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Exhibit 10.18(a)(1)
CONTRIBUTION AGREEMENT
by and among
TRUST LEASING, INC.,
TRUST MANAGEMENT INC.,
PHILLIP H. McNEILL, SR.,
CROSSROADS/MEMPHIS COMPANY, L.L.C.
and
CROSSROADS/MEMPHIS PARTNERSHIP, L.P.
Dated As Of
October 4, 1996
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TABLE OF CONTENTS
Page
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I. TRANSACTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
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1.1. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2. Admission to Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3. Contributions to the Capital of the Partnership . . . . . . . . . . . . . . . . . 2
1.4. Liabilities Assumed and Liabilities Excluded . . . . . . . . . . . . . . . . . . 3
1.4.1. Liabilities Assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.4.2. Excluded Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.5. Transfer Taxes and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.6. Expenses of Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.7. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.8. Closing Prorations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
II. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
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2.1. Representations and Warranties of Companies . . . . . . . . . . . . . . . . . . . 12
2 1.1. Organizational Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.1.2. Authorization and Effect of Agreement . . . . . . . . . . . . . . . . . . . . 14
2.1.3. No Restrictions Against Transfer of Companies' Assets . . . . . . . . . . . . 14
2.1.4. Compliance With Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.1.5. Litigation; Decrees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.1.6. Contract Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.1.7. No Brokerage or Finder's Fees . . . . . . . . . . . . . . . . . . . . . . . . 16
2.1.8. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.1.9. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.1.10. Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.1.11. Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.1.12. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.1.13. Conduct of the Hotels . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.1.14. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.1.15. Employee Benefit Plans, Programs or Arrangements . . . . . . . . . . . . . . 26
2.1.16. Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.1.17. Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.2. Representations and Warranties of Crossroads . . . . . . . . . . . . . . . . . . 30
2.2.1. Organizational Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.2.2. Authorization and Effect of Agreement . . . . . . . . . . . . . . . . . . . . 31
2.2.3. No Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
III. COVENANTS PENDING CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
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3.1. Investigation by Crossroads . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.2. No Announcement/Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . 33
3.3. Regulatory Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
3.4. Operation of the Hotels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
3.5. Satisfaction of Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
3.6. No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
IV. THE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
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4.1. Conditions Precedent to Obligations of Crossroads and Companies . . . . . . . . . 36
4.2. Additional Conditions Precedent to Obligations of Crossroads . . . . . . . . . . 37
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TABLE OF CONTENTS
Page
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4.2.1. No Material Misrepresentation or Breach . . . . . . . . . . . . . . . . . . . 38
4.2.2. Transfer Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
4.2.3. Due Diligence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.2.4. Amendments to Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.2.5. Additional Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.3. Additional Conditions Precedent to Obligations of Companies . . . . . . . . . . . 42
4.3.1. No Material Misrepresentation or Breach . . . . . . . . . . . . . . . . . . . 42
4.3.2. Closing Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.3.3. Crossroads Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.4. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
V. SURVIVAL AND INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
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5.1. Survival; Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
5.2. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
5.3. Defense of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
VI. MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
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6.1. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
6.2. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
6.3. Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
6.4. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
6.5. Amendments, Supplement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
6.6. Rights of the Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
6.7. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
6.8. Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
6.9. Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
6.10. Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
6.11. Titles and Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
6.12. Certain Interpretive Matters and Definitions . . . . . . . . . . . . . . . . . . 55
6.13. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
6.14. Joint and Several . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
6.15. Invalid Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
6.16. Time of the Essence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
6.17. Risk of Loss/Insurance/Condemnation . . . . . . . . . . . . . . . . . . . . . . 57
VII. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
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Exhibits
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Exhibit A Amended and Restated Agreement of Limited Partnership
Exhibit B Matters to be Covered by Opinion of Bogatin Law Firm
Exhibit C Matters to be Covered by Opinion of Jones, Day, Reavis & Pogue
Schedules
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Schedule 1.3.1(b) Companies' Assets and Hotels
Schedule 2.1.1(a) Jurisdictions Where Companies Qualified to do Business
Schedule 2.1.1(c) Shareholders of Companies
Schedule 2.1.3 Approvals, Consents for Companies
Schedule 2.1.4 Compliance with Laws
Schedule 2.1.8 Environmental Matters
Schedule 2.1.10(a) Real Property - Exceptions
Schedule 2.1.10(b) Real Property - Flood Plain
Schedule 2.1.11 Intellectual Property
Schedule 2.1.12 Financial Statements
Schedule 2.1.14 Insurance
Schedule 2.1.15 Employee Benefits
Schedule 2.1.16 Labor Relations
Schedule 2.2.3 Approvals, Consents for Crossroads, Partnership
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CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (this "Agreement") is made and
entered into this 4th day of October, 1996 by and among CROSSROADS/MEMPHIS
COMPANY, L.L.C., a Delaware limited liability company ("Crossroads"),
CROSSROADS MEMPHIS PARTNERSHIP, L.P. a Delaware limited partnership (the
"Partnership"), TRUST LEASING, INC., a Tennessee corporation and TRUST
MANAGEMENT INC., a Tennessee corporation (collectively, the "Companies") and
PHILLIP H. MCNEILL, SR., an individual resident of the State of Tennessee
("McNeill").
WITNESSETH:
WHEREAS, the Companies and Crossroads engage in the business
of leasing and managing various hotel properties; and
WHEREAS, McNeill owns a majority of the issued and outstanding
shares of capital stock of the Companies; and
WHEREAS, the Companies and Crossroads desire to conduct
certain of their hotel leasing and management business through the Partnership,
as more fully described herein; and
WHEREAS, the Companies and Crossroads desire to contribute
certain assets to the Partnership upon the terms and subject to the conditions
set forth herein,
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NOW, THEREFORE, the parties hereto, for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged and
intending to be legally bound, hereby agree as follows:
I. TRANSACTION.
1.1. Defined Terms. Certain capitalized terms used herein
shall have the meanings given to such terms in Article VII hereof.
1.2. Admission to Partnership. On the terms and subject to
the conditions hereof, at the Closing (as hereinafter defined) the Companies
and Crossroads will execute (or cause to be executed), an Amended and Restated
Agreement of Limited Partnership, substantially in the form attached hereto as
Exhibit A (the "Partnership Agreement"), pursuant to which the Companies will
be admitted as limited partners of the Partnership. In addition, at the
Closing the Partnership and the Companies will execute a Redemption and Stock
Exchange Agreement, substantially in the form attached to the Partnership
Agreement as Exhibit C thereto (the "Exchange Agreement").
1.3. Contributions to the Capital of the Partnership.
(a) On the terms and subject to the conditions hereof, at
the Closing (as hereinafter defined), Crossroads will (or will
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cause Crossroads Hospitality Company, L.L.C. to) transfer, assign, deliver and
contribute to the Partnership, free and clear of any and all Liens, 1,957,895
shares of Common Stock of Interstate Hotels Company (the "Crossroads
Contribution").
(b) On the terms and subject to the conditions hereof, at
the Closing, the Companies will transfer, assign, deliver and contribute to the
Partnership free and clear of any and all Liens, the management agreements,
hotel leases ("Hotel Leases"), service contracts, Franchise Agreements and
other agreements (collectively, "Contracts"), the inventory, utility bonds,
cash (to the extent contemplated in Section 1.8 hereof), accounts receivable
and the other assets listed on Schedule 1.3(b) attached hereto (such other
assets together with the Contracts being collectively referred to as, the
"Companies' Assets") related to those certain hotels listed on Schedule 1.3(b)
("Hotels").
