Execution Copy
Exhibit 10.2
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SECURITIES PURCHASE AGREEMENT
between
U.S. FRANCHISE SYSTEMS, INC.
AND
ALPINE HOSPITALITY EQUITIES LLC
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Dated: as of April 28, 1998
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TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS.......................................................1
1.1 Definitions.......................................................1
ARTICLE 2 PURCHASE AND SALE OF SECURITIES...................................4
2.1 Purchase and Sale of Securities...................................4
2.2 Closing...........................................................4
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY.....................5
3.1 Corporate Existence and Power.....................................5
3.2 Corporate Authorization; No Contravention.........................5
3.3 Governmental Authorization; Third Party Consents..................5
3.4 Binding Effect....................................................6
3.5 Capitalization of the Company.....................................6
3.6 Options...........................................................6
3.7 Private Offering..................................................6
3.8 Broker's, Finder's or Similar Fees................................6
3.9 Litigation........................................................6
3.10 No Default or Breach..............................................7
3.11 Financial Condition...............................................7
3.12 No Material Adverse Change........................................7
3.13 Investment Company................................................7
3.14 Exchange Act Documents............................................7
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE
PURCHASERS........................................................8
4.1 Existence and Power...............................................8
4.2 Authorization; No Contravention...................................8
4.3 Governmental Authorization; Third Party Consents..................8
4.4 Binding Effect....................................................9
4.5 Investment; Purchase for Own Account..............................9
4.6 Broker's, Finder's or Similar Fees...............................10
ARTICLE 5 INDEMNIFICATION..................................................10
5.1 Indemnification by the Company...................................10
5.2 Indemnification by the Purchaser.................................10
5.3 Additional Indemnification by the Company........................10
5.4 Notification.....................................................11
5.5 Registration Rights Agreement....................................12
Page
ARTICLE 6 MISCELLANEOUS....................................................12
6.1 Notices..........................................................12
6.2 Successors and Assigns...........................................13
6.3 Amendment and Waiver.............................................13
6.4 Counterparts.....................................................14
6.5 Headings.........................................................14
6.6 Governing Law....................................................14
6.7 Severability.....................................................14
6.8 Entire Agreement.................................................14
6.9 Further Assurances...............................................14
6.10 Expenses.........................................................15
6.11 Payments.........................................................15
6.12 Survival of Provisions...........................................16
Schedules
Schedule 3.6 - Options
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT, dated as of April 28, 1998 (this
"Agreement"), by and between U.S. Franchise Systems, Inc., a Delaware
corporation (the "Company"), and Alpine Hospitality Equities LLC, a Delaware
limited liability company (the "Purchaser").
WHEREAS, the Company proposes to issue and sell to Purchaser 350,000 shares
of the Class A Common Stock, par value $0.01 per share (the "Common Stock"), of
the Company upon the terms and subject to the conditions set forth in this
Agreement and the Purchaser desires to purchase such shares from the Company for
an aggregate consideration of $1,600,000;
WHEREAS, Best Acquisition, Inc., a Georgia corporation and a wholly-owned
subsidiary of the Company ("BAI"), is party to that certain Asset Transfer
Agreement, dated as of the date hereof (the "Asset Transfer Agreement"), among
BAI, Ventures, RSVP-BI OPCO, LLC, a Delaware limited liability company ("OPCO"),
RSVP-ABI REALCO, LLC, a Delaware limited liability company ("REALCO"), America's
Best Inns, Inc., a Delaware corporation ("ABI"), and the entities identified on
Schedule I thereto (collectively, with ABI, the "Sellers"), pursuant to which
Alpine Hospitality Ventures LLC, a Delaware limited liability company
("Ventures"), has agreed to purchase certain Best brand lodging properties that
BAI is acquiring from ABI; and
WHEREAS, concurrently herewith, the Company and the Purchaser are entering
into a Registration Rights Agreement, dated the date hereof (the "Registration
Rights Agreement"), pursuant to which the parties thereto are agreeing, among
other things, to provide for certain registration rights with respect to the
Common Stock.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and for good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. As used in this Agreement, and unless the context
requires a different meaning, the following terms shall have the meanings set
forth below:
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"Affiliate" of any Person means any other Person directly or indirectly
controlling, controlled by or under direct or indirect common control with such
Person. For the purposes of this definition, "control," when used with respect
to any Person, means the power to direct or cause the direction of the
management or policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "con trolled" have meanings correlative to the foregoing.
