REDACTED INDEMNIFICATION AGREEMENT
Indemnification Agreement dated this ____ day of ________, 200_, by and
among Xxxxxxx X. Xxxxx ("MPH"), MPH Investments of Mississippi, Inc.
("MPH-Mississippi"), MPH Investments of Illinois, Inc. ("MPH-Illinois" --
together with MPH-Mississippi and MPH, collectively, the "Indemnitors" and
individually, an "Indemnitor"), AP Properties of Mississippi, Inc. ("APM"),
Freeport, IL 899, L.L.C. ("899") and Arlington Hospitality, Inc. ("AHI" --
together with APM and 899, collectively, the "AHI Group").
RECITALS:
A. APM has contracted to sell the 89-room AmeriHost Inn located in
Vicksburg, Mississippi (the "Vicksburg Property") to MPH-Mississippi. 899 has
contracted to sell the 64-room AmeriHost Inn located in Freeport, Illinois (the
"Freeport Property") to MPH-Illinois. MPH is the controlling shareholder of each
of MPH-Mississippi and MPH-Illinois.
B. Effective as of September 30, 2000, AHI (formerly known as AmeriHost
Properties, Inc.), together with its affiliates AmeriHost Management, Inc.,
AmeriHost Development, Inc. and AmeriHost Inn Franchising, Inc. (collectively,
the "AmeriHost Parties") entered into a Development Agreement with Cendant
Corporation ("Cendant") and AmeriHost Franchise Systems, Inc. (the
"Franchisor"). Section 4.3(a)(ii) of the Development Agreement provides in part
that upon transfer of an "API Facility" to an "Unaffiliated Third Party" which
has been operational for at least eighteen (18) months prior to transfer and is
approved by the Franchisor, then either Cendant or the Franchisor will pay to
the operator of the facility an "Incremental Fee" in cash equal to the product
of [REDACTED] of the facility for the twelve (12) full months preceding the
"Closing Date."
C. Section 4.3(d) of the Development Agreement provides that at the option
of Franchisor, if the "Franchise Agreement" for a particular "Transferred
Facility" terminates for any reason prior to the seventy-six (76) month
anniversary, it has the right either: (i) to set-off against amounts due AHI or
its affiliates under the Development Agreement or a separate "Royalty Sharing
Agreement" (as defined in the Development Agreement") an amount equal to the
unamortized portion of the Incremental Fee; or (ii) to receive all "Royalty" and
"System Assessment Fees" on a mutually agreeable "API Facility" or "Additional
API Facility" then owned by AHI, which is comparable to the "Transferred
Facility" in question for the remainder of the seventy-six (76) month period
following such termination (the fee stream to Franchisor per this subparagraph
(ii) being the "Franchisor Substitute Stream"). The Repayment Amount is to be
reduced by fifty percent (50%) of the liquidated damages actually received by
the Franchisor from and on behalf of the transferee, net of costs of collection
-- such net sum being the "Net Repayment Amount." The amount, if any, that
Franchisor is entitled to from AHI or its affiliates pursuant to Section 4.3(d)
of the Development Agreement (either per offset of the Net Repayment Amount or
comprising the Franchisor Substitute Stream) is hereinafter referred to as the
"Offset Amount."
D. The sale of the properties owned by 899 to MPH-Illinois and by APM to
MPH-Mississippi will qualify the respective owners to Incremental Fees of
approximately [REDACTED] and [REDACTED], respectively, which will be subject to
potential Offset Amount reductions. The
actual amount of Offset Amount to which Franchisor is entitled from AHI or its
affiliates with respect to the Vicksburg Property or Freeport Property are
hereinafter referred to as the "Vicksburg Offset Amount" and the "Freeport
Offset Amount," respectively.
E. The parties, as a condition to the closing of the sale of the Vicksburg
Property to MPH-Mississippi and of the Freeport Property to MPH-Illinois is the
undertakings of the Indemnitors hereunder.
NOW THEREFORE, in consideration of the premises and covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereby agree as follows:
1. Recitals. The recitals set forth above are incorporated by reference
herein and made a part hereof, as if fully rewritten. Capitalized terms used
herein and not otherwise defined shall have the same meaning as set forth in the
Development Agreement.
2. Indemnification. MPH-Mississippi and MPH jointly and severally indemnify
and hold each of the AHI Group Members and their affiliates (collectively, the
"Indemnitees") harmless from and against any and all cost, loss and liabilities
they may incur with respect to the operation of Section 4.3 of the Development
Agreement regarding the Vicksburg Property, including but not limited to any
Offset Amount to which Franchisor is entitled or which it has taken with respect
to the Vicksburg Property or APM.
MPH-Illinois and MPH jointly and severally indemnify and hold the
Indemnitees harmless from and against any and all cost, loss and liabilities
they may incur with respect to the operation of Section 4.3 of the Development
Agreement regarding the Freeport Property, including but not limited to any
Offset Amount to which Franchisor is entitled or which it has taken with respect
to the Freeport Property or 899.
