EXHIBIT 10.1
TERMINATION AGREEMENT
BETWEEN
XXXXXXX HOSPITALITY SERVICES INC.
AND
INTERSTATE MANAGEMENT AND INVESTMENT CORPORATION
DATED AS OF JULY 1, 2003
TERMINATION AGREEMENT
THIS TERMINATION AGREEMENT (the "Agreement") is made as of the
1st day of July, 2003, between XXXXXXX HOSPITALITY SERVICES INC., a North
Carolina corporation ("Xxxxxxx") and INTERSTATE MANAGEMENT AND INVESTMENT
CORPORATION, a South Carolina corporation ("IMIC").
WITNESSETH:
X. Xxxxxxx, as assignee of Capstar Winston Company, LLC, and
IMIC are parties to seven Amended and Restated Management Agreements dated as of
November 11, 1996 (the "Management Agreements"), as amended by those Amendments
to Management Agreement (the "Amendments") dated as of June 20, 2000 (the
Management Agreements and the Amendments are hereinafter collectively the
"Management Agreements"), with respect to the hotel properties described in
Exhibit A attached hereto and made a part hereof (the "Managed Hotels").
X. Xxxxxxx, as assignee, and IMIC are also parties to that
certain Non-Competition, Development Restriction, and Right of First Refusal
Agreement dated September 2, 1994 (the "Side Agreement").
X. Xxxxxxx and IMIC have mutually agreed to terminate the
Management Agreements and Side Agreement effective as of the Termination Date
(as hereinafter defined) subject to the terms and conditions described 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:
1. Termination of Management Agreements.
Subject to the terms and conditions set forth herein,
the Management Agreements shall terminate as of the 1st day of July, 2003 (the
"Termination Date"). Xxxxxxx may request that IMIC continue to manage one or
more of the Managed Hotels after the Termination Date up to and through a
mutually agreed upon date. Any and all management services provided by IMIC
subsequent to the Termination Date will be provided pursuant to a separately
executed management agreement, in form and content acceptable to Xxxxxxx and
IMIC.
2. Termination Payment.
As consideration for the termination of the
Management Agreements and the Side Agreement on the Termination Date, Xxxxxxx
shall deliver to IMIC the sum of One Million Three Hundred Thousand Dollars
($1,300,000) (the "Management Termination Payment"), which shall be paid by wire
transfer in immediately available funds to such bank account(s) as IMIC shall
specify by written notice delivered to Xxxxxxx on the Termination Date.
3. The Closing.
(a) The closing of the transactions contemplated by
this Agreement shall take place on the Termination Date by delivery of documents
by air courier, hand delivery or the equivalent.
(b) On or before the Termination Date, IMIC shall
execute and deliver or cause to be executed and delivered the following to
Xxxxxxx:
(i) a counterpart to a closing statement;
(ii) a counterpart to an assignment and
assumption agreement for each Managed Hotel substantially in the form of Exhibit
3(b)(ii) attached hereto covering all leases, concession agreements and
commercial or other agreements to be assigned and assumed as of the Termination
Date identified in Section (b) of Exhibit 5 attached hereto; and
(iii) a certificate that the representations
and warranties of IMIC contained in Section 5(a) hereof are true and correct in
all material respects as of the Termination Date.
4. Effect of Termination.
Effective on the Termination Date, each Management
Agreement shall terminate and shall be null and void and have no further force
and effect, except for obligations and liabilities which, under the terms of
each Management Agreement, survive any termination of the same.
5. Disclosure.
(a) Representations and Warranties. IMIC hereby makes
the following representations and warranties:
(i) Litigation. To the actual knowledge of
E. L. Xxxxxx, President of IMIC, Section (a) of Exhibit 5 attached hereto sets
forth a true and correct list of all pending and threatened actions, suits and
proceedings against the Managed Hotels or IMIC in connection with the Managed
Hotels as of the date of this Agreement.
