As filed with the Securities and Exchange Commission on March 14, 1997
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Act of 1933
Date of Report (Date of earliest event reported) March 14, 1997
________________
SUBURBAN LODGES OF AMERICA, INC.
(Exact name of Registrant as specified in its charter)
Georgia 0-28108 58-1781184
(State or other (Commission File (I.R.S.
jurisdiction of Number) Employer
incorporation) Identification
Number)
1000 Parkwood Circle
Suite 850
Atlanta, Georgia 30339
(770) 951-9511
(Address, including zip code, and telephone number,
including area code, of registrant's principal
executive offices)
Not Applicable
(Former name or former address, if changed since last report)
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Item 1. Acquisitions or Dispositions of Assets.
On February 28, 1997, the Company acquired four existing
Suburban Lodge Hotels from Lodge Partners I Limited Partnership,
Lodge Partners II Limited Partnership, Lodge Partners III Limited
Partnership and Lodge Partners IV Limited Partnership (the
"Selling Partnerships"), each of which was a Suburban Lodge
franchisee. The aggregate purchase price was $23,000,000,
including the assumption of mortgage and construction
indebtedness. The acquisition was pursuant to a Purchase and
Sale Agreement entered into on February 3, 1997, which contains
customary representations, warranties, indemnities and non-
compete agreements from the sellers and their partners.
The Company paid the purchase price for these properties
by paying off the existing mortgage and construction indebtedness
on the properties in cash and by delivering approximately 556,000
shares to the partners of the Selling Partnerships and 46,000
shares to an escrow agent for purposes of partially securing the
sellers' indemnity obligations. The escrow fund expires six
months after the closing of the transaction. In connection with
the transaction, the Company has granted the sellers both demand
and incidental registration rights. The demand registration
rights may be exercised at any time after June 30, 1997. The
four facilities are all located within the metropolitan Atlanta
area and all of them are open and operating.
Item 2. Financial Statements and Exhibits.
(a) Financial statements of businesses acquired.
The financial statements of the businesses acquired
shall be filed by amendment not later than sixty days
after the date that the initial report on Form 8-K with
respect to this transaction must be filed.
(b) Pro forma financial information.
The pro forma financial information required by this
item shall be filed by amendment not later than sixty
days after the date that the initial report on Form 8-K
with respect to this transaction must be filed.
(c) Exhibits.
10.18 Purchase and Sale Agreement dated February 3,
1997, among the Registrant, Suburban Holdings LP
and the Selling Partnerships.
10.19 Registration Rights Agreement dated February 28,
1997, among the Company and four shareholders.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
By: /s/ Dan J. Berman
Name: Dan J. Berman
Title: Vice President - Franchising
Date: March 14, 1997
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Exhibit Index
Exhibit Description
No.
10.18 Purchase and Sale Agreement dated February 3, 1997,
among the Registrant, Suburban Holdings LP and the
Selling Partnerships.
10.19 Registration Rights Agreement dated February 28,
1997, among the Company and four shareholders.
PURCHASE AND SALE AGREEMENT
THIS AGREEMENT is made and entered into this 3rd day of
February, 1997, by and among LODGE PARTNERS I LIMITED
PARTNERSHIP, a Georgia limited partnership ("Lodge Partners I");
LODGE PARTNERS II LIMITED PARTNERSHIP, a Georgia limited
partnership ("Lodge Partners II"); LODGE PARTNERS III LIMITED
PARTNERSHIP, a Georgia limited partnership ("Lodge Partners
III"); LODGE PARTNERS IV LIMITED PARTNERSHIP, a Georgia limited
partnership ("Lodge Partners IV"; and together with Lodge
Partners I, Lodge Partners II, and Lodge Partners III,
collectively referred to as "Sellers", and individually, a
"Seller"); LODGE PARTNERS CORPORATION, a Georgia corporation
("General Partner"); BURSON AND SIMPSON LODGE DEVELOPMENT, INC.,
a Georgia corporation ("Development"); LEEMAR PROPERTIES, INC., a
Georgia corporation ("Leemar"), CLAIRE LEE BURSON, an individual
resident of the state of Georgia ("CLB"); ANDREW C. SHIPP, SR.,
an individual resident of the state of Georgia ("ACS"); STEVE
SIMPSON, an individual resident of the state of Georgia ("SS");
KENNETH L. BURSON, an individual resident of the state of Georgia
("KB"); SUBURBAN HOLDINGS, LP, a Georgia limited partnership
("Purchaser"); and SUBURBAN LODGES OF AMERICA, INC., a Georgia
corporation ("Corporation"). General Partner, CLB, ACS, SS and
KB are sometimes hereinafter collectively referred to as the
"Partners" and individually as a "Partner". The Sellers,
Development, Leemar, and the Partners are sometimes hereinafter
collectively referred to as the "B/S/S Parties", and individually
as a "B/S/S Party".
W I T N E S S E T H:
WHEREAS, Lodge Partners I was formed for the purpose of, and
owns and operates, a Suburban Lodge extended stay facility at
4142 Stone Mountain Highway, Lilburn, Georgia (the "Lilburn
Lodge"); and
WHEREAS, Lodge Partners II was formed for the purpose of
operating a Suburban Lodge extended stay facility at 1175 Hembree
Road, Roswell, Georgia (the "Hembree Road Lodge"); and
WHEREAS, Lodge Partners III was formed for the purpose of
operating a Suburban Lodge extended stay facility at 1990
Willowtrail Parkway, Norcross, Georgia (the "Norcross Lodge");
and
WHEREAS, Lodge Partners IV was formed for the purpose of
operating a Suburban Lodge extended stay facility at 3750
Satellite Boulevard, Duluth, Georgia (the "Satellite Boulevard
Lodge"); and
WHEREAS, the Hembree Road Lodge and the Satellite Boulevard
Lodge are presently owned and operated by Development, and
Development desires to contribute to Lodge Partners II and Lodge
Partners IV, respectively, the Hembree Road Lodge and the
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Satellite Boulevard Lodge, prior to consummation of the
transactions contemplated hereby; and
WHEREAS, the Norcross Lodge is presently owned and operated
by Leemar, and Leemar desires to contribute to Lodge Partners III
the Norcross Lodge, prior to consummation of the transactions
contemplated hereby; and
WHEREAS, the Lilburn Lodge is situated upon that certain
real property as more particularly described on Exhibit A-1 to
this Agreement, as are all improvements thereon (the "Lilburn
Hotel") and the Lilburn Personal Property (as defined below) (the
Lilburn Land (as defined below), the Lilburn Hotel, and the
Lilburn Personal Property hereinafter collectively are referred
to as the "Lilburn Property"); and
WHEREAS, the Hembree Road Lodge is situated upon that
certain real property as more particularly described on Exhibit
A-2 to this Agreement, as are all improvements thereon (the
"Hembree Road Hotel") and the Hembree Road Personal Property (as
defined below) (the Hembree Road Land (as defined below), the
Hembree Road Hotel, and the Hembree Road Personal Property
hereinafter collectively are referred to as the "Hembree Road
Property"); and
WHEREAS, the Norcross Lodge is situated upon that certain
real property as more particularly described on Exhibit A-3 to
this Agreement, as are all improvements thereon (the "Norcross
Hotel") and the Norcross Personal Property (as defined below)
(the Norcross Land (as defined below), the Norcross Hotel, and
the Norcross Personal Property hereinafter collectively are
referred to as the "Norcross Property"); and
WHEREAS, the Satellite Boulevard Lodge is situated upon that
certain real property as more particularly described on Exhibit
A-4 to this Agreement, as are all improvements thereon (the
"Satellite Boulevard Hotel") and the Satellite Boulevard Personal
Property (the Satellite Boulevard Land (as defined below), the
Satellite Boulevard Hotel, and the Satellite Boulevard Personal
Property hereinafter collectively are referred to as the
"Satellite Boulevard Property"); and
WHEREAS, the Lilburn Land, the Hembree Road Land, the
Norcross Land, and the Satellite Boulevard Land are sometimes
hereinafter referred to as the "Land"; and
WHEREAS, the Lilburn Hotel, the Hembree Road Hotel, the
Norcross Hotel, and the Satellite Boulevard Hotel are sometimes
hereinafter referred to as the "Hotels"; and
WHEREAS, the Lilburn Personal Property, the Hembree Road
Personal Property, the Norcross Personal Property, and the
Satellite Boulevard Personal Property are sometimes hereinafter
referred to as the "Personal Property"; and
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WHEREAS, the Lilburn Property, the Hembree Road Property,
the Norcross Property, and the Satellite Boulevard Property are
sometimes hereinafter referred to as the "Properties"; and
WHEREAS, General Partner, CLB, ACS and SS are the only
partners of, and the only holders of, partnership interests in
any of Sellers; and
WHEREAS, KB and SS are the record and beneficial holders,
collectively, of all of the issued and outstanding capital stock
of Development and Leemar; and
WHEREAS, Corporation is the record and beneficial owner,
directly or indirectly, of all of the partnership interests of
Purchaser; and
WHEREAS, the partners in each of the Sellers deem it
advisable and in their respective best interests to effect the
sales of the Properties contemplated by and provided for in this
Agreement; and
WHEREAS, each of Development, Leemar, General Partner, CLB,
ACS, SS and KB as partners or affiliates of each of General
Partner and each of Sellers will individually benefit from
consummation of the transactions contemplated by this Agreement
and desire to join in this Agreement as a material and essential
inducement to Purchaser and Corporation entering into this
Agreement and, subject to the terms and conditions hereof,
agreeing to consummate the transactions described herein;
NOW, THEREFORE, in consideration of the premises and of the
mutual agreements set forth herein, the parties agree as follows:
ARTICLE 1
THE SALES AND PURCHASES
1.1 Sales and Purchases. On the Closing Date (as
defined in Section 3.4), in consideration of the Earnest Money
(as defined in Section 1.2) and other good and valuable
consideration, the parties agree as follows:
1.1.1 Lilburn. Lodge Partners I shall sell and convey
to Purchaser, and Purchaser shall purchase and take from
Lodge Partners I, subject to and in accordance with all of
the terms and conditions of this Agreement:
(a) All that certain lot, tract or parcel of improved
real estate more particularly described on Exhibit A-1
attached hereto, together with all plants, shrubs and trees
located thereon, and together with all rights, ways and
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easements appurtenant thereto, including, without
limitation, all of Lodge Partner I's right, title and
interest in and to the land underlying and the air space
overlying any public or private ways or streets crossing or
abutting said real estate, hereinafter collectively called
the "Lilburn Land";
(b) All buildings, structures and other improvements
of any and every nature located on the Lilburn Land and all
fixtures attached or affixed, actually or constructively, to
the Lilburn Land or to any such buildings, structures or
other improvements, hereinafter collectively called the
"Lilburn Improvements";
(c) All goods, equipment, machinery, apparatus,
fittings, furniture, furnishings, supplies, spare parts,
tools and other personal property of every kind located on
the Lilburn Land or within the Lilburn Improvements and used
in connection with the operation, management or maintenance
of the Lilburn Land or the Lilburn Improvements, hereinafter
collectively called the "Lilburn Personal Property";
(d) All of the right, title and interest accruing to
the owner of the Lilburn Land, the Lilburn Personal
Property, or the Lilburn Improvements in, to and under: (i)
those management, service and other contracts and
agreements, if any, scheduled and identified on Exhibit B-1
attached hereto, hereinafter called the "Lilburn Service
Agreements"; (ii) any and all interest of Lodge Partners I
in and to the name Suburban Lodge hotels, hereinafter
called the "Tradename"; and (iii) all warranties,
guaranties, certificates of occupancy, certificates,
licenses, building permits, operating permits and all other
permits, authorizations, consents and approvals with respect
to the use, development, occupancy, possession and operation
of the Lilburn Land, the Lilburn Personal Property, or the
Lilburn Improvements, hereinafter called the "Lilburn
Permits";
(e) All of Lodge Partner I's right, title and interest in
and to any impact fee credits with, or impact fee payments
to, any county or municipality in which the Lilburn Land is
located arising from any construction of improvements, or
dedication or contribution of property, by or on behalf of
Lodge Partners I, or any of its predecessors in title or
interest, related to the Lilburn Land, or otherwise arising
in connection with the Lilburn Land or the Lilburn
Improvements, hereinafter called the "Lilburn Impact Fee
Credits"; and
(f) All customer lists and all building, development and
architectural plans and specifications with respect to the
Lilburn Lodge.
1.1.2 Hembree Road. Lodge Partners II shall sell and
convey to Purchaser, and Purchaser shall purchase and take
from Lodge Partners II, subject to and in accordance with
all of the terms and conditions of this Agreement:
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(a) All that certain lot, tract or parcel of improved
real estate more particularly described on Exhibit A-2
attached hereto, together with all plants, shrubs and trees
located thereon, and together with all rights, ways and
easements appurtenant thereto, including, without
limitation, all of Lodge Partner II's right, title and
interest in and to the land underlying and the air space
overlying any public or private ways or streets crossing or
abutting said real estate, hereinafter collectively called
the "Hembree Road Land";
(b) All buildings, structures and other improvements
of any and every nature located on the Hembree Road Land and
all fixtures attached or affixed, actually or
constructively, to the Hembree Road Land or to any such
buildings, structures or other improvements, hereinafter
collectively called the "Hembree Road Improvements";
(c) All goods, equipment, machinery, apparatus,
fittings, furniture, furnishings, supplies, spare parts,
tools and other personal property of every kind located on
the Hembree Road Land or within the Hembree Road
Improvements and used in connection with the operation,
management or maintenance of the Hembree Road Land or the
Hembree Road Improvements, hereinafter collectively called
the "Hembree Road Personal Property";
(d) All of the right, title and interest accruing to
the owner of the Hembree Road Land, the Hembree Road
Personal Property, or the Hembree Road Improvements in, to
and under: (i) those management, service and other con-
tracts and agreements, if any, scheduled and identified on
Exhibit B-2 attached hereto, hereinafter called the "Hembree
Road Service Agreements"; (ii) any and all interest of Lodge
Partners II in and to the Tradename; and (iii) all
warranties, guaranties, certificates of occupancy,
certificates, licenses, building permits, operating permits
and all other permits, authorizations, consents and
approvals with respect to the use, development, occupancy,
possession and operation of the Hembree Road Land, the
Hembree Road Personal Property, or the Hembree Road
Improvements, hereinafter called the "Hembree Road Permits";
(e) All of Lodge Partner II's right, title and interest in
and to any impact fee credits with, or impact fee payments
to, any county or municipality in which the Hembree Road
Land is located arising from any construction of
improvements, or dedication or contribution of property, by
or on behalf of Lodge Partners II, or any of its
predecessors in title or interest, related to the Hembree
Road Land, or otherwise arising in connection with the
Hembree Road Land or the Hembree Road Improvements,
hereinafter called the "Hembree Road Impact Fee Credits";
and
(f) All customer lists and all building, development and
architectural plans and specifications with respect to the
Hembree Road Lodge.
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1.1.3 Norcross. Lodge Partners III shall sell and
convey to Purchaser, and Purchaser shall purchase and take
from Lodge Partners III, subject to and in accordance with
all of the terms and conditions of this Agreement:
(a) All that certain lot, tract or parcel of improved
real estate more particularly described on Exhibit A-3
attached hereto, together with all plants, shrubs and trees
located thereon, and together with all rights, ways and
easements appurtenant thereto, including, without
limitation, all of Lodge Partner III's right, title and
interest in and to the land underlying and the air space
overlying any public or private ways or streets crossing or
abutting said real estate, hereinafter collectively called
the "Norcross Land";
(b) All buildings, structures and other improvements
of any and every nature located on the Norcross Land and all
fixtures attached or affixed, actually or constructively, to
the Norcross Land or to any such buildings, structures or
other improvements, hereinafter collectively called the
"Norcross Improvements";
(c) All goods, equipment, machinery, apparatus,
fittings, furniture, furnishings, supplies, spare parts,
tools and other personal property of every kind located on
the Norcross Land or within the Norcross Improvements and
used in connection with the operation, management or
maintenance of the Norcross Land or the Norcross
Improvements, hereinafter collectively called the "Norcross
Personal Property";
(d) All of the right, title and interest accruing to
the owner of the Norcross Land, the Norcross Personal
Property, or the Norcross Improvements in, to and under:
(i) those management, service and other contracts and
agreements, if any, scheduled and identified on Exhibit B-3
attached hereto, hereinafter called the "Norcross Service
Agreements"; (ii) any and all interest of Lodge Partners III
in and to the Tradename; and (iii) all warranties,
guaranties, certificates of occupancy, certificates,
licenses, building permits, operating permits and all other
permits, authorizations, consents and approvals with respect
to the use, development, occupancy, possession and operation
of the Norcross Land, or the Norcross Personal Property, or
the Norcross Improvements, hereinafter called the "Norcross
Permits";
(e) All of Lodge Partner III's right, title and interest in
and to any impact fee credits with, or impact fee payments
to, any county or municipality in which the Norcross Land is
located arising from any construction of improvements, or
dedication or contribution of property, by or on behalf of
Lodge Partners III, or any of its predecessors in title or
interest, related to the Norcross Land, or otherwise arising
in connection with the Norcross Land or the Norcross
Improvements, hereinafter called the "Norcross Impact Fee
Credits"; and
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(f) All customer lists and building, development, and
architectural plans and specifications with respect to the
Norcross Lodge.