The indemnification obligation shall be paid by the Indemnitors in question
within five (5) days following delivery of written notice from one of the AHI
Group Members to the applicable Indemnitors detailing the amount of which
indemnification is sought (the "Indemnification Amount"). Should an Indemnitor
fail to make payment on a timely basis of the Indemnification Amount, then the
Indemnitees shall be entitled to payment of:
(a) interest computed at the lesser of the maximum legal rate or
twelve percent (12%) per annum, with respect to the unpaid Indemnification
Amount outstanding from time to time; plus
(b) all costs and expenses incurred by the Indemnitee with respect to
collecting the Indemnification Amount, including but not limited to
reimbursement of all applicable legal fees, paralegal fees, costs and
expenses.
3. Miscellaneous.
(a) Survival. All representations, warranties and covenants of the
parties contained in this Agreement or made pursuant hereto, shall survive
the date of execution
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of this Agreement and remain in full force and effect, and shall survive
the termination or expiration of this Agreement.
(b) Counsel. All parties hereto have been represented by counsel, and
no inference shall be drawn in favor of or against any party by virtue of
the fact that such party's counsel was or was not the principal draftsman
of this Agreement.
(c) Notices. All notices or other communications required or permitted
under this Agreement shall be in writing and shall be deemed to have been
duly given if delivered personally or sent by registered or certified mail,
postage prepaid or via national courier, addressed to the party entitled to
notice at the address set forth below, or such other address as is
subsequently provided by written notice from such party to the other
parties:
IF TO THE AHI GROUP: WITH A COPY TO:
Arlington Hospitality, Inc. Xxxxxxx & Xxxxxxxx Ltd.
0000 Xxxxx Xxxxxxxxx Heights Road--Suite 400 444 North Michigan Avenue--Suite 2500
Xxxxxxxxx Xxxxxxx, XX 00000 Xxxxxxx, XX 00000
Attention: Xxxxx Xxxx, Chief Financial Officer Attention: Xxxxxxxx X. Xxxxxxxxx, Esq.
Telephone: 000-000-0000 Telephone: 000-000-0000
Facsimile: 000-000-0000 Facsimile: 000-000-0000
IF TO INDEMNITORS: WITH A COPY TO:
Xxxxxxx X. Xxxxx Xxxxx Xxxxxxx
000 Xxxx Xxxxx 22 203 North LaSalle Street--Suite 0000
Xxxxx Xxxxxxxxxx, XX 00000 Xxxxxxx, XX 00000
Telephone: 000-000-0000 Attention: Xxxxx Xxxxxxxxxx, Esq.
E-Mail: xxxxxxx@xxx.xxx Telephone: 000-000-0000
Facsimile: 000-000-0000
(d) No Assignment. Except as expressly noted below, this Agreement and
the rights of the parties under this Agreement may not be sold, assigned or
otherwise transferred without the prior written consent of the other party.
(e) Entire Agreement. This Agreement, and the documents appended
hereto, sets forth the entire agreement and understanding of the parties
hereto in respect of the subject matter contemplated hereby, and supersedes
all prior agreements, arrangements and understandings relating to the
subject matter hereof.
(f) Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Illinois. Should any dispute
arise under this Agreement, it shall be litigated in the state or federal
courts situated in Xxxx County, Illinois, to which jurisdiction and venue
all parties consent.
(g) Counterparts. This Agreement may be executed in two or more
counterparts, each of which, whether photocopy, facsimile or ink, shall be
deemed an original, but all of which together shall constitute one
instrument.
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(h) Approval. This Agreement shall be binding upon the parties, their
respective heirs, successors and assigns, and each entity party represents
and warrants that this Agreement has been duly approved by proper corporate
action.
(i) Remedies. No party hereunder shall be entitled to consequential
damages as a result of the breach by any other party of its obligations
hereunder. Each party's damages shall be limited to actual damages as a
result of the breach of any obligation hereunder.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first set forth above.
INDEMNITORS: AHI GROUP:
AP PROPERTIES OF MISSISSIPPI, INC.
-------------------------------------
XXXXXXX X. XXXXX By:
------------------------------
Xxxxx X. Xxxx, Secretary
MPH INVESTMENTS OF MISSISSIPPI, INC.
FREEPORT, IL 899 L.L.C.
By:
--------------------------------
Xxxxxxx X. Xxxxx, President By: ARLINGTON INNS OF AMERICA, INC.,
its Manager
MPH INVESTMENTS OF ILLINOIS, INC. By:
---------------------------
Xxxxx X. Xxxx, Secretary
By:
--------------------------------
Xxxxxxx X. Xxxxx, President
ARLINGTON HOSPITALITY, INC.
By:
------------------------------
Xxxxx X. Xxxx, Secretary
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