<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
INTERSTATE HOTELS COMPANY
-------------------------
(Name of Issuer)
COMMON STOCK, $.01 PAR VALUE
----------------------------
(Title of class of securities)
460886104
---------
(CUSIP NUMBER)
David J. Fine
Interstate Hotels Company
Foster Place 10
680 Andersen Drive
Pittsburgh, Pennsylvania 15220
(412) 937-0600
--------------
(Name, address and telephone number of person authorized to
receive notices and communications)
July 1, 1997
------------
(Date of event which requires filing of this statement)
If the filing person has previously filed a statement
on Schedule 13G to report the acquisition which is the
subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4),
check the following box [ ].
Check the following box if a fee is being paid with
this statement [ ].
<PAGE> 2
<TABLE>
<CAPTION>
CUSIP NO. 460886104 13D Page 2 of 8 Pages
<S> <C> <C> <C> <C> <C>
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
(A) PHILLIP H. MCNEILL, SR.
(B) TRUST LEASING, INC.
EIN: 62-1557619
(C) TRUST MANAGEMENT, INC.
EIN: 62-14608010
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (A) [X]
N/A (B) [ ]
3 SEC use only
4 Source of funds*
SC (Exchange for common stock of unaffiliated corporation)
5 Check box if disclosure of legal proceedings is required
pursuant to item 2(d) or 2(e) [ ]
6 Citizenship or place of organization
(a) U.S./TENNESSEE
(b) U.S./TENNESSEE
(c) U.S./TENNESSEE
Number of 7 Sole voting power
shares
beneficially (a) Phillip H. McNeill, Sr. - 1,957,684
owned by (b) Trust Leasing, Inc. - 0
each (c) Trust Management, Inc. - 0
reporting
person with 8 Shared voting power
(a) Phillip H. McNeill, Sr. - 0
(b) Trust Leasing, Inc. - 0
(c) Trust Management, Inc. - 0
9 Sole dispositive power
(a) Phillip H. McNeill, Sr. - 1.957,684
(b) Trust Leasing, Inc. - 0
(c) Trust Management, Inc. - 0
10 Shared dispositive power
(a) Phillip H. McNeill, Sr. - 0
(b) Trust Leasing, Inc. - 0
(c) Trust Management, Inc. - 0
</TABLE>
2
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C> <C>
11 Aggregate amount beneficially owned by each reporting person
(a) Phillip H. McNeill, Sr. - 1,957,684
(b) Trust Leasing, Inc. - 978,842
(c) Trust Management, Inc. - 978,842
12 Check box if the aggregate amount in row (11) excludes
certain shares* [ ]
13 Percent of class represented by amount in row (11)
5.3%
14 Type of reporting person*
(A) PHILLIP H. McNEILL, SR. - IN
(B) TRUST LEASING, INC. - CO
(C) TRUST MANAGEMENT, INC. - CO
</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
3
<PAGE> 4
ITEM 1. SECURITY AND ISSUER.
This statement relates to the Common Stock, $.01 par value (the
"Common Stock") of Interstate Hotels Company ("Interstate"), a Pennsylvania
corporation, having its principal executive offices at 410 North Foster Place
10, 680 Andersen Drive, Pittsburgh, Pennsylvania 15220.
ITEM 2. IDENTITY AND BACKGROUND.
(a) This statement is being filed jointly by (i) Phillip H. McNeill,
Sr., an individual and resident of Tennessee, (ii) Trust Leasing, Inc., a
Tennessee corporation ("Trust Leasing") and (iii) Trust Management, Inc., a
Tennessee corporation ("Trust Management"). Trust Management is wholly owned
by Phillip H. McNeill, Sr. Trust Leasing is approximately 82% beneficially
owned by Mr. McNeill.
(b) The principal office and business addresses of each reporting
person ("Reporting Person") is set forth below:
<TABLE>
<CAPTION>
Name Address
---- -------
<S> <C>
Phillip H. McNeill, Sr. 4735 Spottswood
Suite 201
Memphis, TN 38117
Trust Leasing, Inc. 4735 Spottswood
Suite 201
Memphis, TN 38117
Trust Management, Inc. 4735 Spottswood
Suite 201
Memphis, TN 38117
</TABLE>
(c) Mr. McNeill's principal occupation is Chairman of the Board and
Chief Executive Officer of Equity Inns, Inc. He is also President and sole
Director of each of Trust Leasing and Trust Management.
(d) During the last five (5) years, none of the Reporting Persons has
been convicted in a criminal proceeding.
(e) During the last five (5) years, none of the Reporting Persons has
been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to
a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to federal or state securities laws
or finding any violation with respect to such laws.
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<PAGE> 5
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Effective November 15, 1996, Trust Leasing and Trust Management
received an aggregate of 1,957,894 limited partnership units ("Units") of
Crossroads/Memphis Partnership, L.P. ("Crossroads/Memphis L.P."), pursuant to a
Contribution Agreement dated October 4, 1996 (the "Contribution Agreement") by
and among Trust Leasing, Trust Management, Crossroads/Memphis Company, L.L.C.
and Crossroads/Memphis L.P., in exchange for the transfer and assignment of the
assets of Trust Leasing and Trust Management, including hotel leases and hotel
management contracts to Crossroads/Memphis L.P. The sole general partner of
Crossroads/Memphis L.P. is a wholly-owned subsidiary of Interstate Hotels
Corporation, whose parent is Interstate Hotels Company ("Interstate").
Effective July 1, 1997, Trust Leasing and Trust Management may elect
to cause Crossroads/Memphis L.P. to redeem the Units, on a one-for-one basis,
for an aggregate of 1,957,894 shares of Interstate Common Stock. Trust Leasing
and Trust Management must redeem and exchange their Units in Crossroads/Memphis
L.P. for shares of Interstate Common Stock prior to November 15, 2006.
ITEM 4. PURPOSE OF TRANSACTION.
(a) Under a Redemption and Stock Exchange Agreement dated November 15,
1996 (the "Redemption Agreement") and an accompanying Registration
Rights and Shareholders Agreement, each of Trust Leasing and Trust
Management (i) will have the right to tender and convert Units to
Interstate Common Stock and to demand registration of its shares
of Interstate Common Stock received upon such conversion at any
time after June 30, 1997, and (ii) will have the right to demand
up to two registrations in connection with any proposed public
offering of Common Stock by Interstate, with each such demand to
include up to 500,000 shares of Interstate Common Stock, prior to
November 15, 1999. Interstate shall cause to be filed as soon as
practicable after June 30, 1997 a shelf registration statement on
Form S-3 to cover the registration of the Interstate Common Stock
redeemable for Units by Trust Leasing and Trust Management.
However, Trust Leasing and Trust Management may not transfer
(except to certain permitted tranferees) more than 50% of the
Interstate Common Stock they are entitled to receive on or before
December 31, 1997.
(b) N/A
(c) N/A
(d) N/A
(e) N/A
5
<PAGE> 6
(f) N/A
(g) N/A
(h) N/A
(i) N/A
(j) N/A
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
The number of shares and the approximate ownership percentage of the
Common Stock beneficially owned by each Reporting Person is set forth below.
Mr. McNeill, the President and sole Director of each of Trust Leasing and Trust
Management, claims sole voting and investment power with respect to the
aggregate 1,957,894 shares of the Interstate Common Stock owned by Trust
Leasing and Trust Management.
<TABLE>
<CAPTION>
Name Number of Shares Percent*
---- ---------------- -------
<S> <C> <C>
Phillip H. McNeill, Sr. 1,957,894 5.3%
Trust Leasing, Inc. 978,947 2.6%
Trust Management, Inc. 978,947 2.6%
- --------------------
</TABLE>
* Based on 35,326,468 shares of Interstate Common Stock outstanding on
May 14, 1997 as reported in the Quarterly Report on Form 10-Q for Interstate
for the quarter ended March 31, 1997.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
See description of the Redemption Agreement described in Item 4(a) above.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1. Redemption and Stock Exchange Agreement, dated November 15, 1996,
by and among Crossroads/Memphis Partnership, L.P., Trust Leasing,
Inc. and Trust Management, Inc.
Exhibit 2. Contribution Agreement, dated October 4, 1996, by and among Trust
Leasing, Inc., Trust Management, Inc., Phillip H. McNeill, Sr.,
Crossroads/Memphis Company, L.L.C. and Crossroads/Memphis
Partnership, L.P.
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<PAGE> 7
SIGNATURE
After reasonable inquiry and to the best of each of the undersigned's
knowledge and belief, each of the undersigned certifies that the information
set forth in this statement is true, complete and correct.
TRUST LEASING, INC.
Dated: July 9, 1997 By:/s/ Phillip H. McNeill, Sr.
---------------------------
Name: Phillip H. McNeill, Sr.
-------------------------
Title: Chairman and CEO
------------------------
TRUST MANAGEMENT, INC.
Dated: July 9, 1997 By: /s/ Phillip H. McNeill, Sr.
----------------------------
Name: Phillip H. McNeill, Sr.
--------------------------
Title: Chairman
-------------------------
Dated: July 9, 1997 /s/ Phillip H. McNeill, Sr.
-------------------------------
Phillip H. McNeill, Sr.
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<PAGE> 8
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
<S> <C>
Exhibit 1 Redemption and Stock Exchange Agreement, dated November 15, 1996, by and among Crossroads/Memphis
Partnership, L.P., Trust Leasing, Inc. and Trust Management, Inc.
Exhibit 2 Contribution Agreement, dated October 4, 1996, by and among Trust Leasing, Inc., Trust Management,
Inc., Phillip H. McNeill, Sr., Crossroads/Memphis Company, L.L.C. and Crossroads/Memphis Partnership,
L.P.
</TABLE>
<PAGE> 1
EXHIBIT 1
REDEMPTION AND STOCK EXCHANGE AGREEMENT
November 15, 1996
THIS REDEMPTION AND STOCK EXCHANGE AGREEMENT (this "Agreement") is
entered into effective as of the 15th day of November, 1996, by and among
CROSSROADS/MEMPHIS PARTNERSHIP, L.P., a Delaware limited partnership (the
"Partnership"), TRUST LEASING, INC., a Tennessee corporation ("Trust Leasing"),
and TRUST MANAGEMENT, INC., a Tennessee corporation ("Trust Management") (Trust
Leasing and Trust Management being herein referred to individually as an
"Offeree" and collectively as the "Offerees").
W I T N E S S E T H:
WHEREAS, the Partnership desires to grant the Offerees the right to
cause the Partnership to redeem, 'and the Offerees desire to grant to the
Partnership the right to redeem, any or all of the Offerees' interests in the
Partnership in exchange for shares of Common Stock (as hereinafter defined),
upon and subject to the terms and conditions hereinafter set forth in this
Agreement;
NOW, THEREFORE, in consideration of the mutual promises and agreements
set forth herein, the adequacy and sufficiency of which are hereby
acknowledged, and intending to be legally bound, the parties hereto agree as
follows:
1. Definitions. As used in this Agreement, the following terms
shall have the following meanings, whether used in the singular or the plural:
"Act" means the Securities Act of 1933, as amended, and the rules and
regulations of the SEC thereunder, all as the same shall be in effect at the
relevant time.
"Business Day" means any Day on which the New York Stock Exchange is
open for trading.
"Capital Stock" means the common stock and preferred stock authorized
to be issued by the Company in the Amended and Restated Articles of
Incorporation of the Company.
"Code" means the Internal Revenue Code of 1986, as the same shall be
in effect at the relevant time.
"Common Stock" means the common stock of the Company, as defined in
the Amended and Restated Articles of Incorporation of the Company, par value
$.01 per share.
<PAGE> 2
"Company" means Interstate Hotels Company, a Pennsylvania corporation,
and its successors and assigns.
"Contribution Agreement" means the Contribution Agreement by and among
the Offerees, Phillip H. McNeill, Sr., Crossroads/ Memphis Company, L.L.C. and
the Partnership, dated October 4, 1996.
"Day" means each calendar day, including Saturdays, Sundays and legal
holidays; provided, however, that if the Day on which a period of time for
consent or approval or other action ends is not a Business Day, such period
shall end on the next Business Day.
"Determination" is defined in Section 2 hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission thereunder, all as the same
shall be in effect at the relevant time.
"Exchange Number of Shares" means, with respect to a tender of
Partnership Units for exchange hereunder, the number of shares of Common Stock
equal to the number of Partnership Units tendered by the applicable Offeree.
The aggregate Exchange Number of Shares, assuming all Partnership Units of the
Offerees are tendered, will not exceed 1,957,894 shares of Common Stock
(assuming the number of shares of Common Stock held by the Partnership does not
change as a result of the circumstances described in Section 1.3(c) of the
Partnership Agreement).
"Fair Market Value of the Partnership Interests" means an amount equal
to $46,500,000, assuming the Offerees contribute to the Partnership all of the
Companies' Assets (as defined in the Contribution Agreement). In the event the
Offerees contribute less than all of the Companies' Assets to the Partnership,
the Fair Market Value of the Partnership Interests shall mean $46,500,000 less
the amount allocated to the Companies' Assets which were not contributed to the
Partnership, as set forth in Sections 1.8 and 6.17 of the Contribution
Agreement.
"HSR" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.
"Letter of Transmittal" means the form of letter attached hereto and
made a part hereof pursuant to which an Offeree may tender its Partnership
Units in exchange for shares of Common Stock.
"Partnership Agreement" means the Amended and Restated Agreement of
Limited Partnership of Crossroads/Memphis
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Partnership, L.P., dated as of November 15, 1996, as the same may be amended or
supplemented.
"Partnership Interest" means an ownership interest, as a Partner, in
the Partnership, as such term is defined in the Partnership Agreement.
"Partnership Unit" means a fractional, undivided share of the
Partnership Interests of all the partners of the Partnership, as such term is
defined in the Partnership Agreement.
"Person" or "Persons" means an individual, a partnership (general or
limited), corporation, limited liability company, joint venture, business
trust, cooperative, association, or other form of business organization,
whether or not regarded as a legal entity under applicable law, a trust (inter
vivos or testamentary), an estate of a deceased, insane or incompetent person,
a quasi-governmental entity, a government or any agency, authority, political
subdivision, or other instrumentality thereof, or any other entity.
"Registration Rights Agreement" means the Registration Rights and
Shareholders Agreement in the form attached to this Agreement as Exhibit "A",
to be entered into by the Company and the Offerees on or before the first
Settlement Date, as the same may be amended or supplemented.
"SEC" is defined in Section 3 hereof.
"Settlement Date" is defined in Section 3 hereof.
2. Terms of This Agreement. (a) Upon the terms and subject to
the conditions of this Agreement, the Partnership will exchange shares of
Common Stock for outstanding Partnership Units owned by an Offeree which are
properly tendered. Notwithstanding any other provision of this Agreement to
the contrary, this Agreement and the rights of the Offerees to tender their
Partnership Units in exchange for Common Stock shall terminate on that date
which is ten (10) years from the date hereof.
(b) Any exchange of Partnership Units hereunder shall
constitute a representation and warranty to the Partnership that:
(i) The Offeree's interest in the Partnership and
the Common Stock to be acquired by such Offeree will be acquired for
the Offeree's own account and not with a view to, or present intention
of, distribution thereof in violation of the Act or any other law,
rule, or regulation of the United States or any state which regulates,
restricts or affects the ownership or the sale, assignment,
disposition or transfer of any security, including, without
limitation, the Act and the Investment Company Act
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(collectively, the "Securities Laws"), and will not be disposed of in
contravention of the Act or any other Securities Laws (without any
limitations of any rights such Offeree may have under the Registration
Rights Agreement);
(ii) The Offeree is sophisticated in financial
matters and is able to evaluate the risks and benefits of its
investment in the Partnership and/or the Company;
(iii) The Offeree has had an opportunity to ask
questions and received answers concerning the terms and conditions of
the acquisition of its interest in the Partnership and the Common
Stock and had full access to such other information concerning the
Company and the Partnership as the Offeree has requested;
(iv) The Offeree is able to bear the economic risk
of its investment in the Partnership and/or the Common Stock for an
indefinite period of time;
(v) The Offeree has such knowledge, skill and
experience in business, financial and investment matters so that it is
capable of evaluating the merits and risks of an investment in the
Partnership and/or the Common Stock (to the extent the Offeree has
deemed it appropriate to do so, the Offeree has retained, and relied
upon, appropriate professional advice regarding the tax, legal and
financial merits and consequences of an investment of the Partnership
and/or the Common Stock;
(vi) The Offeree has made, either alone or
together with advisors (if any), such independent investigation of the
Partnership and the Company, their management and related matters as
the Offeree deems to be, or such advisors (if any) have advised to be,
necessary, desirable or advisable in connection with an investment in
the Partnership and/or the Common Stock, and the Offeree and the
Offeree's advisors (if any) have received all information and data
which the Offeree or such advisors (if any) believe to be necessary to
reach an informed decision as to the advisability of an investment in
the Partnership and/or the Company, and the Offeree is familiar with
the business and financial condition, operation and prospects of the
Partnership and the Company;
(vii) The Offeree has reviewed its financial
condition and commitments, alone and together with the Offeree's
advisors, and that, based on such review, the Offeree is satisfied
that (a) the Offeree has adequate means of providing for its financial
needs and possible contingencies and has assets or sources of income
which taken together, are more than sufficient and the Offeree
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could bear the risk of loss of the Offeree's entire investment in the
Partnership and/or the Company, (b) the Offeree has no present or
contemplated future need to dispose of all or any portion of its
interest in the Partnership or the Common Stock to satisfy any
existing or contemplated undertaking, need or indebtedness, and (c)
the Offeree is capable of bearing the economic risk of an investment
in the Partnership and/or the Common Stock for the indefinite future,
and the Offeree agrees to furnish any additional information requested
by the Company or the Partnership to assure compliance of this
transaction was applicable Federal and State securities laws.