"Agreement" means this Agreement as the same may be amended, supplemented
or modified in accordance with the terms hereof.
"Asset Transfer Agreement" has the meaning assigned to such term in the
recitals to this Agreement.
"Business" has the meaning assigned to such term in the recitals to this
Agreement.
"Business Day" means any day other than Saturday, Sunday or other day on
which commercial banks in the State of New York are authorized or required by
law or executive order to close.
"Bylaws" means the bylaws of the Company as in effect as of the Closing
Date.
"Certificate of Incorporation" means the Certificate of Incorporation of
the Company as in effect as of the Closing Date.
"Closing" has the meaning assigned to such term in Section 2.2.
"Closing Date" has the meaning assigned to such term in Section 2.2.
"Commission" means the Securities and Exchange Commission or any similar
agency then having jurisdiction to enforce the Securities Act.
"Common Stock" means the Class A Common Stock, par value $.01 per share, of
the Company, or any other capital stock of the Company into which such stock is
reclassified or reconstituted.
"Contractual Obligations" means as to any Person, any agreement,
undertaking, contract, indenture, mortgage, deed of trust or other instrument to
which such Person is a party or by which it or any of its property is bound.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission thereunder.
"GAAP" means generally accepted United States accounting principles in
effect from time to time.
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"Governmental Authority" means the government of any nation, state, city,
locality or other political subdivision of any thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, encumbrance, lien (statutory or other) or other security interest of
any kind or nature whatsoever.
"Person" means any individual, firm, corporation, partnership, limited
liability company, trust, incorporated or unincorporated association, joint
venture, joint stock company, Governmental Authority or other entity of any
kind.
"Purchase Agreement" means that certain Agreement of Purchase and Sale,
dated as of December 15, 1997 (as amended by amendments dated December 15, 1997,
January 7, 1998, March 9, 1998 and April 1, 1998) by and between BAI, ABI and
the other selling entities listed on Schedule I thereto.
"PW Debt" means the indebtedness of OPCO of at least $64,700,000 to PWREI
under that certain loan agreement of even date herewith among PWREI, OPCO
REALCO, as such loan agreement may be amended from time to time (including
through waivers of any provisions thereof) or any refinancing or refunding of
such indebtedness.
"PW Loan" means that certain borrowing of at least $64,700,000 by OPCO from
PW Real Estate Investments, Inc. ("PWREI")
"Registration Rights Agreement" has the meaning assigned to such term in
the recitals to this Agreement.
"Requirements of Law" means as to any Person, the Certificate of
Incorporation and Bylaws or other organizational or governing documents of such
Person, and any law, treaty, rule, regulation, right, privilege, qualification,
license or franchise or determination of an arbitrator or a court or other
Governmental Authority, in each case applicable or binding upon such Person or
any of its property or to which such Person or any of its property is subject or
pertaining to any or all of the transactions contemplated or referred to herein.
"Securities" has the meaning assigned to such term in Section 2.1.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder.
"Subsidiary" means, as to any Person, any corporation or other entity of
which at least a majority of the securities or other ownership interests having
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ordinary voting power for the election of directors or other persons performing
similar functions are at the time owned directly or indirectly by such Persons.
"Transaction" means (i) the loan of $10,000,000 by NationsBank, N.A. to
Company, (ii) the direct and indirect contribution of $7,000,000 of equity into
Ventures by Alpine Hospitality Holdings LLC, a Delaware limited liability
company, (iii) the issuance of the Securities pursuant to this Agreement, (iv)
the loan of $15,000,000 by Company to Ventures, (v) the direct and indirect
capital contribution of $22,000,000 by Ventures into OPCO in return for 1,000
membership units of OPCO, (vi) the loan of at least $64,700,000 under the PW
Loan, (vii) the sale transactions contemplated under the Purchase Agreement,
(viii) the sale transactions and redemption transaction contemplated under the
Asset Transfer Agreement and (ix) all other acts and things contemplated under
any of the Transaction Documents.
