of the representations
or warranties of the Partnership or IHC
contained in this Agreement or in any Sales
Agreement; and/or
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(ii) Any breach by Partnership, New Lessee
or IHC of any covenant of the Partnership,
New Lessee or IHC contained in this
Agreement.
5.3 Defense of Claims. (a) If any Indemnitee receives notice of
the assertion or commencement of any Third Party Claim against such Indemnitee
with respect to which an Indemnifying Party is obligated to provide
indemnification under this Agreement, the Indemnitee will give such Indemnifying
Party reasonably prompt written notice thereof, but in any event not later than
20 calendar days after receipt of such notice of such Third Party Claim. Such
notice will describe the Third Party Claim in reasonable detail, will include
copies of all material written evidence thereof and will indicate the estimated
amount, if reasonably practicable, of the Indemnifiable Loss that has been or
may be sustained by the Indemnitee. The Indemnifying Party will have the right
to participate in, or, by giving written notice to the Indemnitee, to assume,
the defense of any Third Party Claim at such Indemnifying Party's own expense
and by such Indemnifying Party's own counsel (reasonably satisfactory to the
Indemnitee), and the Indemnitee will cooperate in good faith in such defense.
(b) If, within ten (10) calendar days after giving
notice of a Third Party Claim to an Indemnifying Party pursuant to Section
5.3(a), an Indemnitee receives written notice from the Indemnifying Party that
the Indemnifying Party has elected to assume the defense of such Third Party
Claim as
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provided in the last sentence of Section 5.3(a), the Indemnifying Party will not
be liable for any legal expenses subsequently incurred by the Indemnitee in
connection with the defense thereof; provided, however, that if the Indemnifying
Party fails to take reasonable steps necessary to defend diligently such Third
Party Claim within ten (10) calendar days after receiving written notice from
the Indemnitee that the Indemnitee believes the Indemnifying Party has failed to
take such steps or if the Indemnifying Party has not undertaken fully to
indemnify the Indemnitee in respect of all Indemnifiable Losses relating to the
matter, the Indemnitee may assume its own defense, and the Indemnifying Party
will be liable for all reasonable costs or expenses paid or incurred in
connection therewith. Without the prior written consent of the Indemnitee, the
Indemnifying Party will not enter into any settlement of any Third Party Claim
which would lead to liability or create any financial or other obligation on the
part of the Indemnitee for which the Indemnitee is not entitled to
indemnification hereunder. If a firm offer is made to settle a Third Party Claim
without leading to liability or the creation of a financial or other obligation
on the part of the Indemnitee for which the Indemnitee is not entitled to
indemnification hereunder and the Indemnifying Party desires to accept and agree
to such offer, the Indemnifying Party will give written notice to the Indemnitee
to that effect. If the Indemnitee fails to consent to such firm offer within ten
(10) calendar days after its receipt of such notice, the Indemnitee may continue
to contest or defend such Third Party Claim and, in
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such event, the maximum liability of the Indemnifying Party as to such Third
Party Claim will not exceed the amount of such settlement offer, plus costs and
expenses paid or incurred by the Indemnitee through the end of such ten (10)
calendar day period.
(c) Any claim by an Indemnitee on account of an
Indemnifiable Loss which does not result from a Third Party Claim (a "Direct
Claim") will be asserted by giving the Indemnifying Party reasonably prompt
written notice thereof, but in any event not later than twenty (20) calendar
days after the Indemnitee becomes aware of such Direct Claim, and the
Indemnifying Party will have a period of twenty (20) calendar days within which
to respond in writing to such Direct Claim. If the Indemnifying Party does not
so respond within such twenty (20) calendar day period, the Indemnifying Party
will be deemed to have rejected such claim, in which event the Indemnitee will
be free to pursue such remedies as may be available to the Indemnitee on the
terms and subject to the provisions of this Article VI.
(d) A failure to give timely notice or to include any
specified information in any notice as provided in Sections 5.2(a) or 5.2(b)
will not affect the rights or obligations of any party hereunder except and
only to the extent that such failure is actually prejudicial to the rights or
obligations of the Indemnifying Party.
(e) Any liability for any indemnification hereunder
shall be net of any insurance proceeds received by an Indemnitee with respect
to any Third Party Claim.