(c) This Agreement is a continuous offer and may not be
withdrawn, changed or modified by the Partnership without the prior written
consent of each of the Offerees; provided, however, that a change or
modification that is for the benefit of, and not adverse to the rights of, the
Offerees may be made unilaterally by the Partnership; provided further,
however, that a change or modification that is only adverse to the rights of
one or more Offeree(s) may be made with the prior written consent of only each
such Offeree(s), but in any case, prompt written notice of such change or
modification shall be given to all Offerees.
(d) The total aggregate number of shares of Common Stock
delivered in exchange for tendered Partnership Units shall be 1,957,894 (as
adjusted to reflect any stock splits, stock dividends or other increases or
decreases in the number of such shares as a result of the same or similar types
of corporate action). All determinations (each, a "Determination") of the
number of shares of Common Stock to be delivered pursuant to a proper tender of
Partnership Units will be made by the general partner of the Partnership in its
sole and absolute discretion but in accordance with the provisions hereof,
which Determination will, in the absence of manifest error, be binding upon
each tendering Offeree.
(e) No tendering Offeree will have any rights as a
shareholder of the Company until such time as that person becomes a holder of
record of shares of Common Stock.
(f) Notwithstanding any other provision of this Agreement
to the contrary, it shall be an express condition precedent to the obligations
of the Partnership to deliver any shares of Common Stock to the Offerees
pursuant to this Agreement on the first Settlement Date for the Offerees to
have entered into the Registration Rights Agreement.
3. Acceptance for Payment and Payment for Partnership Units. (a)
Upon the terms and subject to the conditions of this Agreement, the Partnership
will deliver shares of Common Stock for Partnership Units properly tendered on
that date (the
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"Settlement Date") which is the later of: (i) the expiration of two (2)
Business Days from the date that the Partnership receives the tender of the
Partnership Units in proper form and meeting all of the requirements of this
Agreement, and (ii) the expiration or termination of the waiting period
applicable to each tender, if any, under HSR. The Partnership agrees to use
its best efforts to obtain an early termination of the waiting period
applicable to each tender, if any, under HSR. Furthermore, each tender and the
issuance of Common Stock with respect thereto will be subject to any change in
securities or other applicable law imposing limits or conditions on such tender
or the issuance of Common Stock with respect thereto. In all cases, payment
for the Partnership Units tendered pursuant to this Agreement will be made only
after receipt by the Partnership of a properly completed and duly executed
Letter of Transmittal and any other documents required by the Letter of
Transmittal.
(b) Under no circumstances will interest be paid by the
Company or the Partnership by reason of any delay in making such issuance or
delivery of shares of Common Stock as a result of the conditions set forth in
the preceding paragraph.
(c) The Partnership, effective as of the Settlement Date
with respect to any Partnership Units tendered to and acquired by the
Partnership, assumes all obligations related to the tendered Partnership Units
arising from and after the applicable Settlement Date and will hold the Person
tendering those Partnership Units harmless from any such obligations other than
with respect to any breach of any representation contained in the Letter of
Transmittal to be delivered in connection with the exercise of rights pursuant
to this Agreement.
4. Procedure for Tendering Partnership Units.
(a) Subject to the conditions set forth herein, each
tendering Offeree may tender any or all Partnership Units owned by such Offeree
by delivering to the Partnership, c/o Crossroads/ Memphis Company, L.L.C.,
Foster Plaza Ten, 680 Andersen Drive, Pittsburgh, Pennsylvania 15220; Attn:
Secretary (or such other address as the general partner of the Partnership
shall provide in writing to each Offeree), a completed and duly executed Letter
of Transmittal and any other documents required by the Letter of Transmittal.
(b) Unless an exception applies under applicable law and
regulations, the Partnership will be required to withhold, and will withhold,
31 percent (or such other amount as subsequent law may require) of the gross
proceeds (based upon dollar equivalent of shares of Common Stock) paid to a
tendering Offeree unless the Offeree pursuant to this Agreement provides his
tax identification number (employer identification number or Social Security
Number) and certifies that such number is correct.
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<PAGE> 7
Therefore, unless such an exception exists and is proved in a manner
satisfactory to the Partnership, each tendering Offeree should complete and
sign the main signature form on the Letter of Transmittal and sign the
Substitute Form W-9 included as part of the Letter of Transmittal, so as to
provide the information and certification necessary to avoid backup
withholding.
(c) The tender of Partnership Units pursuant to the
foregoing will constitute a binding agreement between the tendering Offeree and
the Partnership upon the terms and subject to the conditions of this Agreement
and will not be subject to withdrawal or change.
(d) All questions as to the validity and form of any
tender of Partnership Units will be determined in the sole discretion of the
Partnership, which determination shall be final and binding.
5. Rights as a Partner. Until the Settlement Date, each
tendering Offeree shall continue to own its respective tendered Partnership
Units, and will continue to be treated as the holder of such tendered
Partnership Units for all purposes of the Partnership Agreement, including,
without limitation, for purposes of voting, consent, allocations and
distributions (subject only to reasonable accounting conventions adopted by the
Partnership for purposes of determining the partners' varying percentage
interests in the Partnership during the taxable year). Tendered Partnership
Units will be transferred to the Partnership only upon receipt by the tendering
Offeree of Common Stock in payment in full therefor.
6. Cash Options. Notwithstanding any other provision of this
Agreement to the contrary, with regard to any Partnership Units properly
tendered by an Offeree, if such Offeree advises either the Partnership or the
Company that such Offeree intends within 30 days thereafter to exercise any of
its registration rights under the Registration Rights Agreement, then at the
sole and absolute discretion of the Partnership, part or all of such
Partnership Units may be redeemed by the Partnership (or one or more of its
affiliates) in exchange for cash (in amounts as set forth below), otherwise
pursuant to the terms of this Agreement. The amount of cash paid for such
Partnership Units will be equal to the Fair Market Value of the Common Stock
which the Offeree would have received had such Partnership Units been tendered
in exchange for shares of Common Stock.
7. Right to Set Off. Notwithstanding any other provision of this
Agreement, the Contribution Agreement, the Registration Rights Agreement or any
other agreement relating thereto, the Partnership will have the absolute right
to set off against amounts owed to the Offerees (whether cash or shares of
Common
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<PAGE> 8
Stock) for any amounts owed by any of the Offerees to the Partnership, the
Company or to their affiliates.
8. Miscellaneous.
(a) Successors and Assigns; No Third-Party Beneficiaries.
The stipulations, terms, covenants and agreements contained in this Agreement
shall inure to the benefit of, and shall be binding upon, the parties hereto
and their respective successors and assigns and nothing herein expressed or
implied shall give or be construed to give to any person or entity, other than
the parties hereto and such successors and assigns, any legal or equitable
rights hereunder.
(b) Assignment. This Agreement may not be assigned by an
Offeree without the consent of the Partnership. Notwithstanding any such
assignment, the assigning party will continue to remain primarily liable under
this Agreement.
(c) Notices. All notices, demands or requests made
pursuant to, under or by virtue of this Agreement must be in writing and shall
be (i) personally delivered, (ii) delivered by express mail, Federal Express or
other comparable overnight courier service, (iii) telecopied or (iv) mailed to
the party to which the notice, demand or request is being made by certified or
registered mail, postage prepaid, return receipt requested, as follows:
To a Offeree:
4735 Spottswood #102
Memphis, TN 38117
Attention: Mr. Phillip H. McNeill, Sr.
Facsimile: 901-761-3945
With a copy to:
Bogatin Law Firm
860 Ridge Lake Blvd., Suite 360
Memphis, Tennessee 38120
Attention: Patrick G. Arnoult, Esq.
Facsimile: 901/767-1234
To the Partnership:
Interstate Hotels Company
Foster Plaza Ten
680 Andersen Drive
Pittsburgh, Pennsylvania 15220
Attention: Mr. W. Thomas Parrington, Jr.
Facsimile: 412-937-8053
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<PAGE> 9
with copies thereof to:
Interstate Hotels Company
Foster Plaza Ten
680 Andersen Drive
Pittsburgh, Pennsylvania 15220
Attention: Marvin I. Droz, Esq.
Facsimile: 412-937-3265
All notices (i) shall be deemed to have been given on the date that the same
shall have been delivered in accordance with the provisions of this Section and
(ii) may be given either by a party or by such party's attorneys named above.
Any party may, from time to time, specify as its address for purposes of this
Agreement any other address upon the giving of ten (10) days' notice thereof to
the other parties.
(d) Amendments. This Agreement may not be amended,
modified, supplemented or terminated, nor may any of the obligations of the
parties hereto be waived, except by written agreement executed by the party or
parties to be charged.
(e) Waiver. Any party by written notice to the other
parties may (a) extend the time for performance of any of the obligations or
other actions of the other under this Agreement, (b) waive any inaccuracies in
the representations or warranties of the other contained in this Agreement, (c)
waive compliance with any of the conditions or covenants of the other contained
in this Agreement or (d) waive or modify a performance of any of the
obligations of the other under this Agreement; provided however, that no such
party may, without the prior written consent of such other party, make or grant
such extension of time, waiver of inaccuracies or compliance or waiver or
modification of performance with respect to its (or any of its affiliates')
representations, warranties, conditions or covenants hereunder. Except as
provided in the immediately preceding sentence, no action taken pursuant to
this Agreement will be deemed to constitute a waiver of compliance with any
representations, warranties or covenants contained in this Agreement and will
not operate or be construed as a waiver of any subsequent breach, whether of a
similar or dissimilar nature.
(f) Remedies. The parties hereto will be entitled to
enforce their rights under this Agreement specifically (without posting a bond
or other security), to recover damages by reason of any breach of any provision
of this Agreement and to exercise all other rights existing in their favor.
The parties hereto agree and acknowledge that money damages will not be an
adequate remedy for any breach of the provisions of this Agreement and that any
party may in its sole discretion apply to any court of law or equity or
competent jurisdiction for specific performance
9
<PAGE> 10
and/or injunctive relief in order to enforce or prevent any violation of the
provisions of this Agreement.
(g) Governing Law. This Agreement shall be governed by,
interpreted under, and construed and enforced in accordance with the
substantive laws of the Commonwealth of Pennsylvania, without giving effect to
the principles of conflict of laws thereof.
(h) Submission to Jurisdiction. Any action arising out
of this Agreement may be brought in the state or federal courts of
Pennsylvania. The parties hereto do hereby irrevocably submit to the exclusive
jurisdiction of the appropriate state or federal court in Pennsylvania for the
purpose of any suit, action, proceeding or judgment relating to or arising out
of this Agreement. Each Offeree and the Partnership further agrees that
service of process, summons, notice or document by U.S. registered mail to such
party's respective address set forth above shall be effective service of
process for any action, suit or proceeding in Pennsylvania with respect to any
matters to which it has submitted to jurisdiction as set forth above in the
immediately preceding sentence. Each Offeree and the Partnership irrevocably
and unconditionally waives any objection to the laying of venue of any action,
suit or proceeding arising out of this Agreement or the transactions
contemplated hereby in (a) the Supreme Court of the Commonwealth of
Pennsylvania or (b) the United States District Court for the Western District
of Pennsylvania, and hereby further irrevocably and unconditionally waives and
agrees not to plead or claim in any such court that any such action, suit or
proceeding brought.in any such court has been brought in an inconvenient forum.
The parties hereto unconditionally waive any right to a jury trial for any
action, suit or proceeding arising out of this Agreement or the transactions
contemplated hereby.
(i) Severability. If any term or provision of this
Agreement or the application thereof to any person or circumstances shall, to
any extent, be invalid or unenforceable, the remainder of this Agreement or the
application of such term or provision to persons or circumstances other than
those as to which it is held invalid or unenforceable shall not be affected
thereby, and each term and provision of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.
(j) Section Headings. The headings of the various
Sections of this Agreement have been inserted only for purposes of convenience,
are not part of this Agreement and shall not be deemed in any manner to modify,
explain, expand or restrict any of the provisions of this Agreement.
10
<PAGE> 11
(k) Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, and it shall
not be necessary in making proof of this Agreement to produce or account for
more than one such counterpart.
(1) Gender. Whenever the context shall so require, all
words herein in any gender shall be deemed to include the masculine, feminine
or neuter gender, and all singular words shall include the plural, and all
plural words shall include the singular.
(m) Further Assurances. From time to time, as and when
requested by any party hereto, the other parties will execute and deliver, or
cause to be executed and delivered, all such documents and instruments as may
be reasonably necessary to consummate the transactions contemplated by this
Agreement.
(n) Certain Interpretive Matters and Definitions. (a)
unless the context otherwise requires, (i) all references to Section, Articles,
Schedules or Exhibits are to Sections, Articles, Schedules or Exhibits of or to
this Agreement, (ii) each term defined in this Agreement has the meaning
assigned to it in this Agreement, (iii) each accounting term not otherwise
defined in this Agreement has the meaning assigned to it in accordance with
generally accepted accounting principles and practices and (iv) the word "or"
is disjunctive but not necessarily exclusive. All references to "$" or dollar
amounts will be to lawful currency of the United States of America.
(b) No provision of this Agreement will be
interpreted in favor of, or against, any of the parties hereto by
reason of the extent to which any such party or its counsel
participated in the drafting thereof or by reason of the extent to
which any such provision is inconsistent with any prior draft hereof
or thereof.
(o) This Agreement. The words "herein," "hereof,"
"hereunder," "hereby," "this Agreement" and other similar references shall be
construed to mean and include this Redemption and Stock Exchange Agreement and
all amendments thereof and supplements thereto, unless the context should
clearly indicate or require otherwise.
11
<PAGE> 12
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the day and year first above written.
CROSSROADS/MEMPHIS PARTNERSHIP,
L.P., a Delaware limited partnership
By: Crossroads/Memphis Company, L.L.C.,
a Delaware limited liability
company, General Partner
By: /s/ Kevin P. Kilkeary
-------------------------------
Name: Kevin P. Kilkeary
--------------------
Title:
-------------------
TRUST LEASING, INC., a Tennessee corporation
By: /s/ Phillip H. McNeill, Sr.
---------------------------------------
Name: Phillip H. McNeill, Sr.
-----------------------------
Title: President
----------------------------
TRUST MANAGEMENT, INC., a Tennessee corporation
By: /s/ David L. Levine
------------------------------------
Name: David L. Levine
-----------------------------
Title: President
----------------------------
12
<PAGE> 13
LETTER OF TRANSMITTAL
To Tender Partnership Units
Pursuant to the Redemption and Stock Exchange Agreement
Dated as of _________________ __, 1996,
among
Crossroads/Memphis Partnership, L.P.
and
Trust Leasing, Inc.
and
Trust Management, Inc.
TO: Crossroads/Memphis Partnership, L.P.
Foster Plaza Ten
680 Andersen Drive
Pittsburgh, Pennsylvania
Attn: General Partner
Description of Partnership Units:
- -----------------------------------------------------------------------------
Name and Addresses of Offeree:
-------------------------------------------
-------------------------------------------
-------------------------------------------
Number of Units Tendered:
----------------------------------
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Gentlemen:
The undersigned hereby tenders to Crossroads/Memphis Partnership,
L.P., a Delaware limited partnership ("Partnership"), the above-described
Partnership Units as defined in the Redemption and Stock Exchange Agreement,
dated as of ___________ __, 1996 (the "Agreement"), in accordance with the
terms and conditions of the Agreement and this Letter of Transmittal (which
together constitutes the "Offer"), receipt of which is hereby acknowledged.
All terms used herein but not defined herein are used as defined in the
Agreement.