1.1.4 Satellite Boulevard. Lodge Partners IV shall sell
and convey to Purchaser, and Purchaser shall purchase and
take from Lodge Partners IV, subject to and in accordance
with all of the terms and conditions of this Agreement:
(a) All that certain lot, tract or parcel of improved
real estate more particularly described on Exhibit A-4
attached hereto, together with all plants, shrubs and trees
located thereon, and together with all rights, ways and
easements appurtenant thereto, including, without
limitation, all of Lodge Partner IV's right, title and
interest in and to the land underlying and the air space
overlying any public or private ways or streets crossing or
abutting said real estate, hereinafter collectively called
the "Satellite Boulevard Land";
(b) All buildings, structures and other improvements
of any and every nature located on the Satellite Boulevard
Land and all fixtures attached or affixed, actually or
constructively, to the Satellite Boulevard Land or to any
such buildings, structures or other improvements,
hereinafter collectively called the "Satellite Boulevard
Improvements";
(c) All goods, equipment, machinery, apparatus,
fittings, furniture, furnishings, supplies, spare parts,
tools and other personal property of every kind located on
the Satellite Boulevard Land or within the Satellite
Boulevard Improvements and used in connection with the
operation, management or maintenance of the Satellite
Boulevard Land or the Satellite Boulevard Improvements,
hereinafter collectively called the "Satellite Boulevard
Personal Property";
(d) All of the right, title and interest accruing to
the owner of the Satellite Boulevard Land, the Satellite
Boulevard Personal Property, or the Satellite Boulevard
Improvements in, to and under: (i) those management,
service and other contracts and agreements, if any,
scheduled and identified on Exhibit B-4 attached hereto,
hereinafter called the "Satellite Boulevard Service
Agreements"; (ii) any and all interest of Lodge Partners IV
in and to the Tradename; and (iii) all warranties,
guaranties, certificates of occupancy, certificates,
licenses, building permits, operating permits and all other
permits, authorizations, consents and approvals with respect
to the use, development, occupancy, possession and operation
of the Satellite Boulevard Land, the Satellite Boulevard
Personal Property, or the Satellite Boulevard Improvements,
hereinafter called the "Satellite Boulevard Permits";
(e) All of Lodge Partner IV's right, title and interest in
and to any impact fee credits with, or impact fee payments
to, any county or municipality in which the Satellite
Boulevard Land is located arising from any construction of
improvements, or dedication or contribution of property, by
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or on behalf of Lodge Partners IV, or any of its
predecessors in title or interest, related to the Satellite
Boulevard Land, or otherwise arising in connection with the
Satellite Boulevard Land or the Satellite Boulevard
Improvements, hereinafter called the "Satellite Boulevard
Impact Fee Credits"; and
(f) All customer lists and building, development, and
architectural plans and specifications with respect to the
Satellite Boulevard Lodge.
1.2 Earnest Money. Contemporaneously with the
execution of this Agreement, Purchaser has delivered to each of
Sellers, the receipt of which each of them hereby acknowledges,
the sum of One Hundred Dollars ($100.00), which sum is herein
called the "Earnest Money". If the transactions contemplated
hereby are consummated, the Sellers shall return the Earnest
Money to Purchaser.
1.3 Certain Defined Terms. The following terms, when
used in this Agreement, shall have the respective meanings set
forth below:
"Impact Fee Credits" shall mean, collectively, the
Lilburn Impact Fee Credits, the Hembree Road Impact Fee Credits,
the Norcross Impact Fee Credits, and the Satellite Boulevard
Impact Fee Credits.
"Improvements" shall mean, collectively, the Lilburn
Improvements, the Hembree Road Improvements, the Norcross
Improvements, and the Satellite Boulevard Improvements.
"Permits" shall mean, collectively, the Lilburn
Permits, the Hembree Road Permits, the Norcross Permits, and the
Satellite Boulevard Permits.
"Service Agreements" shall mean, collectively, the
Lilburn Service Agreements, the Hembree Road Service Agreements,
the Norcross Service Agreements, and the Satellite Boulevard
Service Agreements.
1.4 Obligations Not Assumed. Except for the Service
Agreements (which shall not include any obligation or liability
arising from any default, breach, misfeasance, malfeasance or
nonfeasance by any of the Sellers, Development or Leemar),
Purchaser shall not assume any liability or obligation of any
Seller or of Development or Leemar of any kind, and the Sellers
shall, prior to the Closing, pay, satisfy and perform all of
their respective liabilities and obligations (other than for
payments payable under the Service Agreements after the Closing
for services performed thereunder after the Closing) and any
liability and obligation of Development or Leemar, which may
affect in any way the Properties or the operation of the Hotels
(collectively the "Excluded Liabilities"). Without limiting the
generality of the foregoing, the Excluded Liabilities shall
include, and under no circumstances shall Purchaser or its
affiliates be deemed to assume any liability or obligation of
Development, Leemar or any of the Sellers arising out of or
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relating to: (a) any actual or alleged tortious conduct of any
Seller or of Development or Leemar or any of their respective
employees or agents, or any actual or alleged tortious conduct of
any other person or entity that is in any way related to or
arises in connection with the Properties or the Hotels; (b) any
product liability claim; (c) any claim for breach of warranty or
contract by Development, Leemar or any Seller; (d) any claim
predicated on strict liability or any similar legal theory;
(e) any actual or alleged violation of any law, rule or
regulation in effect prior to the Closing; (f) any liability or
obligation for taxes of any kind or character, other than for
taxes being prorated hereunder; (g) any liability or obligation
of any B/S/S Party under or arising by reason of this Agreement;
(h) any liability or obligation of any B/S/S Party to their
respective present or former employees for vacation, sick leave,
holiday or severance obligations; (i) any liability or obligation
relating to any asset which is not being acquired hereunder; (j)
any liability or obligation relating to any B/S/S Party's
employee benefit plans; or (k) except as provided in Section
12.5(a), any liability or obligation of the Sellers or
Development or Leemar or any other party hereto incurred in
connection with the transactions contemplated by this Agreement,
including, without limitation, legal and accounting fees and
expenses.
ARTICLE 2
CONTRIBUTIONS BY DEVELOPMENT
2.1 Contributions. (a) At least fifteen (15) business
days prior to the Closing Date, Development shall:
(i) Contribute to Lodge Partners II, on a non-recourse
basis, and in exchange for a partnership interest therein, the
Hembree Road Property, together with all of Development's right,
title and interest in and to the Hembree Road Improvements, the
Hembree Road Service Agreements, the Hembree Road Permits, and
the Hembree Road Impact Fees, free and clear of all claims,
liens, encumbrances, charges and rights of others other than as
set forth in Schedule 2.1B to this Agreement; and
(ii) Contribute to Lodge Partners IV, on a non-recourse
basis, and in exchange for a partnership interest therein, the
Satellite Boulevard Property, together with all of Development's
right, title and interest in and to the Satellite Boulevard
Improvements, the Satellite Boulevard Service Agreements, the
Satellite Boulevard Permits, and the Satellite Boulevard Impact
Fees, free and clear of all claims, liens, encumbrances, charges
and rights of others other than as set forth in Schedule 2.1D to
this Agreement.
(b) At least fifteen (15) business days prior to the
Closing Date, Leemar shall contribute to Lodge Partners III, on a
non-recourse basis, and in exchange for a partnership interest
therein, the Norcross Property, together with all of Leemar's
right, title and interest in and to the Norcross Improvements,
the Norcross Service Agreements, the Norcross Permits, and the
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Norcross Impact Fees, free and clear of all claims, liens,
encumbrances, charges and rights of others other than as set
forth in Schedule 2.1C to this Agreement.
2.2 Documentation. The documentation and all deeds,
agreements, and instruments necessary or convenient to evidence
the contributions described in Section 2.1 shall be on such terms
and conditions, and in such form, as shall be reasonably
acceptable to Purchaser and Corporation. All deeds, agreements,
documents and instruments shall be presented to Purchaser and
Corporation for their approval in a timely manner so as to allow
them adequate time to review and comment on same, and such
approval shall not be unreasonably withheld or delayed. The
costs and expenses of same, including, without limitation, all
recording, registration and other fees, taxes and assessments in
connection therewith shall be the sole and exclusive
responsibility of Development, Leemar and Lodge Partners II,
Lodge Partners III, and Lodge Partners IV, as appropriate.
ARTICLE 3
PURCHASE PRICE AND CLOSING; PERORATIONS
3.1 Purchase Price. Subject to Section 3.2 and the
prorations and adjustments set forth in this Agreement, the
"Purchase Price" payable to each of the Sellers is as follows:
(a) To Lodge Partners I, a number of shares of the
Common Stock, $0.01 par value per share, of Corporation ("Parent
Stock"), equal to the quotient derived by dividing (i) the
difference between (x) $5,750,000 less (y) the amount of the debt
identified and set forth on Schedule 3.1A to this Agreement
outstanding on the Closing Date, as certified by a certificate of
the principal accounting officer of Lodge Partners I and
delivered to Corporation at the Closing (the "Lodge I Debt"), by
(ii) the average of the closing sales prices, without regard to
volume (adjusted for any stock splits or other reclassification
during the applicable time period) for shares of Parent Stock on
The Nasdaq National Market for each of the 20 consecutive trading
days immediately preceding the date hereof, which the parties
acknowledge and agree is $17.50 (the "Average Price").
(b) To Lodge Partners II, a number of shares of Parent
Stock, equal to the quotient derived by dividing (I) the
difference between (x) $5,750,000 less (y) the amount of the debt
identified and set forth on Schedule 3.1B to this Agreement
outstanding on the Closing Date, as certified by a certificate of
the principal accounting officer of Lodge Partners II and
delivered to Corporation at the Closing (the "Lodge II Debt"), by
(II) the Average Price.
(c) To Lodge Partners III, a number of shares of
Parent Stock, equal to the quotient derived by dividing (I) the
difference between (x) $5,750,000 less (y) the amount of the debt
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identified and set forth on Schedule 3.1C to this Agreement
outstanding on the Closing Date, as certified by a certificate of
the principal accounting officer of Lodge Partners III and
delivered to Corporation at the Closing (the "Lodge III Debt"),
by (II) the Average Price.
(d) To Lodge Partners IV, a number of shares of Parent
Stock, equal to the quotient derived by dividing (I) the
difference between (x) $5,750,000 less (y) the amount of the debt
identified and set forth on Schedule 3.1D to this Agreement
outstanding on the Closing Date, as certified by a certificate of
the principal accounting officer of Lodge Partners IV and
delivered to Corporation at the Closing (the "Lodge IV Debt"), by
(II) the Average Price.
Notwithstanding anything in this Section 3.1 to the
contrary, no fractional shares shall be issued, and an amount in
cash shall be paid in lieu thereof equal to such fractional part
of a share (if any) multiplied by the Average Price. Further,
the sum of the Lodge I Debt, the Lodge II Debt, the Lodge III
Debt and the Lodge IV Debt, does not exceed $12,500,000 on the
date hereof and the B/S/S Parties hereby covenant and agree that
it will not exceed $12,500,000 on the Closing Date.
3.2 Repayment of Certain Indebtedness. All of the
unpaid principal and accrued but unpaid interest in respect of
those certain loans made by some or all of the B/S/S Parties to
the Sellers as reflected as a separate line item on Schedules
3.1A through 3.1D shall be payable in full in shares of Parent
Stock, the number of shares deliverable in respect thereof being
equal to the aggregate amount of such indebtedness (principal and
accrued but unpaid interest) as of the Closing Date, as certified
by a certificate of the principal accounting officer of each
Seller and delivered to Corporation at the Closing, divided by
the Average Price. The holders of such loans shall, by their
acceptance of such shares, be deemed to have made in favor of
Purchaser and Corporation the investment representations and
warranties set forth in Section 4.30 and consented to the
legending of the share certificates representing same as provided
therein. Notwithstanding anything in this Section 3.2 to the
contrary, no fractional shares shall be issued, and an amount in
cash shall be paid in lieu thereof equal to such fractional part
of a share (if any) multiplied by the Average Price.
3.3 Establishment of Escrow. Notwithstanding Section
3.1 above, an aggregate number of shares of Parent Stock equal to
(or as nearly equal as is practicable) three and one-half percent
(3 1/2%) of the sum of (x) the aggregate Purchase Price plus (y) the
sum of the Lodge Partners I Debt, the Lodge Partners II Debt, the
Lodge Partners III Debt, and the Lodge Partners IV Debt shall be
placed in escrow with Wachovia Bank of Georgia, N.A. pursuant to
an escrow agreement that provides, among other terms, that the
shares of Parent Stock held therein shall be held by the escrow
agent for six months (the "Escrow Agreement"). The escrowed
shares shall partially secure the indemnification obligations of
the Indemnitors (as defined in Section 9.1) under Article 9
hereof. The fees and expenses of the escrow agent under the
Escrow Agreement shall be borne equally by the Purchaser and the
B/S/S Parties, provided that the B/S/S Parties share of such fees
and expenses shall in no event exceed $1,000.
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3.4 Closing. The closing of the transactions
contemplated by this Agreement (the "Closing") shall take place
at the offices of Kilpatrick Stockton LLP, 1100 Peachtree Street,
Atlanta, Georgia 30309 at 10:00 a.m. on February 28, 1997,
provided that all of the conditions set forth in Article 10 and
Article 11 shall have been waived or satisfied prior to or
contemporaneously with such time, or otherwise as agreed to by
the parties hereto (such date is referred to herein as the
"Closing Date"). The parties shall execute and deliver such
documents, agreements, instruments, certificates and other papers
as may be necessary or convenient to effectuate the consummation
of the transactions contemplated by this Agreement and its
purposes and intent.
3.5 Certain Transactions and Documents at Closing. At
the Closing, each Seller shall deliver to Purchaser the following
documents and instruments, duly executed by or on behalf of the
appropriate Seller: (i) a limited warranty deed, in recordable
form, in the form of, and on the terms and conditions reasonably
satisfactory to Purchaser, conveying the relevant Land and the
Improvements; (ii) a bill of sale with general warranty of title,
in the form of, and on the terms and conditions reasonably
satisfactory to Purchaser, conveying the relevant Personal
Property; (iii) an assignment, in the form of, and on the terms
and conditions reasonably satisfactory to Purchaser, transferring
and assigning the relevant Service Agreements, Permits, Tradename
and Impact Fee Credits; (iv) a seller's or owner's affidavit, in
the form of, and on the terms and conditions reasonably
satisfactory to the title company issuing the Title Policies (as
defined in Section 10.5), and Purchaser, with respect to the
relevant Property; (v) a certificate and affidavit of non-foreign
status, in the form of, and on the terms and conditions
reasonably satisfactory to Purchaser; (vi) a certificate and
affidavit that (A) the relevant Seller is a resident of the State
of Georgia as defined in O.C.G.A. Section 48-7-128; or (B) the relevant
Seller is deemed to be a resident of the State of Georgia
pursuant to O.C.G.A. Section 48-7-128; or (C) the purchase and sale of
the relevant Property is otherwise exempt from the withholding
requirements of O.C.G.A. Section 48-7-128, in the form reasonably
satisfactory to Purchaser; (vii) a completed 1099-S request for
taxpayer identification number and certification, and
acknowledgment, in the form reasonably satisfactory to Purchaser;
(viii) a certificate, in form and substance satisfactory to
counsel for Purchaser, to the effect that the representations and
warranties of the relevant Seller in this Agreement are true and
correct on and as of the Closing Date; (ix) a quitclaim deed
conveying all of the relevant Seller's right, title and interest
in and to the relevant Property in accordance with the legal
description prepared from the survey of the Land to be obtained
pursuant to this Agreement; and (x) the originals of all Permits.