(ii) Contracts. To the actual knowledge of
E. L. Xxxxxx, President of IMIC, (i) Section (b) of Exhibit 5 attached hereto
sets forth a true and correct list of any leases, concession agreements and
commercial or other agreements in effect with respect to the Managed Hotels
previously entered into by IMIC pursuant to the authority provided for in the
Management Agreement and which are in IMIC's or Xxxxxxx'x, name; (ii) no lease,
concession agreement, commercial or other agreement will be binding upon Xxxxxxx
or any Managed Hotel that cannot be terminated without penalty or payment upon
thirty (30) days notice that are material in the aggregate, except as set forth
in Section (c) of Exhibit 5. For purposes hereof, "material" means all such
leases and concession, commercial and other agreements require payments in
excess of $10,000 in the aggregate.
(iii) The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated herein by IMIC has been duly authorized
by all necessary corporate action. This Agreement constitutes a valid and
binding agreement of IMIC, enforceable in accordance with its terms.
(iv) No consents, waivers or other actions
by any third party are required in connection with the execution, delivery and
performance of this Agreement by IMIC.
(b) Updating of Disclosures. IMIC shall promptly
update any of the information set forth in Exhibit 5 hereto to include
developments after the date hereof by delivering written notice of such new
developments to Xxxxxxx.
6. Transition Procedures.
IMIC shall do the following (and the provisions of
this Section 6 shall survive the expiration or termination of this Agreement
until they have been fully performed) and, in general shall cooperate in good
faith to effect an orderly transition of the management of the Managed Hotels:
(a) Licenses. IMIC shall exercise good faith
reasonable commercial efforts to assist Xxxxxxx, at Xxxxxxx'x sale cost and
expense, or its designee in obtaining replacement licenses, permits and
approvals, including, but not limited to, liquor licenses, and execute all
documents and instruments reasonably necessary to transfer (if transferable) to
Xxxxxxx or its designee all governmental permits and licenses held by IMIC in
operating the Managed Hotels
(b) Leases, Concessions and Agreements. On the
Termination Date, IMIC shall assign and deliver to Xxxxxxx or its designee, and
Xxxxxxx or its designee as the case may be, shall assume, the leases, concession
agreements and commercial or other agreements in effect with respect to the
Managed Hotels identified in Section (b) of Exhibit 5 attached hereto which were
previously entered into by IMIC pursuant to its authority provided for in the
Management Agreement and which are then in IMIC's, rather than Xxxxxxx'x, name
(c) Books and Records. On the Termination Date,
copies of all books and records for the Managed Hotels kept by IMIC, and,
subject to IMIC obtaining any consents which IMIC deems required by law, which
consents IMIC agrees to use its best efforts to obtain, copies of all personnel
files regarding persons employed at the Managed Hotels, shall be delivered
promptly to Xxxxxxx or its designee, but such books and records shall thereafter
be available to IMIC at all reasonable times for inspection, audit, examination
and transcription for a period of one (1) year and IMIC may retain (on a
confidential basis) copies or computer records thereof.
(d) Remittance. On the Termination Date, IMIC shall
remit to Xxxxxxx or its designee all funds remaining in IMIC's possession or
control which are the property of Xxxxxxx, if any, after payment of all accrued
Gross Operating Expenses and Fees (as defined in the Management Agreements) and
other amounts due IMIC and after deducting the costs of any scheduled repair,
replacement or refurbishment of Furniture and Equipment (as defined in the
Management Agreements) with respect to which funds have been provided
specifically for such purposes.
(e) Other Transfers and Deliveries. On the
Termination Date, IMIC shall assign, transfer and deliver to Xxxxxxx or its
designee (i) keys to all portions of the Managed Hotels or any lockboxes,
equipment or security devices maintain therein, and (ii) all other items of
property, information and materials relating to IMIC's discharge of its
obligations under the Management Agreements.
(f) Temporary Continuation. At the reasonable request
of Xxxxxxx, IMIC shall continue its performance hereunder under any license,
permit or approval for the period specified by Xxxxxxx, not to exceed four (4)
months; provided, however, in return for such continuation Xxxxxxx shall pay all
"out-of-pocket" expenses of IMIC with respect to such continued performance.