1.4. Liabilities Assumed and Liabilities Excluded
1.4.1. Liabilities Assumed. On the terms and
subject to the conditions hereof, at the Closing the Companies will transfer to
the Partnership and the Partnership will assume and agree to satisfy or perform
when due the Assumed Liabilities.
1.4.2. Excluded Liabilities. Notwithstanding anything contained in this
Agreement to the contrary, the
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Partnership will assume and agree to satisfy or perform only the Assumed
Liabilities, and shall not assume or be obligated to satisfy or perform any
other liability, obligation or commitment of the Companies of whatever nature,
whether absolute or contingent, direct or indirect, or currently existing or
arising hereafter. All such other liabilities, obligations and commitments
shall be retained by and remain liabilities, obligations and commitments of the
Companies (collectively, "Excluded Liabilities"). Without limitation of the
foregoing, Excluded Liabilities shall include, without limitation, the
following:
(a) Contingent and Other Claims and Liabilities. Any
contingent or unknown claim against or liability or obligation of Companies.
(b) Indebtedness. Any liability or obligation of
Companies in favor of any person, partnership, corporation or other business
entity other than the Assumed Liabilities.
(c) Taxes. Any present or future liability or obligation
of Companies for taxes of any kind or nature whatsoever, whether federal, state
or local, including without limitation, taxes on capital gains or the income of
the Companies, any franchise or doing business type taxes, or any employment or
payroll withholding taxes, together with any interest, penalties and/or fines
associated therewith.
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(d) Litigation. Any liability or obligation of Companies
in connection with any litigation (whether legal, administrative or otherwise)
or alternative dispute resolution mechanism pending or threatened including any
liability, obligation to arbitrate, claims, grievances or causes of action
under any collective bargaining agreement of Companies.
(e) Severance Obligations. Any liability or obligation
of Companies to its employees, whether arising by contract, by any plan or
program or pursuant to any Law, including, without limitation, the Worker
Adjustment and Retraining Notification Act ("WARN"), for severance or similar
pay.
(f) Employee Benefits. Any liabilities or obligations
relating to employee benefits or compensation arrangements including, without
limitation, any liabilities or obligations for any retiree medical or other
welfare benefits, or liabilities or obligations under any of Companies'
employee benefit plans, programs or arrangements, including without limitation,
those under health plan continuation coverage arising under a federal law
commonly known as "COBRA" or any similar state law or arising under WARN.
(g) Contracts. Any liabilities, obligations or
commitments of Companies arising under any contracts (including, without
limitation, any liability for past practices or
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liabilities under any union agreement), agreements or commitments, other than
the Assumed Liabilities.
(h) Environmental. Any and all liabilities, damages,
losses or expenses (including, without limitation, reasonable counsel fees and
expenses), resulting from, arising out of or in any way connected with any
Environmental Liability.
1.5. Transfer Taxes and Fees. All sales and use, stamp,
transfer, documentary or other ad valorem taxes imposed by any governmental
taxing authority or any other taxing authority (excluding, however, taxes on
capital gains or income) as a result of the transfer, assignment, delivery or
contribution of the Crossroads Contribution and the Companies' Assets hereunder
("Transfer Taxes") shall be allocated and shared fifty percent (50%) by
Crossroads and fifty percent (50%) by the Companies.
1.6. 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 (a) all costs charged by
the holder of any Lien on the Crossroads Contribution or the Companies' Assets
shall be paid by Crossroads or the Companies, respectively, as its sole cost
and obligation, (b) the Companies shall be solely responsible for all fees and
costs owing to Smith
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Barney, Inc. in connection with the transactions contemplated hereby, (c)
Crossroads and the Companies will each pay fifty percent (50%) of any
out-of-pocket expenses incurred to obtain a transfer or assignment of any
franchises, licenses or permits necessitated by the transactions contemplated
by this Agreement, (d) Companies shall be solely responsible for any and all
fees to be paid under the HSR Act and (e) notwithstanding anything contained
herein to the contrary, neither Crossroads nor the Partnership shall have any
responsibility for any and all costs or expenses associated with any property
improvement program imposed and/or required as a result of the transactions
contemplated hereby and by the Master Agreement, which costs and expenses shall
be the sole responsibility of Equity Inns Partnership, L.P. or Equity Inns,
Inc. ("ENNS").
1.7. 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 1, 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 Jones, Day, Reavis & Pogue at 500 Grant Street, Pittsburgh,
Pennsylvania.
1.8. Closing Prorations. (a) The following matters and
items pertaining to the Hotels shall be apportioned between the Companies and
the Partnership or, where applicable, credited
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in total to or the sole responsibility of a particular party, as of the Cutoff
Time. To the extent known at Closing, net credits in favor of Partnership
shall be contributed to the Partnership by the Companies in cash at Closing and
net credits in favor of Companies shall be paid in cash at the Closing. Unless
otherwise indicated below, Partnership shall receive a credit for any of the
following items to the extent the same are accrued but unpaid as of the Cutoff
Time (whether or not due, owing or delinquent as of the Cutoff Time), and
Companies shall receive a credit to the extent any of the following items shall
have been paid prior to the Closing Date to the extent the payment thereof
relates to any period of time after the Cutoff Time:
(i) Guest Ledger Receivables; Food and Beverage
Receivables. Guest Ledger Receivables shall be prorated between Partnership
and Companies. Companies shall receive a credit for all Guest Ledger
Receivables for all room nights up to but not including the room night during
which the Cutoff Time occurs, and Partnership shall be entitled to the amounts
of Guest Ledger Receivables for the room nights after the Cutoff Time.
Companies and Partnership shall each receive a credit equal to one-half of the
amount of Guest Ledger Receivables for the full room night during which the
Cutoff Time occurs. All restaurant and bar facilities will be deemed closed as
of the Cutoff Time and Companies shall receive the income from the same until
the Cutoff Time.
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(ii) Contracts. Any amounts prepaid or payable under any
Contracts, including, without limitation, base rent under each Hotel Lease.
All amounts known to be due under Contracts with reference to periods prior to
the Closing Date shall be paid by Companies. Percentage rents shall be
adjusted based on the last full reporting period under the applicable Hotel
Lease. Any amounts not known at the Closing will be part of the post-closing
adjustments contemplated in Section 1.8(c).
(iii) Bookings. Partnership shall receive a credit for
advance payments, if any, under Bookings to the extent the Bookings relate to a
period after the Cutoff Time.
(iv) Prepaid Expenses. Companies shall received a credit
for any and all expenses prepaid as of the Closing which will be assigned or
contributed to the Partnership and ensure to the benefit of the Partnership
after the Closing.
(v) Petty Cash Funds and House Banks. Partnership shall
receive and Companies shall contribute to Partnership as part of the Companies'
Assets all petty cash funds and cash in house banks at 100% of face value at
the Cutoff Time.
(vi) Security Deposits. Partnership shall be entitled to a
credit for all security and other deposits held by Companies as of the Cutoff
Time with respect to Contracts.
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(b) Receivables. The receivables (including, without limitation,
commission vending machines) of the Companies shall be included in the
Companies' Assets and the Partnership shall collect them for its own account.
In the event that the amounts actually collected the the Partnership on account
of such receivables is less than the amount paid by the Partnership on account
of the Accounts Payable, Companies shall make a cash contribution to the
Partnership in the amount of such shortfall in accordance with Section 1.8(c)
hereof. In the event the amounts actually collected by the Partnership on
account of such receivables exceeds the amounts paid by the Partnership on
account of the Accounts Payable, the Partnership shall pay such excess to the
Companies in accordance with Section 1.8(c).