3.6 Prorations. In respect of the relevant Property,
as between Purchaser and the relevant Seller, the following
prorations and adjustments shall be made in cash at Closing, or
thereafter if Purchaser and the relevant Seller shall agree, all
with respect to the Purchase Price payable in respect of the
relevant Property:
(a) All city, state and county ad valorem taxes and
similar impositions levied or imposed upon or assessed
against the Property, hereinafter called the "Taxes", for
the year in which Closing occurs shall be prorated as of the
Closing Date. In the event the Taxes for such year are not
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determinable at the time of Closing, said Taxes shall be
prorated on the basis of the best available information with
respect to the Taxes anticipated to be levied or imposed for
the year in which the Closing occurs (but in no event shall
the basis for such proration be less than 105% of the Taxes
levied or imposed for the preceding year upon the Lilburn
Lodge), and Seller and Purchaser shall re-prorate the Taxes
for such year promptly upon the receipt of the tax bills for
such year and shall make between themselves any equitable
adjustment required by reason of any difference between the
estimated amount of the Taxes used as a basis for the
proration at Closing and the actual amount of the Taxes for
such year. In the event any of the Taxes are due and
payable at the time of Closing, the same shall be paid at
Closing. If the Taxes are not paid at Closing, Seller shall
deliver to Purchaser the bills for the Taxes promptly upon
receipt thereof and Purchaser shall thereupon be responsible
for the payment in full of the Taxes within the time fixed
for payment thereof and before the same shall become delin-
quent;
(b) All utility charges for the Property (including,
without limitation, telephone, water, storm and sanitary
sewer, electricity, gas, garbage and waste removal) shall be
prorated as of the Closing Date, transfer fees required with
respect to any such utility shall be paid by or charged to
Purchaser, and Seller shall be credited with any deposits
transferred to the account of Purchaser; provided, however,
that at either party's election any one or more of such
utility accounts shall be closed as of the Closing Date, in
which event Seller shall be liable and responsible for all
charges for service through the Closing Date and shall be
entitled to all deposits theretofore made by Seller with
respect to such utility, and Purchaser shall be responsible
for reopening and reinstituting such service in Purchaser's
name, and shall be responsible for any fees, charges and
deposits required in connection with such new account;
(c) Cash on hand, cash in banks and room revenues or
charges due for the period prior to, and paid by guests on
or before 12:01 a.m. on the Closing Date shall belong to
Seller. Any accounts receivable resulting from room
revenues or charges due from guests belonging to Seller
shall be collected by Seller or by Purchaser in the normal
course of operating the motel property, and remitted to
Seller as received, without any obligation on Purchaser of
any kind to effect collection or guarantee payment of such
receivables;
(d) Seller shall pay all payroll charges and the
employee benefits for time worked (specifically including
accrued vacation, sick pay, holiday pay and the like) by
employees through 12:01 a.m. on the Closing Date, including
all payroll taxes and insurance through the Closing Date.
Purchaser will be responsible for all payroll and all other
such expenses in connection with the Hotels accruing after
12:01 a.m. on the Closing Date;
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(e) It is understood and agreed that all room or other
deposits or room revenues or charges for future occupancy
after checkout time on the day of Closing shall become the
property of Purchaser upon Closing;
(f) Seller shall pay all other expenses incurred with
respect to the period ending 12:01 a.m. on the Closing Date;
(g) All amounts payable under any of the Service
Agreements shall be prorated as of the Closing Date; and
(h) Any other items which are customarily prorated in
connection with the purchase and sale of properties similar
to the Property shall be prorated as of the Closing Date.
In making the prorations required by this Section 3.6, the
economic burdens and benefits of ownership of the Property for
the Closing Date shall be allocated to Purchaser.
3.7 Possession at Closing. The Sellers shall
surrender possession of the Properties to Purchaser at the
Closing Date.
ARTICLE 4
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE B/S/S PARTIES
To induce Corporation and Purchaser to enter into and
perform this Agreement, to consummate the transactions
contemplated herein, and to deliver the Purchase Price as
provided herein, each of the B/S/S Parties, jointly and
severally, represent and warrant to, and covenant and agree with,
Corporation and Purchaser as follows:
4.1 Organization and Standing. Each Seller is (or
will be at the Closing) a Georgia limited partnership, duly
organized and validly existing under the laws of the State of
Georgia and has (or will have at Closing) all requisite power and
authority, and all governmental and regulatory licenses,
authorizations, consents, and approvals to carry on its business
as now conducted, and to own, lease and operate its properties.
4.2 Ownership Interests. General Partner, CLB, KB,
ACS and SS, as appropriate, are the record and beneficial holders
of all of the partnership interests in each Seller and all of the
issued and outstanding capital stock of General Partner,
Development and Leemar (it being acknowledged, however, that
Development and Leemar will hold a portion of such partnership
interests as of the Closing and that CLB and SS may withdraw in
whole or in part from any or all of the Sellers), all as set
forth in Schedule 4.2 to this Agreement, and the legal and
beneficial owner of each such ownership interest is as set forth
in Schedule 4.2 to this Agreement and said Schedule may be
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modified as appropriate to reflect the addition of Development
and Leemar and the deletion of CLB and/or SS. There are no
voting trusts, proxies or other agreements or understandings with
respect to the voting of any interests in the Sellers, General
Partner, Development and Leemar.
4.3 Authority. Each B/S/S Party has (or will have at
Closing) the lawful right, power, authority and capacity to enter
into and perform this Agreement and to consummate the
transactions contemplated hereby, and the same have been duly
authorized and approved by all necessary action on the part of
each B/S/S Party, and no other actions by said parties are
necessary to authorize and approve this Agreement and the
transactions contemplated hereby. This Agreement has been duly
executed and delivered by each B/S/S Party and constitutes, and
each other document, agreement or instrument to be entered into
by any or all of them in connection with this Agreement
constitutes (or when so executed and delivered, shall constitute)
a valid and binding obligation of such B/S/S Party, enforceable
against each of them in accordance with its respective terms
(except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or similar
laws affecting creditors' rights generally, or by the principles
governing the availability of equitable remedies).
4.4 Suits, Etc. Except as set forth on Schedule 4.4,
no actions, suits, claims, or proceedings are pending against or
by, or threatened against or by, or affecting, any B/S/S Party,
or any portion of the Property or the condition of title thereto,
in any court or before any judicial, administrative, or union
body or any arbitrator or any governmental authority.
4.5 Execution; No Default. Except for any loan
document with respect to any indebtedness of a Seller secured by
the relevant Property (each, a "Mortgage Loan") and except as set
forth on Schedule 4.5, the execution of and entry into this
Agreement, the execution and delivery of the documents,
agreements, instruments and other papers to be executed and
delivered on the Closing Date, and the performance of their
related duties and obligations under this Agreement and of all
other acts necessary and appropriate for the full consummation of
the transactions as contemplated by and provided for in this
Agreement by the relevant Seller or any B/S/S Party, are
consistent with and not in violation of, and will not create any
adverse condition under, any contract, agreement or other
instrument to which any B/S/S Party is a party, any judicial
order or judgment of any nature by which any B/S/S Party is
bound, and this Agreement.
4.6 Financial Statements. Prior to the date hereof,
each Seller (other than Lodge Partners IV) has provided Purchaser
with unaudited financial statements, including a balance sheet
and income statement, with respect to such Seller's most recently
concluded fiscal year (collectively, the "Financial Statements")
and the parties acknowledge and agree that the Financial
Statements provided by Lodge Partners II and Lodge Partners III
are presented as if the transactions contemplated in Section 2.1
had occurred on or before January 1, 1996, and Lodge Partners IV,
Development and Leemar have provided Purchaser with Schedule 3.1D
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which shows the amount of indebtedness with respect to the
Satellite Boulevard Property on the date hereof. To the best
knowledge of each B/S/S Party, the Financial Statements are true,
correct and complete, and the Financial Statements have been
prepared in accordance with generally accepted accounting
principles (subject to normal year-end adjustments), and present
fairly, in all material respects, the financial position of such
B/S/S Party and the results of its operations for the periods
then ended. Since the date of the latest Financial Statements,
there has been no material adverse change in the financial
condition or in the operations of any Seller or General Partner,
and since December 31, 1996, there has been no material adverse
change in the condition or operations of the Hotels owned by
Development and Leemar.
4.7 Absence of Undisclosed Liabilities; Compliance
with Laws. No B/S/S Party has any liabilities or obligations,
either accrued, contingent or otherwise, except those reflected
in the Financial Statements (or in the case of Development and
Leemar, with respect to or secured by the Properties owned
thereby, those reflected in the financial information delivered
pursuant to Section 4.6) or arising in the ordinary course of its
business after December 31, 1996. On the Closing Date, neither
Development, Leemar nor any Seller will be indebted to any
contractor, laborer, mechanic, materialman, architect, engineer
or any other person or entity for work, labor or services
performed or rendered, or for materials supplied or furnished,
for which any such person or entity could claim a lien against
any property. Each B/S/S Party has complied in all material
respects with all applicable laws, rules, regulations,
certificates, permits and authorizations.
4.8 Title to Property; Condition of Property. (a) The
relevant Seller will, prior to Closing, own good and marketable
fee simple title to the relevant Property, free and clear of any
and all encumbrances, except as set forth on the policy of title
insurance currently in effect with regard to the relevant
Property, as attached hereto as Exhibits C-1 through C-4, and on
the policy of title insurance currently being procured by
Corporation in connection with the transactions contemplated
herein, subject to such title report being procured being
satisfactory to Corporation (the "Existing Exceptions"). In
addition to the relevant Property, except as set forth on
Schedule 4.8, the relevant Seller owns (or will own prior to
Closing) all other assets used or useful in the conduct of its
business, and all such assets are free and clear of all claims,
liens, charges and encumbrances, other than the Existing
Exceptions, and the same are included within the relevant
Personal Property.
(b) Subject to the completion of the Satellite
Boulevard Lodge, the Improvements and Personal Property
(including heating, ventilating, and air conditioning systems)
are in good condition and good working order and there are no
material defects in the structural or mechanical aspects of the
Improvements or Personal Property of which any B/S/S Party has
knowledge, other than wear and tear occurring in the normal
course of business.
(c) Those public utilities (including without
limitation, water, electricity, gas, sanitary sewage, storm water
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drainage facilities, and telephone utilities) sufficient to
operate the Properties for their current uses are available to
each Property and, subject to the completion of the Satellite
Boulevard Lodge, are completed on each Property and, as may be
appropriate, are connected to the improvements located on the
Properties; to the knowledge of each B/S/S Party, such utilities
enter the Property through adjoining public streets or valid and
enforceable private easements, and to the knowledge of each B/S/S
Party, all of the installation costs, access or "tap on" fees,
and similar costs for such utilities have been paid in full.
4.9 Encroachments. Except as set forth on Schedule
4.9, no encroachments on the Land exist, and the location of each
Hotel is entirely within the boundaries of the Land and within
applicable building lines.
4.10 Condemnation. No pending, threatened (in
writing), or, to the knowledge of each B/S/S Party, contemplated
condemnation actions involving all or any portion of the
Properties exist; and no B/S/S Party has any knowledge of any
existing, proposed, or contemplated plans to widen, modify, or
realign any public rights-of-way located adjacent to any portion
of the Land. Each B/S/S Party will, promptly upon receiving any
such notice or learning of any such contemplated or threatened
action, give Purchaser written notice thereof. Further, there
are no pending, threatened (in writing), or, to the knowledge of
each B/S/S Party, contemplated plans by any governmental unit or
authority to annex all or any portion of any Property.
4.11 Access. Except as set forth on Schedule 4.11,
access to the Land from public streets and roads adjoining the
Land is not limited or restricted.
4.12 Environmental Matters. For purposes of this
Section, the term "hazardous waste or substances" means petroleum
(including crude oil or any fraction thereof), radon gas
naturally occurring, and any substance identified in the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended ("CERCLA") or any other federal, state,
or county environmental laws, regulations, or ordinances.
(a) Each B/S/S Party and its predecessors in interest
have complied in all material respects with all applicable
laws and regulations relating to pollution and environmental
control.
(b) Each B/S/S Party has received all material permits
and approvals with respect to emissions into the environment
(including solids, liquids and gases) and the proper
disposal of materials (including solid waste materials)
required for the operation of its business.
(c) Each B/S/S/ Party has kept all records and made
all material filings required by applicable state, local and
federal laws and regulations with respect to emissions into
the environment (including solids, liquids and gases) and
the proper disposal of materials (including solid waste
materials).
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<PAGE>
(d) No toxic materials, hazardous waste or substances,
including any asbestos or asbestos-related products, and any
oils, petroleum-derived compounds or pesticides, are now
located on any of the Properties, or contained in any
materials in any of the Improvements, except as specifically
disclosed in that certain environmental report with regards
to the relevant Property attached hereto as Exhibits D-1
through D-4 (collectively, the "Environmental Reports").
(e) No B/S/S Party has received any complaint, order,
citation, or notice with regard to air emissions, water
discharges, noise emissions, solid waste or hazardous waste
or substance, if any, or any other environmental, health, or
safety matters affecting the Properties, or any portion
thereof, from any person, entity or government, and, to the
best knowledge of each B/S/S/ Party, none has been filed or
issued, except as disclosed in the applicable Environmental
Report.
(f) No B/S/S/ Party has knowledge of any of the
Properties having been used as a landfill or as a dump for
garbage or refuse or construction debris.
(g) Except as disclosed in the Environmental Reports,
to the knowledge of the B/S/S Parties, (i) no storage tanks
are or have been located on the Properties, either above or
below ground, and (ii) there are no underground pipes or
lines on the Properties, except for water, sewer,
electrical, or other utility lines.
(h) Except as disclosed in the Environmental Reports,
to the knowledge of the B/S/S Parties, there has not been
any leaking or disposal of material of any type onto or into
any of the Properties.
(i) No B/S/S/ Party has any knowledge that solid or
hazardous waste material has been generated, disposed,
released or identified on any of the Properties.
(j) To the knowledge of the B/S/S Parties, (i) no
asbestos or asbestos containing materials have been
installed, used, incorporated into, or disposed of on the
Properties, and (ii) no polychlorinated biphenyls have been
located on or in any of the Properties, whether in
electrical transformers, fluorescent light fixtures with
ballast, cooling oils, or otherwise.
(k) To the knowledge of the B/S/S Parties, no
hazardous waste or substances have been generated, disposed
of, released, found, or allowed to escape on, under or in
the vicinity of any of the Properties, except as disclosed
in the applicable Environmental Report.
4.13 Assessments. No assessments have been made
against any portion of the Properties which are unpaid (except ad
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valorem taxes for the current year), whether or not they have
become liens, and each B/S/S/ Party shall notify Purchaser upon
learning of such assessments.
4.14 Fees. All impact fees and facilities taxes, if
any, with respect to the Properties and the improvements thereon
have been paid by the relevant Seller or its predecessor in
interest.
4.15 No Parties In Possession. Except for guests of
the Hotel occupying rooms therein in the ordinary course of
business ("Hotel Guest") and the Existing Exceptions, there is no
tenant, lessee, or other occupant of any of the Properties
(including any Improvements thereon) having any right or claim to
possession or use of any of the Properties (or any such
Improvements).
4.16 No Violations. No Seller nor any other B/S/S
Party has received any notice (oral or written) that any
municipality or other governmental or quasi-governmental
authority has determined that there are any violations of zoning,
health, environmental, or other statutes, ordinances, or
regulations affecting any of the Properties, and the Sellers,
Development and Leemar are all in substantial compliance with all
of the foregoing. If notice of any such violations are received
prior to the Closing Date, the B/S/S Party receiving such notice
shall notify Purchaser thereof.
4.17 Property - Flood Plain. None of the Improvements
and, except as set forth on Schedule 4.17, no part of any
Property is situated in a flood plain or flood hazard area which
is delineated on any flood hazard area boundary map available
under the National Flood Insurance Program through the Department
of Housing and Urban Development, Federal Insurance
Administration.
4.18 Property - Wetlands. No part of any Property is
situated within any "wetlands" designated by any applicable
governmental authority.
4.19 Zoning. The zoning classification for each
Property supports the current use of such Property; no B/S/S
Party has any knowledge of any proceeding to change such zoning
classification or the conditions applicable thereto and none of
them shall apply for or acquiesce in any such change, and there
exists no violation of any requirement or condition of such
zoning classification which is applicable to any Property.
4.20 Historical Districts. To the knowledge of each
B/S/S Party, no Property, nor any portion thereof, is (a) listed,
or eligible to be listed, in any national, state, or local
register of historic places or areas, or (b) located within any
designated district or area in which the permitted uses of land
located therein are restricted by regulations, rules, or laws
other than those specified under local zoning ordinances.
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4.21 Casualty. To the knowledge of each B/S/S Party,
there has been no unrestored fire or other casualty damage which
has affected any of the Properties.
4.22 Insurance. Development, Leemar and each Seller,
as appropriate, maintains adequate insurance with respect to the
Properties as of the date hereof. To each B/S/S/ Party's
knowledge, all such insurance is in full force and effect. To
each B/S/S/ Party's knowledge, each Property complies with all
requirements of each insurance policy carried in respect thereof
and no B/S/S Party has received from any of the insurers
thereunder any notice requiring or suggesting that any work be
performed at any Property (or any work so required or suggested
has been performed). No B/S/S Party has received any written
notice of defects or inadequacies in any of the Properties which
would adversely affect the insurability (other than the Existing
Exceptions) of the same or cause the imposition of extraordinary
premiums therefor or create or be likely to create a hazard,
excessive maintenance costs or material operating deficiencies.