"Transaction Documents" means each agreement, instrument or document being
entered into or delivered by the Company, any of its Subsidiaries or OPCO and/or
REALCO (but only to the extent at such time of delivery OPCO and/or REALCO, as
the case may be, are Subsidiaries of the Company) in connection with the
Transaction, including, in any event, but not limited to, this Agreement, the
Purchase Agreement, the Asset Transfer Agreement, the Registration Rights
Agreement, the loan documents relating to the PW Debt, the Senior Subordinated
Note Purchase Agreement between the Company and Ventures, and those management
and franchise agreements entered into between OPCO and/or REALCO and certain
Subsidiaries of the Company.
ARTICLE 2
PURCHASE AND SALE OF SECURITIES
2.1 Purchase and Sale of Securities. Subject to the terms herein set
forth, the Company agrees to sell to Purchaser, and Purchaser agrees that it
will purchase from the Company, on the Closing Date, 350,000 shares of Common
Stock (the "Securities") for an aggregate purchase price of $1,600,000.
2.2 Closing. The purchase and issuance of the Securities shall take place
at and simultaneously with the closing (the "Closing") of the acquisition of the
Hospitality Assets (as defined in the Asset Transfer Agreement), to be held at
the offices of Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx, 0000 Xxxxxx xx xxx
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 on the date hereof (the "Closing Date"). The
Company is delivering to the Purchaser certificates representing the Securities,
and the Purchaser is delivering to the Company the aggregate purchase price
therefor by wire transfer of immediately available funds to an account
designated by the Company.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchaser as follows:
3.1 Corporate Existence and Power. The Company (a) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware; (b) has all requisite corporate power and authority to own and operate
its property and to conduct the business in which it is currently, or is cur
rently proposed to be, engaged; and (c) has the corporate power and authority to
execute, deliver and perform its obligations under this Agreement, the
Registration Rights Agreement and any other Transaction Document to which it is
a party. Each of the Subsidiaries of the Company (a) is duly organized and
validly existing under the laws of the states of their respective formation or
incorporation and (b) has the requisite power and authority to execute, deliver
and perform its obligations under the Transaction Documents to which it is a
party.
3.2 Corporate Authorization; No Contravention. The execution, delivery and
performance of this Agreement and each of the Transaction Documents and the
transactions contemplated hereby and thereby, including, without limitation, the
sale, issuance and delivery of the Securities, (a) have been duly authorized by
all necessary corporate action of the Company (or, where applicable, its
Subsidiaries); (b) do not contravene the terms of the Certificate of
Incorporation or Bylaws or such similar corporate or limited liability company
documents of any Subsidiary of the Company; and (c) do not violate, conflict
with or result in any breach or contravention of or the creation of any Lien
under, any Contractual Obligation of the Company or any Subsidiary, or any
Requirement of Law applicable to the Company or any Subsidiary.
3.3 Governmental Authorization; Third Party Consents. No approval,
consent, compliance, exemption, authorization, or other action by, or notice to,
or filing with, any Governmental Authority or any other Person in respect of any
Requirement of Law, including any filings and other applicable requirements
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, (the
"HSR Act"), and no lapse of a waiting period under a Requirement of Law, is
necessary or required in connection with the execution, delivery or performance
(including, without limitation, the sale, issuance and delivery of the
Securities) by the Company, or enforcement against the Company or any
Subsidiary, of this Agreement and each of the other Transaction Documents to
which the Company or any Subsidiary is a party or the transactions contemplated
hereby and thereby, other than those that have been obtained or made on or prior
to the Closing.
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3.4 Binding Effect. This Agreement and each of the other Transaction
Documents to which the Company or any of its Subsidiaries is a party have been
duly executed and delivered by the Company or such Subsidiary, as the case may
be, and constitute the legal, valid and binding obligations of the Company or,
where applicable, its Subsidiaries, enforceable against it in accordance with
their terms.
3.5 Capitalization of the Company. The authorized capital stock of the
Company consists as of April 15, 1998 of (i) 30,000,000 shares of Common Stock,
of which 12,567,194 shares were issued and outstanding as of such date
(excluding the securities being issued hereunder) and 58,807 are treasury
shares, (ii) 5,000,000 shares of Class B Common Stock, par value $.01 per share,
of which 2,707,919 shares were issued and outstanding as of such date, and (iii)
1,000,000 shares of Preferred Stock, none of which was issued and outstanding as
of such date. The issued and outstanding shares of Common Stock and Class B
Common Stock including, without limitation, the Securities, are all duly
authorized, and are (or, in the case of the Securities after payment therefor to
the Company, will be) validly issued, fully paid and nonassessable.