(c) Closing Statement.
(i) Partnership shall cause its accounting staff
("Partnership's Accountants") to make such inventories, examinations and audits
of the Hotels, and of the books and records of the Hotels, as Partnership's
Accountants may deem necessary to make the adjustments and prorations required
under this Section 1.8, or under any other provisions of this Agreement.
Companies or their designated representatives may be present at such
inventories, examinations and audits of the Hotels. Based upon such audits and
inventories, Partnership's Accountants will prepare and deliver to the parties
no later than five (5) days prior to the Closing Date an estimated closing
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statement (the "Closing Statement"). The Closing Statement shall contain
Partnership's best estimate of the amounts of the items requiring the
prorations and adjustments in this Agreement. The Closing Statement shall be
subject to Companies' review and approval, not to be unreasonably withheld or
denied. The parties shall attempt in good faith to reconcile any differences
before Closing. The amounts set forth on the Closing Statement, as reviewed,
approved and/or adjusted, shall be the basis upon which the prorations and
adjustments provided for herein shall be made at the Closing.
(ii) Within one hundred eighty (180) days following the
Closing Date, Partnership's Accountants shall deliver a final report to
Companies setting forth their final determination of all items to be included
on the Closing Statement. In the event that, at any time within said 180-day
period, either party discovers any items which should have been included in the
Closing Statement but were omitted therefrom or which were included on the
Closing Statement but which need further adjustment, such items shall be
adjusted in the same manner as if their existence had been known at the time of
the preparation of the Closing Statement. The foregoing limitation shall not
apply to any item which, by its nature, cannot be finally determined within the
period specified. However, no further adjustments shall be made beyond twelve
(12) months after the Closing Date.
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(iii) The Closing Statement shall be binding and conclusive
on all parties hereto to the extent of the items covered by the Closing
Statement, unless within thirty (30) days after receipt by Companies of the
final Closing Statement Companies notifies Partnership that it disputes the
Closing Statement, and specifies in reasonable detail the items and reasons
that it so disputes. The parties shall attempt to resolve such dispute. If
such dispute is not resolved within forty-five (45) days after delivery of the
original notice by Buyer, then the parties shall submit such dispute to Coopers
& Lybrand ("Outside Accountants") and the determination of the Outside
Accountants, which shall be made within a period of fifteen (15) days after
such submittal by the parties, shall be conclusive. The fees and expenses of
the Outside Accountants shall be paid equally by Partnership and Companies.
II. REPRESENTATIONS AND WARRANTIES.
2.1. Representations and Warranties of Companies and McNeill.
The Companies and McNeill hereby, jointly and severally, represent and warrant
to Crossroads as follows:
2.1.1. Organizational Matters. (a) Each of Companies is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Tennessee and has the requisite corporate power and
authority to own, lease or
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otherwise hold the assets owned, leased or otherwise held by it and to carry on
their respective business as presently conducted by it. Each of the Companies
is duly qualified to do business as a foreign corporation under the laws of the
jurisdictions listed on Schedule 2.1.1 (a), which are the only jurisdictions
where such qualification is necessary or required to operate its assets and/or
conduct its business.
(b) Companies own the Companies' Assets free and
clear of any Liens. Companies will transfer to the Partnership good and
marketable title to the Companies' Assets upon the delivery of the title
documents contemplated in this Agreement. The Companies' Assets are the only
assets of the Companies.
(c) The persons listed on Schedule 2.1.1 (c) are
the only shareholders of the Companies and own the number of shares in the
Companies listed opposite their names on Schedule 2.1.1 (c). McNeill has the
requisite power and capacity to execute and deliver this Agreement and to
perform the transactions contemplated hereby. The execution and delivery of
this Agreement by McNeill and the performance by McNeill of the transactions
contemplated hereby have been duly authorized by all necessary action on the
part of McNeill. This Agreement has been duly executed and delivered by
McNeill and constitutes a valid and binding obligation of McNeill enforceable
in accordance with its terms.
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2.1.2. Authorization and Effect of Agreement. Companies have
the requisite corporate power and authority to execute and deliver this
Agreement and to perform the transactions contemplated hereby to be performed
by Companies. The execution and delivery by Companies of this Agreement and
the performance by Companies of the transactions contemplated hereby to be
performed by Companies have been duly authorized by all necessary corporate
action on the part of Companies. This Agreement has been duly executed and
delivered by Companies and, assuming the due execution and delivery of this
Agreement by Crossroads and the Partnership, constitutes a valid and binding
obligation of Companies enforceable in accordance with its terms.
2.1.3. No Restrictions Against Transfer of Companies' Assets.
The execution and delivery of this Agreement by Companies and McNeill, and the
performance by Companies and/or McNeill of the transactions contemplated hereby
to be performed by them or him will not violate any law, rule, regulation,
judgment, order or decree applicable to them or him 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 organizational documents of Companies or any agreement,
contract, lease, or other instrument or obligation included in any of the
Companies' Assets or Permit listed or required to be listed on any Schedule,
other than any such
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19
conflicts, violations or defaults as are listed or described on Schedule 2.1.3.
consent, approval, order or authorization of, notice to, or registration,
declaration or filing with, any Governmental Authority or other entity,
domestic or foreign, or any other third party is required to be obtained or
made by or with respect to Companies or McNeill in connection with the
execution and delivery of this Agreement by Companies or McNeill or the
performance by Companies or McNeill of the transactions contemplated hereby to
be performed by him or them, except for such of the foregoing as are listed or
described on Schedule 2.1.3.
2.1.4. Compliance With Laws. Without limiting the
representations and warranties set forth in Section 2.1.9 or 2.1.12, and except
as listed or described on Schedule 2.1.4, Companies are not in material
violation of any Laws in the operation of the Hotels.
2.1.5. Litigation; Decrees. Without limiting the
representations and warranties set forth in Section 2.1.9 or 2.1.12, there are
no lawsuits, claims, administrative or other proceedings relating to the
conduct of the Companies' Assets or the Hotels pending or, to the knowledge of
Companies or McNeill after due investigation, threatened in writing, against or
affecting Companies which, if determined adversely, would have a material
adverse effect on the Companies' Assets or the Hotels. Companies are not in
default under any judgment, order or decree
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20
of any Governmental Authority applicable to the operation or conduct of the
Hotels or the Companies' Assets.
2.1.6. Contract Rights. Each of the Contracts included in
the Companies' Assets is a valid and binding obligation of each of the parties
thereto and is in full force and effect. Each of the parties to the Contracts
included in the Companies' Assets has performed all obligations required to be
performed by it through the Closing Date under such Contracts 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. Companies have delivered to Crossroads
true, correct and complete copies of such Contracts.
2.1.7. No Brokerage or Finder's Fees. Neither Companies nor
NcNeill have 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, except any fees owing to Smith Barney, Inc. for
which Companies will be solely responsible.
2.1.8. Environmental Matters. Without limiting the
representations or warranties contained elsewhere herein:
(a) To the best of Companies' and McNeill's
knowledge after due investigation, Schedule 2.1.8 sets forth a list of all
proceedings and alleged claims related to the
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21
ownership, leasing and/or operation of the Hotels which Companies are or in the
last five (5) years have been a party before any Governmental Authority
relating to pollution or protection of the environment and human health and
safety, the disposition of which may result in (i) liability against Companies
for any amount for penalties, fines, damages, monitoring, maintenance of wells,
testing, investigation, sampling, response, remedial or inspection costs or
other monetary relief; (ii) the making of a capital expenditure in any amount;
or (iii) in the impairment of the utility of or the diminution in any amount in
value of the Companies' Assets or the Hotels for the purposes for which such
Companies' Assets or the Hotels are presently being used and operated.