4.23 Governmental Permits. Development, Leemar and
each Seller, as appropriate, has obtained all permits, licenses,
certificates of occupancy, approvals, and authorizations from the
applicable governmental authorities required for the occupancy
and use of each Property and its current operations and all of
such are in good standing; provided, however, that the parties
acknowledge that a certificate of occupancy has not yet been
obtained with respect to the Satellite Boulevard Lodge.
4.24 FIRPTA. No B/S/S Party is a "foreign person" as
that term is defined in the Internal Revenue Code of 1986, as
amended, and the regulations promulgated pursuant thereto.
4.25 No Defaults. To the knowledge of each B/S/S
Party, no B/S/S Party is in default under any of the Existing
Exceptions.
4.26 Employee Benefits; Labor Activity. None of
Development, Leemar nor any Seller has any pension or retirement
benefits or employment contract with or otherwise payable to the
employees of a Hotel. None of Development, Leemar nor any Seller
is a party to any collective bargaining agreement or agreement of
any kind with any union or labor organization, and no union or
other collective bargaining unit has been certified or recognized
by Development, Leemar or any Seller as representing any
employee, nor, to the knowledge of any B/S/S Party or any
Partner, is a union or other collective bargaining unit seeking
recognition for such purpose.
4.27 No Broker. No B/S/S Party has entered into any
agreement or arrangement nor has any of them received services
from any broker or broker's employees or independent contractors,
including, without limitation, any agreement or arrangement that
would give rise to any claim of lien or lien against any of the
Properties pursuant to the Georgia Commercial Real Estate Broker
Lien Act, O.C.G.A. Sections 44-1A-600, et seq.
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4.28 No Special Taxes. No B/S/S Party has any
knowledge of, nor has it received any notice of, any special
taxes or assessments relating to any of the Properties or any
part thereof.
4.29 Books and Records. The books and records of each
Seller (including, without limitation, the Financial Statements)
do or will at the Closing accurately reflect and fairly present
all material actions taken during the period covered thereby by
directors and equity holders thereof, and the books and records
of Development and Leemar do or will at the Closing accurately
reflect and fairly present all material actions taken during the
period covered thereby with respect to the Properties and the
debt associated therewith by the directors and equity holders of
Development and Leemar.
4.30 Investment Representations. The shares of Parent
Stock to be received by each Seller are to be received for
investment for such Seller's own account, not on behalf of
others, and not with a view to sell or otherwise distribute such
shares except in accordance with all applicable securities laws,
rules and regulations. Each Seller, and its partners,
acknowledges that such shares of Parent Stock have not been and
will not be registered under the Securities Act of 1933, as
amended, (the "Securities Act") or under any state securities
laws, rules or regulations, and, therefore, cannot be resold
unless registered under the Securities Act and applicable state
securities laws, rules and regulations or unless an exemption
from registration is available; and, as a result, each such
Seller, and its partners, must bear the risk of an investment in
the Parent Stock for an indefinite period of time. Each Seller,
and its partners, has sufficient knowledge and experience in
investment and business matters to understand the economic risk
of such an investment and the risk involved in a commercial
enterprise such as Corporation. Each Seller, and its partners,
has received and had an opportunity to read all SEC Documents (as
defined in Section 6.6). Each Seller, and its partners, has had
an opportunity to ask questions of, and receive answers from,
officers of Corporation, concerning Corporation and the Parent
Stock, and to obtain any additional information which such Seller
reasonably requested and is material to its investment decision.
Each Seller, and each partner of Seller, is an "accredited
investor" within the meaning of Regulation D under the Securities
Act. The financial condition of each Seller, and its partners,
is currently adequate to bear the economic risk of investment in
the Parent Stock. Each of the Sellers, and its partners,
acknowledges and agrees that the share certificates representing
the shares of Parent Stock (and any certificates issued in
replacement therefor) shall contain an appropriate securities law
legend.
4.31 Liens. On the Closing Date, neither Seller nor
any tenant of any of the Properties will be indebted to any
contractor, laborer, mechanic, materialman, architect, engineer
or any other person for work, labor or services performed or
rendered, or for materials supplied or furnished, in connection
with such Property for which any such person could claim a lien
against such Property.
4.32 Full Disclosure. Except as set forth on Schedule
4.32 no representation, warranty, covenant, agreement or
indemnity of any B/S/S Party contained in this Agreement or in
any other document, instrument, agreement, paper or other written
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statement or certificate delivered by any B/S/S Party, or any of
them, pursuant to this Agreement, or in connection with the
transactions contemplated herein, contains or will contain any
untrue statement of a material fact or omits or will omit to
state a material fact necessary to make the statements herein or
therein not misleading. There is no fact known to any B/S/S
Party which materially and adversely affects, or in the future
may materially and adversely affect, the business, operations,
cash flows, affairs, prospects, properties or assets or the
condition (financial or otherwise) of any B/S/S Party which has
not been disclosed in this Agreement, the schedules attached to
this Agreement, or in the documents, instruments, agreements,
papers or other written agreements or certificates furnished to
Purchaser and Corporation for use in connection with this
Agreement and the transactions contemplated hereby.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to each B/S/S
Party, as follows:
5.1 Organization and Standing. Purchaser is a Georgia
limited partnership, duly organized and validly existing under
the laws of the State of Georgia and has all requisite powers and
all governmental and regulatory licenses, authorizations,
consents, and approvals to carry on its business as now
conducted, to own, lease, and operate its properties, to execute
and deliver this Agreement and any document or instrument
required to be executed and delivered on behalf of Purchaser
hereunder, to perform its obligations under this Agreement and
any such other documents or instruments and to consummate the
transactions contemplated herein.
5.2 Authority. Purchaser has the lawful right, power,
authority and capacity to enter into and perform this Agreement
in accordance with its terms, provisions, and conditions and the
execution, delivery, and performance of this Agreement and the
consummation of the transactions contemplated hereby have been
duly authorized and approved by all necessary action on the part
of Purchaser and its partners and no other actions are necessary
to authorize and approve this Agreement and the transactions
contemplated hereby. This Agreement has been duly executed and
delivered by, and constitutes a valid and binding obligation of
Purchaser, enforceable against Purchaser in accordance with its
terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or similar
laws affecting creditors' rights generally, or by the principles
governing the availability of equitable remedies).
5.3 Suits, Etc. No actions, suits, or proceedings are
pending against or by, threatened against or by, or affecting
Purchaser that question the validity or enforceability of this
Agreement or of any action taken by it under this Agreement, in
any court or before any governmental authority, domestic or
foreign.
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<PAGE>
5.4 Execution; No Default. Except as set forth on
Schedule 5.4, The execution of and entry into this Agreement, the
execution and delivery of the documents and instruments that
Purchaser will execute or deliver on the Closing Date, and the
performance by Purchaser of its duties and obligations under this
Agreement and of all other acts necessary and appropriate for the
full consummation of the transactions as contemplated by and
provided for in this Agreement, are consistent with and not in
violation of, and will not create any adverse condition under,
any contract, agreement or other instrument to which Purchaser is
a party, any judicial order or judgment of any nature by which
Purchaser is bound, and this Agreement. The covenants and
agreements of Purchaser under this Agreement are the valid and
binding obligations of Purchaser, enforceable in accordance with
their terms.
5.5 No Broker. Neither Purchaser nor Corporation has
entered into any agreement or arrangement nor has either of them
received services from any broker or broker's employees or
independent contractors, including, without limitation, any
agreement or arrangement that would give rise to any claim of
lien or lien against any of the Properties pursuant to the
Georgia Commercial Real Estate Broker Lien Act, O.C.G.A. Sections 44-
1A-600, et seq.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF CORPORATION
Corporation hereby represents and warrants to each
B/S/S Party, as follows:
6.1 Organization and Standing. Corporation is a
Georgia corporation, duly organized, validly existing, and in
good standing under the laws of the State of Georgia and has all
requisite powers and all governmental and regulatory licenses,
authorizations, consents, and approvals to carry on its business
as now conducted, to own, lease, and operate its properties, to
execute and deliver this Agreement and any document or instrument
required to be executed and delivered on behalf of Corporation
hereunder, to perform its obligations under this Agreement and
any such other documents or instruments and to consummate the
transactions contemplated herein.
6.2 Authority. Corporation has the lawful right,
power, authority and capacity to enter into and perform this
Agreement and the execution, delivery, and performance of this
Agreement and the consummation of the transactions contemplated
hereby have duly authorized and approved by all necessary action
on the part of Corporation and no other actions are necessary to
authorize and approve this Agreement and the transactions
contemplated hereby. This Agreement has been duly executed and
delivered by, and constitutes a valid and binding obligation of
Corporation, enforceable against Corporation in accordance with
its terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or similar
laws affecting creditors' rights generally, or by the principles
governing the availability of equitable remedies).
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6.3 Suits, Etc. No actions, suits, or proceedings are
pending against or by, threatened against or by, or affecting
Corporation that question the validity or enforceability of this
Agreement or of any action taken by it under this Agreement, in
any court or before any governmental authority, domestic or
foreign.
6.4 Execution; No Default. Except as set forth on
Schedule 6.4, the execution of and entry into this Agreement, the
execution and delivery of the documents and instruments that
Corporation will execute or deliver on the Closing Date, and the
performance by Corporation of its duties and obligations under
this Agreement and of all other acts necessary and appropriate
for the full consummation of the transactions as contemplated by
and provided for in this Agreement, are consistent with and not
in violation of, and will not create any adverse condition under,
any contract, agreement or other instrument to which Corporation
is a party, any judicial order or judgment of any nature by which
Corporation is bound, and this Agreement. The covenants and
agreements of Corporation under this Agreement are the valid and
binding obligations of Corporation, enforceable in accordance
with their terms.
6.5 Authorization of Parent Stock. The shares of
Parent Stock to be issued to the Sellers pursuant to this
Agreement will be duly authorized and reserved for issuance at or
before the Closing and, upon issuance to the Sellers, will be
fully paid and nonassessable.
6.6 SEC Documents. The documents listed on Schedule
6.6 to this Agreement (collectively, the "SEC Documents")
constitute all of the documents (other than preliminary filings,
Form S-8 Registration Statements, and in the case of other
Registration Statements, the "Part II" information) that
Corporation was required by applicable securities laws to file
with the Securities and Exchange Commission (the "SEC") since May
23, 1996. The financial statements of Corporation for the fiscal
years included or incorporated by reference in the SEC Documents
were prepared in accordance with generally accepted accounting
principles and present fairly, in all material respects, in
accordance with the generally accepted accounting principles, the
consolidated financial condition, results of operations and
changes in financial position of Corporation as of the dates
thereof.
6.7 No Broker. Neither Purchaser nor Corporation has
entered into any agreement or arrangement nor has either of them
received services from any broker or broker's employees or
independent contractors, including, without limitation, any
agreement or arrangement that would give rise to any claim of
lien or lien against any of the Properties pursuant to the
Georgia Commercial Real Estate Broker Lien Act, O.C.G.A. Sections 44-
1A-600, et seq.
6.8 Full Disclosure. No representation, warranty or
covenant of Purchaser and Corporation contained in this
Agreement, or in any other written statement or certificate
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delivered by Purchaser and Corporation pursuant to this Agreement
or in connection with the transactions contemplated herein,
contains or will contain any untrue statement of a material fact
or omits or will omit to state a material fact necessary to make
the statements contained herein or therein not misleading.
ARTICLE 7
COVENANTS OF THE B/S/S PARTIES
From the date of this Agreement until and including the
Closing Date:
7.1 Preservation of Business and Property. Subject to
the provisions of Section 2.1, each B/S/S Party shall use its
respective best efforts to (a) preserve intact the present
business organization and personnel of Development, Leemar and
each Seller, (b) preserve the present goodwill and advantageous
relationships of Development, Leemar and each Seller with all
persons and entities having business dealings with it, (c)
preserve and maintain in force all material licenses,
certificates, leases, contracts, permits, registrations,
franchises, patents, trademarks, trade names, copyrights, bonds,
and other similar material rights and confidential information of
Development, Leemar and each Seller, and (d) preserve and
maintain the Properties in good condition and repair so that, on
the Closing Date, each Property will be in the same condition as
it now exists, the completion of the Satellite Boulevard Lodge
and natural wear and tear excepted. No B/S/S/ Party shall enter
into any new employment or consulting agreements with any of its
present management personnel or consultants, or any other
employment or consulting agreement with any other person or
entity, in any way relating to any Property or any Hotel, except
as has been previously disclosed and approved by Purchaser in
writing.
7.2 Ordinary Course. Development, Leemar and each
Seller shall operate its business only in the ordinary course and
in accordance with the applicable Franchise Agreement (as defined
in Section 7.11) and, except in the ordinary course of business,
none of Development, Leemar nor any Seller shall, without the
prior written consent of Purchaser, (a) encumber or mortgage any
of the Properties or its other assets (or in the case of
Development and Leemar, their other assets used in connection
with the operation of the Hotels), (b) incur any obligation
(contingent or otherwise) (or in the case of Development and
Leemar, with respect to the operation of the Hotels), (c)
purchase, acquire, transfer, or convey any assets or property (or
in the case of Development and Leemar, their assets used in
connection with the operation of the Hotels), (d) enter into any
other transaction (in the case of Development and Leemar, with
respect to or affecting the Properties), (e) make or enter into
any contract or commitment (in the case of Development and
Leemar, with respect to or affecting the Properties), or (f)
acquire any corporation, partnership, trust, or other entity.
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<PAGE>
7.3 Books and Records. Development, Leemar and each
Seller shall maintain its books, accounts, and records in the
usual, regular, and ordinary manner, in compliance with
applicable laws and on a basis consistent with prior years.
7.4 No Organic Change; No Distributions. None of
Development, Leemar nor any Seller shall make any amendment to
its Articles of Incorporation, its Certificate of Limited
Partnership (in the case of Lodge Partners II and Lodge Partners
III after the filing thereof with the Georgia Secretary of State)
or the limited partnership agreement of any Seller. Except as
specifically permitted by Section 2.1, no Seller shall make any
change to any of its partnership interests by reclassification,
subdivision, reorganization, or otherwise. No Seller shall merge
or consolidate with any other partnership, corporation, trust, or
entity or change the character of its business.
7.5 No Issuance of Partnership Interests or Options.
No Seller nor any of its Partners shall grant any option,
warrant, or other right to purchase or to convert any obligation
made by a Seller or the partners of a Seller, into a partnership
interest in a Seller.
7.6 Compensation. Without the prior written consent
of Purchaser, none of Development, Leemar nor any Seller shall
increase the compensation or fees payable to any management
employee of a Hotel, and shall increase the compensation payable
to other Hotel personnel only in accordance with past practices
for merit, length of service, change in position or
responsibility, or other similar reason.
7.7 Ad Valorem Taxes. Development, Leemar and each
Seller will pay or cause to be paid promptly when due all city,
state, and county ad valorem taxes and similar taxes and
assessments, all sewer and water charges, and all other
governmental charges levied or imposed upon or assessed against
the Properties between the date hereof and the date of the
Closing, and will pay or cause to be paid all expenses incurred
in the use, occupancy, and operation of the Properties between
the date hereof and the date of the Closing.
7.8 Insurance. Each B/S/S Party shall continue to
carry and maintain in force all existing policies of casualty and
public liability insurance with respect to the Properties.
7.9 Accuracy as of Closing Date. No B/S/S Party will
cause or permit any action to be taken that will cause any of the
conditions of Purchaser's or Corporation's obligations set forth
in Article 10 hereof to be unsatisfied or unperformed on or as of
the date of the Closing.
7.10 Consents and Approvals. Each of the B/S/S/
Parties shall use their best efforts to obtain all necessary
consents and approvals of all persons, firms, entities, and
governmental authorities to the consummation of the transactions
contemplated by this Agreement.
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7.11 Franchise Agreement and Termination. The parties
acknowledge and agree that certain of them are parties to a
franchise agreement relating to the operation of each Hotel
(each, a "Franchise Agreement") and that they are presently bound
by, and shall continue to be bound by, each Franchise Agreement.
Immediately prior to the Closing, any and all funds due
Corporation or its affiliates pursuant to any Franchise
Agreement, through the Closing Date, shall be paid, unless
already paid. The parties acknowledge and agree that at Closing,
and following such payment, but only if the transaction
contemplated herein is consummated, each Franchise Agreement
shall be terminated pursuant to a Termination of Franchise
Agreement and Release in the form of Exhibit E to this Agreement
(the "Termination Agreement") and such other parties as
Corporation shall reasonably designate shall execute and deliver
the Termination Agreement to evidence their agreement with the
terms and conditions thereof.
7.12 Completion of Construction. (a) Construction of
the Satellite Boulevard Hotel shall have been completed
substantially in accordance with the specifications and plans
therefor approved by Purchaser and the Suburban Lodge Franchise
Manual and in compliance with all laws, statutes, ordinances,
rules and regulations (including, without limitation, the
Americans with Disabilities Act and any similar state or local
law).