3.6 Options. Except as set forth in Schedule 3.6, there are no options,
warrants or other rights to purchase shares of capital stock or other securities
of the Company, nor is the Company obligated in any manner to issue shares of
its capital stock or other securities.
3.7 Private Offering. No form of general solicitation or general
advertising was used by the Company or its representatives in connection with
the offer or sale of the Securities. In reliance upon Section 4.5, no
registration of the Securities pursuant to the provisions of the Securities Act
or any state securities or "blue sky" laws will be required by the offer, sale,
or issuance of the Securities pursuant to this Agreement.
3.8 Broker's, Finder's or Similar Fees. There are no brokerage
commissions, finder's fees or similar fees or commissions payable in connection
with the transactions contemplated hereby based on any agreement, arrangement or
understanding with the Company or any action taken by the Company.
3.9 Litigation. There are no actions, suits, proceedings, claims or
disputes pending, or to the best knowledge of the Company threatened, at law, in
equity, in arbitration or before any Governmental Authority against the Company
or the Subsidiaries:
(a) with respect to any Transaction Document or any of the
transactions contemplated hereby or thereby; or
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(b) which could reasonably be expected to, after giving effect to the
Transaction Documents and the transactions contemplated hereby and thereby, if
adversely determined, (i) have a material adverse effect on the assets,
business, properties, prospects, operations or financial or other condition of
the Company and its Subsidiaries taken as a whole or (ii) have a material
adverse effect on the ability of the Company to perform its obligations under
this Agreement or any other Transaction Document. No injunction, writ, temporary
restraining order, decree or any order of any nature has been issued by any
court or other Governmental Authority purporting to enjoin or restrain the
execution, delivery and performance of this Agreement or any other Transaction
Document.
3.10 No Default or Breach. Neither the Company nor any of its Subsidiaries
is, and after giving effect to the transactions contemplated by the Transaction
Documents, will be in default under or with respect to any Transaction Document
or any other agreement material to the Company or any such Subsidiary, other
than any such violations that, individually or in the aggregate, could not
reasonably be expected to (i) have a material adverse effect on the assets,
business, properties, prospects, operations or financial or other condition of
the Company and its Subsidiaries taken as a whole, (ii) impair the ability of
the Company to perform its obligations under the Transaction Documents or (iii)
prevent or materially delay consummation of the transactions contemplated by the
Transaction Documents.
3.11 Financial Condition. The Company heretofore has delivered to Purchaser
true and correct copies of financial statements of the Company for the fiscal
year ended December 31, 1997 (audited) (the "Year-end Financials"), reported
upon by Deloitte & Touche LLP. The Financials have been prepared in accordance
with GAAP applied consistently throughout the periods covered thereby, and
present fairly in all material respects the financial condition of the Company
as of the dates thereof, and the results of operations of the Company for the
period then ended. The Year-End Financials present fairly in all material
respects the financial condition of the Company as of the date thereof and the
results of operations of the Company for the period then ended, all in
conformity with GAAP applied in a consistent basis.
3.12 No Material Adverse Change. Since December 31, 1997, there has not
been any material adverse change, nor to the knowledge of the Company is any
such change threatened, in the assets, business, properties, prospects,
operations or financial or other condition of the Company and its Subsidiaries
taken as a whole.
3.13 Investment Company. Neither the Company nor any Person controlling the
Company is an "investment company" within the meaning of the Investment Company
Act of 1940, as amended.