(b) Except as disclosed in Schedule 2.1.8,
neither the Companies nor McNeill have received notice of, nor have reason to
believe there exists, any threatened proceedings, claims or allegations of the
nature described in Section 2.1.8(a) and neither the Companies nor McNeill are
aware of facts that, with the passage of time or otherwise, could lead to
proceedings of the nature described in Section 2.1.8(a).
(c) Except as to matters described in Schedule
2.1.8, and to the best of Companies' and McNeill's knowledge after due
investigation, Companies are and have always been in compliance in all respects
with all applicable Environmental Laws applicable to themselves and with
respect to
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22
the respective property, activities and/or operations of the Companies' Assets
and the Hotels.
(d) There are no asserted claims nor any bases
for any claims that Companies are in violation and/or breach of or have
liability under any Environmental Laws with respect to the ownership,
management and/or operation of the Companies' Assets or the Hotels.
(e) Except as set forth on Schedule 2.1.8, in
connection with the ownership, management and/or operation of the Companies'
Assets or the Hotels, to the best of McNeill's and the Companies' knowledge
after due investigation, Companies have obtained and complied with and kept in
effect all Permits (which are listed on Schedule 2.1.8(h)) and other approvals
necessary to operate the Hotels or to store, dispose of and otherwise handle
any Hazardous Substances and/or wastes and Companies has reported, to the
extent required by Environmental Laws, all past and present sites owned,
operated or used by Companies in connection with the ownership, leasing and/or
operation of the Companies' Assets or the Hotels where Hazardous Substances
and/or wastes have been treated, stored or disposed of. Companies and NcNeill
represent that the Companies have not spilled, discharged, released, stored, or
disposed of any Hazardous Substances or wastes in violation of any
Environmental Laws.
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23
(f) Except as set forth in Schedule 2.1.8, and in
connection with the ownership, leasing, management and/or operation of the
Companies' Assets or the Hotels, and to the best of the Companies' and
McNeill's knowledge after due investigation, there is no Contamination at any
on-site or off-site location to which Companies have transported Hazardous
Substances, or arranged for the transportation of Hazardous Substances, or at
which any Hazardous Substances for which the Companies may reasonably be
expected to have liability have been deposited and/or disposed of. In
addition, except as disclosed on Schedule 2.1.8, no such on-site or off-site
location is the subject of any enforcement actions or other investigations by
any Governmental Authority or other third party that may lead to claims against
Companies or Partnership for clean-up costs, investigation, remedial work,
damages to natural resources or property, or for personal injury claims.
(g) Except as otherwise disclosed on Schedule
2.1.8:
(i) Neither Companies nor McNeill have
received any request for information, notice, demand letter, administrative
inquiry, or formal or informal compliance notice or claim with respect to the
presence of Contamination or any Hazardous Substance, in, on, under or about
any property owned, leased, subleased or occupied by Companies or used in the
Hotels or the threat of migration of Contamination or any Hazardous
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24
Substances onto, at, into or under any property owned or occupied by a third
party which contamination or Hazardous Substance originated at sites or
facilities currently or previously owned, operated, leased, subleased or used
by Companies;
(ii) Neither Companies nor McNeill have
received any request nor, to the best of their knowledge, do they have reason
to believe there is a basis for any information, notice, demand letter or
inquiry from a Governmental Authority or other third-party concerning
Contamination or threatened Contamination at any off-site location or locations
to which Companies transported or arranged for the transportation of Hazardous
Substances during Companies operation and/or ownership or leasing of the
Companies' Assets or the Hotels.
(iii) Except as disclosed on Schedule 2.1.8
and to the best of Companies' or McNeill's knowledge after due investigation,
no Contamination exists at, in or under any of the Hotels or structures at any
site and/or facility currently or formerly owned, operated, leased, subleased
or used by Companies; and
(iv) Except as set forth on Schedule 2.1.8
and to the best of Companies' or McNeill's knowledge after due investigation,
there are no underground storage tanks, above-ground storage tanks or
subsurface structures, or any containment vessel, located on any of the Hotels.
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25
(h) To the best of Companies' and McNeill's
knowledge after due investigation, Companies have all Permits required by
Environmental Laws including, without limitation, those related to occupational
health and safety in the ownership, leasing, management, subleasing and/or
operation of the Companies' Assets and the Hotels. Schedule 2.1.8(h) contains
a listing of all Permits held by Companies required by Environmental Laws.
2.1.9. Taxes. With respect to the Companies' Assets and the
Hotels, Companies have filed or caused to be filed (on a timely basis) any and
all returns, reports, statements, declarations, schedules, notices,
certificates or other documents ("Tax Returns") filed with or submitted to any
Governmental Authority in connection with the determination, assessment,
collection or payment of any tax, lien, assessment, impost, toll duty,
deficiency, fee or related amount imposed or assessed ("Taxes") by any
Governmental Authority ("Tax Authority") that are or were required to be filed
by or with respect to any of them, either separately or as a member of a group
of corporations, pursuant to the requirements of each Tax Authority with
jurisdiction over them or their assets. Companies have paid, or made provision
for the payment of, all Taxes, which are, may be or become a lien on the
Companies' Assets or the Hotels, as reflected on such Tax Returns, or
otherwise, or pursuant to any assessment received by Companies, except such
Taxes, if any, as are being contested in good faith and as to which adequate
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26
reserves (determined in accordance with GAAP) have been provided. There exists
no proposed tax assessment against Companies related to the ownership or
operation of the Companies' Assets or the Hotels. All Taxes that Companies are
or were required by any requirements to withhold or collect have been duly
withheld or collected and, to the extent required, have been paid to the proper
governmental body.
2.1.10. Real Property. Companies and McNeill have previously
furnished to Crossroads copies of all deeds and recorded instruments in the
possession of Companies and McNeill related to the Hotels and copies of all
opinions, abstracts, environmental reports, structural or other engineering
reports, title policies and surveys in the possession of Companies and McNeill
relating to the Hotels. The Hotels are the only real property owned or leased
by Companies and used in connection with the Companies' Assets. The Hotels are
not subject to any rights of way, easements, building use restrictions,
exceptions, variances, reservations or limitations of any nature whatsoever,
except such as are listed in Schedule 2.1.10(a) or those which would not
materially interfere with the current use and/or ownership and/or operation of
the Hotels. All of the Hotels are in safe condition and operating repair and
comply in all material respects with all applicable ordinances, codes,
regulations and building and other Laws applicable thereto. The present use of
the Hotels is in compliance with all zoning classifications except for
noncompliance which would not have a material adverse
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27
effect on the ownership and/or operation of the Hotels. The Hotels are each
currently serviced by a community sewage system. The Hotels are situated on
properly subdivided parcels of property. All buildings and other improvements
constituting the Hotels are within the record property lines. Except as set
forth in Schedule 2.1.10(b), no portion of the Hotels are located in a flood
plain or consists of any wetlands. To the extent any of the Hotels are located
in a flood plain, Companies have adequate flood insurance for such Hotels.