(b) All pre-opening activities as specified in the
Suburban Lodge Franchise Manual and the Franchise Agreement
relating to the Satellite Boulevard Hotel shall have been
completed.
(c) Any and all actual or potential claims, liens,
charges or encumbrances on the Satellite Boulevard Property or
any portion thereof arising from or related to the construction
of the Satellite Boulevard Hotel shall have been fully satisfied,
discharged and released and full and final written lien waivers
from each contractor and subcontractor shall have been obtained
and delivered to Purchaser, in form and substance reasonably
acceptable to Purchaser.
(d) All permits, license, certificates of occupancy,
approvals, and authorizations from the applicable governmental
authorities required for the occupancy and use of the Satellite
Boulevard Property as a Suburban Lodge extended stay facility in
accordance with the Suburban Lodge Franchise Manual and the
Franchise Agreement shall have been obtained and shall be in good
standing and shall be deemed to be Satellite Boulevard Permits
under this Agreement.
ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 Access and Inspection. (a) Each B/S/S Party
shall provide Purchaser, Corporation and their representatives
full access during normal business hours from and after the date
hereof until the Closing to the Properties and all of the assets,
properties and businesses of Development, Leemar and each Seller
and the books and records of Development, Leemar and each Seller,
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and shall furnish such information concerning the business and
affairs of Development, Leemar and each Seller as may be
requested, in each case for the purpose of making such continuing
investigation of the Properties, Development, Leemar and each
Seller as Purchaser and Corporation may desire provided, however,
that in the case of Development and Leemar such right of access
shall be limited to the Properties and their books and records
related to the Properties. Each B/S/S Party shall cause its
representatives to assist Purchaser, Corporation and their
representatives in such continuing investigation. No B/S/S Party
shall provide any other person or entity with similar access or
information between the date hereof and any termination or
expiration of this Agreement. No investigation made heretofore
or hereafter by or on behalf of Purchaser or Corporation shall
limit or affect in any way the representations, warranties,
covenants, agreements and indemnities of any B/S/S Party
hereunder, each of which shall survive any such investigation.
Without limiting the foregoing, Purchaser, Corporation and their
representatives shall have the right to enter each of the
Properties for the purpose of inspecting such Property,
conducting soil tests, and making mechanical and structural
engineering studies.
(b) Purchaser shall have the right to cause an as-
built survey of each Property to be prepared by a surveyor
registered and licensed in the State of Georgia, which survey
shall depict such information as Purchaser shall require. Upon
completion of a plat of the survey, Purchaser shall furnish the
Sellers with a copy thereof. The Survey shall be used as the
basis for the preparation of the legal description to be included
in each of the quitclaim deeds to be delivered by the Sellers to
Purchaser at Closing.
8.2 Cooperation. The parties shall cooperate fully
with each other and with their respective representatives in
connection with any steps required to be taken as part of their
respective obligations under this Agreement, and all parties
shall use their best commercial efforts to consummate the
transactions contemplated herein and to fulfill their obligations
hereunder, including, without limitation, causing to be fulfilled
at the earliest practical date the conditions precedent to the
obligations of the parties to consummate the transactions
contemplated hereby. Without the prior written consent of the
other parties, no party hereto may take any intentional action
that would cause the conditions precedent to the obligations of
the parties hereto to effect the transactions contemplated hereby
not to be fulfilled, including, without limitation, taking or
causing to be taken any action which would cause the
representations and warranties made by such party herein not to
be true, correct and complete as of the Closing.
8.3 Covenant Against Competition. (a) In order to
induce Purchaser and Corporation to enter into and perform this
Agreement, each B/S/S Party agrees that, for a period of thirty
(30) months beginning on the Closing Date, he, she or it shall
not, without the prior written consent of Corporation, for his,
her or its own account or jointly or in combination with another,
directly or indirectly, for or on behalf of any person or entity,
as principal, agent or otherwise: (i) engage in, consult with,
or own, control, manage or otherwise participate in the
ownership, control, development, construction or management of an
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extended stay lodging facility featuring guest rooms with
kitchens or kitchenettes rented primarily for periods in excess
of one day within a three mile radius of any Suburban Lodge
extended stay facility now existing or under development and
identified on Exhibit F to this Agreement (such geographic area
for each being collectively referred to herein as the "Service
Area"), except as an employee or otherwise for and on behalf of
Purchaser or Corporation; or (ii) solicit, call upon, or attempt
to solicit the patronage of any person or entity within the
Service Area and to whom any B/S/S Party provided services during
the 12-month period immediately preceding the Closing Date, for
the purpose of obtaining the patronage of any such Person for the
purchase, rental or lease of any products or services competitive
with those of any such Suburban Lodge extended stay facility,
except as an employee and on behalf of Purchaser or Corporation;
or (iii) solicit or induce, or in any manner attempt to solicit
or induce, any individual who is employed by Development, Leemar
or any Seller (but only insofar as relates to the development,
ownership or operation of a Hotel), Purchaser or Corporation
(including those employed pursuant to Section 8.11) to leave such
employment, whether or not such employment is pursuant to a
written contract or otherwise.
(b) Notwithstanding anything herein to the contrary,
(i) it shall not be a breach of the covenants contained in this
Section 8.3 for the B/S/S Parties, collectively, to own, of
record or beneficially, not more than five percent (5.0%) of the
capital stock or other equity interest of any entity whose shares
or equity interests are publicly traded, and (ii) the covenants
described in this Section 8.3 shall apply only if the
transactions contemplated by this Agreement are consummated.
(c) The parties acknowledge that a breach or threat to
breach any of the terms of this Section 8.3 would result in
material and irreparable damage and injury to the Purchaser and
Corporation; therefore, in addition to any other relief
available, Purchaser and Corporation shall be entitled to
injunctive relief by a court of appropriate jurisdiction in the
event of the breach or threatened breach of any of the terms
contained in this Section 8.3. In the event of any breach or
threatened breach of this Section 8.3, if Purchaser or
Corporation should employ attorneys or incur other expenses for
the enforcement of any of the obligations or agreements contained
in this Section 8.3 and Purchaser or Corporation prevails on any
count or claim in any such action, including any settlement
thereof, the breaching parties shall reimburse Purchaser and
Corporation for their reasonable attorneys' fees and such other
expenses so incurred.
(d) Further, each of the B/S/S Parties agrees to
abandon any present or contemplated plans they or any of their
affiliates may have to own, control, develop, construct or manage
any extended stay lodging facility featuring efficiency guest
rooms rented primarily for periods in excess of one day that
would violate the terms of this Section 8.3.
8.4 Payment of Debt. Contemporaneously with the
Closing, Purchaser or Corporation shall repay or cause to be
repaid in full the Lodge I Debt, the Lodge II Debt, the Lodge III
Debt, and the Lodge IV Debt; provided, however, that to the
extent such debt exceeds $12,500,000 on the Closing Date, such
excess shall be paid by the Sellers.
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8.5 Expenses. (a) Except as set forth in Section
12.4(b), all expenses incurred by Purchaser and Corporation in
connection with the authorization, preparation, execution and
performance of this Agreement and the transactions contemplated
hereby, including, without limitation, all fees and expenses of
their representatives, shall be paid by Purchaser and
Corporation.
(b) Except as set forth in Section 12.4(a), all
expenses incurred by any or all of the B/S/S Parties in
connection with the authorization, preparation, execution and
performance of this Agreement and the transactions contemplated
hereby, including, without limitation, all fees and expenses of
their respective representatives and any representatives acting
for any one or more of the B/S/S Parties, shall be paid by the
B/S/S Parties.
(c) The Sellers shall pay the State of Georgia Realty
Transfer Tax payable on the transfer of the Land and the
Improvements, and all recording costs relating to any title
clearance matters. Purchaser shall pay all recording costs
relating to the purchase by Purchaser of the Properties, the cost
of any survey obtained pursuant to Section 8.1(b) hereof, and the
premium for the Title Policies and any related title examination
fees incurred at the request of Purchaser.
8.6 Brokers. The B/S/S Parties, jointly and
severally, hereby represent and warrant to Purchaser and
Corporation that no broker or finder has acted on behalf of the
B/S/S Parties or any of them in connection with this Agreement or
the transactions contemplated herein, and each of them agrees,
jointly and severally, to indemnify Purchaser and Corporation and
their affiliates from and against any and all claims or demands
for commissions or other compensation by any broker, finder or
similar agent claiming to have been employed by or on behalf of
such person or entity. Purchaser and Corporation represent and
warrant that no broker or finder has acted on their behalf in
connection with this Agreement or the transactions contemplated
herein, and they agree to indemnify the B/S/S Parties and hold
them harmless from and against any and all claims or demands for
commissions or other compensation by any broker, finder or
similar agent claiming to have been employed by or on behalf of
Purchaser and Corporation.
8.7 Other Post-Closing Cooperation. The B/S/S
Parties, jointly and severally, covenant and agree that they
shall cooperate fully and in good faith, and shall use their
reasonable best efforts to cause any and all accountants, legal
counsel, actuaries and other professional advisors employed or
engaged at any time prior to the Closing to cooperate (both
before and after the Closing) fully and in good faith, with
Corporation and Purchaser in connection with the preparation and
filing of any and all documents, agreements, instruments,
certificates, consents, registration statements and other reports
or papers required or permitted to be filed, registered or
submitted in accordance with any law, including, without
limitation, the federal securities laws.
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8.8 Publicity. Except as required by applicable law
or any Nasdaq rule, no B/S/S Party shall make any press release
or other public announcement respecting the subject matter hereof
without the prior approval of Corporation, which approval shall
not be unreasonably withheld.
8.9 Update of Information. (a) All documents,
agreements, instruments, statements and other writings furnished
to Purchaser, Corporation or any of their representatives
pursuant to this Agreement are and shall be true, correct and
complete as of the date furnished, and any and all amendments and
supplements of the same have been or will be delivered to
Purchaser and Corporation (or to their representatives if and as
requested) in a timely and expeditious manner prior to the
Closing. At all times prior to and including the Closing Date,
the B/S/S Parties shall promptly provide Purchaser and
Corporation (and to their representatives if and as requested)
with written notification of any event, occurrence or other
information of any kind whatsoever which affects, or may affect,
the continued truth, correctness or completeness of any
representation, warranty, covenant or agreement made in this
Agreement or any document, agreement, instrument, certificate or
writing furnished to Purchaser or Corporation pursuant to or in
connection with this Agreement, and each such written
notification shall specifically identify any and all of the
representations, warranties, covenants and agreements affected by
the fact, event, occurrence or information that necessitated the
giving of such notice. No such notification or other disclosure
shall be deemed to amend or supplement this Agreement, the
Schedules hereto, or any representation, warranty, covenant,
agreement or indemnity or any other document, agreement,
instrument, certificate or writing furnished to Purchaser and
Corporation pursuant to or in connection with this Agreement.
(b) If, prior to the Closing, Purchaser or Corporation
notifies any B/S/S Party that one or more of the B/S/S Parties
has breached a representation, warranty, covenant, agreement or
other provision of this Agreement, the B/S/S Parties shall have
ten (10) days within which to cure such breach; provided, that
(i) such breach is capable of being cured, and (ii) unless
consented to in writing by Purchaser, the B/S/S Parties' right to
cure under this Section 8.10(b) will not extend beyond March 10,
1997; provided, further, that Purchaser shall not be deemed to
waive any right or remedy hereunder if the Closing occurs and
such breach has not been cured prior thereto, unless it delivers
a written waiver thereof to the Agent, which specifically states
that Purchaser is waiving its rights with respect to such
breach. Notwithstanding the foregoing, in no event (i) shall
Purchaser or Corporation have any obligation or duty to verify
the truth of any representation or warranty of any Seller,
Development, Leemar or any other B/S/S Party, and each B/S/S
Party hereby acknowledges that Purchaser and Corporation are
relying on the truth of each such representation and warranty
without independent investigation or verification, or (ii) shall
any failure of Purchaser or Corporation to discover or become
aware of, or to notify Agent of, any inaccuracy or breach of any
such representation or warranty be deemed to be a waiver of such
representation or warranty.
8.10. Title. The Sellers covenant to convey to
Purchaser at Closing good and marketable fee simple title in and
to the Properties. For the purposes of this Agreement, "good and
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marketable fee simple title" shall mean fee simple ownership
which is: (i) free of all claims, liens and encumbrances of any
kind or nature whatsoever other than the Permitted Exceptions (as
defined below); and (ii) insurable by a title insurance company
reasonably acceptable to Purchaser, at then current standard
rates under the standard form of ALTA owner's policy of title
insurance (ALTA Form B-1992), with the standard printed
exceptions therein deleted, and without exception other than for
the Permitted Exceptions. For the purposes of this Agreement,
the term "Permitted Exceptions" shall mean: (i) current city,
state and county ad valorem taxes not yet due and payable; (ii)
easements for the installation or maintenance of public utilities
serving only the applicable Property; and (iii) any other matters
specified on Schedule 8.10 attached hereto.
8.11 Employees. Schedule 8.11, which shall be
delivered to Purchaser within five (5) days of the date hereof,
will contain a list of all employees of the B/S/S Parties and of
Trident Hospitality Management, Inc., whether actually employed
by such parties or leased by such parties, who work at the
Properties, which list shall also identify such employees'
position and responsibilities. Purchaser may, at the closing,
extend offers of employment to any or all of such employees, and
neither Trident Hospitality Management, Inc. nor any B/S/S Party
shall interfere with or dissuade any such employee from accepting
such offer.
ARTICLE 9
INDEMNIFICATION
9.1 Indemnification. In accordance with and subject
to the provisions of this Article 9, each of the B/S/S Parties
(collectively, "Indemnitors") shall, jointly and severally,
indemnify and hold harmless Corporation, Purchaser, and their
affiliates, and their respective officers, directors, agents and
employees (other than for any officer, director, agent or
employee who is an Indemnitor hereunder; collectively,
"Indemnitees"), from and against and in respect of any and all
loss, damage, liability, claim, cost and expense, including
reasonable attorneys' fees and amounts paid in settlement
pursuant to Paragraph 9.3(b) (collectively, the "Indemnified
Losses"), suffered or incurred by any one or more of the
Indemnitees by reason of, or arising out of:
(a) any misrepresentation, breach of warranty, or
breach or nonfulfillment of any covenant or agreement of any of
the B/S/S Parties contained in this Agreement, or in any
certificate, schedule, document, agreement or instrument
delivered to Purchaser or Corporation by or on behalf of any of
the B/S/S Parties pursuant to the provisions of this Agreement;
(b) all obligations and liabilities of the B/S/S
Parties other than the Debt and the Service Agreements, whether
direct or indirect, fixed or contingent, known or unknown,
including, without limitation, all obligations and liabilities
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resulting from or arising out of any default, performance or non-
performance by the B/S/S Parties prior to the Closing Date and
arising out of any contract of any Seller, Development or Leemar;
and
(c) any claims, liabilities, obligations, damages,
costs and expenses, known or unknown, fixed or contingent,
claimed or demanded by third parties against Purchaser or
Corporation or any of their affiliates arising out of or
resulting from operation of Sellers', Development's or Leemar's
businesses prior to the Closing Date.
9.2 Payment. The B/S/S Parties shall, subject to the
provisions of Section 9.3, reimburse Indemnitees, within 10 days
of written demand on Agent, (as defined in Section 9.3), for any
Indemnified Loss.
9.3 Defense of Claims. (a) If any claim or action by
a third party arises after the Closing Date for which an
Indemnitor may be liable under the terms of this Agreement, then
Indemnitees shall notify KB, as the agent for the B/S/S Parties
("Agent"), within a reasonable time after such claim or action
arises and is known to Indemnitees, and shall give the
Indemnitors a reasonable opportunity: (i) to conduct any
proceedings or negotiations in connection therewith and necessary
or appropriate to defend Indemnitees; (ii) to take all other
required steps or proceedings to settle or defend any such claim
or action; and (iii) to employ counsel to contest any such claim
or action in the name of Indemnitees or otherwise. The expenses
of all proceedings, contests or lawsuits with respect to such
actions shall be borne by the Indemnitors. If the Indemnitors
wish to assume the defense of such claim or Action, then Agent
shall give written notice to Indemnitees within 30 days after
notice from Indemnitees of such claim or action (unless the claim
or action reasonably requires a response in less than 30 days
after the notice is given to Agent, in which event Agent shall
notify Indemnitees at least 10 days prior to such reasonably
required response date), and the Indemnitors shall thereafter
assume the defense of any such claim or action through counsel
reasonably satisfactory to Indemnitees; provided that Indemnitees
may participate in such defense at their own expense; provided
further that Indemnitors may not settle any such claim or action
without the prior written approval of the Indemnitees, which
approval shall not be unreasonably withheld.