3.14 Exchange Act Documents. The Company (including its predecessor) has
made all filings required to be made with the Securities and Exchange Commission
(the "SEC") since October 24, 1996 and has delivered or made available to
Purchaser the Company's correct and complete copies of the
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Company's (i) Annual Reports on Form 10-K for the years ended December 31, 1996
and December 31, 1997 (the "Company 1996 Form 10-K" and the "Company 1997 Form
10-K," respectively), as filed with the SEC, (ii) proxy statements relating to
all of the Company's meetings of stockholders (whether annual or special) since
October 24, 1996, and (iii) all other reports, statements and registration
statements (including Quarterly Reports on Form 10-Q and Current Reports on Form
8-K) filed by the Company with the SEC since October 24, 1996 (collectively, and
in each case including all exhibits and schedules thereto and documents
incorporated by reference therein, the "Company SEC Filings"). As of their
respective dates, the SEC Filings (i) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading and (ii) complied in all material respects
with applicable requirements of the Exchange Act.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
The Purchaser hereby represents and warrants to the Company as follows:
4.1 Existence and Power. The Purchaser (i) is duly organized and validly
existing under the laws of the Delaware and (ii) has the requisite power and
authority to execute, deliver and perform its obligations under this Agreement
and the Registration Rights Agreement.
4.2 Authorization; No Contravention. The execution, delivery and
performance by the Purchaser of this Agreement and the Registration Rights
Agreement and the transactions contemplated hereby, including, without
limitation, the purchase of the Securities, (i) have been duly authorized by all
necessary action, (ii) do not contravene the terms of such Purchaser's
organizational documents, or any amendment thereof, and (iii) do not violate,
conflict with or result in any breach or contravention of or the creation of any
Lien under, any Contractual Obligation of such Purchaser, or any Requirement of
Law applicable to such Purchaser.
4.3 Governmental Authorization; Third Party Consents. No approval,
consent, compliance, exemption, authorization, or other action by, or notice to,
or filing with, any Governmental Authority or any other Person in respect of any
Requirement of Law, including any filings and other applicable requirements
under the HSR Act, and no lapse of a waiting period under a Requirement of Law,
is necessary or required in connection with the execution, delivery or
performance (including, without limitation, the purchase, of the Securities) by
the Purchaser, or enforcement against the Purchaser, of this Agreement, the
Registration Rights Agreement or the transactions contemplated hereby and
thereby.
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4.4 Binding Effect. Each of this Agreement and the Registration Rights
Agreement has been duly executed and delivered by the Purchaser and constitutes
the legal, valid and binding obligation of the Purchaser, enforceable against it
in accordance with its terms.
4.5 Investment; Purchase for Own Account. The Purchaser has had an
opportunity to ask questions of and receive answers from officers of the Company
concerning the terms and conditions of this investment. The Purchaser is an
"accredited investor" as such term is defined in Regulation 501 promulgated
under the Securities Act and has such knowledge and experience in financial and
business matters to evaluate the rights of investment in the Company. The
Purchaser represents and warrants that it has received copies of the Company's
most recent annual, quarterly and current reports on Form 10-K, Form 10-Q and
Form 8-K and that it is not making this investment in response to any general
solicitation or advertisement by the Company. The Securities to be acquired by
the Purchaser pursuant to this Agreement are being acquired for its own account
and with no intention of distributing or reselling such Securities or any part
thereof in any transaction that would be in violation of the securities laws of
the United States of America, or any state, without prejudice, however, to the
rights of the Purchaser at all times to sell or otherwise dispose of all or any
part of such Securities under an effective registration statement under the
Securities Act (including, without limitation, a registration of the Securities
by the Company pursuant to the terms and provisions of the Registration Rights
Agreement), or under an exemption from such registration available under the
Securities Act, and subject, nevertheless, to the disposition of the Purchaser's
property being at all times within its control. If the Purchaser should in the
future decide to dispose of any part of the Securities, the Purchaser
understands and agrees that it may do so only in compliance with the Securities
Act and applicable state securities laws, as then in effect. The Purchaser
agrees to the imprinting, so long as required by law, of a legend on
certificates representing all of such Securities to the following effect: THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES
LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF SUCH ACT AND SUCH LAWS. The legend set forth in the preceding sentence shall
be removed from a particular certificate representing any of the Securities when
an opinion of counsel has ben delivered to the Company to the effect that any
such security may be freely sold to the public without compliance with the
registration provisions of the Securities Act. Such counsel shall be reasonably
acceptable to the Company and may include an attorney who is an employee of a
Purchaser and such opinion shall be subject to the reasonable approval of the
Company, such approval or disapproval to be given within 5 days after receipt by
the Company of the form of such opinion. The Purchaser
10
consents that stop transfer instructions in respect of the Securities may be
issued to any transfer agent, transfer clerk or other agent at any time acting
for the Corporation.