Neither McNeill nor Companies have received any notice of any increase in real
estate assessments affecting the Hotels. Neither McNeill nor Companies have
received notice of any assessment for public improvement and have no knowledge
of any pending assessment, including, without limitation, assessments for
business improvement districts, transportation districts or utility services
affecting the Hotels. There are no pending or, to the best of Companies' and
McNeill's knowledge, threatened condemnation or eminent domain proceedings
which affect or would affect the Hotels or any portion thereof. The Hotels
(including, without limitation, any buildings or improvements thereof) are in
material compliance with all Laws, including, without limitation, the Americans
with Disabilities Act, as the same may be amended and any and all regulations
promulgated thereunder ("ADA"). All easements, utilities and related services
necessary for the permanent and efficient use and operation of the Hotels for
their present purposes (including potable water, storm and sanitary sewer, gas,
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28
electric and telephone facilities) have been completed, paid for in full and
are presently available to the occupants thereof.
2.1.11. Intellectual Property. (a) Companies use no
trademarks, servicemarks, patents, know-how or other intellectual property
(collectively, "Intellectual Property") in connection with operation of the
Hotels, except as set forth on Schedule 2.1.11 attached hereto. The right to
use the Intellectual Property as currently used by Companies is included with
the Companies' Assets.
(b) Schedule 2.1.11 is an accurate and complete listing and
summary of all Intellectual Property. The Companies are the owners or lessees
of all right, title and interest in and to all of the Intellectual Property
free and clear of all Liens; the Intellectual Property has been registered and
is currently in compliance with formal legal requirements (including the
payment of filing, examination and maintenance fees and proofs of working or
use), are valid and enforceable and are not subject to any maintenance fees or
taxes or actions falling due within ninety (90) days after the Closing Date; no
part of the Intellectual Property has been or is now involved in any
opposition, invalidation or cancellation proceeding nor, to the best of
Companies' and McNeill's knowledge after due investigation, is any such action
threatened with respect to any of the Intellectual Property; neither Companies
nor McNeill are aware of any potentially interfering intellectual property of
any third
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29
party; and no part of the Intellectual Property is infringed or has been
challenged or threatened in any way. None of the Intellectual Property used by
Companies infringe or are alleged to infringe any intellectual property of any
third party.
2.1.12. Financial Statements. (a) Attached as Schedule
2.1.12 is a list and description of the financial information delivered to IHC,
New Lessee and Partnership (collectively, the "Financial Statements"). The
Financial Statements have been prepared in accordance with GAAP consistently
applied and are true, accurate and complete in all material respects.
(b) There are no liabilities arising out of the conduct
of the Hotels which are not set forth or reflected in the Financial Statements,
except (i) liabilities which, in accordance with GAAP, were not required to be
set forth therein, or (ii) liabilities or obligations arising after the
Financial Statements in the ordinary course of business of the Hotels.
2.1.13. Conduct of the Hotels. Except as a result of matters
relating to this Agreement, since December 31, 1995 (or such date as such Hotel
has initially leased and/or managed by the Companies) the Hotels have been
operated in the ordinary course of business, the Companies have not taken any
action which would have constituted a violation of Section 3.4 if Section 3.4
had applied to Companies since December 31, 1995, and there has
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30
not been any material adverse change in any of the Hotels or the financial
condition or results of operations of any of the Hotels.
2.1.14. Insurance. Set forth on Schedule 2.1.14 is
a list of all material casualty, liability and other insurance maintained by
Companies. Except as set forth on Schedule 2.1.14, all such insurance is in
full force and effect on the date hereof. Companies have received no notice,
nor do they or McNeill have knowledge after due investigation, of any condition
which may cause the cancellation, reduction or modification of such insurance
or the increase in the premiums therefor.
2.1.15. Employee Benefit Plans, Programs or
Arrangements. (a) Except as set forth on Schedule 2.1.15, Companies are not a
party to or obligated to contribute to any employee benefit plan or program,
guaranteed annual income plan, fund or arrangement, employee association or
union, or any incentive, bonus, profit-sharing, deferred compensation, stock
option or purchase plan or agreement or arrangement, or any non-competition
agreement, or any severance or termination pay plans or policies, any medical,
health, hospitalization, disability, life or other insurance plans, or any
other employee fringe benefit plans which covers any employee (collectively the
"Employee Plans"). True and correct and complete copies of all of the written
plans, programs, agreements or arrangements, and true, correct and complete
written descriptions of all of the
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31
oral plans, programs, agreements or arrangements, required to be described in
Schedule 2.1.15 have heretofore been delivered or otherwise made available to
Crossroads.
(b) None of Companies, any Employee Plan of Companies or
any "party in interest," as defined in Section 3(14) of the Employee Retirement
Income Security Act of 1974, as amended and the rules and regulations
promulgated thereunder ("ERISA"), has engaged in a "prohibited transaction," as
defined in Section 406 of ERISA or Section 4975(c)(1) of the Code, which could
subject any of them or Crossroads or Partnership to liability under Section 409
or 502(i) of ERISA or Section 4975 of the Code. Companies, and each fiduciary
for each of the Employee Plans of Companies, is in material compliance with the
terms of such Employee Plans and with the requirements of any and all Laws,
including but not limited to ERISA, applicable to each such Plan. Companies
have not failed to make any contribution to, or to pay any amount due and
owing, as required by applicable Law or by the terms of any such Employee Plan
as of the last day of the most recent fiscal year of each of such Plans ended
prior to the Closing Date.
(c) There is no pending or, to the best of Companies' or
McNeill's knowledge after due investigation, threatened legal action,
administrative or regulatory proceedings or investigations against Companies or
any Employee Plan of Companies with respect to any such Plan, other than
routine
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32
claims for benefits, which could result in liability to Companies or Crossroads
or Partnership and, to the best of Companies' or McNeill's knowledge after due
investigation, there is no basis for any such legal action, proceeding or
investigation.
(d) Except as set forth on Schedule 2.1.15, Companies do
not maintain or contribute to, and have not maintained or contributed to, (i)
any "multiemployer plan" (as defined in Section 3(37) of ERISA) that covers any
employee; (ii) any pension plan (as defined in Section 3(2) of ERISA) that is
subject to Title IV of ERISA that covers any employee; or (iii) any plan or
program that provides post-employment medical, health or life insurance
benefits (other than any such benefits required to be provided pursuant to
Section 4980B of the Code). During the five (5) year period preceding the
Closing Date, the Companies have not terminated any employee benefit plan
subject to Title IV of ERISA for which a Notice of Sufficiency has not been
issued by the Pension Benefit Guaranty Corporation. No amount is due or owing
from the Companies to the Pension Benefit Guaranty Corporation under Title IV
of ERISA for any reason, or to any "multiemployer plan" (as defined in Section
3(37) of ERISA) on account of any complete or partial withdrawal therefrom.
(e) With respect to each "group health plan" (within the
meaning of Section 4980B of the Code) maintained by Companies, Companies are in
compliance with, and will satisfy all
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33
liabilities and obligations relating to, the continuation coverage requirements
of the federal law commonly referred to as "COBRA" or any similar state law.
Companies are in compliance with, and will satisfy all liabilities and
obligations relating to, the notice and all other requirements arising under
WARN.
(f) Companies and McNeill have delivered to Crossroads true,
correct and complete information regarding the current levels of salaries
and/or wages for the employees of the Hotels and the Companies.