(b) If the Indemnitors do not assume the defense of,
or if after so assuming the Indemnitors fail to defend, any such
action, then Indemnitees may defend against such claim or action
in such manner as they may deem appropriate (provided that the
Indemnitors may participate in such defense at their own
expense); Indemnitees may settle such claim or action on such
terms as they may deem appropriate; and the Indemnitors shall
promptly reimburse Indemnitees for the amount of all expenses,
legal and otherwise, reasonably and necessarily incurred by
Indemnitees in connection with the defense against and settlement
of such claim or action. If no settlement of such claim or
action is made, the Indemnitors shall satisfy any judgment
rendered with respect to such claim or in such action, before
Indemnitees are required to do so, and shall pay all expenses,
legal or otherwise, reasonably and necessarily incurred by
Indemnitees in the defense of such claim or action.
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(c) If a judgment is rendered against any of the
Indemnitees in any action covered by the indemnification
hereunder, or any lien or other encumbrance in respect of such
judgment attaches to any of the assets of any of the Indemnitees,
the Indemnitors shall immediately upon such entry or attachment
pay such judgment in full or discharge such lien or encumbrance
unless, at the expense and direction of the Indemnitors, an
appeal is taken under which the execution of the judgment or
satisfaction of the lien or encumbrance is stayed. If and when a
final judgment is rendered in any such action, the Indemnitors
shall forthwith pay such judgment or discharge such lien or
encumbrance before any of Indemnitees is compelled to do so.
9.4 Special Limitation. For purposes of this
Agreement, CLB shall not be considered an Indemnitor under this
Article 9 unless and until she receives any of the shares of
Parent Stock paid to any of the B/S/S Parties hereunder.
Thereafter, CLB shall constitute an Indemnitor hereunder for the
remainder of the survival period of the representations,
warranties, covenants and agreements contained herein; provided,
however, that CLB's maximum liability pursuant to this Article 9
shall be limited to (a) the value of the shares of Parent Stock
transferred to her hereunder, as determined, on the date of
resolution of the indemnity claim (the "Determination Date"),
based upon the average of the closing sales prices, without
regard to volume (adjusted for any stocks splits or other
reclassification during the applicable time period) for shares of
Parent Stock on The NASDAQ National Market for each of the twenty
(20) consecutive trading days immediately preceding the
Determination Date or (b) the net sales price thereof if CLB has
previously sold such shares of Parent Stock.
ARTICLE 10
CONDITIONS TO OBLIGATIONS OF
PURCHASER AND CORPORATION
The obligations of Purchaser and Corporation under this
Agreement are subject to satisfaction of the following conditions
at or prior to the Closing, any or all of which Purchaser may
waive in whole or in part.
10.1 Representations and Warranties. The
representations and warranties of the B/S/S Parties set forth in
this Agreement and in any certificate or other writing delivered
pursuant hereto or in connection with the transactions
contemplated hereby shall be true, complete, and accurate in all
material respects on and as of the Closing Date to the same
extent and with the same force and effect as if made on such
date.
10.2 Performance. Each of the B/S/S Parties shall have
duly performed in all material respects all obligations,
covenants, and agreements undertaken by it herein and complied in
all material respects with all terms and conditions applicable to
it hereunder to be performed and complied with on or prior to the
Closing Date.
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10.3 Other Agreements. Purchaser shall have received
at or prior to the Closing (i) from each Seller, and its
partners, a fully completed and executed Supplemental Agreement
and Questionnaire relating to securities law representations,
(ii) from each relevant party, an execution counterpart original
of the Termination Agreement, (iii) from each relevant party, an
execution counterpart original of the Escrow Agreement, and (iv)
from each Seller and each of its partners a Lock-Up Agreement for
a period of four months following the Closing in form and
substance satisfactory to Purchaser.
10.4 Third-Party Consents. All necessary approvals or
consents shall have been obtained from any and all federal and
state departments and regulatory and other agencies and from all
other commissions, boards, agencies, and any other person or
entity whose approval or consent is necessary to consummate the
transactions contemplated hereunder.
10.5 Title Insurance; Survey. Purchaser shall have
obtained a current title policy insuring fee simple title in each
Property to Purchaser (the "Title Policies") and a current survey
of each Property, each of which must show only the Permitted
Exceptions as exceptions to title and must otherwise be
reasonably acceptable to Purchaser and Corporation.
10.6 Due Diligence Investigation. Purchaser and
Corporation shall be satisfied, in their sole and absolute
discretion, with the findings and results of the due diligence
investigation of the Sellers, Development and Leemar and of each
of the Properties (including, without limitation, the condition
of title and any matter depicted on any survey).
10.7 Miscellaneous. Parent and its counsel shall have
received such other opinions, certifications and documents from
each of the B/S/S Parties as Corporation and its counsel may
reasonably request, which shall include, without limitation, a
legal opinion of counsel to the B/S/S Parties opining as to those
matters specified on Exhibit G attached hereto.
ARTICLE 11
CONDITIONS TO OBLIGATIONS OF B/S/S PARTIES
The obligations of the B/S/S Parties under this
Agreement are subject to satisfaction of the following conditions
at or prior to the Closing, any or all of which the Agent may
waive in whole or in part on behalf of the B/S/S Parties.
11.1 Representations and Warranties. The
representations and warranties of Purchaser and Corporation set
forth herein and in any certificate or other writing delivered
pursuant hereto or in connection with the transactions
contemplated hereby shall be true, complete, and accurate in all
material respects on and as of the date of the Closing Date to
the same extent and with the same force and effect as if made on
such date.
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11.2 Performance by Purchaser. Purchaser and the
Corporation shall have duly performed in all material respects
all obligations, covenants and agreements undertaken by them
herein and complied in all material respects with all the terms
and conditions applicable to them hereunder to be performed or
complied with on or prior to the date of the Closing.
11.3 Consent. Each Seller shall have received at the
Closing a duly adopted consent, (a) authorizing and approving the
execution and delivery of this Agreement on behalf of Purchaser
and Corporation and the consummation of the transactions
contemplated herein, and (b) authorizing and approving all other
necessary and proper actions to enable Purchaser to comply with
the terms hereof.
11.4 Third-Party Consents. All necessary approvals or
consents shall have been obtained from any and all federal and
state departments and regulatory and other agencies and from all
other commissions, boards, agencies, and any other person or
entity whose approval or consent is necessary to consummate the
transactions contemplated hereunder.
11.5 Registration Rights Agreements. Corporation shall
have executed and delivered a Registration Rights Agreement to
those Sellers receiving shares of Parent Stock granting them (a)
a one-time demand registration right, which registration right
shall be exercisable commencing four (4) months after the Closing
Date, to cause Corporation to register such shares of Parent
Stock under the Securities Act, and (b) "piggyback" registration
rights commencing four (4) months after the Closing Date and
expiring on the third anniversary of the Closing Date which shall
be on substantially similar terms as the "piggyback" registration
rights granted by Corporation at the time of its initial public
offering. The Sellers and Partners (who shall be treated as one
party for purposes of this Section) and the Corporation shall
bear equally the first $50,000 of expenses (other than filing
fees with the SEC and brokerage commissions) incurred in
connection with the exercise of such demand registration rights.
The Sellers and Partners shall be solely responsible for all
other fees and expenses incurred in connection with such
registration.
ARTICLE 12
TERMINATION
12.1 Termination. Notwithstanding any other provision
of this Agreement, this Agreement may be terminated at any time
up to and including the date of the Closing upon written notice
to the other parties as follows:
(a) by unanimous agreement of the parties hereto;
(b) by Purchaser if a material adverse change in the
financial condition or business of any Seller shall have
occurred (or with respect to Development or Leemar, if a
material adverse change in the financial condition or
business of the Hotels shall have occurred), or any Seller
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shall have suffered a loss or damage to any of its
properties or assets, including, without limitation, the
Properties, which loss or damage materially adversely
affects or impairs the ability of such Seller to conduct its
business, including, without limitation, the business of the
Hotels, or Development or Leemar shall have suffered a loss
or damage to any of its properties or assets, including,
without limitation, the Hotels, which loss or damage
materially adversely affects or impairs the ability of
Development or Leemar to conduct the business of the Hotels,
or if the conditions to the obligations of Purchaser and
Corporation have not been waived or satisfied; and
(c) by the Sellers, solely through their general
partners, or by Purchaser, solely through its general
partner, if any action, suit or proceeding shall have been
instituted or threatened against any party to this Agreement
which would restrain, prohibit, invalidate or otherwise
affect in an adverse way the transactions contemplated by
this Agreement.
Notwithstanding anything in this Article 12 to the contrary, this
Agreement shall terminate automatically on April 30, 1997, if the
Closing shall not have occurred prior to such date.
12.2 Termination by Purchaser. If any of the foregoing
conditions have not been satisfied at or prior to the Closing,
Purchaser may, by written notice to Agent, terminate this
Agreement. If Purchaser terminates this Agreement because the
condition stated in Section 10.6 is not satisfied, $100.00 of the
Earnest Money shall be delivered to the appropriate Seller as
consideration for such Seller's execution of and entry into this
Agreement. Each Seller acknowledges that Purchaser will expend
time, money and other resources in connection with the
examination and investigation of each of the Properties, and
that, notwithstanding the fact that Purchaser may terminate this
Agreement pursuant to this Section 12.2, such time, money and
other resources expended, together with the payment of the
portion of the Earnest Money hereinabove described to be paid to
the appropriate Seller in the event of a termination of this
Agreement, constitute good, valuable, sufficient and adequate
consideration for such Seller's execution of and entry into this
Agreement.
12.3 Condemnation. In the event of the taking of all
or any part of any of the Properties by eminent domain
proceedings, or the commencement or bona fide threat of the
commencement of any such proceedings, prior to Closing, Purchaser
shall have the right, at Purchaser's option, to terminate this
Agreement by giving written notice thereof to the Agent prior to
Closing, in which event the Earnest Money shall be refunded to
Purchaser immediately upon request, all rights and obligations of
the parties under this Agreement shall expire, and this Agreement
shall become null and void. If Purchaser does not so terminate
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this Agreement, the Purchase Price shall be reduced by the total
of any awards or other proceeds received by the Sellers prior to
Closing with respect to any taking, and, at Closing, the Sellers
shall assign to Purchaser all rights of the Sellers in and to any
awards or other proceeds to be paid or to become payable after
Closing by reason of any taking. The Sellers shall notify
Purchaser of eminent domain proceedings within two (2) business
days after any Seller learns thereof.
12.4 Effect of Termination. Each party's right of
termination under Section 12.1 is in addition to any other rights
it may have under this Agreement or otherwise, and the exercise
of a right of termination will not be an election of remedies.
If this Agreement is terminated pursuant to Section 12.1 or 12.2,
all further obligations of the parties under this Agreement will
terminate, except that the obligations in Sections 7.11, 8.5, 8.6
and 8.8 and Article 9 will survive; provided, however, that if
this Agreement is terminated by a party because of the breach of
this Agreement by any other party, or because one or more of the
conditions to the terminating party's obligations under this
Agreement is not satisfied as a result of any other party's
failure to comply with its obligations under this Agreement, the
terminating party's right to pursue all legal remedies will
survive such termination unimpaired.
12.5 Special Remedies. (a) Without limiting the
rights of the B/S/S Parties under the proviso contained in
Section 12.4, if (i) (A) any representation or warranty of either
Purchaser or Corporation set forth in this Agreement or any
certificate, schedule, document, agreement or instrument
delivered to the B/S/S Parties by or on behalf of Purchaser or
Corporation shall prove to be untrue or incorrect in any material
respect, or (B) either Purchaser or Corporation shall fail to
keep, observe, perform, satisfy or comply with, fully and
completely, any of the covenants, conditions, or agreements
required by this Agreement to be kept, observed, performed,
satisfied or complied with by either of them, and (ii) the
purchase and sale of the Properties is not consummated in
accordance with the terms and conditions of this Agreement due to
circumstances or conditions which constitute a default by
Purchaser or Corporation under this Agreement, or the B/S/S
Parties terminate this Agreement because an event specified in
clause (i) above occurs, then the Earnest Money shall be retained
by the Sellers, and Purchaser and Corporation shall reimburse the
B/S/S Parties for any and all attorneys' fees incurred by the
B/S/S Parties in connection the negotiation, execution, delivery
and performance of this Agreement.
(b) Without limiting the rights of the Purchaser and
Corporation under the proviso contained in Section 12.4, if (i)
(A) any representation or warranty of any B/S/S Party set forth
in this Agreement or in any certificate, schedule, document,
agreement or instrument delivered to Purchaser or Corporation by
or on behalf of any B/S/S Party shall prove to be untrue or
incorrect in any material respect, or (B) any B/S/S Party shall
fail to keep, observe, perform, satisfy or comply with, fully and
completely, any of the covenants, conditions, or agreements
required by this Agreement to be kept, observed, performed,
satisfied or complied with by any of them, and (ii) the purchase
and sale of the Properties is otherwise not consummated in
accordance with the terms of this Agreement due to circumstances
or conditions which constitute a default by any of the B/S/S
-38-<PAGE>
Parties under this Agreement, or Purchaser or the Corporation
terminates this Agreement because of an event specified in clause
(i) above, then the Earnest Money shall be refunded to Purchaser
immediately upon request, the B/S/S Parties shall reimburse
Purchaser and Corporation for any and all attorneys' and
accountants' fees incurred by Purchaser and Corporation in
connection with the negotiation, execution, delivery and
performance of this Agreement and the costs of obtaining any
surveys, appraisals, environmental reports and title insurance
policies, and Purchaser may exercise such rights and remedies as
may be provided for in this Agreement or any other agreement;
provided, however, that if the B/S/S Parties use their best
efforts to obtain, but fail to so obtain, a certificate of
occupancy for the Satellite Boulevard Lodge, Purchaser may
terminate this Agreement pursuant to Section 12.1, but it may not
recover under this Section 12.5(b).
ARTICLE 13
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
All statements contained in this Agreement and in any
Schedule or Exhibit hereto or any certificate delivered at the
Closing by or on behalf of the parties hereto pursuant to this
Agreement shall be deemed representations and warranties
hereunder. All representations and warranties made by the
respective parties hereunder, including those set forth herein or
in any other document required to be executed by the terms of
this Agreement, shall survive the consummation of the
transactions contemplated by this Agreement for a period ending
on March 31, 2000, at which time such representations and
warranties shall terminate, except for those representations,
warranties and covenants relating to title to the Properties
which shall survive indefinitely.
ARTICLE 14
MISCELLANEOUS
14.1 Assignment; Third Parties; Binding Effect. Except
as expressly provided in this Agreement, the rights under this
Agreement shall not be assignable nor the duties delegable by any
party without the prior written consent of all other parties
hereto. Nothing contained in this Agreement, express or implied,
is intended to confer upon any person or entity, other than the
parties hereto and their successors in interest, any rights or
remedies under or by reason of this Agreement unless so stated
expressly to the contrary herein. All covenants, agreements,
representations, and warranties of the parties contained herein
shall be binding upon and inure to the benefit of the parties
hereto and their successors and assigns.
14.2 Notices. All notices, requests, demands, and
other communications hereunder shall be in writing and shall be
deemed to have been duly given when personally delivered or
deposited in the United States mail, certified or registered,
return receipt requested, postage prepaid, addressed to the
parties at the following addresses or at such other address as
shall be given in writing by any party to the others in
accordance with this Section.
-39-<PAGE>
To any of the B/S/S
Parties: Lodge PartnersCorporation
c/o McGee & Oxford
2800 Tower Place
3340 Peachtree Road, N.E.
Atlanta, Georgia 30326
Attn: Pearce Hardwick
To Corporation and
Purchaser: Suburban Lodges of America, Inc.
1000 Parkwood Circle
Suite 850
Atlanta, Georgia 30339
Attn: David E. Krischer
14.3 Remedies Not Exclusive. No remedy conferred by
any of the specific provisions of this Agreement is intended to
be exclusive of any other remedy (unless expressly so stated),
and each and every remedy shall be cumulative and shall be in
addition to every remedy given hereunder or now or hereafter
existing, at law or in equity, by statute or otherwise. The
election of any one or more remedies shall not constitute a
waiver of the right to pursue other available remedies.
14.4 Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed to be an
original and all of which together shall constitute one and the
same instrument.
14.5 Article and Section Headings. Article and Section
headings used herein are for convenience only and are not a part
of this Agreement and shall not be used in construing it.
14.6 Waiver. Any failure by any of the parties hereto
to comply with any of the obligations, agreements, or conditions
set forth herein may be waived in writing by the other party or
parties; provided, that any such waiver shall not be deemed a
waiver of any other obligation, agreement or condition contained
herein.
14.7 Cooperation. Each of the parties agrees to
cooperate to consummate the transactions contemplated hereby and
to execute and deliver any and all instruments, and take such
additional action, as shall be reasonably necessary or
appropriate for such purpose.