<PAGE> 14
Subject to, and effective upon, issuance or delivery of shares of Common
Stock for the Partnership Units tendered herewith, the undersigned hereby
assigns and transfers to the Partnership all right, title and interest in and
to all the Partnership Units that are being tendered hereby and irrevocably
constitutes and appoints the Partnership (and its general partner) as its
attorney-in-fact (the "Agent"), with full power of substitution (such power of
attorney being deemed to be an irrevocable power coupled with an interest), to
(a) present such Partnership Units for transfer or redemption on the
Partnership's books (b) except to the extent tendered to the Partnership for
redemption, receive all rights, privileges and benefits, and any and all
obligations and liabilities appertaining thereto and otherwise exercise all
rights of beneficial ownership of such Partnership Units, all in accordance
with the terms of the Offer and (c) execute and enter into on behalf of such
Offeree any and all documents or instruments of conveyance or assignment, and
any amendment to the Partnership Agreement or to the Certificate of Limited
Partnership.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the tendered
Partnership Units and that upon payment, the Partnership will acquire
unencumbered title thereto, free and clear of all liens, restrictions, charges
and encumbrances and the same will not be subject to any adverse claim. The
undersigned hereby represents and warrants that all representations and
warranties made by the undersigned in the Agreement are true and correct on the
date of this Letter of Transmittal and will continue to be true and correct on
the Settlement Date (as defined in the Agreement), including specifically,
those representations and warranties contained in Section 2(b) of the
Agreement. The undersigned will, upon request, execute any additional
documents deemed by the Partnership to be reasonably necessary or desirable to
complete the sale, assignment and transfer of the tendered Partnership Units.
All authority conferred or agreed to be conferred in this Letter of
Transmittal shall not be affected by, and shall survive, the dissolution,
termination or bankruptcy of the undersigned, and any obligation of the
undersigned hereunder shall be binding upon the successors, assigns, heirs,
executors, administrators and legal representatives of the undersigned.
The undersigned understands that a tender of Partnership Units pursuant to
the Agreement constitutes a binding agreement between the undersigned and the
Partnership upon the terms and subject to the conditions of the Agreement.
This tender is irrevocable.
The Partnership, effective as of the Settlement Date, will assume all
obligations related to the Partnership Units tendered to the Partnership which
arise from and after the applicable
<PAGE> 15
Settlement Date and will hold the undersigned harmless from such obligations,
including any liabilities, demands, claims, actions or causes of action,
assessments, losses, fines, penalties, costs, damages and expenses as a result
of or arising out of the ownership of such tendered Partnership Units.
Partnership Units tendered to and acquired by the Partnership will be
cancelled, and the remaining Partnership Units of the Offeree tendering such
Partnership Units, if any, will be unchanged.
The Partnership and the undersigned agree that they will cooperate with
each other and will make, execute, acknowledge, deliver, record and file, or
cause to be made, executed, acknowledged, delivered, recorded and filed, at
such times and places as the other may reasonably deem necessary, all other and
further documents and instruments (including, but not limited to, any and all
documents or instruments of conveyance or assignment, and amendments to the
Partnership Agreement and the Certificate of Limited Partnership), and will
take all other and further actions, as the other may reasonably request from
time to time in order to effectuate the purposes and provisions of the tender
made pursuant to this Letter of Transmittal.
Any notice, delivery or mailing should be made to the applicable party at
the address set forth in the Agreement for such party.
The undersigned understands that, notwithstanding the foregoing, with
regard to any Partnership Units properly tendered by an Offeree, if such
Offeree advises the Partnership or the Company that such Offeree intends within
30 days thereafter to exercise any of its registration rights under the
Registration Rights Agreement, then at the sole and absolute discretion of the
Partnership, part or all of such Partnership Units may be redeemed by the
Partnership in exchange for cash, in an amount equal to the Fair Market Value
of the Common Stock (as defined in the Agreement) of the Common Stock which the
Offeree would have received had such Partnership Units been exchanged for
shares of Common Stock, otherwise pursuant to the terms of the Agreement and
this Letter of Transmittal.
<PAGE> 16
Mail certificate(s) for shares of Common Stock to:
Name
------------------------------------------------------------------------
(please print)
Address
---------------------------------------------------------------------
- -----------------------------------------------------------------------------
(include Zip Code)
- -----------------------------------------------------------------------------
(Tax Identification or Social Security Number)
SIGN HERE
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
(Signature(s) of holder of Partnership Units)
If signature is by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, please set-forth full title.
Dated
-----------------------------------------------------------------------
Name(s)
---------------------------------------------------------------------
(please print)
Capacity
--------------------------------------------------------------------
(Full Title)
Address
---------------------------------------------------------------------
- -----------------------------------------------------------------------------
(include Zip Code)
Area Code and Tel. No.
------------------------------------------------------
Tax Identification or
Social Security No.
---------------------------------------------------------
(Complete Substitute Form W-9)
<PAGE> 17
INSTRUCTIONS
Forming Part of the Terms and Conditions of the
Agreement
1. Delivery of Letter of Transmittal. This Letter of Transmittal
is to be completed by the record holder of the applicable Partnership Units. A
properly completed and duly executed Letter of Transmittal, and any other
documents required by this Letter of Transmittal, must be received by the
Partnership. No alternative, conditional or contingent tenders will be
accepted.
2. Inadequate Space. If the space provided herein is inadequate,
the information required should be listed on a separate schedule attached
hereto.
3. Partial Tenders. If fewer than all the Partnership Units are
to be tendered, fill in the Number of Partnership Units represented by the
Partnership Units which are to be tendered in the box entitled Number of
Partnership Units Tendered.
4. Signatures on Letter of Transmittal. The signature must
correspond with the name as written on the signature page of the Partnership
Agreement without any change whatsoever.
5. If this Letter of Transmittal is signed by trustees,
executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary--or representative capacity, each
person should so indicate when signing, and proper evidence satisfactory to the
Partnership of their authority so to act must be submitted.
6. Waiver of Conditions. The Partnership reserves the right to
waive any of the specified conditions of the Offer in the case of the
Partnership Units tendered.
7. Back-up Withholding. Under the Federal income tax law, a
person surrendering Partnership Units must provide the Partnership with his
correct taxpayer identification number ("TIN") on Substitute Form W-9 below
unless an exemption applies. If the correct TIN is not provided, a $50 penalty
may be imposed by the Internal Revenue Service and payments made in exchange
for the surrendered Partnership Units may be subject to back-up withholding of
that rate provided by the Federal income tax law (such rate being at the date
hereof, 31%). The TIN that must be provided is that of the record holder of
the Partnership Units.
<PAGE> 18
IMPORTANT TAX INFORMATION
Under Federal income tax laws, a holder whose tendered Partnership
Units are accepted for payment is required by law to provide the Partnership
(as payer) with its correct taxpayer identification number on Substitute Form
W-9 below. If the Partnership is not provided with the correct taxpayer
identification number, the holder may be subject to a $50 penalty imposed by
the Internal Revenue Service. In addition, payments that are made to such
holder with respect to Partnership Units purchased pursuant to the Offer may be
subject to back-up withholding.
If back-up withholding applies, the Partnership is required to
withhold that rate provided by the Federal income tax law (such rate being at
the date hereof, 31% of any such payments made to the holder of Partnership
Units). Shares of Common Stock otherwise deliverable hereunder may, at the
expense (and with all risk of loss for the account) of the undersigned, be sold
to pay such amounts. Back-up withholding is not an additional tax. Rather,
the tax liability of persons subject to back-up withholding will be reduced by
the amount of tax withheld. If withholding results in an overpayment of taxes,
a refund may be obtained.
Purpose of Substitute Form W-9
To prevent back-up withholding on payments that are made to a holder
of Partnership Units purchased pursuant to the Offer, the holder is required to
notify the Partnership of its correct taxpayer identification number by
completing the form below certifying that the taxpayer identification number
provided on Substitute Form W-9 is correct.
<PAGE> 19
WHAT NUMBER TO GIVE THE PARTNERSHIP
The holder is required to give the Partnership the social security
number or employer identification number of the record owner of the Partnership
units.
PAYOR'S NAME: Crossroads/Memphis Partnership, L.P.
<TABLE>
<S> <C> <C>
Substitute Form W-9 Part 1 - Please provide your TIN in the box at Social Security
right and certify by signing and dating below Number/Employer
Identification Number
Department of the Certification - Under the penalties of Perjury,
Treasury/ (i) I certify that the information provided on
Internal Revenue this form is true, correct and complete and (ii) I
Service am not subject to backup withholding because: (a)
I am exempt from backup withholding, or (b) I have
not been notified by the Internal Revenue Service
(IRS) that I am subject to backup withholding as a
result of a failure to report all interest or
dividends, or (c) the IRS has notified me that I
am no longer subject to backup withholding.
Signature _________________ Date _______
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACK-UP
WITHHOLDING OF THAT RATE PROVIDED BY THE FEDERAL INCOME TAX LAW (SUCH
RATE BEING AT THE DATE HEREOF, 31%) OF ANY PAYMENTS MADE TO YOU
PURSUANT TO THE CONTINUING OFFER.
<PAGE> 20
Exhibit A to Redemption and
Stock Exchange Agreement
- --------------------------------------------------------------------------------
REGISTRATION RIGHTS and SHAREHOLDERS AGREEMENT
among
INTERSTATE HOTELS COMPANY
and
THE SHAREHOLDERS NAMED HEREIN
Dated as of ____________________, 1996
- --------------------------------------------------------------------------------
<PAGE> 21
REGISTRATION RIGHTS AND SHAREHOLDERS AGREEMENT
THIS REGISTRATION RIGHTS AND SHAREHOLDERS AGREEMENT (the "Agreement"),
is dated as of the ____ day of __________, 1996 among INTERSTATE HOTELS
COMPANY, a Pennsylvania corporation (the "Company") and the shareholders
signatory hereto (individually, a "Shareholder"; collectively, the
"Shareholders").
WITNESSETH:
WHEREAS, the Shareholders have exchanged a part or all of their
partnership interest in Crossroads/Memphis Partnership, L.P., a Delaware
limited partnership ("Partnership") for restricted shares of Common Stock of
the Company pursuant to that certain Redemption and Stock Exchange Agreement
dated as of ____________, 1996, among the Company, the Partnership, Trust
Leasing, Inc. and Trust Management, Inc. ("Exchange Agreement");
WHEREAS, the parties hereto desire to execute a shareholder agreement
relating to the Transfers of shares of Common Stock; and
WHEREAS, the Company has agreed to grant to the Shareholders certain
registration rights, as more specifically described herein, with respect to
shares of Common Stock of the Company which they own and may hereafter acquire
pursuant to the Exchange Agreement; and
NOW, THEREFORE, in consideration of the mutual promises and agreements
set forth herein, the adequacy of which are hereby acknowledged and intending
to be legally bound, the parties hereto agree as follows:
1. Definitions. As used in this Agreement, the following
terms shall have the following meanings, whether used in the singular or the
plural:
"Affiliate" means, with respect to any person, any other
person that directly or indirectly through one or more intermediaries
Controls, or is Controlled by,. or is under common Control with, such
first person.
"Charter Documents" means the articles of incorporation and
bylaws (or other constituent documents) of the Company.
"Common Stock" means the common stock, par value $0.01 per
share, of the Company and any other shares, units or other equity
interests into which such common stock may be converted or exchanged
in any acquisition, merger, consolidation, reorganization,
reclassification or similar transaction.
"Control" means, with respect to any person, the possession,
directly or indirectly, of the power to direct
<PAGE> 22
or cause the direction of the management and policies of such person,
whether through the ownership of voting securities, by contract or
otherwise.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.
"Permitted Transferee" means (1) each spouse, child ,(natural
or adopted), grandchild or parent of any Shareholder (provided no
individual who is less than 21 years of age shall be a Permitted
Transferee), (2) any trustee for the benefit of a Shareholder or a
person described in clause (1), (3) any corporation or partnership
controlled b(5) one or more Shareholders or any persons described in
clause (1) so long as a majority of the economic and voting interests
of such corporation or partnership are owned by such Shareholders, the
persons described in clause (1) or the trusts referred to in clause
(2), (4) any director, officer or employee of the Shareholders, or (5)
any shareholders, partners or members of a Shareholder in connection
with the dissolution of such Shareholder.
"Person" means any individual, partnership, joint venture,
limited liability company, corporation or other entity, trust,
unincorporated organization or government or department or agency
thereof.
"Rule 144" shall mean Rule 144 under the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended
from time to time.
"Securities and Exchange Commission" means the Securities and
Exchange Commission and includes any federal governmental body or
agency succeeding to the functions' thereof.
"Subsidiary" means, with respect to any person, any
corporation, limited liability company, partnership, joint venture,
trust or estate of which (or in which) more than 50% of: (a) the
outstanding capital stock having ordinary voting power to elect a
majority of the Board of Directors of such corporation (irrespective
of whether or not at the time capital stock of any other class or
classes of such corporation shall or might have voting power upon the
occurrence of any contingency); (b) the interest in the capital or
profits of such partnership, limited liability company or joint
venture; or (c) the beneficial interest of such trust or estate, is at
the time directly or indirectly (through one.or more other
Subsidiaries of such person) owned by such person.
<PAGE> 23
"Transfer" of any shares of Common Stock, means any sale,
transfer, assignment, pledge or other disposition of such shares or
any interest therein for value, directly or indirectly (including a
transfer by any person of the capital stock or other interest in a
Subsidiary of such person which is the direct or indirect holder of
shares of Common Stock).
2. Registration Rights (a) If during the three (3) year period
after the date hereof, the Company intends to file with the Securities and
Exchange Commission a registration statement on any registration form of the
Securities and Exchange Commission (other than Form S-8 or S-4) covering the
sale of shares of Common Stock for cash in a public offering by the company or
any of its stockholders, the Company shall notify the Shareholders of its
intention to file that registration statement at least 30 days prior to the
filing thereof. The notice shall state the total number of shares of Common
Stock proposed to be registered thereby. If a Shareholder notifies the Company
within 10 days after receipt of such notice from the Company of the desire of
the Shareholder to have included in that registration statement up to Five
Hundred Thousand ($500,000) of his shares of Common Stock, then, subject to
Section 2(e), the Company shall include those shares in that registration
statement ("Company Registration"). Neither the delivery of a notice under
this Section 2(a) nor a request by a Shareholder under this Section 2(a) shall
in any way, obligate the Company to file any registration statement and
notwithstanding the filing of such a registration statement, the Company may,
at any time before the effective date thereof, elect to terminate the entire
registration process without.any further obligation to a Shareholder with
respect thereto. A registration request pursuant to this Section 2(a) shall not
be deemed to have been effected (i) unless a registration statement with
respect thereto has become effective for such period as is described in Section
2(c), and (ii) if after it has become effective such registration is interfered
with by any stop order, injunction or other order or requirement of the
Securities and Exchange Commission or other governmental authority. If the
registration demanded pursuant to this Section 2(a) shall not have been deemed
to be so effected, the Shareholder shall be entitled to exercise his
registration rights as provided herein until the registration demanded pursuant
to this Section 2(a) shall be deemed to be so effected.
(b) Shareholders holding not less than fifty percent (50%) of the
Common Stock subject to the provisions hereof may, subject to the terms and
conditions contained in this Section 2, exercise the demand registration rights
contained in this Section 2(b) at any time and from time to time following
expiration of the 180 day period contained in that certain Lock-Up Agreement
with Merrill Lynch & Co. The Company will be obligated to effect only two (2)
Demand Registrations (as defined below) pursuant to this Section 2(b). The
Shareholders shall have the right to make a demand on the Company to effect the
registration (a "Demand
<PAGE> 24
Registration") for an underwritten public offering involving a secondary
offering of all or a portion of the shares of Common Stock held by them on Form
S-1 (or other form available for registration of sales of securities for cash)
subject to Section 2(d). Shareholders shall notify the Company of their desire
to exercise each Demand Registration by delivering to the Company written
notice (a "Demand Notice") specifying the number of shares of Common Stock
which they desire to be included in the Demand Registration. Upon receipt of
the Demand Notice, the company shall promptly give written notice of the Demand
Registration to all other holders of shares of Common Stock, if any, that are
entitled to have such shares included in such registration (the "Other
Holders") and otherwise comply with the registration procedures contained
herein. Each of the Other Holders may elect to participate in the Demand
Registration by giving the company written notice of such Other Holder's
election] to include its shares of Common Stock in the Demand Registration
within 15 days from the date on which the notice to Other Holder is given by
the Company, which notice shall specify the number of shares of Common Stock
which such Other Holder desires to be included in the Demand Registration. A
registration demanded pursuant to this Section 2(b) shall not be deemed to have
been effected (i) unless a registration statement with respect thereto has
become effective for such period as is described in Section 2(c) and (ii) if
after it has become effective, such registration is interfered with by any stop
order, injunction or other order or requirement of-the Securities and Exchange
Commission or other governmental authority. If the registration demanded
pursuant t this Section 2(b) shall not have been deemed to be so effected, such
registration shall not be counted against the number of Demand Registrations
permitted by this Section 2(b).