2.1.16. Labor Relations. Except as disclosed on
Schedule 2.1.16, (a) no employee of the Hotels or the Companies is represented
by any union or other labor organization and no effort exists to organize any
of Companies' employees or the employees of the Hotel; (b) there is no unfair
labor practice complaint against the Hotels or the Companies pending or, to the
knowledge of either McNeill or the Companies after due investigation,
threatened before the National Labor Relations Board; (c) there is no labor
strike, dispute, picketing or other labor disputes, slow-down or stoppage
actually pending or, to the knowledge of either McNeill or the Companies,
threatened against or involving the Hotels or the Companies; (d) there is no
grievance pending against the Companies; (e) there is no private agreement or
understanding to which the Companies are a party restricting the Hotels or the
Companies from relocating, closing or terminating any of its operations or
facilities; and
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34
(f) neither the Companies nor the Hotels have, in the past three years,
experienced any work stoppage or other labor difficulty or committed any unfair
labor practice.
2.1.17. Accounts Receivable. All of the accounts receivable
included in the Companies' Assets represent actual sales made in the ordinary
course of business and to the best knowledge of Companies and McNeill after due
investigation, are not subject to any setoffs or counterclaims as to the
performances of any obligation or contract arising prior to the Closing Date.
2.2. Representations and Warranties of Crossroads.
Crossroads hereby represents and warranties to Companies and McNeill as
follows:
2.2.1. Organizational Matters. (a) Crossroads is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has the requisite corporate power to own,
lease or otherwise hold its properties and assets and to carry on its business
as presently conducted.
(b) The 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 to own, lease or otherwise
hold its properties and assets and to carry on its business as presently
conducted.
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35
2.2.2. Authorization and Effect of Agreement. Crossroads has
the requisite corporate power and the Partnership has the requisite partnership
power to execute and deliver this Agreement and to consummate the transactions
contemplated hereby to be consummated by them. The execution and delivery by
Crossroads and Partnership of this Agreement and the consummation by them of
the transactions contemplated hereby to be consummated by them have been duly
authorized by all necessary action on the part of Crossroads and Partnership.
This Agreement has been duly executed and delivered by Crossroads and
Partnership and, assuming the due execution and delivery of this Agreement by
Companies and McNeill, constitutes a valid and binding obligation of Crossroads
and Partnership.
2.2.3. No Restrictions. Except as set forth on Schedule
2.2.3, the execution and delivery of this Agreement by Crossroads and
Partnership does not, and the performance by Crossroads and Partnership of the
transactions contemplated hereby to be performed by them will not violate any
law, rule, regulation, judgment, order or decree applicable to them 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 loss of a
material benefit under, any provision of the Certificate of Incorporation or
bylaws of Crossroads or the Certificate of Limited Partnership or partnership
agreement of Partnership, or any agreement, contract,
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36
lease or other instrument or obligation to which Crossroads or Partnership is a
party or by which their assets are bound. No material consent, approval, order
or authorization of, or registration, declaration or filing with, any
Governmental Authority or other entity is required to be obtained or made by or
with respect to Crossroads or Partnership in connection with the execution and
delivery of this Agreement by them or the consummation by them of the
transactions contemplated hereby to be consummated by them, except as listed or
described on Schedule 2.2.3.
III. COVENANTS PENDING CLOSING
3.1. Investigation by Crossroads. (a) Prior to the Closing,
upon reasonable notice from Crossroads to Companies given in accordance with
this Agreement, Companies will afford to the officers, attorneys, accountants
or other authorized representatives of Crossroads access during normal business
hours to the facilities and the books and records of the Companies relating to
the Companies' Assets or Hotels so as to afford Crossroads full opportunity to
make such review, examination and investigation of the Companies' Assets or
Hotels as Crossroads may desire to make (including, without limitation,
environmental audits of the Hotels.) Crossroads will be permitted to make
extracts from or to make copies of such books and records as may be reasonably
necessary. Prior to the Closing, Companies will furnish or cause to be
furnished such financial and operating
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37
data and other information pertaining to the Companies' Assets or Hotels as
Crossroads may request.
(b) Prior to the Closing, Companies and McNeill
will provide Crossroads with access to meet and interview current employees of
Companies; provided, however, that Companies and McNeill acknowledge that,
neither Partnership nor Crossroads is under any obligation to offer employment
to and/or to hire any such employees.
3.2. No Announcement/Confidentiality. Upon execution of this
Agreement, Companies, McNeill and Crossroads agree to make a press release in a
form to be mutually agreed upon by all of the parties. Prior to the Closing
Date, no party shall publish or permit any of its Affiliates to publish any
other press release or similar public 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 on the proposed disclosure).
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38
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 liquor licensing
authorities, 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 Hotels. Except as consented to by
Crossroads in writing, prior to the Closing, Companies will, in respect of
their operation of the Hotels and the Companies' Assets:
(a) Use reasonable best efforts to not take or
permit to be taken or do or suffer to be done anything other than in the
ordinary course of operation of the Hotels as presently conducted, and use
reasonable best efforts to maintain the goodwill associated with the Hotels;
(b) Continue its existing practices relating to
maintenance of the Hotels and operations under the Companies' Assets;
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39
(c) Except as provided in Section 1.2 of the
Master Agreement with respect to the Hotel Leases, not terminate, amend or
modify any Contract included in the Companies' Assets;
(d) Except in the ordinary course of business and
consistent with past practices, not enter into any new service contracts
related to the Hotels;
(e) Maintain and keep in full force and effect
its current insurance and shall pay any deductibles related to any claims made
under such insurance; and
(f) Not terminate or make material amendments to
any benefit plan or employee practice or policy or increase the general rates
of compensation for employees of the Hotels and/or the Companies.
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
Companies nor McNeill nor their respective employees, officers,
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40
agents or representatives, including without limitation, Smith Barney, Inc.,
shall directly or indirectly (a) solicit, initiate or encourage any inquiries,
proposals or offers from any person relating to any lease, acquisition or
purchase of any of the Companies' Assets, or any securities of, or any merger,
consolidation or business combination with, Companies, 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 Companies' Assets, 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 Crossroads and
Companies. The obligations of each of Crossroads, the Partnership, the
Companies and McNeill 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 identified on Schedule 2.1.3 or
Schedule 2.2.3 as being a condition of the Closing shall have been obtained,
including, without limitation, approval under the HSR Act, the consent of the
other parties to the Companies' Assets and the transfer of all Permits (or in
the case of liquor licenses, consummation of an arrangement deemed acceptable
by
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41
Crossroads in its sole discretion under the applicable liquor laws allowing the
continuation of liquor service pending approval of the license transfer
application), (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, (c) execution of a Master Agreement by and among the Partnership,
Interstate Hotels Corporation, ENNS and Equity Inns Partnership, L.P., in form
and substance satisfactory to the parties thereto ("Master Agreement") and all
conditions to closing under the Master Agreement shall have been satisfied
other than the obligations hereunder, (d) the approval of ENNS' line of credit
lender shall have been obtained, (e) the approval of the franchisors of the
Hotels shall have been obtained, (f) the approval of Credit Lyonnais shall have
been obtained, and (g) the consent of Merrill Lynch & Co. shall have been
obtained. Any of the foregoing conditions may be waived, (x) insofar as it is
a condition to the obligations of Crossroads or the Partnership, by Crossroads
at its option and (y) insofar as it is a condition to the obligations of
Companies and McNeill, by Companies at their option.