14.8 Entire Agreement. This Agreement, together with
the Schedules and Exhibits hereto, embodies the entire
understanding and agreement among the parties, may be amended or
modified only in a writing signed by all parties, and supersedes
all prior understandings and agreements among or between the
parties relating to the subject matter hereof.
-40-<PAGE>
14.9 Schedules. All references to Schedules herein
shall mean separate Schedules delivered by the appropriate
parties as required by the terms of this Agreement, which
Schedules shall be attached hereto, except as otherwise expressly
stated herein.
14.10 Severability. The provisions of this
Agreement, and of each separate Article and Section, are
severable, and if any one or more provisions may be determined to
be illegal or otherwise unenforceable, in whole or in part, the
remaining provisions, and any unenforceable provision to the
extent enforceable in any jurisdiction, shall nevertheless be
binding and enforceable.
14.11 Applicable Law. This Agreement shall be
governed by and construed in accordance with the laws of the
State of Georgia.
14.12 Partner Consent. By their execution and
delivery of this Agreement, each of the partners of each Seller
hereby consents to the transactions contemplated by and provided
for in this Agreement, and hereby authorizes and directs the
general partner of each Seller and each of its officers,
directors and employees to take any and all actions as may be
necessary or convenient in connection therewith.
-41-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first written above.
LODGE PARTNERS I LIMITED
PARTNERSHIP
By: Lodge Partners
Corporation, its general
partner
By: /s/ Kenneth L. Burson
Name: Kenneth L. Burson
Title: President
LODGE PARTNERS II LIMITED
PARTNERSHIP
By: Lodge Partners
Corporation, its general
partner
By: /s/ Kenneth L. Burson
Name: Kenneth L. Burson
Title: President
LODGE PARTNERS III LIMITED
PARTNERSHIP
By: Lodge Partners
Corporation, its general
partner
By: /s/ Kenneth L. Burson
Name: Kenneth L. Burson
Title: President
<PAGE>
LODGE PARTNERS IV LIMITED
PARTNERSHIP
By: Lodge Partners
Corporation, its general
partner
/s/ Kenneth L. Burson
Name: Kenneth L. Burson
Title: President
SUBURBAN HOLDINGS, LP.
By: Suburban Lodges of America,
Inc., its general partner
By: /s/ David Krischer
Name: David Krischer
Title: President
SUBURBAN LODGES OF AMERICA,
INC.
By: /s/ David Krischer
Name: David Krischer
Title: President
LODGE PARTNERS CORPORATION
By: /s/ Kenneth L. Burson
Name: Kenneth L. Burson
Title: President
<PAGE>
BURSON AND SIMPSON LODGE
DEVELOPMENT, INC.
By: /s/ Kenneth L. Burson
Name: Kenneth L. Burson
Title: President
LEEMAR PROPERTIES, INC.
By: /s/ Kenneth L. Burson
Name: Kenneth L. Burson
Title: President
Kenneth L. Burson, Attorney
in Fact for
/s/ Kenneth L. Burson
CLAIRE LEE BURSON
/s/ Kenneth L. Burson
ANDREW C. SHIPP, SR.
/s/ Kenneth L. Burson
STEVE SIMPSON
/s/ Kenneth L. Burson
KENNETH BURSON<PAGE>
Trident Hospitality Management, Inc. hereby agrees to be a
party to this Agreement for the purpose of being bound by the
provisions of Sections 8.3(a)(iii) and 8.11 above.
TRIDENT HOSPITALITY MANAGEMENT, INC.
By: /s/ Andrew C. Shipp, Sr.
Name: Andrew C. Shipp, Sr.
Title: President
REGISTRATION RIGHTS AGREEMENT
THIS AGREEMENT is made and entered into as of this 28th
day of February, 1997, by and among SUBURBAN LODGES OF AMERICA,
INC., a Georgia corporation (the "Company"), and the persons
whose names appear in the signature pages hereto under the
caption "Shareholders" (collectively, the "Shareholders" and
individually a "Shareholder").
W I T N E S S E T H:
WHEREAS, in connection with the acquisition of four
Suburban Lodge extended stay hotels from Lodge Partners I, L. P,
Lodge Partners II, L.P, Lodge Partners III, L.P., and Lodge
Partners IV, L.P., the Company issued ________________ shares of
its common stock, par value $0.01 per share, to the Shareholders
(such shares are referred to herein as the "Shares"); and
WHEREAS, the Shares have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"); and
WHEREAS, the Shareholders may desire to register some
or all of the Shares under the Securities Act at a future date;
and
WHEREAS, the Company has previously granted "piggyback"
registration rights with respect to _______________ shares of its
common stock, par value $0.01 per share (the "Initial Registrable
Shares") pursuant to that certain Registration Rights Agreement
dated May ___, 1996, among the Company and the signatories
thereto (collectively, the "Initial Shareholders"); and
WHEREAS, the parties hereto desire to provide the
Shareholders with certain demand and "piggyback" registration
rights with respect to the sale of all or a portion of the
Shares;
NOW, THEREFORE, for and in consideration of the
premises and the mutual covenants and agreements contained
herein, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
1. Definitions. As used herein, unless the context
otherwise requires, the following capitalized terms shall have
the meanings set forth below:
(a) "Commission" means the Securities and Exchange
Commission or any other Federal agency at the time administering
the Securities Act.
<PAGE>
(b) "Common Stock" means the Company's common stock,
par value $0.01 per share.
(c) "Exchange Act" means the Securities Exchange Act
of 1934, as amended (or any similar successor statute), and the
rules and regulations thereunder, all as the same shall be in
effect at the time.
(d) "Person" means any individual, corporation,
association, partnership, business trust, joint stock company,
limited liability company, unincorporated association, joint
venture or other entity, or governmental or political subdivision
or agency thereof.
(e) "Registrable Securities" means the Shares and any
other securities issued or issuable in respect of or in exchange
for any of the Shares by way of a stock dividend or other
distribution on the Shares, stock split or in connection with a
combination of shares, recapitalization, merger, consolidation,
reclassification or exchange offer.
(f) "Piggyback Registration Expenses" means all
expenses incident to the Company's performance of or compliance
with Article 3, including, without limitation, all Commission
filing fees and National Association of Securities Dealers, Inc.
or stock exchange listing fees, all fees and expenses of
complying with state securities or blue sky laws, all printing
expenses, the fees and disbursements of counsel for the Company
and of its independent public accountants, including the expenses
of any special audits or "cold comfort" letters required by or
incident to such performance and compliance; provided, however,
that Piggyback Registration Expenses do not include (i) the fees
and costs of counsel and advisors to the selling Shareholders,
(ii) underwriting discounts and commissions, and (iii) transfer
taxes, if any, relating to sale of shares by the Shareholders.
2. Demand Registration under the Securities Act.
2.1 Number and Timing of Request. At any time during
the eight month period immediately following June 30, 1997, the
holders of Registrable Securities constituting at least eighty
percent (80%) of the total number of Registrable Securities then
outstanding may request the Company to register under the
Securities Act all of the Registrable Securities held by such
requesting holder(s). The holders of the Registrable Securities
may make only one such request. Promptly following receipt of any
request under this Section 2.1, the Company shall immediately
notify all other Shareholders, and shall use its reasonable best
efforts to register under the Securities Act, for public sale in
the manner specified in Section 2.4, the total number of shares
of Registrable Securities specified in the original request and
in any requests received from the other Shareholders within
twenty (20) days after receipt of such notice from the Company.
2.2 Right to Delay Registration. If, at the time the
Company receives a request for registration under this Article 2,
in the good faith judgment of a majority of the disinterested
2<PAGE>
members of the board of directors of the Company an undisclosed
material event has occurred and is continuing or is likely to
occur within ninety (90) days and public disclosure thereof would
have a material adverse affect on the Company or on the proposed
material transaction involving the Company, then the Company may,
at its option, delay the imposition of its obligations under this
Article 2 for up to sixty (60) days; provided, however, if the
Company elects to delay such obligations, the holders of a
majority of the Registrable Securities requesting such
registration may elect to withdraw such registration request,
and, if such request is withdrawn, such request shall not count
as a request hereunder.
2.3 Other Securities. The Company shall be entitled
to include in any registration statement referred to in this
Article 2, for sale in the manner specified herein, shares of
Common Stock to be sold by or for the account of other Persons
who may then be holding "piggyback" registration rights,
including, without limitation the Initial Shareholders.
2.4 Registration Procedure. If and whenever the
Company is required to effect the registration of any Registrable
Securities under the Securities Act as provided in this Article
2, the Company will as expeditiously as possible:
(a) prepare and file with the Commission a
registration statement on Form S-3 under the Securities Act
(or its equivalent) and use its best efforts to cause such
registration statement to become and remain effective
through the one year anniversary of the date of this
Agreement. Such registration statement shall be filed as a
"shelf registration" pursuant to Rule 415 promulgated under
the Securities Act, providing for the sale of shares
included therein on a delayed or continuous basis;
(b) prepare and file with the Commission such
amendments and supplements to such registration and the
prospectus used in connection therewith as may be necessary
to comply with the provisions of the Securities Act with
respect to the disposition of the Registrable Securities
covered by such registration statement, including, such
amendments and supplements as may be necessary to reflect
the intended method of disposition;
(c) use its best efforts to cause such
registration statement to be declared effective by the
Commission under the Securities Act as soon as practicable
to permit the disposition of the Registrable Securities by
the holders thereof in regular way transactions effected
without solicitation of the buyer on The Nasdaq National
Market or such other exchange or market upon which the
Company's shares are traded;
(d) use its best efforts to register or qualify
(or to secure an exemption therefrom) all Registrable
Securities covered by such registration statement under the
securities or blue sky laws of such jurisdictions as the
sellers thereof shall reasonably request. The foregoing
shall not obligate the Company (i) to qualify generally to
do business as a foreign corporation in any jurisdiction in
3<PAGE>
which it is not otherwise so qualified or subject or (ii) to
consent to service of process in any such jurisdiction or to
subject itself to taxation in any such jurisdiction;
(e) provide and cause to be maintained a transfer
agent and registrar for all Registrable Securities covered
by such registration statement from and after the effective
date of such registration statement; and
(f) if the Company shall list or maintain the
listing of any shares of Common Stock on any securities
exchange or national market system, use its best efforts to
list all Registrable Securities covered by such registration
statement on any securities exchange or national market
system on which any of the Registrable Securities are then
listed.
2.5 Underwriter; Expenses. (a) No underwriter shall
be used in connection with any registration under this Article 2,
and the Company shall select counsel and accountants to prepare
the registration statement requested hereunder.
(b) The Company and the Shareholders requesting
registration hereunder shall each pay fifty percent (50%) of the
expenses incident to the Company's performance of or compliance
with this Article 2, including, without limitation, all National
Association of Securities Dealers, Inc. or stock exchange listing
fees, all fees and expenses of complying with state securities or
blue sky laws, all printing expenses, the fees and disbursements
of counsel for the Company and of its independent public
accountants, including the expenses of any special audits or
"cold comfort" letters required by or incident to such
performance and compliance; provided, however, that the Company's
obligations under this Article 2 shall not exceed $25,000, and
the selling Shareholders shall pay all other such expenses;
provided, further, that the selling Shareholders shall be solely
responsible for any and all Commission filing fees and brokerage
commissions incurred in connection with the exercise of such
demand rights.
3. "Piggyback" Registration Under the Securities Act.
3.1 "Piggyback Rights.
(a) Right to Include Registrable Securities. If
the Company at any time after the date which is four months after
the date hereof and prior to the third anniversary of the date
hereof proposes to register any of its securities under the
Securities Act in connection with a public offering of Common
Stock (other than by a registration on Form S-4, Form S-8 or any
successor or similar forms) whether or not for sale for its own
account, then it shall give written notice to all holders of
Registrable Securities of the proposed filing, and the notice
shall inform such holders of their rights under this SECTION 3.1.
Upon the written request of any such holder, made within thirty
(30) days after receipt of any such notice by the Company, to
register any of its Registrable Securities (which request shall
specify the Registrable Securities intended to be disposed of by
4<PAGE>
such holder), the Company will use its best efforts to cause such
Registrable Securities to be included among the securities to be
covered by the registration statement otherwise proposed to be
filed by the Company, all to the extent requisite to permit the
sale or other disposition of such Registrable Securities by the
holder. Anything herein to the contrary notwithstanding, if at
any time after giving written notice of its intention to register
any securities and prior to the effective date of the
registration statement filed in connection with such
registration, the Company shall in good faith determine for any
reason not to register or to delay registration of such
securities, then the Company may, at its election, give written
notice of such determination to each holder of Registrable
Securities and, thereupon, (i) in the case of a determination not
to register, shall be relieved of its obligation under this
Section 3.1 to register any Registrable Securities in connection
with such registration (but not from its obligation to pay the
Piggyback Registration Expenses in connection therewith), and
(ii) in the case of a determination to delay registration, shall
be permitted to delay the registration of any Registrable
Securities, for the same period as the delay in registering such
other securities. Any holder of Registrable Securities may
withdraw its request for inclusion, in whole or in part, at any
time at least forty-eight (48) hours prior to the effective time
of the registration statement for such offering. The Company will
pay all Piggyback Registration Expenses in connection with each
registration of Registrable Securities requested pursuant to this
Section 3.1; provided that such fees or expenses for which the
Company shall not be liable shall be borne by all holders pro
rata on the basis of the amount of securities so registered;
provided, however, that if any such cost or expense is
attributable solely to one selling Shareholder and does not
constitute a normal cost or expense of such a registration, such
cost or expense shall be allocated to that selling Shareholder.
(b) Priority. In connection with any underwritten
offering of Common Stock being issued by the Company, the Company
shall not be required under Section 3.1(a) to include any
holder's Registrable Securities in such offering unless such
holder accepts the terms of the underwriting agreement with
respect to such offering as agreed upon between the Company and
the underwriters, and then only in such quantity as will not, in
the opinion of the underwriters, jeopardize the success of the
offering by the Company. If the underwriters of such
underwritten offering inform the Company in writing that in their
opinion the number of Registrable Securities requested to be
included in such registration statement exceeds the number that
can be sold in (or during the time of) such offering, or that the
inclusion of the Registrable Securities would materially
adversely affect the marketing of the securities to be sold by
the Company therein, then the Company may include all securities
proposed by the Company to be sold for its own account in the
offering and reduce the number of Registrable Securities
requested to be included in the offering and the number of
securities of all other shareholders of the Company to be
included in such registration (pro rata among all selling
shareholders, including, without limitation, all holders of the
Initial Registrable Shares electing to sell their shares, or in
such other proportions as may be mutually agreed to by all of the
selling shareholders) to the extent necessary to reduce the
number of securities to be included in the registration to the
level recommended by the underwriters.
5<PAGE>
(c) Lock-up Agreements. Each holder of
Registrable Securities to be distributed by the underwriters in
any underwritten offering under this Section 3.1 agrees, if so
required by such underwriters, not to effect any sale or
distribution of any equity securities of the Company during a
period of up to 180 days (or such shorter period as may be agreed
by such underwriters with any other holder of shares of Common
Stock or of any right to purchase shares of Common Stock)
beginning on the effective date of any underwritten registration
in which his securities are included (except as part of such
underwritten offering).
(d) Delay of Registration. No holder of
Registrable Securities shall have any right to take any action to
restrain, enjoin or otherwise delay any registration as the
result of any controversy that might arise with respect to the
interpretation or implementation of this Agreement.
3.2 Registration Procedures. If and whenever the
Company is required to use its best efforts to effect the
registration of any Registrable Securities under the Securities
Act as provided in Section 3.1, the Company will as expeditiously
as possible:
(a) prepare and file with the Commission the
appropriate registration statement to effect such
registration and use its best efforts to cause such
registration statement to become and remain effective for
the period of the disposition contemplated thereby;
provided, however, that the Company may discontinue any
registration of its securities which are not Registrable
Securities (and, under the circumstances specified in
Section 3.1(a), its securities which are Registrable
Securities) at any time prior to the effective date of the
registration statement relating thereto;
(b) prepare and file with the Commission such
amendments and supplements to such registration statement
and the prospectus used in connection therewith as may be
necessary to comply with the provisions of the Securities
Act with respect to the disposition of all Registrable
Securities covered by such registration statement, including
such amendments and supplements as may be necessary to
reflect the intended method of disposition;
(c) use its best efforts to cause such
registration statement to be declared effective by the
Commission under the Securities Act as soon as practicable
to permit the disposition of the Registrable Securities by
the holders thereof in regular way transactions effected
without solicitation of the buyer on The Nasdaq National
Market or such other exchange or market upon which the
Company's shares are traded;
(d) use its best efforts to register or qualify
(or to secure an exemption therefrom) all Registrable
Securities covered by such registration statement under the
securities or blue sky laws of such jurisdictions as the
sellers thereof shall reasonably request. The foregoing
shall not obligate the Company (i) to qualify generally to
do business as a foreign corporation in any jurisdiction in
which it is not otherwise so qualified or subject or (ii) to
6<PAGE>
consent to service of process in any such jurisdiction or to
subject itself to taxation in any such jurisdiction;
(e) provide and cause to be maintained a transfer
agent and registrar for all Registrable Securities covered
by such registration statement from and after the effective
date of such registration statement; and
(f) if the Company shall list or maintain the
listing of any shares of common stock on any securities
exchange or national market system, use its best efforts to
list all Registrable Securities covered by such registration
statement on any securities exchange or national market
system on which any of the Registrable Securities are then
listed.