(c) Upon the Company's receipt of a Demand Notice and the responses
from Other Holders (or the expiration of the 15-day period referred to above),
the Company shall prepare and file with the Securities and Exchange Commission,
as soon as practicable but no longer than 60 days from the date of the
Company's receipt of the Demand Notice, a registration statement covering the
shares of Common Stock requested to be included in the Demand Registration by a
Shareholder and the Other Holders, and shall use its best efforts to cause such
registration statement to become effective as expeditiously as possible. The
Company shall in no event be required to maintain the effectiveness under the
Securities Act of any registration statement relating to a Demand Registration
for more than 15 months following the date such registration statement became
effective. In connection with the Demand Notice and the filing of such
registration statement, the Company will:
(i) Prepare and file with the Securities and Exchange
Commission such amendments to such registration statement and
supplements to the prospectus contained therein as may be reasonably
necessary to keep such registration statement
<PAGE> 25
effective for such period as may be reasonably necessary to effect the
sale of such securities.
(ii) Cause all securities covered by such registration
statement to be listed on each securities exchange, if any, on which
securities of such class, if any, are then listed if requested by the
Shareholder.
(iii) Cooperate and assist in any filings required tc. be
made with the National Association of Securities Dealers, Inc. (the
"NASD") and the performance of any due diligence investigation by the
underwriters (including any "qualified independent underwriter" that
is required to be retained in accordance with the rules and
regulations of the NASD).
(iv) Use its reasonable best efforts to register or qualify
the securities covered by such registration statement for sale under
such other securities or blue sky laws of such jurisdictions as the
holders of the securities covered thereby (hereinafter in this Section
referred to as "such holders") or the underwriters participating in
such registration may reasonably request and do any and all other acts
and things which may be reasonably necessary or desirable to enable
such holders or the underwriters to consummate the disposition in such
jurisdictions of the securities covered thereby owned by such holders.
(v) Furnish to such holders participating in such
registration and to the underwriters of the securities being
registered a reasonable number of copies of the registration
statement, preliminary prospectus, final prospectus, and such other
documents as such holders or underwriters may reasonably request in
order to facilitate the public offering of such securities.
(vi) Notify such holders participating in such registration,
promptly after it shall receive notice thereof, of the time when such
registration statement has become effective or a supplement to any
prospectus forming part of such registration statement has been filed.
(vii) Notify such holders promptly of any request by the
Securities and Exchange Commission for the amending or supplementing
of such registration statement or prospectus or for additional
information.
(viii) Prepare and file with the Securities and Exchange
Commission, promptly upon the request of any such holders, any
amendments or supplements to such registration statement or prospectus
which, in the opinion of special counsel for such holders or counsel
for the underwriters (and concurred in by counsel for the Company), is
required under the Securities Act or the rules and regulations
<PAGE> 26
thereunder in connection with the distribution of the securities by
such holders.
(ix) Prepare and promptly file with the Securities and
Exchange Commission and promptly notify such holders of the filing of
such amendment or supplement to such registration statement or
prospectus as may be necessary to correct any statements or omissions
if, at the time when a prospectus relating to such securities is
required to be delivered under the Securities Act, any event shall
have occurred as the result of which any such prospectus or any other
prospectus as then in effect would include an untrue statement of a
material fact or omit to state any material fact necessary to make the
statement therein; in the light of the circumstances in which they
were made, not misleading.
(x) Advise such holders, promptly after it shall receive
notice or obtain knowledge thereof, of the issuance of any stop order
by the Securities and Exchange Commission suspending the effectiveness
of such registration statement or the initiation or threatening of any
proceeding for the purpose and promptly use its reasonable best
efforts to prevent the issuance of any stop order or to obtain its
withdrawal if such stop order should be issued.
(xi) As soon as practicable and in no event less than one day
prior to the filing of any amendment or supplement to such
registration statement or prospectus, furnish copies thereof to such
holders and the underwriters and refrain from filing any such
amendment or supplement to which a majority in interest of such
holders shall have reasonably objected on the grounds that such
amendment or supplement does not comply in all material respects with
the requirements of the Securities Act or the rules and regulations
thereunder, unless in the opinion of counsel for the Company the
filing of such amendment or supplement is reasonably necessary to
protect the Company from any liabilities under any applicable federal
or state law and such filing will not violate applicable law.
(xii) Allow the managing underwriter (and its counsel) to
conduct "due diligence" investigations of the Company and participate
in the preparation of the registration statement, and at the request
of any such holder, enter into an underwriting agreement containing
customary terms, conditions and furnish on the date or dates provided
for in the underwriting agreement: (i) an opinion of counsel
satisfactory to such holder, addressed to the underwriters and to such
holder or holders making such request, opining as to such matters as
such underwriters and holder or holders may reasonably request; and
(ii) a letter or letters from the independent certified public
accountants of the Company, addressed to the underwriter and to such
holder or
<PAGE> 27
holders making such request, covering such matters as such
underwriters and holder or holders may reasonably request, in which
letters such accountants shall state (without limiting the generality
of the foregoing) that they are independent certified public
accountants within the meaning of the Securities Act and that in the
opinion of such accountants the financial statements and other
financial data of the Company included in the registration statement
or any amendment or supplement there to comply in all material
respects with the applicable accounting requirements of the Securities
Act.
(xiii) Make available to the underwriters such member of
senior.management of the Company as the underwriters may reasonably
request to assist in drafting and reviewing the registration statement
and prospectus, for underwriters due diligence purposes and to meet
with brokers and investors for "roadshow presentations" in connection
with any underwritten offering.
(d) The obligations of the Company under Section 2(b) to comply
with requests for Demand Registration are subject to the following limitations:
(i) The Company shall not be required to comply with a Demand
Notice until after June 30, 1997.
(ii) The Company shall be entitled to postpone the filing of
any registration statement otherwise required to be prepared and filed
by it pursuant to Section 2(b) if, at the time it receives a Demand
Notice, the Company determines, in its reasonable and good faith
judgment, that such registration and sale would materially interfere
with any financing, acquisition, corporate reorganization or other
material transaction involving the Company or any of its Subsidiaries
and promptly gives the Shareholders written notice of such
determination. If the Company shall so postpone the filing of a
registration statement, the Demand Notice received by the Company
shall not be counted for purposes of determining the number of Demand
Registrations to which Shareholders are entitled pursuant to this
Section 2.
(iii) The Company shall not be obligated to file a
registration statement pursuant to Section 2(b) hereof within 120 days
of the filing of a registration statement pursuant to Section 2(a)
hereof.
(iv) Any Demand Notice shall be for the registration Of
shares of Common Stock representing at least 50% of the total number
of shares of Common Stock to be issued to the Shareholders under the
Exchange Agreement, or, if less and provided that the Shareholders
have received all shares of Common Stock to be issued under the
Exchange Agreement, all
<PAGE> 28
shares of Common Stock owned by the Shareholders delivering such
Demand Notice and their Permitted Transferees.
(v) In the event of a Demand Registration, sales shall be
made through a managing underwriter or underwriter mutually selected
by the Shareholders and the Company.
(e) Notwithstanding the provisions of Section 2(a) an 2(b)(i) in the
event of any Company Registration in which the managing underwriter(s) notify
the company that the aggregate amount of securities of the Company proposed to
be offered by the Company, the Shareholders and Other Holders would adversely
affect the ability to effect such offering, then the number of shares of Common
Stock proposed to be offered by the Shareholder and any Other Holders shall be
reduced (if need be to zero) to the aggregate amount determined by the managing
underwriter(s) that can be offered without adversely affecting the ability to
effect such offering, such reductions to be made pro rata among the
Shareholders and such Other Holders in accordance with the number of shares of
Common Stock proposed to be offered by each such offeror; and (ii) in the event
of any Demand Registration in which the managing underwriter(s) notify the
Company that the aggregate amount of securities of the Company proposed to be
offered by the Company, the Shareholders and any Other Holders would adversely
affect the ability to effect such offering, then the shares of Common Stock, if
any, proposed to be included in such registration by the Shareholders and any
Other Holders shall be reduced (if need be to zero) to the aggregate amount
determined by the managing underwriter(s) that can be offered without adversely
affecting the ability to effect such offering, such reductions to be made pro
rata in accordance with the numbs of shares of Common Stock proposed to be
offered by each such offeror; provided, however, if the number of shares of
Common Stock which the Shareholders have requested to sell in any Demand
Registration is so reduced by 50% or more, the Shareholders shall be granted an
additional Demand Registration hereunder.
(f) The Company shall cause to be filed as soon as practicable after
June 30, 1997, a registration statement (a "Shelf Registration Statement") on
Form S-3 or any other appropriate form under the Securities Act for an offering
to be made on a delayed or continuous basis pursuant to Rule 415 thereunder or
any similar rule that may be adopted by the Commission (and shall register or
qualify the shares to be sold in such offering under such other securities or
"blue sky" laws as required pursuant to this Section) covering no less than the
aggregate number of shares of Common Stock to be issued to Shareholders
pursuant to the Exchange Agreement so that (i) the shares of Common Stock to be
issued to the Shareholders pursuant to the Exchange Agreement will be included
in an effective registration statement under the Securities Act or (ii) if the
Company is unable to register such shares of Common Stock in the manner
described in clause (i), so that the Shareholders may resell such shares of
Common Stock in ordinary course brokerage
<PAGE> 29
or dealer transactions not involving an underwritten public offering. The
Company shall use its reasonable efforts to keep the Shelf Registration
Statement continuously effective (and to register or qualify the shares to be
sold in such off,ring under such other securities or "blue sky" laws as
required pursuant to this Section) for so long as the Shareholders may exchange
any of all of their interest in the Partnership for shares of Common Stock
under the Exchange Agreement or until the Company has caused to be delivered to
the Shareholders an opinion of counsel (which counsel shall be reasonably
acceptable to the Shareholders) stating that the shares of Common Stock issued
pursuant to the Exchange Agreement may be sold by such Shareholders pursuant to
Rule 144 without regard to any volume limitations and that the Company has
satisfied the informational requirements of Rule 144. The Company shall file
any necessary listing applications or amendments to existing applications to
cause the shares of Common Stock issuable pursuant to the Exchange Agreement to
be listed on the primary exchange on which the Common Stock is then listed, if
any. The Company will use reasonable efforts to register or qualify such Common
Stock under such other securities or "blue sky" laws of such jurisdictions a
the Shareholders may reasonably request and do any and all other acts and
things that may be reasonably necessary or advisable to register or qualify for
sale in such jurisdictions the Common Stock owned by such Shareholders;
provided that the Company shall not be required to (i) qualify generally to do
business in any jurisdiction where it is not then so qualified, (ii) subject
itself to taxation in any such jurisdiction, (iii) consent to general service
of process in any such jurisdiction or (iv) provide any undertaking required by
such other securities or "blue sky" laws or make any change in its Charter
Documents that the Board of Directors determine in good faith to be contrary to
the best interest of the Company and its stockholders. Notwithstanding the
foregoing, if the Company shall furnish to such Shareholders a certificate
signed by the Chief Executive Officer of the Company stating that in the good
faith judgment of the Board of Directors of the Company it would be
significantly disadvantageous to the Company and its stockholders for the Shelf
Registration Statement to be amended or supplemented, the Company may defer
such amending or supplementing of such Shelf Registration Statement for not
more than sixty (60) days and in such event the Shareholders shall be required
to discontinue disposition of any Common Stock covered by such Shelf
Registration Statement during such period unless the Shareholders may otherwise
dispose of such common Stock in compliance with state and federal securities
laws.
3. Registration Expenses. To the extent permitted by applicable law,
the Company shall pay the expenses in connection with any Company Registration
or Demand Registration or Shelf Registration Statement, including, without
limitation, (a) all expenses incident to filing with the NASD, (b) registration
fees (c) printing expenses, (d) legal fees and expenses of one law
<PAGE> 30
firm to represent all selling Shareholders (selected by a majority of the
Shareholders participating in such registration, in the case of any Demand
Registration, and reasonably acceptable to a majority of the Shareholders, in
the case of any Company Registration), (e)expenses of any special audits
incident to or required by any such registration or qualification, (f) premiums
for insurance in such amount, if any, deemed appropriate by the managing
underwriter, and (g) expenses of complying with the securities or blue sky laws
of any jurisdictions in connection with such registration or qualification;
provided, however, the Shareholders shall be solely responsible for and the
Company shall not be liable for (1) any discounts or commissions to any
underwriter attributable to shares of Common Stock being sold by any selling
stockholder, (2) any stock transfer taxes incurred i respect of the shares of
Common Stock being sold by any selling stockholder, or (3) the legal fees of
any selling stockholder (other than as set forth in clause 3(d) above).
4. Blue Sky Laws. In any registration under Section 2(a), 2(b) and
2(f), the Company shall use its reasonable best efforts to register, qualify,
or effect an exemption with respected to the shares of Common Stock of the
Shareholders under the "blue sky" laws of such states as may be reasonably
requested by the Shareholders or the managing underwriter(s); provided,
however, that the company shall not be required to qualify to do business or to
file a general consent to service of process in any .such jurisdictions.
5. Indemnification. In connection with any registration pursuant to
Section 2:
(a) The Company hereby agrees to indemnify and hold harmless,
to the fullest extent permitted by law, each Shareholder, and each of
their respective shareholders, partners, members, officers, directors,
employees, heirs, personal or legal representatives and agents, and
any Affiliates (as defined in the Securities Act), against any losses,
costs, expenses, claims, damages, liabilities, actions or judgments,
including reasonable attorneys' fees and disbursements (collectively,
"Damages"), joint or several, to which any of them may become subject
under the Securities Act or otherwise, insofar as such Damages arise
out of or are based upon any untrue or alleged untrue statement of a
material fact contained in a registration statement filed with the
Securities and Exchange Commission by the Company, or preliminary or
final prospectus contained therein, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated
therein or necessary in order to make the statements made therein not
misleading; and will reimburse each Shareholder and their respective
shareholders, partners, members, officers, directors, employees,
heirs, personal or legal representatives, and any Affiliates, for any
legal or other
<PAGE> 31
expenses incurred by any of them in connection with ,investigating or
defending against any such Damages; except that the company will not
be liable in any such case to a Shareholder or any other person or
entity to the extent that any Damages arise out of or are based upon
an untrue statement or alleged untrue statement or omission or alleged
omission made in a registration statement, or preliminary or final
prospectus contained therein, or any amendment or supplement thereto,
in reliance upon and in conformity with written information furnished
by or on behalf of such Shareholder specifically for use therein.
(b) Each Shareholder, jointly and severally, agrees to
indemnify and hold harmless, to the fullest extent permitted by law,
the Company, each of its shareholders, directors, officers, employees,
agents, and any Affiliates (as defined in the Securities Act) of the
Company and each person who controls the Company (within the meaning
of the Securities Act or the Exchange Act), against any Damages, joint
or several, to which any of them may become subject under the
Securities Act or otherwise, insofar as such Damages arise out of or
are based upon any untrue or alleged untrue statement of a material
fact contained in a registration statement filed with the Securities
and Exchange Commission by the Company, or preliminary or final
prospectus contained therein or any amendment or supplement thereto,
or arise of or are based upon the 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
untrue or alleged untrue statement or omission or alleged omission is
made in reliance upon and in conformity with written information
furnished to.the Company by or on behalf of such Shareholder,
specifically for use therein, and will reimburse the Company, its
directors, officers, agents, and Affiliates or control persons, for
any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such Damages.