4.6 Broker's, Finder's or Similar Fees. There are no brokerage
commissions, finder's fees or similar fees or commissions payable to any third
party in connection with the transactions contemplated hereby based on any
agreement, arrangement or understanding with the Purchaser or any action taken
by the Purchaser.
ARTICLE 5
INDEMNIFICATION
5.1 Indemnification by the Company. The Company shall defend, indemnify
and hold harmless and reimburse the Purchaser and Ventures and each of
Purchaser's and Ventures' assignees and designees and each of their respective
Affiliates, officers, directors, agents, employees, members and partners
(collectively, the "Purchaser Indemnitees") for any and all losses, claims,
damages, expenses (including reasonable fees, disbursements and charges of
counsel) or other liabilities (hereinafter "Purchase Agreement Loss" or
"Purchase Agreement Losses") suffered or incurred by any Purchaser Indemnitee
resulting from, relating to or otherwise in any manner attributable to (i) any
breach or inaccuracy of any representation or warranty of the Company set forth
in this Agreement or in any certificate or other document delivered by the
Company pursuant hereto or in connection herewith or (ii) any breach of or
noncompliance by the Company with any covenant or agreement of the Company
contained in this Agreement.
5.2 Indemnification by the Purchaser. The Purchaser and Ventures, jointly
and severally, shall defend, indemnify and hold harmless and reimburse the
Company and each of the Company's assignees and designees and each of their
respective Affiliates, officers, directors, agents and employees (collectively,
the "Company Indemnitees") for any and all Purchase Agreement Losses suffered or
incurred by any Company Indemnitee resulting from, relating to or otherwise in
any manner attributable to, (i) any breach or inaccuracy of any representation
or warranty of the Purchaser or Ventures set forth in this Agreement or in any
certificate or other document delivered by Purchaser or Ventures pursuant hereto
or in connection herewith and (ii) any breach of or noncompliance by the
Purchaser or Ventures with any covenant or agreement of Purchaser or Ventures
contained in this Agreement.
5.3 Additional Indemnification by the Company. In addition to other
amounts due hereunder or provided for under this Agreement, including, without
limitation, under Section 5.1, the Company shall defend, indemnify and hold
harmless the Purchaser Indemnitees for any and all losses, claims, damages,
expenses (including reasonable fees, disbursements and other charges of counsel)
or other
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liabilities ("Losses") resulting from, relating to or otherwise in any manner
attributable to, any legal, administrative or other actions (including actions
brought by any equity holders of the Company or derivative actions brought by
any Person claiming through the Company or in the Company's name), proceedings
or investigations (whether formal or informal), or written threats thereof,
based upon, relating to or arising out of, this Agreement or the transactions
contemplated hereby or by the Transaction or any of the Transaction Documents;
provided, however, that the Company shall not be liable: (a) for any amount paid
in settlement of claims without the Company's consent (which consent shall not
be unreasonably withheld), (b) with respect to Losses arising solely out of
actions brought by one indemnified party against another or (c) to the extent
that it is finally judicially determined that such Losses resulted from the
willful misconduct, bad faith or gross negligence of such indemnified party or a
material breach of Ventures' or the Purchaser's representations in any
Transaction Document (to which the Company or any of its Subsidiaries is a
party) or of Ventures' or the Purchaser's material obligations under the
Agreement or any Transaction Document (a "Breach"). In connection with the
obligation of the Company to indemnify for expenses as set forth above, the
Company further agrees to reimburse each indemnified party for all such expenses
(including reasonable fees, disbursements and other charges of counsel) as they
are reasonably incurred by such indemnified party; provided, however, that if an
indemnified party is reimbursed hereunder for any expenses, such reimbursement
of expenses shall be refunded to the extent it is finally judicially determined
that the Losses in question resulted from the willful misconduct, bad faith or
gross negligence of such indemnified party or from a Breach.