(g) Confidential Information. Each party agrees that
neither it nor its Affiliates (as defined in the Management Agreements) shall
disclose to any third party or use to the detriment of the other party or its
Affiliates any information (in any form or medium) which is confidential or
proprietary to the other party or its Affiliates, which in the case of Xxxxxxx
shall include but not be limited to confidential or proprietary information
related to the Managed Hotels, customer lists, contracts, or pricing
information, and shall hold any and all such information in strict confidence,
for the sole and exclusive benefit of the other party and its Affiliates. In the
event of a breach or a threatened breach by a party of this Section 6g), the
non-breaching party shall be entitled to an injunction restraining the party
breaching or threatening to breach from violating the terms of this Section 6g).
Nothing in this Section 5(g) shall be construed or prohibiting the non-breaching
party from pursuing any other available remedies for such breaches or threatened
breaches, including recovery of damages from the other party. Information shall
not be considered confidential or proprietary if such information (x) is
available to the public at the time of disclosure, otherwise than as a result of
a breach of this Agreement, or (y) is disclosed pursuant to a lawful order of
any instrumentality of the United States or any of the several states, but only
to the extent of such order. On the Termination Date, each party shall deliver
promptly to the other party any and all copies, records, notes, or other
written, printed, or tangible materials pertaining to, or generated through the
use of, confidential or proprietary information relating to the other party or
its Affiliates or, at the direction of the other party, shall destroy such
items. The provisions of this Section 6(g) shall survive this Agreement.
(h) Employees of Managed Hotels. Xxxxxxx, or its
designee, will hire for at least one (1) day all of the employees, including the
general managers, currently working at any of the Managed Hotels as of the date
of this Agreement. IMIC further agrees not to transfer any of the employees
currently working at any of the Managed Hotels to any other hotels owned and/or
managed by IMIC. If Xxxxxxx'x terminates any such employees, or after a period
of six (6) months following the Termination Date, IMIC may re-employ any of the
employees.
(i) Accounting. IMIC shall deliver accounting
statements for the Managed Hotels, if requested by Xxxxxxx, through September
30, 2003. The format and number of reports will be the same as those presently
done under the Management Agreement. IMIC shall receive a fee of $___ per month
for each month it delivers such requested accounting statements.
7. Further Assurances.
Xxxxxxx and IMIC hereby agree to cooperate in good
faith with the other party and to execute and deliver such other agreements,
documents or instruments as may be necessary or desirable in connection with the
transactions contemplated by this Agreement effecting the transfer of the
operational control of the Managed Hotels resulting therefrom. Xxxxxxx and IMIC
each hereby further agree to use their good faith reasonable commercial efforts
to obtain consents and waivers from third parties, including franchisers,
suppliers, vendors, employees, lessors, lessees, lenders, trustees, rating
agencies and other third parties necessary to effect the transactions
contemplated by this Agreement.
8. Indemnification; Defense of Claims.
(a) Indemnification by IMIC. IMIC agrees to
indemnify, defend and hold harmless Xxxxxxx and its affiliates, officers,
directors, shareholders, employees and agents (collectively, the "Indemnitees")
from and against any and all claims, demands, obligations, losses, liabilities,
damages, recoveries and deficiencies, including interest, penalties and
reasonable attorneys' fees, costs and expenses, and any and all actions, suits
and proceedings in respect thereof (collectively, "Liabilities"), suffered or
incurred by any Indemnitee as a result of (i) the breach of any covenant of IMIC
set forth herein or in any document or instrument delivered in connection
herewith, (ii) the failure of any representation and warranty made by IMIC set
forth herein, or in any document or instrument delivered in connection herewith,
to be true and correct in all material respects, (iii) the operation of the
Managed Hotels by IMIC prior to the Termination Date, including, without
limitation, claims or causes of action relating in any way to any employees of
IMIC based upon events occurring prior to the Termination Date, including but
not limited to any alleged or actual unfair labor practices, employment
discrimination charges and lawsuits, violations of collective bargaining
contracts or trust agreements, any ERISA claims, and any other claims regarding
employment, severance, safety, compensation, benefits or other matters, or (iv)
any untrue statement of a material fact or omission of any material fact
included in written information provided by IMIC to Indemnitees or their
permitted successors and assigns. IMIC shall pay any and all amounts owing under
this indemnity within two (2) business days after demand by the applicable
Indemnitee together with reasonable supporting documentation therefor. This
indemnity shall survive the Termination Date for a period of one (1) year, plus
with respect only to any claim for indemnification made hereunder before the
expiration of such one (1) year period, any period during which such claim is
pending and unresolved hereunder. Payment of a liability by an Indemnitee shall
not be a condition precedent to the obligations of IMIC under this indemnity.