VI. MISCELLANEOUS PROVISIONS.
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6.1 Notices. All notices and other communications required or
permitted hereunder will be in writing and, unless otherwise provided in this
Agreement, will be deemed to have been duly given when delivered in person or
when dispatched by telegram or electronic facsimile transfer (confirmed in
writing by mail simultaneously dispatched) or one business day after having
been dispatched by a nationally recognized overnight courier service to the
appropriate party at the address specified below:
(a) If to the Partnership, New Lessee or IHC, to:
Interstate Hotels Corporation
Xxxxxx Plaza Ten, 000 Xxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000-0000
Facsimile No.: 000-000-0000
Attention: Xxxxx X. Xxxxxxxx
With a copy to:
Interstate Hotels Corporation
Xxxxxx Plaza, 000 Xxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000-0000
Facsimile No.: 000-000-0000
Attention: Xxxxxx X. Xxxx, Esquire
Senior Vice President and General
Counsel
(b) If to EIP or XXXX, to:
c/o Equity Inns, Inc.
0000 Xxxxxxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Chairman of the Board
With a copy to:
Hunton & Xxxxxxxx
2000 Riverview Tower
000 X. Xxx Xxxxxx
Xxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
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6.2 Successors and Assigns. This Agreement will be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns. This Agreement may not be assigned by IHC,
New Lessee or the Partnership and the Leases may not be assigned by New Lessee
or the Partnership without the prior written consent of EIP and XXXX (except to
an entity under the control of (i) IHC or Company, (ii) the then senior
management of IHC, or (iii) Crossroads Hospitality Company L.L.C.), provided
that in connection with any such transaction, any transferee, assignee,
successor in interest to IHC, New Lessee or the Partnership agrees in writing
with EIP and XXXX to assume all of IHC's, New Lessee's and the Partnership's
obligations hereunder. During the term of the Leases, IHC, New Lessee and
Partnership agree that there will be no change in control of New Lessee or the
Partnership (except to an entity under the control of (i) IHC or Company, (ii)
the then senior management of IHC, or (iii) Crossroads Hospitality Company
L.L.C.) and any such change in control shall be deemed an assignment of the
Leases and this Agreement and which shall require the prior written consent of
EIP and XXXX. In no event shall a change in control, merger, consolidation or
sale of all or substantially all of the assets of IHC or Company or any
successor be deemed to be an assignment hereunder or under the Leases.
6.3 Waiver. IHC, New Lessee and the Partnership, on the one
hand, and XXXX and EIP, on the other hand, by written notice to the other may
(a) extend the time for performance of
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any of the obligations or other actions of the other under this Agreement, (b)
waive any inaccuracies in the representations or warranties of the other
contained in this Agreement, (c) waive compliance with any of the conditions or
covenants of the other contained in this Agreement, or (d) waive or modify
performance of any of the obligations of the other under this Agreement;
provided, however, that no such party may, without the prior written consent of
such other party, make or grant such extension of time, waiver of inaccuracies
or compliance or waiver or modification of performance with respect to its (or
any of its Affiliates') representations, warranties, conditions or covenants
hereunder. Except as provided in the immediately preceding sentence, no action
taken pursuant to this Agreement will be deemed to constitute a waiver of
compliance with any representations, warranties or covenants contained in this
Agreement and will not operate or be construed as a waiver of any subsequent
breach, whether of a similar or dissimilar nature.
6.4 Entire Agreement. This Agreement (including the Schedules
and Exhibits hereto) and as to the Partnership the Contribution Agreement
(including the Schedules and Exhibits thereto, to which EIP is neither a party
nor is bound) supersedes any other agreement, whether written or oral, that may
have been made or entered into by any party (or by any director, officer or
representative thereof) including that certain letter agreement dated September
12, 1996 relating to the matters contemplated hereby. This Agreement (together
with the Schedules and Exhibits hereto) and as to the Partnership, the
Contribution Agreement
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(together with the Schedules and Exhibits thereto) constitute the entire
agreement by and among the parties hereto and thereto and there are no
agreements or commitments by or among such parties except as expressly set forth
herein and therein.
6.5 Amendments, Supplement. This Agreement may be amended or
supplemented at any time by additional written agreements signed by all of the
parties hereto.
6.6 Rights of the Parties. Except as specifically set forth
herein, nothing expressed or implied in this Agreement is intended or will be
construed to confer upon or give any person or entity other than the parties
hereto and where applicable, their respective Affiliates, successors and
permitted assigns any rights, duties, obligations or remedies under or by
reason of this Agreement or any transaction contemplated hereby.
6.7 Further Assurances. From time to time, as and when
requested by any party hereto, the other parties will execute and deliver, or
cause to be executed and delivered, all such documents and instruments as may
be reasonably necessary to consummate the transactions contemplated by this
Agreement.
6.8 Time of Essence. Time shall be of the essence for all
provisions of this Agreement.