(c) Any person entitled to indemnification hereunder shall
give prompt notice to the indemnifying person of any claim with
respect to which it shall seek indemnification and shall permit such
indemnifying person to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified person; provided, that any
person entitled to indemnification hereunder shall have the right to
employ separate counsel and to participate in the defense of such
claim, but the fees and expenses of such counsel shall be at the
expense of such person unless (i) the indemnifying person shall have
agreed to pay such fees or expenses, or (ii) the indemnifying person
shall have failed to assume the defense of such claim and employ
counsel reasonably satisfactory to such person, or (iii) in the
opinion of outside counsel to such person there may be one or more
legal defenses available to such person which are
<PAGE> 32
different from or in addition to those available to the indemnifying
person with respect to such claims (in which case, if the person
notifies the indemnifying person in writing that such person elects to
employ separate counsel at the expense of the indemnifying person, the
indemnifying person shall not have the right to assume the defense of
such claim on behalf of such person). If such defense is not assumed
by the indemnifying person, the indemnifying person shall not be
subject to any liability for any settlement made without its consent
(but such consent shall not be unreasonably withheld). No indemnified
person shall be required to consent to entry of any judgment or enter
into any settlement that does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified
person of a written release in form and substance reasonably
satisfactory to such indemnified person from all liability in respect
of such claim or litigation. An indemnifying person who is not
entitled to, or elects not to, assume the defense of a claim shall not
be obligated to pay the fees and expenses of more than one firm of
counsel (and, if necessary, local counsel) for all persons indemnified
by such indemnifying person wit respect to such claim, unless in the
written opinion of outside counsel to an indemnified person a conflict
of interest as to the subject matter exists between such indemnified
person and another indemnified person with respect to such claim, in
which event the indemnifying person shall be obligated to pay the fees
and expenses of additional counsel for such indemnified person.
(d) If for any reason the indemnification provided for herein
is unavailable to an indemnified person or is insufficient to hold it
harmless as contemplated hereby, then the indemnifying person shall
contribute to the amount paid or payable by the indemnified person as
a result of such loss, cost, expense, claim, damage, liability, action
or judgment in such proportion as is appropriate to reflect not only
the relative benefits received by the indemnified person and the
indemnifying person, but also the relative fault of the indemnified
person and the indemnifying person as well as any other relevant
equitable considerations.
6. Lock-Up. Provision. Each Shareholder agrees in connection with
any public offering of the Company's securities following the date hereof that,
upon the request of the managing underwriter(s) in the case of any underwritten
public offering, or the Company in the case of a non-underwritten public
offering, each Shareholder shall not sell or offer to sell any shares of Common
Stock or any other securities of the Company, other than shares of Common Stock
included in the public offering, during the period commencing on the
distribution of a "red herring" prospectus for such offering and ending 90 days
following the date of the final prospectus used in such offering
<PAGE> 33
7. Participation in Registrations. The Shareholders may not
participate in any registration of securities of the Company unless such
Shareholder:
(a) agrees to sell its securities on the basis provided in
any underwriting arrangements approved by the Company and reasonably
acceptable to the Shareholder (in the case of any Demand Registration)
which are customary and which are not in direct contradiction of any
rights granted to the Shareholder under this Agreement; and
(b) completes and executes all questionnaires, powers of
attorney, custodial agreements, indemnities, underwriting agreements
and other documents required under the terms of such underwriting
arrangements which are customary and which are not in direct
contradiction of any rights granted to he Shareholder under this
Agreement.
8. Request to Deregister. The Company will promptly deregister
any of a Shareholder's shares initially included in a registration statement
pursuant to Section 2 if a Shareholder should thereafter desire to withdraw
such shares from the proposed offering, provided that (a) the registration
statement has not been declared effective, or (b) if the registration statement
has been declared effective, it is not current under the requirement of the
Securities Act due to the lapse of time or material changes in the affairs of
the Company. Such deregistration by the Company shall in no way indicate that
the Company.or its counsel deem that any such shares meet the requirements for
sale under such rule.
9. Termination. The Company's obligation to effect a company
Registration or Demand Registration shall expire on the third anniversary
hereof.
10. Legend on Stock Certificates. Each certificate evidencing
shares of Common Stock will be stamped or otherwise imprinted with a legend in
substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
REGISTRATION RIGHTS AND SHAREHOLDERS AGREEMENT, DATED AS OF
___________, 1996, AMONG INTERSTATE HOTELS COMPANY (THE "COMPANY") AND
THE STOCKHOLDERS NAMED THEREIN. A COPY OF SUCH AGREEMENT WILL BE
FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE HOLDER HEREOF UPON
WRITTEN REQUEST.
The Company will imprint such legends on certificates evidencing shares of
Common Stock outstanding prior to the date hereof. The legend set forth in the
paragraph above shall be removed at such time as the Shareholders no longer own
any Common Stock.
11. Transfer Restrictions. The Shareholders will not Transfer
(except to a Permitted Transferee or pursuant to Section 2(a) hereof) any of
the Common Stock received pursuant to the
<PAGE> 34
Exchange Agreement on or before June 30, 1997 and further will not Transfer
(except to a Permitted Transferee or pursuant to Section 2(a) hereof) more than
fifty percent (50%) of the Common Stock which they are entitled to receive
under the Exchange Agreement on or before December 31, 1997.
12. Joint and Several Obligations. Any and all obligations of the
Shareholders hereunder shall be joint and several.
13. Successors and Assigns; No Third-Party Beneficiaries. The
stipulations, terms, covenants and agreement contained in this Agreement shall
inure to the benefit of, and shall be binding upon, the parties hereto and
their respective successors and Permitted Transferees and nothing herein
expressed or implied shall give or be construed to give to any person or
entity, other than the parties hereto and such successors and Permitted
Transferees, any legal or equitable rights hereunder.
14. Assignment. This Agreement may not be assigned by a
Shareholder (except to a Permitted Transferee) without the consent of the
Company. Notwithstanding any such assignment, the assigning party will continue
to remain primarily liable under this Agreement.
15. Notices. All notices, demands or requests made pursuant to,
under or by virtue of this Agreement must be in writing and shall be (i)
personally delivered, (ii) delivered by express mail, Federal Express or other
comparable overnight courier service, (iii) telecopied or (iv) mailed to the
party to which the notice, demand or request is being made by certified c
registered mail, postage prepaid, return receipt requested, as follows:
To a Shareholder:
4735 Spottswood #102
Memphis, TN 38117
Attention: Mr. Phillip H. McNeill, Sr.
Facsimile: 901-761-3945
With a copy to:
Bogatin Law Firm
860 Ridge Lake Blvd., Suite 360
Memphis, TN 38120
Attention: G. Patrick Arnoult, Esq.
Facsimile: 901-767-2803
<PAGE> 35
To the Company:
Interstate Hotels Corporation
Foster Plaza X
680 Andersen Drive
Pittsburgh,Pennsylvania 15220
Attention: Mr. W. Thomas Parrington, Jr.
Facsimile: 412-937-8053
with copies thereof to:
Interstate Hotels Corporation
Foster Plaza X
680 Andersen Drive
Pittsburgh, Pennsylvania 15220
Attention: Marvin I. Droz, Esq.
Facsimile: 412-937-3265
All notices (i) shall be deemed to have been given on the date that the same
shall-have been delivered in accordance with the provisions of this Section and
(ii) may be given either by a party or by such party's attorneys. Any party
may, from time to time, specify as its address for purposes of this Agreement
any other address upon the giving of 10 days' notice thereof to the other
parties.
16. Entire Agreement. This Agreement contains all of the terms
agreed upon between the parties hereto with respect to the subject matter
hereof, and all understandings and agreements heretofore had or made among the
parties hereto are merged in this Agreement which alone fully and completely
expresses the agreement of the parties hereto.
17. Amendments. This Agreement may not be amended, modified,
supplemented or terminated, nor may any of the obligations of the Parties
hereto be waived, except by written agreement executed by the party or parties
to be charged.
18. No Waiver. No waiver by any party of any failure or refusal
by the other party to comply with its obligations hereunder shall be deemed a
waiver of any other or subsequent failure or refusal to so comply.
19. Remedies. The Parties hereto will be entitled to enforce
their rights under this Agreement specifically (without posting a bond or other
security), to recover damages by reason of any breach of any provision of this
Agreement and to exercise all other rights existing in their favor. The parties
hereto agree and acknowledge that money damages will not be an adequate remedy
for any breach of the provisions of this Agreement and that any party may in
its sole discretion apply to any court of law or equity or competent
jurisdiction for specific performance and/or injunctive relief in order to
enforce or prevent any violation of the provisions of this Agreement.
<PAGE> 36
20. Governing Law. This Agreement shall be governed by,
interpreted under, and construed and enforced in accordance with the internal
laws of the Commonwealth of Pennsylvania.
21. Submission to Jurisdiction. Each Shareholder and the Company
irrevocably submits to the jurisdiction of (a) the Supreme Court of the
Commonwealth of Pennsylvania, and (b) the United States District Count for the
Western District of Pennsylvania for the purposes of any suit, action or other
proceeding arising out of this Agreement or any transaction contemplated
hereby. Each Shareholder and the Company further agrees that service of any
process, summons, notice or document by U.S. registered mail to such party's
respective address set forth above shall be effective service of process for
any action, suit or proceeding in Pennsylvania with respect to any matters tc.
which it has submitted to jurisdiction as set forth above in the immediately
preceding sentence. Each Shareholder and the Company irrevocably and
unconditionally waives trial by jury and irrevocably and unconditionally waives
any objection to the laying of venue of any action, suit or proceeding arising
out of this Agreement or the transactions contemplated hereby in (a) the
Supreme Court of the Commonwealth of Pennsylvania, and (b) the United States
District Court for-the Western District of Pennsylvania, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum.
22. Severability. If any term or provision of this Agreement or
the application thereof to any person or circumstances shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable shall not be affected thereby, and each
term and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
23. Section Headings. The headings of the various Sections of
this Agreement have been inserted only for purposes of convenience, are not
part of this Agreement and shall not be deemed in any manner to modify,
explain, expand or restrict any of the provisions of this Agreement.
24. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and it shall not be
necessary in making proof of this Agreement to produce or account for more than
one such counterpart.
25. Changes in Shareholders. All Common Stock Transferred to
third parties in conformity with this Agreement shall remain subject to the
provisions of this Agreement and shall bear the legend set forth in Section 11
hereof. In the event that, in compliance with the other terms and conditions of
this Agreement, shares of Common Stock are Transferred
<PAGE> 37
(including, without limitation, pursuant to a distribution to the partners or
members of any Shareholder) to a person who is not a party to this Agreement,
such person shall, prior to the transfer of such shares and as a condition
precedent to such transfer, become a party to this Agreement by executing an
agreement and consent to join in and be bound by the terms and conditions of
this Agreement, which agreement and consent shall be attached to and become a
part of this Agreement; and thereafter such person shall be a party to this
Agreement for all purposes.
26. Right of First Offer.
(a) A Shareholder shall not Transfer any shares of Common
Stock other than in compliance with this Section 26. Any such
attempted Transfer not in compliance herewith shall be null and void,
ab-initio, and the Company shall not give effect to any such attempted
Transfer in the stock transfer ledgers of the Company.
(b) If a Shareholder proposes to Transfer any shares of
Common Stock, it shall give written notice (the "First Offer Notice")
of such proposal to Milton Fine, his heirs, personal representatives
or his representative ("Fine") at least twenty-four (24) hours in
advance thereof by Personal delivery or facsimile, setting forth the
number of shares which it desires to Transfer (the "First Offer
Shares"), the cash purchase therefor, which in no event shall be
greater than the trailing five (5) day average price for the Common
Stock as quoted on the New York Stock Exchange established as of the
date of the First Offer Notice, and the other terms and conditions of
such proposed Transfer. Fine, on behalf of himself or his designee,
may, in his sole discretion, at any time within twenty-four (24) hours
after delivery by such Shareholder of the First Offer Notice (the
"First Offer Period") elect, pursuant to a written offer given be
personal delivery or facsimile, to purchase (a "Purchase Offer") all
(but not less than all) of the First Offer Shares covered by such
First Offer Notice at a per share cash price and upon the terms and
conditions set forth in the First Offer Notice. In the event Fine or
his designee elects to purchase all of the First Offer Shares, the
parties shall thereafter promptly (and in any event. within ten (10)
days of the date of such written acceptance) close the purchase and
sale of the First Offer Shares covered by the Purchase Offer. At such
closing, the Shareholder shall deliver the First Offer Shares to Fine
or his designee against a cash payment therefor in full by wire
transfer of immediately available funds to such account or accounts as
may be designated by the Shareholder. Such closing shall take place
at the principal office of the Company.
(c) If no Purchase. offer is received by such Shareholder
within the First Offer Period, such Shareholder shall be entitled, for
a period of thirty (30) days
<PAGE> 38
following the date of delivery of the First Offer Notice (the "Free
Transfer Period"), to Transfer all (but not less than all, excluding
shares covered by a First Offer Notice which are Transferred during
the Free Transfer Period in reliance on the provisions of Section
26(d) below) of the First Offer Shares.
(d) The provisions of this Section 26 shall not apply to
Transfers by Shareholders to a Permitted Transferee of Shareholder;
provided that such Permitted Transferee has agreed in writing to be
bound by the terms and conditions of this Agreement, in form and
substance reasonably satisfactory to the Company, to the same extent
and in the same manner applicable to such Shareholder.
27. Representations. The Company hereby represent and warrants to
the Shareholders that all information regarding the Company contained in
reports, registration statements and proxy materials filed by the Company with
the Securities and Exchange Commission is true, accurate and complete in all
material respects and in all material respects accurately presents the business
and financial condition of the Company as of the dates thereof and no material
adverse change in the financial condition of the Company has occurred since the
dates thereof. The Company agrees and acknowledges that the Shareholders have
relied upon the completeness and accuracy of such information in entering into
the Contribution Agreement dated October 4, 1996 by and among the Shareholders,
Phillip H. McNeill, Sr., the Partnership and Crossroads/Memphis Company,
L.L.C., this Agreement and the other agreements related thereto.
IN WITNESS WHEREOF, the parties hereto have caused Agreement to be
duly executed, all as of the day and year first above written.
INTERSTATE HOTELS COMPANY
By:
----------------------
Title:
------------------
TRUST LEASING, INC.
By:
---------------------
Title:
------------------
TRUST MANAGEMENT, INC.
By:
----------------------
Title:
-------------------
<PAGE> 39
The undersigned, intending to be legally bound and for good and
valuable consideration hereby agrees to be bound to the terms and provisions of
Section 26 of the above Agreement.
_________________________
Milton Fine
<PAGE> 1
EXHIBIT 2
CONTRIBUTION AGREEMENT
by and among
TRUST LEASING, INC.,
TRUST MANAGEMENT INC.,
PHILLIP H. McNEILL, SR.,
CROSSROADS/MEMPHIS COMPANY, L.L.C.
and
CROSSROADS/MEMPHIS PARTNERSHIP, L.P.
Dated As Of
October 4, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
I. TRANSACTION............................................................ 2
1.1. Defined Terms................................................. 2
1.2. Admission to Partnership...................................... 2
1.3. Contributions to the Capital of the Partnership............... 3
1.4. Liabilities Assumed and Liabilities Excluded.................. 3
1.4.1. Liabilities Assumed.......................... 3
1.4.2. Excluded Liabilities......................... 4
1.5. Transfer Taxes and Fees....................................... 6
1.6. Expenses of Transaction....................................... 7
1.7. Closing....................................................... 8
1.8. Closing Prorations............................................ 8
II. REPRESENTATIONS AND WARRANTIES......................................... 13
2.1. Representations and Warranties of Companies and
McNeill....................................................... 13
2.1.1. Organizational Matters....................... 13
2.1.2. Authorization and Effect of Agreement........ 14
2.1.3. No Restrictions Against Transfer of
Companies' Assets............................ 15
2.1.4. Compliance With Laws......................... 16
2.1.5. Litigation; Decrees.......................... 16
2.1.6. Contract Rights.............................. 16
2.1.7. No Brokerage or Finder's Fees................ 17
2.1.8. Environmental Matters........................ 17
2.1.9. Taxes........................................ 22
2.1.10. Real Property................................ 23
2.1.11. Intellectual Property........................ 25
2.1.12. Financial Statements......................... 26
2.1.13. Conduct of the Hotels........................ 26
2.1.14. Insurance.................................... 27
2.1.15. Employee Benefit Plans, Programs or
Arrangements................................. 27
2.1.16. Labor Relations.............................. 30
2.1.17. Accounts Receivable.......................... 31
2.2. Representations and Warranties of Crossroads.................. 31
2.2.1. Organizational Matters....................... 31
2.2.2. Authorization and Effect of Agreement........ 32
2.2.3. No Restrictions.............................. 32
III. COVENANTS PENDING CLOSING.............................................. 33
3.1. Investigation by Crossroads................................... 33
3.2. No Announcement/Confidentiality............................... 34
3.3. Regulatory Filings............................................ 35
3.4. Operation of the Hotels....................................... 35
3.5. Satisfaction of Conditions.................................... 37
3.6. No Solicitation............................................... 37
</TABLE>
- i -
<PAGE> 3
<TABLE>
<S> <C> <C>
IV. THE CLOSING............................................................ 38
4.1. Conditions Precedent to Obligations of Crossroads
and Companies................................................. 38
4.2. Additional Conditions Precedent to Obligations of
Crossroads and the Partnership................................ 39
4.2.1. No Material Misrepresentation or Breach...... 39
4.2.2. Transfer Documents........................... 40
4.2.3. Due Diligence................................ 41
4.2.4. Amendments to Leases......................... 42
4.2.5. Additional Matters........................... 42
4.3. Additional Conditions Precedent to Obligations of
Companies and McNeill......................................... 43
4.3.1. No Material Misrepresentation or Breach...... 44
4.3.2. Closing Documents............................ 44
4.3.3. Crossroads Contribution...................... 45
4.4. Termination................................................... 45
V. SURVIVAL AND INDEMNIFICATION........................................... 46
5.1. Survival; Definitions......................................... 46
5.2. Indemnification............................................... 47
5.3. Defense of Claims............................................. 49
VI. MISCELLANEOUS PROVISIONS............................................... 52
6.1. Notices....................................................... 52
6.2. Successors and Assigns........................................ 53
6.3. Waiver........................................................ 53
6.4. Entire Agreement.............................................. 54
6.5. Amendments, Supplement........................................ 55
6.6. Rights of the Parties......................................... 55
6.7. Further Assurances............................................ 55
6.8. Transfers..................................................... 55
6.9. Applicable Law................................................ 56
6.10. Execution in Counterparts............................ 57
6.11. Titles and Headings.................................. 57
6.12. Certain Interpretive Matters and Definitions......... 57
6.13. Survival............................................. 58
6.14. Joint and Several.................................... 58
6.15. Invalid Provisions................................... 58
6.16. Time of the Essence.................................. 59
6.17. Risk of Loss/Insurance/Condemnation.................. 59
VII. DEFINITIONS............................................................ 61
</TABLE>
- ii -
<PAGE> 4
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (this "Agreement") is made and entered into
this 4th day of October, 1996 by and among CROSSROADS/MEMPHIS COMPANY, L.L.C., a
Delaware limited liability company ("Crossroads") , CROSSROADS MEMPHIS
PARTNERSHIP, L.P. a Delaware limited partnership (the "Partnership"), TRUST
LEASING, INC., a Tennessee corporation and TRUST MANAGEMENT INC., a Tennessee
corporation (collectively, the "Companies") and PHILLIP H. MCNEILL, SR., an
individual resident of the State of Tennessee ("McNeill").