(b) Indemnification by Xxxxxxx. Xxxxxxx agrees to
indemnify, defend and hold harmless IMIC and its affiliates, officers,
directors, shareholders, employees and agents (collectively, the "Indemnitees")
from and against any and all claims, demands, obligations, losses, liabilities,
damages, recoveries and deficiencies, including interest, penalties and
reasonable attorneys' fees, costs and expenses, and any and all actions, suits
and proceedings in respect thereof (collectively, "Liabilities"), suffered or
incurred by any Indemnitee as a result of (i) the breach of any covenant of
Xxxxxxx set forth herein or in any document or instrument delivered in
connection herewith, (ii) the failure of any representation and warranty made by
Xxxxxxx set forth herein, or in any document or instrument delivered in
connection herewith, to be true and correct in all material respects, (iii) the
operation of the Managed Hotels by Xxxxxxx after to the Termination Date,
including, without limitation, claims or causes of action relating in
any way to any employees of Xxxxxxx based upon events occurring after the
Termination Date, including but not limited to any alleged or actual unfair
labor practices, employment discrimination charges and lawsuits, violations of
collective bargaining contracts or trust agreements, any ERISA claims, and any
other claims regarding employment, severance, safety, compensation, benefits or
other matters, or (iv) any untrue statement of a material fact or omission of
any material fact included in written information provided by Xxxxxxx to
Indemnitees or their permitted successors and assigns. Xxxxxxx shall pay any and
all amounts owing under this indemnity within two (2) business days after demand
by the applicable Indemnitee together with reasonable supporting documentation
therefor. This indemnity shall survive the Termination Date for a period of one
(1) years plus, with respect only to any claim for indemnification made
hereunder before the expiration of such one (1) year period, any period during
which such claim is pending and unresolved hereunder. Payment of a liability by
an Indemnitee shall not be a condition precedent to the obligations of Xxxxxxx
under this indemnity.
(c) Defense of Claims. If a claim for Liabilities is
to be made by any party entitled to indemnification under this Section 8, the
party entitled to such indemnification shall give written notice to the other
party as soon as practicable after the party entitled to indemnification becomes
aware of any fact, condition or event which may give rise to Liabilities for
which indemnification may be sought under this Section 8. If any action, suit or
proceeding alleging a claim for Liabilities is filed against any party entitled
to the benefit of indemnity hereunder, written notice thereof shall be given to
the other party as promptly as practicable. After such notice, the party
providing the indemnity shall be entitled, if it so elects, (i) to take control
of the defense and investigation of such action, suit or proceeding, (ii) to
employ and engage attorneys and experts of its own choice to handle and defend
the same, and (iii) with the indemnified party's consent, to settle such action,
suit or proceeding, all at the sole risk and expense of the party providing the
indemnity, provided, in each instance, that IMIC and its counsel shall proceed
with diligence and in good faith with respect thereto; provided, however, that
any such settlement shall include, among other things, an absolute and
unconditional release of the indemnified party from all Liabilities. The
indemnified party shall cooperate in all reasonable respects with the party
providing the indemnity and such attorneys in the investigation, trial and
defense of such action, suit or proceeding and any appeal arising therefrom;
provided, however, that the indemnified party may, at its own cost, participate
in the investigation, trial and defense of such action, suit or proceeding and
any appeal arising therefrom.