6.9 Applicable Law. This Agreement and the legal relations
among the parties hereto will be governed by and construed in accordance with
the substantive Laws of the Commonwealth of Pennsylvania, without giving effect
to the principles of conflict of laws thereof. Any action arising out of this
Agreement may be brought in the state or federal courts
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of Pennsylvania or Tennessee. The parties hereby irrevocably submit to the
exclusive jurisdiction of the appropriate state or federal court in
Pennsylvania for the purpose of any suit, action, proceeding or judgement
relating to or arising out of this Agreement. Each of the Partnership, IHC, New
Lessee, XXXX and EIP further agrees that service of any process, summons, notice
or document by U.S. registered mail to such party's respective address set forth
above shall be effective service of process for any action, suit or proceeding
in Pennsylvania with respect to any matters to which it has submitted to
jurisdiction as set forth above in the immediately preceding sentence. Each of
the Partnership, New Lessee, IHC, XXXX and EIP irrevocably and unconditionally
waives any objection to the laying of venue of any action, suit or proceeding
arising out of this Agreement or the transactions contemplated hereby in (a) the
Supreme Court of the Commonwealth of Pennsylvania or the State of Tennessee, or
(b) the United States District Court for the Western District of Pennsylvania or
Tennessee, and hereby further irrevocably and unconditionally waives and agrees
not to plead or claim in any such court that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum. The parties
hereto unconditionally waive any right to a jury trial for any action, suit or
proceeding arising out of this Agreement or the transactions contemplated
hereby.
6.10 Execution in Counterparts. This Agreement may be executed
in two or more counterparts, each of which shall be
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deemed an original, but all of which together shall constitute one and the same
agreement.
6.11 Titles and Headings. Titles and headings to Sections
herein are inserted for convenience of reference only, and are not intended to
be a part of or to affect the meaning or interpretation of this Agreement.
6.12 Certain Interpretive Matters and Definitions. (a) Unless
the context otherwise requires, (i) all references to Sections, Articles,
Schedules or Exhibits are to Sections, Articles, Schedules or Exhibits of or to
this Agreement, (ii) each term defined in this Agreement has the meaning
assigned to it, (iii) each accounting term not otherwise defined in this
Agreement has the meaning assigned to it in accordance with GAAP, (iv) "or" is
disjunctive but not necessarily exclusive and (v) words in the singular include
the plural and vice versa. All references to "$" or dollar amounts will be to
lawful currency of the United States of America.
(b) No provision of this Agreement will be interpreted
in favor of, or against, any of the parties hereto by reason of the extent to
which any such party or its counsel participated in the drafting thereof or by
reason of the extent to which any such provision is inconsistent with any prior
draft hereof or thereof.
6.13 Survival. To the extent that any obligations under this
Agreement requires action or involves liability or obligation after the
Closing, such obligation shall survive the Closing.
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6.14 Invalid Provisions. If any provision hereof is held to be
illegal, invalid or unenforceable under present or future laws, such provision
shall be fully severable; this Agreement shall be construed and enforced as if
such illegal, invalid or unenforceable provision has never comprised a part
hereof; and the remaining provisions hereof shall remain in full force and
effect and shall not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom. In lieu of such illegal, invalid or
unenforceable provision there shall be added automatically as a part hereof a
provision as similar in terms to such illegal, invalid or unenforceable
provision as may be possible and be legal, valid and enforceable.
6.15 Securitization Financing. If requested by EIP, IHC,
the Partnership and New Lessee agree to cooperate in good faith with EIP,
including considering forming a new bankruptcy-remote lessee entity to serve as
the lessee for one or more Hotels owned by EIP which are leased to the
Partnership or New Lessee, in connection with a securitized financing by EIP or
XXXX; provided that the business terms and the legal liabilities imposed upon
the Partnership, New Lessee or IHC shall not be materially different from those
under the arrangements contemplated by this Agreement, in the reasonable
judgment of the Partnership, IHC and/or New Lessee.
VII. DEFINITIONS
Unless otherwise expressly defined herein, the following terms
shall have the following meanings:
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"ADR" shall mean total hotel room revenues divided by occupied
rooms.
"Affiliate" shall have the meaning given to such term in Rule
1-02 of Regulation S-X under the 1933 Act.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Company" shall mean Interstate Hotels Company, a Pennsylvania
corporation.
"Contamination" shall mean the intentional or unintentional
emission, discharge, release or threatened emission, discharge or release of any
Hazardous Substance to, on, onto or into the environment in any concentration
that now or in the future could pose a hazard or threat to human health or the
environment, and the past, current and future effects of such intentional or
unintentional emission, discharge, release or threatened emission, discharge or
release of Hazardous Substances to, on, onto or into the environment.
"Current Hotels" shall mean those hotels listed in Schedule
VIIa.
"Contribution Agreement" shall have the meaning given to such
term in Section 4.1.
"Development Costs" shall mean all land acquisition costs and
any and all hard and soft construction and preconstruction costs.