WITNESSETH:
WHEREAS, the Companies and Crossroads engage in the business of leasing
and managing various hotel properties; and
WHEREAS, McNeill owns a majority of the issued and outstanding shares
of capital stock of the Companies; and
WHEREAS, the Companies and Crossroads desire to conduct certain of
their hotel leasing and management business through the Partnership, as more
fully described herein; and
WHEREAS, the Companies and Crossroads desire to contribute certain
assets to the Partnership upon the terms and subject to the conditions set forth
herein,
<PAGE> 5
NOW, THEREFORE, the parties hereto, for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged and
intending to be legally bound, hereby agree as follows:
I. TRANSACTION
1.1. Defined Terms. Certain capitalized terms used herein shall have
the meanings given to such terms in Article VII hereof.
1.2. Admission to Partnership. On the terms and subject to the
conditions hereof, at the Closing (as hereinafter defined) the Companies and
Crossroads will execute (or cause to be executed), an Amended and Restated
Agreement of Limited Partnership, substantially in the form attached hereto as
Exhibit A (the "Partnership Agreement"), pursuant to which the Companies will be
admitted as limited partners of the Partnership. In addition, at the Closing the
Partnership and the Companies will execute a Redemption and Stock Exchange
Agreement, substantially in the form attached to the Partnership Agreement as
Exhibit C thereto (the "Exchange Agreement").
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<PAGE> 6
1.3. Contributions to the Capital of the Partnership.
(a) On the terms and subject to the conditions hereof, at the
Closing (as hereinafter defined), Crossroads will (or will cause Crossroads
Hospitality Company, L.L.C. to) transfer, assign, deliver and contribute to the
Partnership, free and clear of any and all Liens, 1,957,895 shares of Common
Stock of Interstate Hotels Company (the "Crossroads Contribution").
(b) On the terms and subject to the conditions hereof, at the
Closing, the Companies will transfer, assign, deliver and contribute to the
Partnership free and clear of any and all Liens, the management agreements,
hotel leases ("Hotel Leases"), service contracts, Franchise Agreements and other
agreements (collectively, "Contracts"), the inventory, utility bonds, cash (to
the extent contemplated in Section 1.8 hereof), accounts receivable and the
other assets listed on Schedule 1.3(b) attached hereto (such other assets
together with the Contracts being collectively referred to as, the "Companies'
Assets") related to those certain hotels listed on Schedule 1.3(b) ("Hotels").
1.4. Liabilities Assumed and Liabilities Excluded
1.4.1. Liabilities Assumed. On the terms and subject to the
conditions hereof, at the Closing the Companies
3
<PAGE> 7
will transfer to the Partnership and the Partnership will assume and agree to
satisfy or perform when due the Assumed Liabilities.
1.4.2. Excluded Liabilities. Notwithstanding anything
contained in this Agreement to the contrary, the Partnership will assume and
agree to satisfy or perform only the Assumed Liabilities, and shall not assume
or be obligated to satisfy or perform any other liability, obligation or
commitment of the Companies of whatever nature, whether absolute or contingent,
direct or indirect, or currently existing or arising hereafter. All such other
liabilities, obligations and commitments shall be retained by and remain
liabilities, obligations and commitments of the Companies (collectively,
"Excluded Liabilities"). Without limitation of the foregoing, Excluded
Liabilities shall include, without limitation, the following:
(a) Contingent and Other Claims and Liabilities. Any contingent or
unknown claim against or liability or obligation of Companies.
(b) Indebtedness. Any liability or obligation of Companies in favor of
any person, partnership, corporation or other business entity other than the
Assumed Liabilities.
4
<PAGE> 8
(c) Taxes. Any present or future liability or obligation of Companies
for taxes of any kind or nature whatsoever, whether federal, state or local,
including without limitation, taxes on capital gains or the income of the
Companies, any franchise or doing business type taxes, or any employment or
payroll withholding taxes, together with any interest, penalties and/or fines
associated therewith.
(d) Litigation. Any liability or obligation of Companies in connection
with any litigation (whether legal, administrative or otherwise) or alternative
dispute resolution mechanism pending or threatened including any liability,
obligation to arbitrate, claims, grievances or causes of action under any
collective bargaining agreement of Companies.
(e) Severance Obligations. Any liability or obligation of Companies to
its employees, whether arising by contract, by any plan or program or pursuant
to any Law, including, without limitation, the Worker Adjustment and Retraining
Notification Act ("WARN"), for severance or similar pay.
(f) Employee Benefits. Any liabilities or obligations relating to
employee benefits or compensation arrangements including, without limitation,
any liabilities or obligations for any retiree medical or other welfare
benefits, or liabilities or obligations under any of Companies' employee benefit
plans,
5
<PAGE> 9
programs or arrangements, including without limitation, those under health plan
continuation coverage arising under a federal law commonly known as "COBRA" or
any similar state law or arising under WARN.
(g) Contracts. Any liabilities, obligations or commitments of Companies
arising under any contracts (including, without limitation, any liability for
past practices or liabilities under any union agreement), agreements or
commitments, other than the Assumed Liabilities.
(h) Environmental. Any and all liabilities, damages, losses or expenses
(including, without limitation, reasonable counsel fees and expenses), resulting
from, arising out of or in any way connected with any Environmental Liability.
1.5. Transfer Taxes and Fees. All sales and use, stamp, transfer,
documentary or other ad valorem taxes imposed by any governmental taxing
authority or any other taxing authority (excluding, however, taxes on capital
gains or income) as a result of the transfer, assignment, delivery or
contribution of the Crossroads Contribution and the Companies' Assets hereunder
("Transfer Taxes") shall be allocated and shared fifty percent (50%) by
Crossroads and fifty percent (50%) by the Companies.
6
<PAGE> 10
1.6. Expenses of Transaction. Except as otherwise provided herein, each
party hereto shall bear its own costs and expenses incurred in connection with
entering into this Agreement and consummating the transactions contemplated
herein including without limitation, all fees of counsel, accountants and
consultants; provided, however, that (a) all costs charged by the holder of any
Lien on the Crossroads Contribution or the Companies' Assets shall be paid by
Crossroads or the Companies, respectively, as its sole cost and obligation, (b)
the Companies shall be solely responsible for all fees and costs owing to Smith
Barney, Inc. in connection with the transactions contemplated hereby, (c)
Crossroads and the Companies will each pay fifty percent (50%) of any
out-of-pocket expenses incurred to obtain a transfer or assignment of any
franchises, licenses or permits necessitated by the transactions contemplated by
this Agreement, (d) Companies shall be solely responsible for any and all fees
to be paid under the HSR Act and (e) notwithstanding anything contained herein
to the contrary, neither Crossroads nor the Partnership shall have any
responsibility for any and all costs or expenses associated with any property
improvement program imposed and/or required as a result of the transactions
contemplated hereby and by the Master Agreement, which costs and expenses shall
be the sole responsibility of Equity Inns Partnership, L.P. or Equity Inns, Inc.
("ENNS").
7
<PAGE> 11
1.7. Closing. Subject to the fulfillment or waiver of the conditions
precedent specified in Sections 4.1, 4.2 and 4.3, the consummation of the
transactions contemplated hereby (the "Closing") will take place on November 1,
1996 or such other date as agreed to by the parties (the "Closing Date"). The
Closing will take place at 10:00 a.m., E.S.T. on the Closing Date at the offices
of Jones, Day, Reavis & Pogue at 500 Grant Street, Pittsburgh, Pennsylvania.
1.8. Closing Prorations. (a) The following matters and items pertaining
to the Hotels shall be apportioned between the Companies and the Partnership or,
where applicable, credited in total to or the sole responsibility of a
particular party, as of the Cutoff Time. To the extent known at Closing, net
credits in favor of Partnership shall be contributed to the Partnership by the
Companies in cash at Closing and net credits in favor of Companies shall be paid
in cash at the Closing. Unless otherwise indicated below, Partnership shall
receive a credit for any of the following items to the extent the same are
accrued but unpaid as of the Cutoff Time (whether or not due, owing or
delinquent as of the Cutoff Time), and Companies shall receive a credit to the
extent any of the following items shall have been paid prior to the Closing Date
to the extent the payment thereof relates to any period of time after the Cutoff
Time:
8
<PAGE> 12
(i) Guest Ledger Receivables; Food and Beverage
Receivables. Guest Ledger Receivables shall be prorated between Partnership and
Companies. Companies shall receive a credit for all Guest Ledger Receivables for
all room nights up to but not including the room night during which the Cutoff
Time occurs, and Partnership shall be entitled to the amounts of Guest Ledger
Receivables for the room nights after the Cutoff Time. Companies and Partnership
shall each receive a credit equal to one-half of the amount of Guest Ledger
Receivables for the full room night during which the Cutoff Time occurs. All
restaurant and bar facilities will be deemed closed as of the Cutoff Time and
Companies shall receive the income from the same until the Cutoff Time.
(ii) Contracts. Any amounts prepaid or payable under any
Contracts, including, without limitation, base rent under each Hotel Lease. All
amounts known to be due under Contracts with reference to periods prior to the
Closing Date shall be paid by Companies. Percentage rents shall be adjusted
based on the last full reporting period under the applicable Hotel Lease. Any
amounts not known at the Closing will be part of the post-closing adjustments
contemplated in Section 1.8(c).
(iii) Bookings. Partnership shall receive a credit for
advance payments, if any, under Bookings to the extent the Bookings relate to a
period after the Cutoff Time.
9
<PAGE> 13
(iv) Prepaid Expenses. Companies shall received a credit
for any and all expenses prepaid as of the Closing which will be assigned or
contributed to the Partnership and ensure to the benefit of the Partnership
after the Closing.
(v) Petty Cash Funds and House Banks. Partnership shall
receive and Companies shall contribute to Partnership as part of the Companies'
Assets all petty cash funds and cash in house banks at 100% of face value at the
Cutoff Time.
(vi) Security Deposits. Partnership shall be entitled to a
credit for all security and other deposits held by Companies as of the Cutoff
Time with respect to Contracts.
(b) Receivables. The receivables (including, without limitation,
commission vending machines) of the Companies shall be included in the
Companies' Assets and the Partnership shall collect them for its own account. In
the event that the amounts actually collected the Partnership on account of such
receivables is less than the amount paid by the Partnership on account of the
Accounts Payable, Companies shall make a cash contribution to the Partnership in
the amount of such shortfall in accordance with Section 1.8(c) hereof. In the
event the amounts actually collected by the Partnership on account of such
receivables exceeds the amounts paid by the Partnership on account of the
10
<PAGE> 14
Accounts Payable, the Partnership shall pay such excess to the Companies in
accordance with Section 1.8(c).
(c) Closing Statement.
(i) Partnership shall cause its accounting staff
("Partnership's Accountants") to make such inventories, examinations and audits
of the Hotels, and of the books and records of the Hotels, as Partnership's
Accountants may deem necessary to make the adjustments and prorations required
under this Section 1.8, or under any other provisions of this Agreement.
Companies or their designated representatives may be present at such
inventories, examinations and audits of the Hotels. Based upon such audits and
inventories, Partnership's Accountants will prepare and deliver to the parties
no later than five (5) days prior to the Closing Date an estimated closing
statement (the "Closing Statement"). The Closing Statement shall contain
Partnership's best estimate of the amounts of the items requiring the prorations
and adjustments in this Agreement. The Closing Statement shall be subject to
Companies' review and approval, not to be unreasonably withheld or denied. The
parties shall attempt in good faith to reconcile any differences before Closing.
The amounts set forth on the Closing Statement, as reviewed, approved and/or
adjusted, shall be the basis upon which the prorations and adjustments provided
for herein shall be made at the Closing.
11
<PAGE> 15
(ii) Within one hundred eighty (180) days following the
Closing Date, Partnership's Accountants shall deliver a final report to
Companies setting forth their final determination of all items to be included on
the Closing Statement. In the event that, at any time within said 180-day
period, either party discovers any items which should have been included in the
Closing Statement but were omitted therefrom or which were included on the
Closing Statement but which need further adjustment, such items shall be
adjusted in the same manner as if their existence had been known at the time of
the preparation of the Closing Statement. The foregoing limitation shall not
apply to any item which, by its nature, cannot be finally determined within the
period specified. However, no further adjustments shall be made beyond twelve
(12) months after the Closing Date.
(iii) The Closing Statement shall be binding and conclusive
on all parties hereto to the extent of the items covered by the Closing
Statement, unless within thirty (30) days after receipt by Companies of the
final Closing Statement Companies notifies Partnership that it disputes the
Closing Statement, and specifies in reasonable detail the items and reasons that
it so disputes. The parties shall attempt to resolve such dispute. If such
dispute is not resolved within forty-five (45) days after delivery of the
original notice by Buyer, then the parties shall submit such dispute to Coopers
& Lybrand ("Outside Accountants") and the determination of the
12
<PAGE> 16
Outside Accountants, which shall be made within a period of fifteen (15 days
after such submittal by the parties, shall be conclusive. The fees and expenses
of the Outside Accountants shall be paid equally by Partnership and Companies.
II. REPRESENTATIONS AND WARRANTIES
2.1. Representations and Warranties of Companies and McNeill. The
Companies and McNeill hereby, jointly and severally, represent and warrant to
Crossroads as follows:
2.1.1. Organizational Matters. (a) Each of Companies is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Tennessee and has the requisite corporate power and authority to
own, lease or otherwise hold the assets owned, leased or otherwise held by it
and to carry on their respective business as presently conducted by it. Each of
the Companies is duly qualified to do business as a foreign corporation under
the laws of the jurisdictions listed on Schedule 2.1.1 (a), which are the only
jurisdictions where such qualification is necessary or required to operate its
assets and/or conduct its business.
(b) Companies own the Companies' Assets free and clear of any Liens.
Companies will transfer to the Partnership good and marketable title to the
Companies' Assets upon the delivery of
13
<PAGE> 17
the title documents contemplated in this Agreement. The Companies' Assets are
the only assets of the Companies.
(c) The persons listed on Schedule 2.1.1 (c) are the only shareholders
of the Companies and own the number of shares in the Companies listed opposite
their names on Schedule 2.1.1 (c). McNeill has the requisite power and capacity
to execute and deliver this Agreement and to perform the transactions
contemplated hereby. The execution and delivery of this Agreement by McNeill and
the performance by McNeill of the transactions contemplated hereby have been
duly authorized by all necessary action on the part of McNeill. This Agreement
has been duly executed and delivered by McNeill and constitutes a valid and
binding obligation of McNeill enforceable in accordance with its terms.