5.4 Notification. Each indemnified party under Section 5.1, 5.2 or 5.3
will, promptly after the receipt of notice of the commencement of any action or
other proceeding against such indemnified party in respect of which indemnity
may be sought, notify the indemnifying party in writing of the commencement
thereof. The omission of any indemnified party so to notify the indemnifying
party of any such action shall not relieve the indemnifying party from any
liability which it may have to such indemnified party other than pursuant hereto
and shall not relieve the indemnifying party from its obligations hereunder,
unless, and only to the extent that, such omission results in the indemnifying
party's forfeiture of substantive rights or defenses. In case any such action or
other proceeding shall be brought against any indemnified party, the
indemnifying party shall be entitled to participate therein and, to the extent
that it may wish, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party; provided, however, that any indemnified
party may, at its own expense, retain separate counsel to participate in such
defense. Notwithstanding the foregoing, in any action or proceeding in which
both the indemnifying party and an indemnified party is, or is reasonably likely
to become, a party, such indemnified party shall have the right to employ
separate counsel at the indemnifying party's expense and to control its own
defense of such action or proceeding if, in the reasonable opinion of counsel to
such indemnified party, (a) there are or may be legal defenses available to such
indemnified party or to other
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indemnified parties that are different from or additional to those available to
the indemnifying party or (b) any conflict or potential conflict exists between
the indemnifying party and such indemnified party that would make such separate
representation advisable; provided, however, that in no event shall the
indemnifying party be required to pay fees and expenses under this Agreement for
more than one firm of attorneys in any jurisdiction in any one legal action or
group of related legal actions. The indemnifying party shall not, without the
consent of the indemnified party (which consent shall not be unreasonably
withheld), consent to the entry of any judgment or enter into any settlement of
any action or proceeding covered by this Article 5, which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation or which requires action other than the payment of money by the
indemnifying party. The rights accorded to indemnified parties hereunder shall
be in addition to any rights that any indemnified party may have at common law,
by separate agreement or otherwise.
5.5 Registration Rights Agreement. Notwithstanding anything to the
contrary in this Article 5, the indemnification and contribution provisions of
the Registration Rights Agreement shall govern any claim made with respect to
registration statements filed pursuant thereto or sales made thereunder.
ARTICLE 6
MISCELLANEOUS
6.1 Notices. All notices or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, telecopied or
sent by certified, registered or express mail, postage prepaid. Any such notice
shall be deemed given when so delivered personally, telecopied or sent by
certified, registered or express mail, as follows:
(a) if to the Company:
U.S. Franchise Systems, Inc.
00 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
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with a copy to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
1285 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
(b) if to the Purchaser:
Alpine Hospitality Equities LLC
c/o Alpine Equity Partners L.P.
1285 Avenue of the Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. Xxxxxxx, Esq.
Telecopy: 000-000-0000
with a copy to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
Any party may by notice given in accordance with this Section 6.1 designate
another address or person for receipt of notices hereunder.
6.2 Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and permitted assigns of the parties hereto.
Ventures and its Subsidiaries are intended third party beneficiaries of this
Agreement. Except for Ventures and its Subsidiaries, persons indemnified
pursuant to Article 5, and Affiliates thereof when referred to by specific
provisions hereof, no Person other than the parties hereto and their successors
and permitted assigns is intended to be a beneficiary of this Agreement. No
party hereto may assign its rights under this Agreement without the prior
written consent of the other party hereto, which shall not be unreasonably
withheld.
6.3 Amendment and Waiver.
(a) No failure or delay on the part of the Company or the Purchaser
in exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other
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right, power or remedy. The remedies provided for herein are cumulative and are
not exclusive of any remedies that may be available to the Company or the
Purchaser at law, in equity or otherwise.
(b) Any amendment, supplement or modification of or to any provision
of this Agreement and any waiver of any provision of this Agreement shall be
effective only if it is made or given in writing and signed by the Company and
the Purchaser.
6.4 Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, all of which
when so executed shall be deemed to be an original and both of which taken
together shall constitute one and the same agreement.
6.5 Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
6.6 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
CONFLICTS OF LAW PRINCIPLES, EXCEPT TO THE EXTENT THE GENERAL CORPORATION LAW OF
THE STATE OF DELAWARE APPLIES.
6.7 Severability. If any one or more of the provisions contained herein,
or the application thereof in any circumstance, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, unless the provisions held
invalid, illegal or unenforceable shall substantially impair the benefits of the
remaining provisions hereof.
6.8 Entire Agreement. This Agreement, together with the Registration
Rights Agreement and the other Transaction Documents, is intended by the parties
as a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein and therein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein or therein. This Agreement supersedes all prior agreements
and understandings between the parties with respect to such subject matter.