9. Notices.
Any notice required or permitted to be given under
this Agreement shall be in writing and shall be sent by facsimile transmission
(confirmed by any of the following methods: overnight delivery (with proof of
delivery), courier service (with proof of delivery), hand delivery, or certified
or registered mail (return receipt requested and first class postage prepaid))
and addressed as follows:
If to Xxxxxxx:
c/o Winston Hotels, Inc.
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice) to:
Hunton & Xxxxxxxx, LLP
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
If to IMIC:
Interstate Management & Investment Corp.
Xxx Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: E. L. Xxxxxx
Facsimile: (000)000-0000
with a copy (which shall not constitute notice) to:
Xxxx X. Xxxxxxx, Esq.
Xxxxxx Xxxxx Xxxxxx & Xxxxxxx, LLP
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, XX 00000
Facsimile: 000-000-0000
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date the notice
is received or receipt is rejected.
10. Successors and Assigns.
This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns;
provided, however, that no party may make any assignment of this Agreement or
any rights or obligations hereunder without the prior written consent of the
other party.
11. Entire Agreement; Amendments.
This Agreement and the exhibits hereto constitute the entire
agreement among the parties thereto with respect to the subject matters hereof
and supersede all prior agreements and understandings among the parties with
respect to the matters set forth herein, including, without limitation, any
termination or survival provisions in the Management Agreements. No addition to
or amendment or modification of any provision of this Agreement shall be binding
upon any party hereto unless made in writing and signed by each party hereto.
12. Headings.
Headings of this Agreement are for the convenience of the
parties only and shall be given no substantive or interpretive effect
whatsoever.
13. Incorporation.
The exhibits hereto are hereby incorporated herein and made a
part hereof for all purposes as if fully set forth herein.
14. Enforcement.
The parties agree that irreparable damage will occur in the
event that any of the provisions of this Agreement is not performed in
accordance with the specific terms hereof or are otherwise breached. It is
accordingly agreed that, in addition to any other remedy to which the parties
are entitled at law or in equity, the parties shall be entitled to injunctive
relief to prevent breaches of this Agreement and to enforce specifically the
terms and provisions hereof in any court in the State of North Carolina.
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
rules of conflicts of laws.
16. Severability.
Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction. If any provision of this Agreement is
so broad as to be unenforceable, the provision shall be interpreted to be only
so broad as is enforceable.
17. Attorneys Fees.
If any party brings an action against another party to enforce
any condition or covenant of this Agreement, the prevailing party in such action
shall be entitled to recover its court costs, attorneys' fees and expenses in
the judgment rendered through such action.
18. Time of the Essence.
Time is of the essence of this Agreement.
19. Survival.
All agreements and obligations of the parties to this
Agreement shall survive the Termination Date.
20. Consents.
Whenever the consent or approval of a party is required under
this Agreement, such consent shall not be unreasonably withheld or delayed.
21. Good Faith Reasonable Commercial Efforts.
Whenever a party is obligated under this Agreement to use its
good faith reasonable commercial efforts, such obligation shall not require such
party to expend funds or incur liability not contemplated by this Agreement.
22. Counterparts.
This Agreement may be executed in multiple counterparts, each
of which shall be deemed an original.
[Remainder of page intentionally left blank.]
[Signature pages follow.]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on its behalf 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
INTERSTATE MANAGEMENT AND
INVESTMENT CORPORATION
By: /s/ E. L. Xxxxxx
----------------------------
Name: E. L. Xxxxxx
Title: President
EXHIBIT A
MANAGED HOTELS
HOTEL NAME HOTEL LOCATION
---------- --------------
Comfort Inn Xxxxxxx, Virginia
Comfort Inn Charleston, South Carolina
Quality Suites Charleston, South Carolina
Hampton Inn Hilton Head, South Carolina
Hampton Inn Raleigh, North Carolina
Comfort Inn Durham, North Carolina
Hampton Inn (Sold) Xxxxxxx, Virginia
EXHIBIT 3(b)(ii)
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT 5
Section (a)
Pending or Threatened Actions, Suites and Proceedings
Section (b)
Leases, Concession Agreement and Commercial or Other Agreements
Section (c)
Agreements Not Terminable without Penalty
or Payment on Thirty (30) Days Notice or Less