2.1.2. Authorization and Effect of Agreement. Companies have
the requisite corporate power and authority to execute and deliver this
Agreement and to perform the transactions contemplated hereby to be performed by
Companies. The execution and delivery by Companies of this Agreement and the
performance by Companies of the transactions contemplated hereby to be performed
by Companies have been duly authorized by all necessary corporate action on the
part of Companies. This Agreement has been duly executed and delivered by
Companies and, assuming the due execution and delivery of this Agreement by
14
<PAGE> 18
Crossroads and the Partnership, constitutes a valid and binding obligation of
Companies enforceable in accordance with its terms.
2.1.3. No Restrictions Against Transfer of Companies' Assets.
The execution and delivery of this Agreement by Companies and McNeill, and the
performance by Companies and/or McNeill of the transactions contemplated hereby
to be performed by them or him will not violate any law, rule, regulation,
judgment, order or decree applicable to them or him or conflict with, or result
in any violation of, or constitute a default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any Obligation or to the loss of a material benefit under, any
provision of the organizational documents of Companies or any agreement,
contract, lease, or other instrument or obligation included in any of the
Companies' Assets or Permit listed or required to be listed on any Schedule,
other than any such conflicts, violations or defaults as are listed or described
on Schedule 2.1.3. consent, approval, order or authorization of, notice to, or
registration, declaration or filing with, any Governmental Authority or other
entity, domestic or foreign, or any other third party is required to be obtained
or made by or with respect to Companies or McNeill in connection with the
execution and delivery of this Agreement by Companies or McNeill or the
performance by Companies or McNeill of the transactions contemplated hereby to
be performed by him or them, except for
15
<PAGE> 19
such of the foregoing as are listed or described on Schedule 2.1.3.
2.1.4. Compliance With Laws. Without limiting the
representations and warranties set forth in Section 2.1.9 or 2.1.12, and except
as listed or described on Schedule 2.1.4, Companies are not in material
violation of any Laws in the operation of the Hotels.
2.1.5. Litigation; Decrees. Without limiting the
representations and warranties set forth in Section 2.1.9 or 2.1.12, there are
no lawsuits, claims, administrative or other proceedings relating to the conduct
of the Companies' Assets or the Hotels pending or, to the knowledge of Companies
or McNeill after due investigation, threatened in writing, against or affecting
Companies which, if determined adversely, would have a material adverse effect
on the Companies' Assets or the Hotels. Companies are not in default under any
judgment, order or decree of any Governmental Authority applicable to the
operation or conduct of the Hotels or the Companies' Assets.
2.1.6. Contract Rights. Each of the Contracts included in the
Companies' Assets is a valid and binding obligation of each of the parties
thereto and is in full force and effect. Each of the parties to the Contracts
included in the Companies' Assets has performed all obligations required to be
16
<PAGE> 20
performed by it through the Closing Date under such Contracts and is not (with
or without the lapse of time or the giving of notice, or both) in breach or
default in any respect thereunder. Companies have delivered to Crossroads true,
correct and complete copies of such Contracts.
2.1.7. No Brokerage or Finder's Fees. Neither Companies nor
McNeill have incurred any liability to any broker, finder or agent for any
brokerage fees, finder's fees or commissions with respect to the transactions
contemplated by this Agreement, except any fees owing to Smith Barney, Inc. for
which Companies will be solely responsible.
2.1.8. Environmental Matters. Without limiting the
representations or warranties contained elsewhere herein:
(a) To the best of Companies' and McNeill's knowledge
after due investigation, Schedule 2.1.8 sets forth a list of all proceedings and
alleged claims related to the ownership, leasing and/or operation of the Hotels
which Companies are or in the last five (5) years have been a party before any
Governmental Authority relating to pollution or protection of the environment
and human health and safety, the disposition of which may result in (i)
liability against Companies for any amount for penalties, fines, damages,
monitoring, maintenance of wells, testing, investigation, sampling, response,
remedial or
17
<PAGE> 21
inspection costs or other monetary relief; (ii) the making of a capital
expenditure in any amount; or (iii) in the impairment of the utility of or the
diminution in any amount in value of the Companies' Assets or the Hotels for the
purposes for which such Companies' Assets or the Hotels are presently being used
and operated.
(b) Except as disclosed in Schedule 2.1.8, neither
the Companies nor McNeill have received notice of, nor have reason to believe
there exists, any threatened proceedings, claims or allegations of the nature
described in Section 2.1.8(a) and neither the Companies nor McNeill are aware of
facts that, with the passage of time or otherwise, could lead to proceedings of
the nature described in Section 2.1.8(a).
(c) Except as to matters described in Schedule 2.1.8,
and to the best of Companies' and McNeill's knowledge after due investigation,
Companies are and have always been in compliance in all respects with all
applicable Environmental Laws applicable to themselves and with respect to the
respective property, activities and/or operations of the Companies' Assets and
the Hotels.
(d) There are no asserted claims nor any bases for
any claims that Companies are in violation and/or breach of or have liability
under any Environmental Laws with respect to
18
<PAGE> 22
the ownership, management and/or operation of the Companies' Assets or the
Hotels.
(e) Except as set forth on Schedule 2.1.8, in
connection with the ownership, management and/or operation of the Companies'
Assets or the Hotels, to the best of McNeill's and the Companies' knowledge
after due investigation, Companies have obtained and complied with and kept in
effect all Permits (which are listed on Schedule 2.1.8(h)) and other approvals
necessary to operate the Hotels or to store, dispose of and otherwise handle any
Hazardous Substances and/or wastes and Companies has reported, to the extent
required by Environmental Laws, all past and present sites owned, operated or
used by Companies in connection with the ownership, leasing and/or operation of
the Companies' Assets or the Hotels where Hazardous Substances and/or wastes
have been treated, stored or disposed of. Companies and McNeill represent that
the Companies have not spilled, discharged, released, stored, or disposed of any
Hazardous Substances or wastes in violation of any Environmental Laws.
(f) Except as set forth in Schedule 2.1.8, and in
connection with the ownership, leasing, management and/or operation of the
Companies' Assets or the Hotels, and to the best of the Companies' and McNeill's
knowledge after due investigation, there is no Contamination at any on-site or
off-site location to which Companies have transported Hazardous
19
<PAGE> 23
Substances, or arranged for the transportation of Hazardous Substances, or at
which any Hazardous Substances for which the Companies may reasonably be
expected to have liability have been deposited and/or disposed of. In addition,
except as disclosed on Schedule 2.1.8, no such on-site or off-site location is
the subject of any enforcement actions or other investigations by any
Governmental Authority or other third party that may lead to claims against
Companies or Partnership for clean-up costs, investigation, remedial work,
damages to natural resources or property, or for personal injury claims.
(g) Except as otherwise disclosed on Schedule 2.1.8:
(i) Neither Companies nor McNeill have
received any request for information, notice, demand letter, administrative
inquiry, or formal or informal compliance notice or claim with respect to the
presence of Contamination or any Hazardous Substance, in, on, under or about any
property owned, leased, subleased or occupied by Companies or used in the Hotels
or the threat of migration of Contamination or any Hazardous Substances onto,
at, into or under any property owned or occupied by a third party which
contamination or Hazardous Substance originated at sites or facilities currently
or previously owned, operated, leased, subleased or used by Companies;
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<PAGE> 24
(ii) Neither Companies nor McNeill have
received any request nor, to the best of their knowledge, do they have reason to
believe there is a basis for any information, notice, demand letter or inquiry
from a Governmental Authority or other third-party concerning Contamination or
threatened Contamination at any off-site location or locations to which
Companies transported or arranged for the transportation of Hazardous Substances
during Companies operation and/or ownership or leasing of the Companies' Assets
or the Hotels.
(iii) Except as disclosed on Schedule
2.1.8 and to the best of Companies' or McNeill's knowledge after due
investigation, no Contamination exists at, in or under any of the Hotels or
structures at any site and/or facility currently or formerly owned, operated,
leased, subleased or used by Companies; and
(iv) Except as set forth on Schedule
2.1.8 and to the best of Companies' or McNeill's knowledge after due
investigation, there are no underground storage tanks, above-ground storage
tanks or subsurface structures, or any containment vessel, located on any of the
Hotels.
(h) To the best of Companies' and McNeill's knowledge
after due investigation, Companies have all Permits
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<PAGE> 25
required by Environmental Laws including, without limitation, those related to
occupational health and safety in the ownership, leasing, management, subleasing
and/or operation of the Companies' Assets and the Hotels. Schedule 2.1.8(h)
contains a listing of all Permits held by Companies required by Environmental
Laws.
2.1.9. Taxes. With respect to the Companies' Assets and the
Hotels, Companies have filed or caused to be filed (on a timely basis) any and
all returns, reports, statements, declarations, schedules, notices, certificates
or other documents ("Tax Returns") filed with or submitted to any Governmental
Authority in connection with the determination, assessment, collection or
payment of any tax, lien, assessment, impost, toll duty, deficiency, fee or
related amount imposed or assessed ("Taxes") by any Governmental Authority ("Tax
Authority") that are or were required to be filed by or with respect to any of
them, either separately or as a member of a group of corporations, pursuant to
the requirements of each Tax Authority with jurisdiction over them or their
assets. Companies have paid or made provision for the payment of, all Taxes,
which are, may be or become a lien on the Companies' Assets or the Hotels, as
reflected on such Tax Returns, or otherwise, or pursuant to any assessment
received by Companies, except such Taxes, if any, as are being contested in good
faith and as to which adequate reserves (determined in accordance with GAAP)
have been provided.
22
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There exists no proposed tax assessment against Companies related to the
ownership or operation of the Companies' Assets or the Hotels. All Taxes that
Companies are or were required by any requirements to withhold or collect have
been duly withheld or collected and, to the extent required, have been paid to
the proper governmental body.
2.1.10. Real Property. Companies and McNeill have previously
furnished to Crossroads copies of all deeds and recorded instruments in the
possession of Companies and McNeill related to the Hotels and copies of all
opinions, abstracts, environmental reports, structural or other engineering
reports, title policies and surveys in the possession of Companies and McNeill
relating to the Hotels. The Hotels are the only real property owned or leased by
Companies and used in connection with the Companies' Assets. The Hotels are not
subject to any rights of way, easements, building use restrictions, exceptions,
variances, reservations or limitations of any nature whatsoever, except such as
are listed in Schedule 2.1.10(a) or those which would not materially interfere
with the current use and/or ownership and/or operation of the Hotels. All of the
Hotels are in safe condition and operating repair and comply in all material
respects with all applicable ordinances, codes, regulations and building and
other Laws applicable thereto. The present use of the Hotels is in compliance
with all zoning classifications except for noncompliance which would not have a
material adverse
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effect on the ownership and/or operation of the Hotels. The Hotels are each
currently serviced by a community sewage system. The Hotels are situated on
properly subdivided parcels of property. All buildings and other improvements
constituting the Hotels are within the record property lines. Except as set
forth in Schedule 2.1.10(b), no portion of the Hotels are located in a flood
plain or consists of any wetlands. To the extent any of the Hotels are located
in a flood plain, Companies have adequate flood insurance for such Hotels.
Neither McNeill nor Companies have received any notice of any increase in real
estate assessments affecting the Hotels. Neither McNeill nor Companies have
received notice of any assessment for public improvement and have no knowledge
of any pending assessment, including, without limitation, assessments for
business improvement districts, transportation districts or utility services
affecting the Hotels. There are no pending or, to the best of Companies' and
McNeill's knowledge, threatened condemnation or eminent domain proceedings which
affect or would affect the Hotels or any portion thereof. The Hotels (including,
without limitation, any buildings or improvements thereof) are in material
compliance with all Laws, including, without limitation, the Americans with
Disabilities Act, as the same may be amended and any and all regulations
promulgated thereunder ("ADA"). All easements, utilities and related services
necessary for the permanent and efficient use and operation of the Hotels for
their present purposes (including potable water, storm and sanitary sewer, gas,
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electric and telephone facilities) have been completed, paid for in full and are
presently available to the occupants thereof.
2.1.11. Intellectual Property. (a) Companies use no
trademarks, servicemarks, patents, know-how or other intellectual property
(collectively, "Intellectual Property") in connection with operation of the
Hotels, except as set forth on Schedule 2.1.11 attached hereto. The right to use
the Intellectual Property as currently used by Companies is included with the
Companies' Assets.
(b) Schedule 2.1.11 is an accurate and complete listing and
summary of all Intellectual Property. The Companies are the owners or lessees of
all right, title and interest in and to all of the Intellectual Property free
and clear of all Liens; the Intellectual Property has been registered and is
currently in compliance with formal legal requirements (including the payment of
filing, examination and maintenance fees and proofs of working or use), are
valid and enforceable and are not subject to any maintenance fees or taxes or
actions falling due within ninety (90) days after the Closing Date; no part of
the Intellectual Property has been or is now involved in any opposition,
invalidation or cancellation proceeding nor, to the best of Companies' and
McNeill's knowledge after due investigation, is any such action threatened with
respect to any of the Intellectual Property; neither Companies nor McNeill are
aware of
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any potentially interfering intellectual property of any third party; and no
part of the Intellectual Property is infringed or has been challenged or
threatened in any way. None of the Intellectual Property used by Companies
infringe or are alleged to infringe any intellectual property of any third
party.
2.1.12. Financial Statements. (a) Attached as Schedule 2.1.12
is a list and description of the financial information delivered to IHC, New
Lessee and Partnership (collectively, the "Financial Statements"). The Financial
Statements have been prepared in accordance with GAAP consistently applied and
are true, accurate and complete in all material respects.
(b) There are no liabilities arising out of the conduct of the
Hotels which are not set forth or reflected in the Financial Statements, except
(i) liabilities which, in accordance with GAAP, were not required to be set
forth therein, or (ii) liabilities or obligations arising after the Financial
Statements in the ordinary course of business of the Hotels.
2.1.13. Conduct of the Hotels. Except as a result of matters
relating to this Agreement, since December 31, 1995 (or such date as such Hotel
has initially leased and/or managed by the Companies) the Hotels have been
operated in the ordinary course of business, the Companies have not taken any
action which
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would have constituted a violation of Section 3.4 if Section 3.4 had applied to
Companies since December 31, 1995, and there has not been any material adverse
change in any of the Hotels or the financial condition or results of operations
of any of the Hotels.
2.1.14. Insurance. Set forth on Schedule 2.1.14 is a list of
all material casualty, liability and other insurance maintained by Companies.
Except as set forth on Schedule 2.1.14, ALL such insurance is in full force and
effect on the date hereof. Companies have received no notice, nor do they or
McNeill have knowledge after due investigation, of any condition which may cause
the cancellation, reduction or modification of such insurance or the increase in
the premiums therefor.
2.1.15. Employee Benefit Plans, Programs or Arrangements. (a)
Except as set forth on Schedule 2.1.15, Companies are not a party to or
obligated to contribute to any employee benefit plan or program, guaranteed
annual income plan, fund or arrangement, employee association or union, or any
incentive, bonus, profit-sharing, deferred compensation, stock option or
purchase plan or agreement or arrangement, or any non-competition agreement, or
any severance or termination pay plans or policies, any medical, health,
hospitalization, disability, life or other insurance plans, or any other
employee fringe benefit plans which covers any employee (collectively the
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"Employee Plans"). True and correct and complete copies of ALL of the written
plans, programs, agreements or arrangements, and true, correct and complete
written descriptions of all of the oral plans, programs, agreements or
arrangements, required to be described in Schedule 2.1.15 have heretofore been
delivered or otherwise made available to Crossroads.
(b) None of Companies, any Employee Plan of Companies or any
"party in interest," as defined in Section 3(14) of the Employee Retirement
Income Security Act of 1974, as amended and the rules and regulations
promulgated thereunder ("ERISA"), has engaged in a "prohibited transaction," as
defined in Section 406 of ERISA or Section 4975(c)(1) of the Code, which could
subject any of them or Crossroads or Partnership to liability under Section 409
or 502(i) of ERISA or Section 4975 of the Code. Companies, and each fiduciary
for each of the Employee Plans of Companies, is in material compliance with the
terms of such Employee Plans and with the requirements of any and all Laws,
including but not limited to ERISA, applicable to each such Plan. Companies have
not failed to make any contribution to, or to pay any amount due and owing, as
required by applicable Law or by the terms of any such Employee Plan as of the
last day of the most recent fiscal year of each of such Plans ended prior to the
Closing Date.
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(c) There is no pending or, to the best of Companies' or
McNeill's knowledge after due investigation, threatened legal action,
administrative or regulatory proceedings or investigations against Companies or
any Employee Plan of Companies with respect to any such Plan, other than routine
claims for benefits, which could result in liability to Companies or Crossroads
or Partnership and, to the best of Companies' or McNeill's knowledge after due
investigation, there is no basis for any such legal action, proceeding or
investigation.