4.2. Additional Conditions Precedent to Obligations of
Crossroads and the Partnership. The obligations of Crossroads and the
Partnership under this Agreement to consummate the transactions contemplated
hereby will be subject to the satisfaction, at or prior to the Closing, of all
of the following
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42
conditions, any one or more of which may be waived at the option of Crossroads:
4.2.1. No Material Misrepresentation or Breach. There shall
have been no material breach by Companies or McNeill in the performance of any
of the covenants herein to be performed by them in whole or in part prior to
the Closing, and the representations and warranties of Companies and McNeill
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 Companies and McNeill shall have delivered to Crossroads a certificate
certifying each of the foregoing, dated the Closing Date and signed by McNeill
and by the president and chief financial officer on behalf of each of the
Companies; and
4.2.2. Transfer Documents. There shall have been delivered
to Crossroads and the Partnership by Companies and McNeill the following
documents as executed by Companies and the other parties thereto:
(a) Assignment and Assumption Agreement and Bill of Sale for the
Companies' Assets;
(b) Incumbency and Specimen Signature Certificate of Companies;
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(c) Resolutions of the Board of Directors [and
Shareholders] of Companies authorizing the execution and delivery of this
Agreement and the consummation of the transactions contemplated by them, all as
certified by the Secretary of Companies;
(d) Certificates of the Secretary of State of the
State of Tennessee to the effect that Companies are validly existing and in
good standing and dated as of a date not more than ten (10) days prior to
Closing;
(e) True and correct copies of the
organizational documents of Companies certified by the Secretary of Companies;
(f) The opinion of Bogatin Law Firm, counsel for
Companies and McNeill, to cover the matters set forth in Exhibit B, attached
hereto;
(g) Partnership Agreement;
(h) Exchange Agreement;
(i) Evidence that all consents necessary to
consummate the transactions contemplated by this Agreement have been obtained;
and
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44
(j) Estoppel certificates and nondisturbance
agreements from the parties listed on Schedule 4.2.2(j).
4.2.3. Due Diligence. Crossroads and its representatives
shall be satisfied in their sole and absolute discretion with the results of
all aspects of the due diligence review of the Companies' Assets and the
Hotels.
4.2.4. Amendments to Leases. All of the Hotel Leases
included within the Companies' Assets shall be amended and restated by all of
the parties thereto (simultaneously with the Closing) to be in substantially
the form of Exhibit A to the Master Agreement.
4.2.5. Additional Matters. (a) All of the Hotels shall have
linen, china, glass and silver as of the Closing Date at the levels required by
the applicable franchisor.
(b) All of the utility security deposits (or
bonds in lieu thereof) existing as of the Closing Date for the Hotels shall
have been assigned to the Partnership.
(c) Crossroads and the Partnership shall have
received consents and estoppel certificates from Promus Hotels Corp. and all
third party owners regarding any and all agreements between Promus Hotels Corp.
and the Companies and between the
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45
Companies and other third parties, in form and substance reasonably acceptable
to Crossroads.
(d) The Partnership and Crossroads shall have
received consents and estoppel certificates from all of the franchisors under
the Franchise Agreements and from the third parties to the management
agreements included in the Companies' Assets, in form and substance reasonably
acceptable to Crossroads.
(e) Partnership shall have obtained from a title
company reasonably satisfactory to Partnership (the "Title Company") a standard
ALTA Owner's Policy of Title Insurance (or an irrevocable commitment therefor),
in the amount of $46,500,000, (i) without any of the standard exceptions; (ii)
without the standard exclusion relating to creditors' rights; and (iii) subject
only to such exceptions which are approved by Crossroads, insuring that
Partnership is the owner of the leasehold of the Hotels (the "Title Policy").
Notwithstanding the foregoing, the Title Policy may contain the standard
exception relating to coal and mining rights, but only if the Title Company
insures against future surface operations.
(f) Originals and all copies of the books,
records and other items related to or comprising the Companies' Assets shall
have been delivered to the Partnership.
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46
4.3. Additional Conditions Precedent to Obligations of
Companies and McNeill. The obligations of Companies and McNeill 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 Companies:
4.3.1. No Material Misrepresentation or Breach. There shall
have been no material breach by Crossroads or the Partnership in the
performance of any of the covenants herein to be performed by them in whole or
in part prior to the Closing, and the representations and warranties of
Crossroads 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 Crossroads shall have delivered to
Companies 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
Companies by Crossroads and the Partnership the following documents as executed
by Crossroads and the Partnership as applicable:
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47
(a) Assignment and Assumption Agreement for the
Companies' Assets pursuant to which the Partnership will assume the Assumed
Liabilities;
(b) Incumbency and Specimen Signature Certificate
of Crossroads;
(c) Certificates of the Secretary of State of the
State of Delaware to the effect that Crossroads and the Partnership are validly
existing and in good standing and dated as of a date not more than ten (10)
days prior to Closing;
(d) The opinion of Jones, Day, Reavis & Pogue,
counsel for Crossroads and the Partnership, to cover the matters set forth in
Exhibit C attached hereto;
(e) Partnership Agreement; and
(f) Exchange Agreement.
4.3.3. Crossroads Contribution. Crossroads shall have
delivered to the Partnership certificates representing the Crossroads
Contribution duly endorsed or with duly executed stock powers.
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48
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 Crossroads,
the Partnership, Companies and McNeill;
(b) By either Crossroads and the Partnership or
the Companies and McNeill if the Closing shall not have occurred on or before
December 1, 1996 provided the party (or any of its Affiliates) so terminating
this Agreement is not in default of its obligations hereunder; or
(c) By either Crossroads and the Partnership or
the Companies and McNeill 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 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.
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49
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 for the term of any or all of the Contracts, as amended
and restated as contemplated by this Agreement. 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.
(c) In addition to any and all other remedies of the
Partnership and Crossroads, the Partnership may offset, set-off or deduct any
Indemnifiable Losses it may have against any and all amounts of stock to be
transferred, delivered or assigned to the Companies under or pursuant to the
Exchange Agreement.
5.2. Indemnification. (a) Subject to Section 5.1, Companies
and McNeill will indemnify, defend and hold harmless Crossroads, the
Partnership and their Affiliates and their
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50
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 Companies or McNeill of any of the
representations or warranties of Companies or McNeill contained in
this Agreement;
(ii) Any breach by Companies or McNeill of any covenant of
Companies or McNeill contained in this Agreement;
(iii) Any Third Party Claim related to or arising out of any
matter described in Section 5.2(a)(i) or (ii) hereof or any Excluded
Liability;
(iv) Any and all Environmental Liabilities related to,
arising out of or resulting from the Hotels or the operations thereof,
any franchise agreement, any building code or life/safety code
violations, or any requirement or award relating to course of
employment, working conditions, wages and/or compensation or benefits
of employees or former employees at the Hotels; and/or
(v) Any and all violations of the ADA or WARN.
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51
(b) Subject to Sections 5.1, Crossroads and the
Partnership will indemnify, defend and hold harmless Companies and McNeill 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 Crossroads and the Partnership of any
of their representations or warranties contained in this Agreement;
(ii) Any breach by Crossroads and the Partnership of any
covenant of Crossroads and the Partnership contained in this
Agreement; and/or
(iii) Any Third Party Claim related to or arising out of any
matter described in Section 5.2(b)(i) or (ii).
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 15 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
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52
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 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 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 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
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53
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 10 calendar days after its receipt of such notice, the
Indemnitee may continue to contest or defend such Third Party Claim and, in
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 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 15 calendar days after
the Indemnitee becomes aware of such Direct Claim, and the Indemnifying Party
will have a period of 15 calendar days within which to respond in writing
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54
to such Direct Claim. If the Indemnifying Party does not so respond within
such 15 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 V.
(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.