4. Restrictive Legend. Each certificate representing
Registrable Securities issued, and, except as otherwise provided
in Section 5, each certificate issued upon exchange or transfer
of any Registrable Securities, shall be stamped or otherwise
imprinted with a legend substantially in the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "FEDERAL ACT"),
OR ANY STATE SECURITIES LAW, AND HAVE BEEN
ACQUIRED BY THE REGISTERED OWNER HEREOF FOR
PURPOSES OF INVESTMENT AND HAVE BEEN ISSUED
OR SOLD IN RELIANCE ON STATUTORY EXEMPTIONS
CONTAINED IN THE FEDERAL ACT OR AVAILABLE
UNDER APPLICABLE STATE SECURITIES LAWS. THE
SHARES MAY NOT BE SOLD, TRANSFERRED, OR
OTHERWISE DISPOSED OF EXCEPT IN A TRANSACTION
WHICH IS EXEMPT UNDER THE FEDERAL ACT AND ANY
OTHER APPLICABLE STATE SECURITIES LAWS OR
PURSUANT TO AN EFFECTIVE REGISTRATION UNDER
SUCH ACT AND LAWS; IN THE CASE OF RELIANCE
UPON AN EXEMPTION, THE COMPANY MUST HAVE
RECEIVED AN OPINION OF COUNSEL SATISFACTORY
TO IT THAT SUCH TRANSACTION IS EXEMPT AND
DOES NOT REQUIRE SUCH REGISTRATION OF THE
SHARES."
5. Notice of Proposed Transfer.
(a) Prior to any proposed transfer or other
disposition of any Registrable Security (other than under
circumstances described in Sections 2 or 3), the holder thereof
shall give written notice to the Company of its intention to do
7<PAGE>
so. Each such notice shall describe the manner of the proposed
transfer or disposition and, if requested by the Company, shall
be accompanied by an opinion of counsel reasonably satisfactory
to the Company to the effect that the proposed transaction may be
effected without registration under the Securities Act and
applicable state securities laws, whereupon the holder shall be
entitled to transfer or otherwise dispose of such Registrable
Security in accordance with the terms of its notice. Each
certificate for Registrable Securities transferred as provided
above shall bear the legend set forth in SECTION 4, except that
such certificate shall not bear such legend if (a) such transfer
is in accordance with the provisions of Rule 144 under the
Securities Act (or any other rule under the Securities Act
permitting public sale without registration thereunder) or (b)
the opinion of counsel referred to above is to the further effect
that the transferee and any subsequent transferee (other than an
affiliate of the Company) would be entitled to transfer such
securities in a public sale without registration under the
Securities Act or any applicable state securities law.
(b) The foregoing restrictions on transfer and
disposition of Registrable Securities shall terminate as to any
particular shares of Registrable Securities when such shares
shall have been effectively registered under the Securities Act
and sold or otherwise disposed by the seller thereof in
accordance with the method of disposition set forth in the
registration statement covering such shares. Whenever a holder
of Registrable Securities demonstrates to the Company (and its
counsel) that the provisions of Rule 144(k) of the Securities Act
are available to such holder without limitation, such holder
shall be entitled to receive from the Company, without expense, a
new certificate representing its shares of Registrable Securities
not bearing the restrictive legend set forth in SECTION 4.
6. Indemnification.
6.1 Indemnification by the Company. In the event of
any registration of any Registrable Securities under the
Securities Act, the Company will indemnify and hold harmless each
seller of Registrable Securities covered by such registration
statement, each of their respective officers, directors and
partners and each other Person, if any, who controls such seller,
within the meaning of Section 15 of the Securities Act, from and
against any losses, claims, damages or liabilities, joint or
several, to which such seller, director, officer, partner or
controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material
fact contained in any registration statement under which such
Registered Securities were registered under the Securities Act,
any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement
thereto, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statements therein not misleading, or arise out of or are
based upon any violation by the Company of any rule or regulation
or any action or inaction required by the Company in connection
with such registration and the Company will reimburse each such
seller, director, officer, partner and controlling person for any
8<PAGE>
legal or any other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the Company
shall not be liable in any such case if and to the extent that
any such loss, claim, damage or liability (or action in respect
thereof) arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made or
omitted in such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or
supplement in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such
seller, director, officer, partner or such controlling person
specifically for use in such registration statement, prospectus,
amendment or supplement, and, provided, further, that the Company
shall not be liable to any Person who participates as an
underwriter in the offering or sale of Registrable Securities or
any other Person, if any, who controls such underwriter, within
the meaning of the Securities Act, in any such case to the extent
that any such loss, claim, damage or liability (or action in
respect thereof) arises out of such Person's failure to send or
give a copy of the final prospectus on file with the Commission
at the time the registration statement becomes effective or in
the amended prospectus filed with the Commission pursuant to Rule
424(b) or any successor rule, as the same may be then
supplemented or amended, to the Person asserting an untrue
statement or alleged untrue statement or omission or alleged
omission, at or prior to the written confirmation of the sale of
Registrable Securities to such Person if such statement or
omission was corrected in such final prospectus and if under
applicable law a copy of such final prospectus was required to
have been given or sent to such Person by or on behalf of such
underwriter. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of
such seller, director, officer, partner or controlling person and
shall survive the transfer of such securities by such seller.
6.2 Indemnification by the Sellers. Each holder of
Registrable Securities that are registered by the Company
pursuant to Article 2 or 3 will, severally and not jointly,
indemnify and hold harmless the Company, each director of the
Company, each officer of the Company and each other Person, if
any, who controls the Company within the meaning of the
Securities Act, from and against any losses, claims, damages or
liabilities, joint or several, to which the Company, or any such
director, officer or controlling Person may become subject under
the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in any registration
statement under which such Registered Securities were registered
under the Securities Act, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, or omission or alleged omission
to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, if such
statement or alleged statement or omission or alleged omission
was made in reliance upon and in conformity with information
furnished in writing to the Company by or on behalf of such
seller in connection with such registration statement,
prospectus, amendment or supplement specifically for use therein.
9<PAGE>
Such indemnity shall remain in full force and effect, regardless
of any investigation made by or on behalf of the Company or any
such director, officer or controlling Person and shall survive
the transfer of such securities by such holder. In no event
shall any indemnity by a holder of Registrable Securities exceed
the aggregate price to the public (minus underwriter commissions
and discounts) of the Registrable Securities of such holder
included in such registration.
6.3 Notices of Claims, etc. Promptly after receipt by
an indemnified party of notice of the commencement of any action
or proceeding involving a claim referred to in this Article 6,
such indemnified party will, if a claim in respect thereof is to
be made against an indemnifying party, promptly give written
notice to the latter of the commencement of such action, provided
that the failure of any indemnified party to give notice as
provided herein shall not relieve the indemnifying party of its
obligations under this Article 6, except and to the extent that
the indemnifying party is prejudiced by such failure to give
notice. In case any such action is brought against an
indemnified party, the indemnifying party shall be entitled to
participate in and to assume the defense thereof, jointly with
any other indemnifying party similarly notified to the extent
that it may wish, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party
to such indemnified party of its election to assume the defense
thereof, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof
other than reasonable out-of-pocket costs of investigation and of
liaison with counsel so selected, provided, however, that, if the
defendants in any such action include both the indemnified party
and the indemnifying party and the counsel for the indemnified
party reasonably concludes that there may be a conflict of
interest between the indemnifying party and the indemnified party
in the conduct of the defense of such action and has advised the
indemnified party in writing, that such a conflict of interest
exists, the indemnified party shall have the right to select
separate counsel and to assume such legal defenses and otherwise
to participate in the defense of such action, with the expenses
and fees of such separate counsel and other expenses related to
such participation to be reimbursed by the indemnifying party as
incurred. No indemnifying party shall, without the prior written
consent of the indemnified party, consent to the entry of any
judgment or enter into any settlement with respect to any claim
or action for which indemnity is sought hereunder, and no
indemnifying party shall be liable for any settlement entered
into without its prior written consent.
6.4 Contribution. In order to provide for just and
equitable contribution to joint liability under the Securities
Act in any case in which either (i) any holder of Registrable
Securities exercising rights under this Agreement, or any
controlling person of any such holder, makes a claim for
indemnification pursuant to this ARTICLE 6 but it is judicially
determined (by the entry of a final judgment or decree by a court
10
<PAGE>
of competent jurisdiction and the expiration of time to appeal or
the denial of the last right of appeal) that such indemnification
may not be enforced in such case notwithstanding the fact that
this Article 6 provides for indemnification in such case, or (ii)
contribution under the Securities Act may be required on the part
of any such selling holder or any such controlling person in
circumstances for which indemnification is provided under this
Article 6; then, and in each such case, the Company and such
holder will contribute to the aggregate losses, claims, damages
or liabilities to which they may be subject (after contribution
from others) (A) in such proportion so that such holder is
responsible for the portion represented by the percentage that
the public offering price of its Registrable Securities offered
by the registration statement bears to the public offering price
of all securities offered by such registration statement, and the
Company is responsible for the remaining portion or (B) if the
allocation provided by clause (A) above is not permitted by
applicable law, in such proportion as is appropriate to reflect
not only the relative proceeds but also the relative fault of
each of the contributing parties, on the one hand, and the party
receiving contribution on the other hand in connection with
statements or omissions that resulted in such losses, claims,
damages, expenses or liabilities, as well as any other relevant
equitable considerations; provided, however, that, in any such
case, (X) no such holder will be required to contribute any
amount in excess of the public offering price of all such
Registrable Securities offered by it pursuant to such
registration statement; and (Y) no person or entity guilty of
fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) will be entitled to contribution from any
person or entity who was not guilty of such fraudulent
misrepresentation. Relative fault shall be determined by
reference to, among things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the
Company, or by the holder, and the relative intent, knowledge,
access to information and opportunity to correct or prevent such
untrue statement or omission. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages,
expenses or liabilities (or actions in respect thereof) referred
to above in this SECTION 6.4 shall be deemed to include any legal
or other expenses reasonably incurred by a party entitled to
contribution in connection with investigating or defending such
action or claim. Any party entitled to contribution will
promptly, after receipt of notice of commencement of any action
or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties under
this Section 6.4, notify such party or parties from whom
contribution may be sought, but the omission so to notify such
party or parties shall not relieve the party or parties from whom
contribution may be sought from any obligation it or they may
have hereunder or otherwise than under this Section 6.4, to the
extent that such party or parties were not adversely affected by
such omission. The contribution agreement set forth above shall
be in addition to any liabilities which any party may have at
common law or otherwise. The contribution provided for in this
Section 6.4 shall survive the termination of this Agreement and
shall remain in full force and effect regardless of any
investigation made by or on behalf of any indemnified party.
7. Obligations of Sellers. In connection with each
registration hereunder, and as a condition to the Company's
obligations hereunder to any selling Shareholder, each seller of
11<PAGE>
Registrable Securities will furnish to the Company in writing
such information with respect to such seller and its proposed
disposition as shall be reasonably necessary in order to insure
compliance with the Securities Act and with all other federal and
applicable state securities laws. Without limiting the
generality of the foregoing, in connection with each registration
covering an underwritten public offering, each seller of
Registrable Securities agrees to enter into the underwriting
agreement between the Company and such underwriters and to
complete and execute all questionnaires, powers of attorney, and
other documents or instruments reasonably requested under the
terms of the underwriting agreement. Further, no such holder
shall be required to make any representations or warranties to or
agreements with the Company or the underwriters other than
representations, warranties or agreements regarding such holder,
such holder's Registrable Securities and such holder's intended
method of distribution, and other information supplied in writing
by such holder to the Company specifically for use in the
applicable registration statement and any other representation
required by applicable law.
8. Amendments and Waivers. This Agreement may be
amended and the Company may take any action herein prohibited or
omit to perform any act required herein to be performed by it, if
the Company has obtained the written consent of the holders of
fifty percent (50%) or more of the Registrable Securities (by
number of shares). Each holder of any Registrable Securities at
the time or thereafter outstanding shall be bound by any consent
authorized by this Section 8, whether such Registrable Securities
shall have been marked to indicate such consent.
9. Inconsistent Agreements. Nothing contained herein
shall limit or restrict the Company's right to grant registration
rights to other Persons.
10. Notices. Except as otherwise provided in this
Agreement, all notices and other communications hereunder shall
be in writing and delivered personally, sent by pre-paid, first
class, certified or registered airmail, return receipt requested
or by an express courier service to the intended recipient
thereof at its address set forth below. Any such notice shall be
deemed to have been duly given immediately upon delivery in
person, or five days after mailing (or the second day after
delivery to an express courier service), and in proving the same
it shall be sufficient to show that the envelope containing the
notice was duly addressed, stamped and posted or that the
envelope was delivered to an express courier service, as the case
may be. The addresses of the parties for the purposes of this
Agreement are as follows:
If to Company: Suburban Lodges of America, Inc.
1000 Parkwood Circle
Suite 850
Atlanta, Georgia 30339
Attention: Secretary
with copy to: Kilpatrick Stockton LLP
1100 Peachtree Street
Atlanta, Georgia 30309
Attention: Michael H. Trotter, Esq.
12
<PAGE>
If to holders of
the Registrable
Securities: At their respective addresses of
record as maintained on the stock
records of the Company
11. Headings. The headings of the several articles
and sections of this Agreement are inserted for convenience of
reference only. They do not constitute a part of this Agreement
and shall not limit or otherwise affect the meaning or
interpretation of any provision hereof.
12. Governing Law. This Agreement has been executed
and delivered in the State of Georgia and shall be construed and
enforced in accordance with, and the rights of the parties shall
be governed by, the laws of the State of Georgia.
13. Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be deemed an
original, and all such counterparts shall together constitute one
and the same instrument.
14. Severability. Whenever possible, each provision
of this Agreement shall be interpreted in such a manner as to be
effective and valid under applicable law, but if any provision of
this Agreement is held to be invalid, illegal or unenforceable
under any applicable law or rule in any jurisdiction, such
provision will be ineffective only to the extent of such
invalidity, illegality or unenforceability in such jurisdiction,
without invalidating the remainder of this Agreement in such
jurisdiction or any other provision hereof in any other
jurisdiction.
15. Entire Agreement. This Agreement supersedes all
prior discussions and agreements between the parties with respect
to the subject matter hereof, and this Agreement contains the
sole and entire agreement of the parties with respect to the
matters covered hereby. This Agreement shall not be altered or
amended except by an instrument in writing signed by or on behalf
of the party entitled to the benefit of the provision against
whom enforcement is sought.
16. Waiver. Any term or condition of this Agreement
may be waived at any time by the party which is entitled to the
benefit thereof, but only if such waiver is evidenced by a
writing signed by such party. No failure on the part of any
party hereto to exercise, and no delay in exercising any right,
power or remedy created hereunder, shall operate as a waiver
thereof, nor shall any single or partial exercise of any right,
power or remedy by any such party preclude any other or further
exercise thereof or the exercise of any other right, power or
remedy. No waiver by any party hereto of any breach of or
default in any term or condition of this Agreement shall
constitute a waiver of or assent to any succeeding breach of or
default in the same or any other term or condition hereof.
17. Number and Gender. Where the context requires,
the use of the singular form herein shall include the plural, the
use of the plural shall include the singular, and the use of any
gender shall include any and all genders.
13<PAGE>
18. Resale of Registrable Securities. Each of the
undersigned Shareholders convenants and agrees that any of the
Registrable Securities that he/she sells pursuant to Article 2
hereof, shall be sold only through one or more of the following
named market makers in the Company's common stock, Montgomery
Securities, Smith Barney or J.C. Bradford.
[Signatures Appear on Following Page]
14
<PAGE>
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first above written.
SUBURBAN LODGES OF AMERICA, INC.
By: /s/ David E. Krischer
(CORPORATE SEAL) Name: David E. Krischer
Title: Chairman of the Board, Chief
Executive Officer and President
SHAREHOLDERS:
[readable] /s/ Kenneth L. Burson
Witness KENNETH L. BURSON
[unreadable] /s/ Claire Lee Burson
Witness CLAIRE LEE BURSON
[unreadable] /s/ Steve Simpson
Witness STEVE SIMPSON
[unreadable] /s/ Andrew C. Shipp, Sr.
Witness ANDREW C. SHIPP, SR.
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