6.9 Further Assurances. Each of the parties shall execute such documents
and perform such further acts (including, without limitation, obtaining any
consents, exemptions, authorizations, or other actions by, or giving any notices
to, or making any filings with, any Governmental Authority or any other Person)
as may be reasonably required or desirable to carry out or to perform the
provisions of this
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Agreement both prior and subsequent to the Closing. In furtherance of the
preceding sentence, the Company agrees that it shall, and to the extent
necessary, it shall cause its Subsidiaries to, both prior and subsequent to the
Closing, assist the Purchaser, Ventures or any of Ventures' Subsidiaries in the
procurement of any licenses or permits (including liquor licenses or permits)
necessary to operate the Hospitality Assets (as defined in the Asset Transfer
Agreement) and, at any time Ventures proposes to refinance the PW Loan, the
Company agrees to cooperate fully in connection with any refinancing and
subsequent refinancings, including, without limitation, providing appropriate
subordination agreements, if necessary, for the outstanding loan referred to in
clause (iv) of the definition of Transaction, certificates of estoppel and all
other necessary documents and instruments that may be required, including
franchising consents as reasonably requested by Ventures, provided that such
franchising consents are no more materially burdensome than the franchise
consents the Company has provided with respect to the PW Loan. In addition, if
Ventures or its Subsidiaries decides to refinance the PW Debt prior to one year
from the date hereof, the Company agrees to pay all expenses related to such
refinancing, including, without limitation, any prepayment penalties, points
applicable to the new credit facility, legal fees, fees of consultants, filing
fees, title insurance premiums, mortgage and intangible taxes, and recordation
fees.
6.10 Expenses.
(a) All fees, charges and expenses ("Expenses") incurred by the
Purchaser or Ventures or the Company or any of their respective Affiliates in
connection with the negotiation, execution or delivery of this Agreement, the
other Transaction Documents and the transactions contemplated hereby and thereby
shall be paid by the Company, including, without limitation, the Expenses
required to be paid under Section 11 of the Asset Transfer Agreement, except for
the commitment fee and the structuring fee under the PW Loan and additional
Expenses, up to an aggregate of $1,000,000 for such fee and additional Expenses,
which shall be paid by the Purchaser, Ventures and/or Ventures' Subsidiaries.
(b) If Ventures or any Affiliate thereof (other than OPCO or REALCO
with respect to any apportionments required pursuant to Section 9 of the Asset
Transfer Agreement) is obligated to pay ABI any amounts under the Asset Transfer
Agreement, other than amounts due as a result of or arising from a breach by
such Person of its obligations thereunder, the Company shall pay or reimburse
Ventures or such Affiliate for such amount.
6.11 Payments. Each year, the Company shall pay in perpetuity to Purchaser
(or as directed by Purchaser), $1,000 per hotel for every Best Inn or Suite or
other "Best" product that is added to the USFS system in the future for so long
as such hotel is paying royalties to the Company or any of its Affiliates.
Payments under this Section 6.11 shall be made within 30 days after the end of
each calendar
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year and, with respect to any Best hotel that is not part of the USFS system for
the entire calendar year in question, will be appropriately pro-rated.
6.12 Survival of Provisions. All of the representations, warranties,
covenants and agreements made herein shall survive the execution and delivery of
this Agreement and the Closing hereunder and shall thereafter continue in full
force and effect, except that the liability of the Company for any inaccuracy
in, or breach of, any of the representations and warranties set forth in
Sections 3.11, 3.12 and 3.14 shall terminate 18 months from the Closing Date
with respect to any claim not theretofore asserted.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their respective officers hereunto duly authorized as
of the date first above written.
U.S. FRANCHISE SYSTEMS, INC.
By: /s/ Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxxx
Title: Executive Vice President
ALPINE HOSPITALITY EQUITIES LLC
By: Alpine Hospitality Holdings LLC
its managing member,
By: /s/ Xxxxxxx X. Xxxxxxxxx
Name: Xxxxxxx X. Xxxxxxxxx
Title: President
ALPINE HOSPITALITY VENTURES LLC
by Venturers Manager Inc.,
its managing member
By: /s/ Xxxxxxx X. Xxxxxxxxx
Xxxxxxx X. Xxxxxxxxx
President