VI. MISCELLANEOUS PROVISIONS
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:
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55
(a) If to Crossroads and the Partnership, to:
Interstate Hotels Corporation
Foster Plaza Ten, 680 Andersen Drive
Pittsburgh, PA 15220-8126
Facsimile No.: 412-937-3265
Attention: Kevin P. Kilkeary
With a copy to:
Interstate Hotels Corporation
Foster Plaza Ten, 680 Andersen Drive
Pittsburgh, Pennsylvania 15220-8126
Facsimile No.: (412)937-3116
Attention: Marvin I. Droz, Esquire, Vice President
and General Counsel
(b) If to Companies or McNeill, to:
4735 Spottswood #102
Memphis, TN 38117
Facsimile No.: 901-761-3945
Attention: Mr. Phillip H. McNeill, Sr.
With a copy to:
Bogatin Law Firm
860 Ridge Lake Blvd., Suite 360
Memphis, TN 38120
Facsimile No.: 901-767-1234
Attention: G. Patrick Arnoult, Esq.
or to such other address or addresses as any such party may from time to time
designate as to itself by like notice.
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, but will not be assignable or delegable by
any party without the prior written consent of the other party.
6.3. Waiver. Crossroads and the Partnership on the one hand,
and McNeill and Companies on the other hand, by written
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56
notice to the other may (a) extend the time for performance of 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 the Master Agreement (including the
Schedules and Exhibits thereto) supersede 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 18, 1996 relating to the matters contemplated hereby.
This Agreement (together with the Schedules and Exhibits
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57
hereto) and the Master Agreement (including 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 or their
Affiliates 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 provided in Article V,
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
their respective Affiliates any rights 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. Transfers. Crossroads, McNeill and Companies will
cooperate and take such action as may be reasonably requested by the other in
order to effect an orderly contribution
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58
of the Companies' Assets with a minimum of disruption to the operations and
employees of the Hotels.
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 of Pennsylvania. 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 Crossroads, the Partnership, McNeill and Companies 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 Crossroads, the Partnership, McNeill
and Companies 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 (b) the United States District Court for the
Western District of Pennsylvania, and hereby further irrevocably and
unconditionally waives and agrees
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59
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.
In addition, the parties hereby unconditionally waive trial by jury in any
action 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 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
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60
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 of
Crossroads, the Partnership, Companies or McNeill under this Agreement requires
action or involves liability or obligation after the Closing, such obligation
shall survive the Closing.
6.14. Joint and Several. The obligations of McNeill and the
Companies hereunder shall be joint and several in all respects.
6.15. 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.
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61
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.
6.16. Time of the Essence. Time is of the essence with
respect to each provision of this Agreement.
6.17. Risk of Loss/Insurance/Condemnation. (a) Risk of loss
of the Companies' Assets will remain upon Companies until Closing. Companies
shall maintain in effect until the date of Closing insurance policies with
respect to the Companies' Assets in an amount and type consistent with
Companies' past practice. Companies shall notify Crossroads in writing
promptly (and in no event later than five (5) days after the occurrence) of any
casualty to the Companies' Assets, or any portion thereof. Crossroads will
then, at Crossroads' sole option and discretion, either: (i) terminate this
Agreement by giving notice to Companies within thirty (30) days after
Companies' notifying Crossroads in writing of such casualty; or (ii) proceed
with this Agreement, in which case any and all insurance proceeds not
previously applied shall be assigned to the Partnership and any uninsured
damage or deductible shall be paid by the Companies to the Partnership at
Closing and the Companies shall fully enforce their rights under the Leases
with respect to such casualty which rights will be assigned to Partnership at
Closing; or (iii) proceed with this Agreement, but exclude from the
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62
Companies' Assets the Hotel or Hotels which suffered the casualty and reduce
the value associated with the Companies' Assets by the mutually agreed upon
allocated value of such excluded Hotel or Hotels.
(b) In the event that, during the period between the date
hereof and the Closing, any part of the Hotels is taken in condemnation
proceedings or by exercise of any right of eminent domain or by agreement,
Crossroads and Partnership shall have the right, at their option, either (i) to
terminate this Agreement by notice to Companies without any further obligation
or liability to Companies hereunder; or (ii) to proceed with the transactions
set forth herein with respect to those Hotels (or portions thereof) remaining
following such taking and the Companies shall fully enforce their rights under
the Leases with respect to such condemnation which rights will be assigned to
Partnership at Closing; or (iii) proceed with this Agreement, but exclude from
the Companies' Assets the Hotel or Hotels which were condemned and reduce the
value associated with the Companies' Assets by the mutually agreed upon
allocated value of such excluded Hotel or Hotels. If Crossroads and
Partnership shall proceed with the transactions in accordance with this Section
6.17(b) following such taking, any and all condemnation awards shall be
assigned to Partnership.
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63
VII. DEFINITIONS
Unless otherwise expressly defined herein, the following terms
shall have the following meanings:
"Accounts Payable" shall mean the trade accounts payable of the
Companies related to the operations of the Hotels which existed as of the Cutoff
Time and which were incurred in the ordinary course of business and in arm's
length commercial transactions.
"Affiliate" shall have the meaning given to such term in Rule
1-02 of Regulation S-X under the Securities Act of 1933.
"Assumed Liabilities" shall mean only the liabilities and
obligations of the Companies arising after the Closing Date under the Contracts
(other than liabilities or obligations to the extent related to or attributable
to any act, omission or failure by Companies or the prior lessee or manager to
comply with the terms thereof) and the liability to satisfy the Accounts
Payable.
"Booking" shall mean a contract or reservation for the use of
guest rooms, banquet facilities or meeting rooms in a Hotel.
"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
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64
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.
"Contracts" shall have the meaning ascribed to such term in
Section 1.3(b).
"Cutoff Time" shall mean 12:01 a.m. on the Closing Date.
"Environmental Laws" shall mean all Laws (including, without
limitation, Permits, directives, guidelines, standards or the equivalent issued
by any Governmental Authority and relating 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, expenses or 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.
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65
"Franchise Agreements" shall mean those certain franchise
agreements designated as such on Schedule 1.3(b) hereof.
"GAAP" Shall mean United States generally accepted accounting
principles.
"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
"Guest Ledger Receivables" shall mean amounts, including,
without limitation, room charges, accrued to the accounts of guests occupying
rooms in the Hotels as of the Cutoff Time.
"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.
"Hotel Leases" shall have the meaning ascribed hereto in
Section 1.3(b).
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66
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as the same may be amended from time to time.
"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.
"Indemnifying Party" shall mean any person or entity required
to provide indemnification under this Agreement.
"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,
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67
domestic or foreign, having jurisdiction over it or its assets or business or
operations.
"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.
"Master Agreement" shall have the meaning ascribed to such term in Section 4.1.
"Permits" shall mean any and all Licenses, franchises,
approvals, permits and other governmental authorizations.
"Subsidiary" shall have the meaning ascribed to such term in
Rule 1-02 of Regulation S-X under the Securities Act of 1933.
"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.
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IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement as of the day and year first above written.
CROSSROADS/MEMPHIS COMPANY, L.L.C.
By: /s/ Kevin P. Kilkeary
---------------------------------
Title: President
CROSSROADS/MEMPHIS PARTNERSHIP, L.P.
By: CROSSROADS/MEMPHIS COMPANY,
L.L.C., its general partner
By: /s/ Kevin P. Kilkeary
---------------------------------
Title: President
TRUST LEASING, INC.
By: /s/ Phillip McNeill, Jr.
---------------------------------
Title:
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TRUST MANAGEMENT INC.
By: /s/ David Levine
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Title: President
/s/ Phillip McNeill
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Phillip H. McNeill, Sr.