"Environmental Laws" shall mean all Laws (including, without
limitation, Permits, directives, guidelines, standards or the equivalent issued
by any Governmental Authority and relating
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to or addressing Contamination, protection of the environment and/or occupation
or human health and safety.
"Environmental Liability" shall mean any and all liabilities,
losses, claims, penalties, damages or expenses costs (including, without
limitation, reasonable attorneys, consultants and engineers fees and expenses)
arising from or relating to compliance with any Environmental Law or arising
under any theory of Law or in equity relating to or arising from any
Contamination or the use, treatment, storage, disposal, transport, generation
or handling of any Hazardous Substances.
"Existing Leases" shall mean the leases for the Hotels between
EIP and TLI described on Schedule VIIb attached hereto.
"Franchisors" shall mean the franchisors with respect to the
Leased Hotels.
"GAAP" shall mean generally accepted accounting principles,
consistently applied.
"Governmental Authority" shall mean any nation, or any
political subdivision thereof, or any agency, court or body of any such
government exercising executive, legislative, judicial, regulatory or
administrative functions.
"Hazardous Substances" shall mean any substance or material
that, whether by its nature or use, could be considered toxic or hazardous or
the exposure to which could pose a hazard or threat to human health or the
environment, or which is or contains petroleum, gasoline, diesel fuel or
another petroleum hydrocarbon product or friable asbestos or asbestos
containing materials or PCBs.
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"XXX Xxx" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as the same may be amended from time to time.
"IHC Guarantees" shall have the meaning given to such term in
Section 4.3.3 hereof.
"Indemnifiable Losses" shall mean any and all claims, demands
or suits (by any person or entity, including without limitation any Governmental
Authority), losses (including, direct, indirect, consequential or actual),
liabilities, damages, costs and expenses, including without limitation the costs
and expenses of any and all actions, suits, proceedings, demands, assessments,
judgments, settlements and compromises relating thereto and reasonable
attorneys', accountants', expert witness' or consultants' fees and expenses in
connection therewith.
"Indemnitee" shall mean any person or entity entitled to
indemnification under this Agreement.
"Indemnity Payment" shall mean any amount of Indemnifiable
Losses required to be paid pursuant to this Agreement.
"Laws" shall mean any law, decree, rule, order, regulation or
other governmental requirement of any governmental department, commission,
board, agency or instrumentality, domestic or foreign, having jurisdiction over
it or its assets or business or operations.
"Leased Hotels" shall mean all of the Current Hotels, together
with any hotels subject to a Lease by and between EIP and New Lessee or an
Affiliate of IHC.
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"Leases" shall mean the Consolidated Lease Amendment and/or
any lease of a hotel or motel entered into by and between EIP and Partnership
or New Lessee or an Affiliate of IHC.
"Liens" shall mean any mortgages, liens, security interests,
leases, pledges, encumbrances, equities, claims, charges, options,
restrictions, rights of first refusal, title retention agreements or other
exceptions to title.
"Permits" shall mean any and all Licenses, franchises,
approvals, permits and other governmental authorizations.
"Promus Agreements" shall have the meaning set forth in Section
4.3.
"REVPAR" shall mean total room revenues divided by the number
of available room nights, net of any room nights for which a room is out of
service.
"SEC" shall mean the Securities and Exchange Commission.
"Subordination Agreement" shall mean an agreement in the form
of Exhibit G hereto.
"Subsidiary" shall have the meaning ascribed to such term in
Rule 1-02 of Regulation S-X under the 1933 Act.
"Third Party Claim" shall mean any claim, action or proceeding
made or brought by any person or entity who or which is not a party to this
Agreement or an Affiliate of a party to this Agreement.
"Transfer" shall mean sell, transfer, convey, pledge, assign
and/or deliver.
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"1933 Act" shall mean the Securities Act of 1933, as amended.
"1934 Act" shall mean the Securities Exchange Act of 1934, as
amended.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement the day and year first above written.
EQUITY INNS PARTNERSHIP, L.P.
By: EQUITY INNS TRUST,
general partner
By: /s/ Xxxxxxx X. XxXxxxx
-----------------------------------
Title:
CROSSROADS/MEMPHIS PARTNERSHIP, L.P.
By: CROSSROADS/MEMPHIS COMPANY, L.L.C.
its general partner
By: /s/ Xxxxx X. Xxxxxxxx
-----------------------------------
Title: President/CEO
-------------------------------
INTERSTATE HOTELS CORPORATION
By: /s/ Xxxxxx X. Xxxx
-----------------------------------
Title:
EQUITY INNS, INC.
By: /s/ Xxxxxxx X. XxXxxxx
-----------------------------------
Title:
CROSSROADS FUTURE COMPANY, L.L.C.
By: /s/ Xxxxx X. Xxxxxxxx
-----------------------------------
Title: President/CEO
-------------------------------