(d) Except as set forth on Schedule 2.1.15, Companies do not
maintain or contribute to, and have not maintained or contributed to, (i) any
"multiemployer plan" (as defined in Section 3(37) of ERISA) that covers any
employee; (ii) any pension plan (as defined in Section 3(2) of ERISA) that is
subject to Title IV of ERISA that covers any employee; or (iii) any plan or
program that provides post-employment medical, health or life insurance benefits
(other than any such benefits required to be provided pursuant to Section 4980B
of the Code). During the five (5) year period preceding the Closing Date, the
Companies have not terminated any employee benefit plan subject to Title IV of
ERISA for which a Notice of Sufficiency has not been issued by the Pension
Benefit Guaranty Corporation. No amount is due or owing from the Companies to
the Pension Benefit Guaranty Corporation under Title IV of ERISA for any reason,
or to any "multiemployer plan" (as defined in Section 3(37) of
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ERISA) on account of any complete or partial withdrawal therefrom.
(e) With respect to each "group health plan" (within the
meaning of Section 4980B of the Code) maintained by Companies, Companies are in
compliance with, and will satisfy all liabilities and obligations relating to,
the continuation coverage requirements of the federal law commonly referred to
as "COBRA" or any similar state law. Companies are in compliance with, and will
satisfy all liabilities and obligations relating to, the notice and all other
requirements arising under WARN.
(f) Companies and McNeill have delivered to Crossroads true,
correct and complete information regarding the current levels of salaries and/or
wages for the employees of the Hotels and the Companies.
2.1.16. Labor Relations. Except as disclosed on
Schedule 2.1.16, (a) no employee of the Hotels or the Companies is represented
by any union or other labor organization and no effort exists to organize any of
Companies' employees or the employees of the Hotel; (b) there is no unfair labor
practice complaint against the Hotels or the Companies pending or, to the
knowledge of either McNeill or the Companies after due investigation, threatened
before the National Labor Relations Board; (c) there is no labor strike,
dispute, picketing or other
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labor disputes, slow-down or stoppage actually pending or, to the knowledge of
either McNeill or the Companies, threatened against or involving the Hotels or
the Companies; (d) there is no grievance pending against the Companies; (e)
there is no private agreement or understanding to which the Companies are a
party restricting the Hotels or the Companies from relocating, closing or
terminating any of its operations or facilities; and (f) neither the Companies
nor the Hotels have, in the past three years, experienced any work stoppage or
other labor difficulty or committed any unfair labor practice.
2.1.17. Accounts Receivable. All of the accounts receivable
included in the Companies' Assets represent actual sales made in the ordinary
course of business and to the best knowledge of Companies and McNeill after due
investigation, are not subject to any setoffs or counterclaims as to the
performances of any obligation or contract arising prior to the Closing Date.
2.2. Representations and Warranties of Crossroads. Crossroads hereby
represents and warranties to Companies and McNeill as follows:
2.2.1. Organizational Matters. (a) Crossroads is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has the requisite
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corporate power to own, lease or otherwise hold its properties and assets and to
carry on its business as presently conducted.
(b) The Partnership is a limited partnership duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has the requisite partnership power to own, lease or otherwise hold its
properties and assets and to carry on its business as presently conducted.
2.2.2. Authorization and Effect of Agreement. Crossroads has
the requisite corporate power and the Partnership has the requisite partnership
power to execute and deliver this Agreement and to consummate the transactions
contemplated hereby to be consummated by them. The execution and delivery by
Crossroads and Partnership of this Agreement and the consummation by them of the
transactions contemplated hereby to be consummated by them have been duly
authorized by all necessary action on the part of Crossroads and Partnership.
This Agreement has been duly executed and delivered by Crossroads and
Partnership and, assuming the due execution and delivery of this Agreement by
Companies and McNeill, constitutes a valid and binding obligation of Crossroads
and Partnership.
2.2.3. No Restrictions. Except as set forth on Schedule 2.2.3,
the execution and delivery of this Agreement by Crossroads and Partnership does
not, and the performance by
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Crossroads and Partnership of the transactions contemplated hereby to be
performed by them will not violate any law, rule, regulation, judgment, order or
decree applicable to them or conflict with, or result in any violation of, or
constitute a default (with or without notice or lapse of time, or both) under,
or give rise to a right of termination, cancellation or acceleration of any
obligation or to loss of a material benefit under, any provision of the
Certificate of Incorporation or bylaws of Crossroads or the Certificate of
Limited Partnership or partnership agreement of Partnership, or any agreement,
contract, lease or other instrument or obligation to which Crossroads or
Partnership is a party or by which their assets are bound. No material consent,
approval, order or authorization of, or registration, declaration or filing
with, any Governmental Authority or other entity is required to be obtained or
made by or with respect to Crossroads or Partnership in connection with the
execution and delivery of this Agreement by them or the consummation by them of
the transactions contemplated hereby to be consummated by them, except as listed
or described on Schedule 2.2.3.
III. COVENANTS PENDING CLOSING
3.1. Investigation by Crossroads. (a) Prior to the Closing, upon
reasonable notice from Crossroads to Companies given in accordance with this
Agreement, Companies will afford to the
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officers, attorneys, accountants or other authorized representatives of
Crossroads access during normal business hours to the facilities and the books
and records of the Companies relating to the Companies' Assets or Hotels so as
to afford Crossroads full opportunity to make such review, examination and
investigation of the Companies' Assets or Hotels as Crossroads may-desire to
make (including, without limitation, environmental audits of the Hotels.)
Crossroads will be permitted to make extracts from or to make copies of such
books and records as may be reasonably necessary. Prior to the Closing,
Companies will furnish or cause to be furnished such financial and operating
data and other information pertaining to the Companies' Assets or Hotels as
Crossroads may request.
(b) Prior to the Closing, Companies and McNeill will provide Crossroads
with access to meet and interview current employees of Companies; provided,
however, that Companies and McNeill acknowledge that, neither Partnership nor
Crossroads is under any obligation to offer employment to and/or to hire any
such employees.
3.2. No Announcement/Confidentiality. Upon execution of this Agreement,
Companies, McNeill and Crossroads agree to make a press release in a form to be
mutually agreed upon by all of the parties. Prior to the Closing Date, no party
shall publish or permit any of its Affiliates to publish any other press release
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or similar public announcement with respect to the transactions contemplated by
this Agreement without prior written consent of all of the other parties other
than as the person making such disclosure may determine in good faith to be
required by law, rule, regulation, judicial or administrative process (in which
case the disclosing party shall use reasonable efforts to give notice to all of
the other parties prior to making such disclosure and, if reasonably practicable
in the circumstances, give such other parties the opportunity to review and
comment on the proposed disclosure).
3.3. Regulatory Filings. Each of the parties will use its reasonable
best efforts to obtain, and to cooperate with the other in obtaining, all
authorizations, consents, orders and approvals of Governmental Authorities that
may be or become necessary in connection with the consummation of the
transactions contemplated by this Agreement including, without limitation,
filings required under the HSR Act and liquor licensing authorities, and to take
all reasonable actions to avoid the entry of any order or decree by any
Governmental Authority prohibiting the consummation of the transactions
contemplated hereby.
3.4. Operation of the Hotels. Except as consented to by Crossroads in
writing, prior to the Closing, Companies will, in
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respect of their operation of the Hotels and the Companies' Assets:
(a) Use reasonable best efforts to not take or permit to be
taken or do or suffer to be done anything other than in the ordinary course of
operation of the Hotels as presently conducted, and use reasonable best efforts
to maintain the goodwill associated with the Hotels;
(b) Continue its existing practices relating to maintenance of
the Hotels and operations under the Companies' Assets;
(c) Except as provided in Section 1.2 of the Master Agreement
with respect to the Hotel Leases, not terminate, amend or modify any Contract
included in the Companies' Assets;
(d) Except in the ordinary course of business and consistent
with past practices, not enter into any new service contracts related to the
Hotels;
(e) Maintain and keep in full force and effect its current
insurance and shall pay any deductibles related to any claims made under such
insurance; and
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(f) Not terminate or make material amendments to any benefit
plan or employee practice or policy or increase the general rates of
compensation for employees of the Hotels and/or the Companies.
3.5. Satisfaction of Conditions. Without limiting the generality or
effect of any provision of Article IV, prior to the Closing, each of the parties
hereto will use reasonable efforts with due diligence and in good faith to
satisfy promptly all conditions required hereby to be satisfied by such party in
order to expedite the consummation of the transactions contemplated hereby.
3.6. No Solicitation. Prior to the Closing, neither Companies nor
McNeill nor their respective employees, officers, agents or representatives,
including without limitation, Smith Barney, Inc., shall directly or indirectly
(a) solicit, initiate or encourage any inquiries, proposals or offers from any
person relating to any lease, acquisition or purchase of any of the Companies'
Assets, or any securities of, or any merger, consolidation or business
combination with, Companies, or (b) with respect to any effort or attempt by any
other person to do or seek any of the foregoing (i) participate in any
discussions or negotiations, (ii) furnish to any other person any confidential
information with respect to the Companies' Assets,
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or (iii) otherwise cooperate in any way with, or assist or participate in, or
facilitate or encourage any such effort.
IV. THE CLOSING
4.1. Conditions Precedent to Obligations of Crossroads and Companies.
The obligations of each of Crossroads, the Partnership, the Companies and
McNeill under this Agreement to consummate the transactions contemplated hereby
will be subject to the satisfaction, at or prior to Closing, of the conditions
that (a) each governmental approval, liquor license, and other approvals,
consents or waivers identified on Schedule 2.1.3 or Schedule 2.2.3 as being a
condition of the Closing shall have been obtained, including, without
limitation, approval under the HSR Act, the consent of the other parties to the
Companies' Assets and the transfer of all Permits (or in the case of liquor
licenses, consummation of an arrangement deemed acceptable by Crossroads in its
sole discretion under the applicable liquor laws allowing the continuation of
liquor service pending approval of the license transfer application), (b) there
shall not have been entered a preliminary or permanent injunction, temporary
restraining order or other judicial or administrative order or decree in any
domestic jurisdiction, the effect of which prohibits the Closing, (c) execution
of a Master Agreement by and among the Partnership, Interstate Hotels
Corporation, ENNS and Equity Inns Partnership, L.P., in form and substance
satisfactory
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to the parties thereto ("Master Agreement") and all conditions to closing under
the Master Agreement shall have been satisfied other than the obligations
hereunder, (d) the approval of ENNS' line of credit lender shall have been
obtained, (e) the approval of the franchisors of the Hotels shall have been
obtained, (f) the approval of Credit Lyonnais shall have been obtained, and (g)
the consent of Merrill Lynch & Co. shall have been obtained. Any of the
foregoing conditions may be waived, (x) insofar as it is a condition to the
obligations of Crossroads or the Partnership, by Crossroads at its option and
(y) insofar as it is a condition to the obligations of Companies and McNeill, by
Companies at their option.
4.2. Additional Conditions Precedent to Obligations of Crossroads and
the Partnership. The obligations of Crossroads and the Partnership under this
Agreement to consummate the transactions contemplated hereby will be subject to
the satisfaction, at or prior to the Closing, of all of the following
conditions, any one or more of which may be waived at the option of Crossroads:
4.2.1. No Material Misrepresentation or Breach. There shall
have been no material breach by Companies or McNeill in the performance of any
of the covenants herein to be performed by them in whole or in part prior to the
Closing, and the representations and warranties of Companies and McNeill
contained
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in this Agreement shall be true and correct in all respects as of the Closing
Date, except for representations or warranties made as of a specified date,
which shall be true and correct in all respects as of the specified date, and
Companies and McNeill shall have delivered to Crossroads a certificate
certifying each of the foregoing, dated the Closing Date and signed by McNeill
and by the president and chief financial officer on behalf of each of the
Companies; and
4.2.2. Transfer Documents. There shall have been delivered to
Crossroads and the Partnership by Companies and McNeill the following documents
as executed by Companies and the other parties thereto:
(a) Assignment and Assumption Agreement and Bill of
Sale for the Companies' Assets;
(b) Incumbency and Specimen Signature Certificate of
Companies;
(c) Resolutions of the Board of Directors [and
Shareholders] of Companies authorizing the execution and delivery of this
Agreement and the consummation of the transactions contemplated by them, all as
certified by the Secretary of Companies;
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(d) Certificates of the Secretary of State of the
State of Tennessee to the effect that Companies are validly existing and in good
standing and dated as of a date not more than ten (10) days prior to Closing;
(e) True and correct copies of the organizational
documents of Companies certified by the Secretary of Companies;
(f) The opinion of Bogatin Law Firm, counsel for
Companies and McNeill, to cover the matters set forth in Exhibit B, attached
hereto;
(g) Partnership Agreement;
(h) Exchange Agreement;
(i) Evidence that all consents necessary to
consummate the transactions contemplated by this Agreement have been obtained;
and
(j) Estoppel certificates and nondisturbance
agreements from the parties listed on Schedule 4.2.2(j).
4.2.3. Due Diligence. Crossroads and its representatives shall
be satisfied in their sole and absolute
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discretion with the results of all aspects of the due diligence review of the
Companies' Assets and the Hotels.
4.2.4. Amendments to Leases. All of the Hotel Leases included
within the Companies' Assets shall be amended and restated by all of the parties
thereto (simultaneously with the Closing) to be in substantially the form of
Exhibit A to the Master Agreement.
4.2.5. Additional Matters. (a) All of the Hotels shall have
linen, china, glass and silver as of the Closing Date at the levels required by
the applicable franchisor.
(b) All of the utility security deposits (or bonds in
lieu thereof) existing as of the Closing Date for the Hotels shall have been
assigned to the Partnership.
(c) Crossroads and the Partnership shall have
received consents and estoppel certificates from Promus Hotels Corp. and all
third party owners regarding any and all agreements between Promus Hotels Corp.
and the Companies and between the Companies and other third parties, in form and
substance reasonably acceptable to Crossroads.
(d) The Partnership and Crossroads shall have
received consents and estoppel certificates from all of the
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franchisors under the Franchise Agreements and from the third parties to the
management agreements included in the Companies' Assets, in form and substance
reasonably acceptable to Crossroads.
(e) Partnership shall have obtained from a title
company reasonably satisfactory to Partnership (the "Title Company") a standard
ALTA Owner's Policy of Title Insurance (or an irrevocable commitment therefor),
in the amount of $46,500,000, (i) without any of the standard exceptions; (ii)
without the standard exclusion relating to creditors' rights; and (iii) subject
only to such exceptions which are approved by Crossroads, insuring that
Partnership is the owner of the leasehold of the Hotels (the "Title Policy").
Notwithstanding the foregoing, the Title Policy may contain the standard
exception relating to coal and mining rights, but only if the Title Company
insures against future surface operations.
(f) Originals and all copies of the books, records
and other items related to or comprising the Companies' Assets shall have been
delivered to the Partnership.
4.3. Additional Conditions Precedent to Obligations of Companies and
McNeill. The obligations of Companies and McNeill under this Agreement to
consummate the transactions contemplated hereby will be subject to the
satisfaction, at or prior to the
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Closing, of all the following conditions, any one or more of which may be waived
at the option of Companies:
4.3.1. No Material Misrepresentation or Breach. There shall
have been no material breach by Crossroads or the Partnership in the performance
of any of the covenants herein to be performed by them in whole or in part prior
to the Closing, and the representations and warranties of Crossroads contained
or referred to in this Agreement shall be true and correct in all respects as of
the Closing Date, except for representations or warranties made as of a
specified date, which shall be true and correct in all respects as of the
specified date, and Crossroads shall have delivered to Companies a certificate
certifying each of the foregoing, dated the Closing Date and signed by its
president and chief financial officer on its behalf;
4.3.2. Closing Documents. There shall have been delivered to
Companies by Crossroads and the Partnership the following documents as executed
by Crossroads and the Partnership as applicable:
(a) Assignment and Assumption Agreement for the
Companies' Assets pursuant to which the Partnership will assume the Assumed
Liabilities;
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(b) Incumbency and Specimen Signature Certificate of
Crossroads;
(c) Certificates of the Secretary of State of the
State of Delaware to the effect that Crossroads and the Partnership are validly
existing and in good standing and dated as of a date not more than ten (10) days
prior to Closing;
(d) The opinion of Jones, Day, Reavis & Pogue,
counsel for Crossroads and the Partnership, to cover the matters set forth in
Exhibit C attached hereto;
(e) Partnership Agreement; and
(f) Exchange Agreement.
4.3.3. Crossroads Contribution. Crossroads shall have
delivered to the Partnership certificates representing the Crossroads
Contribution duly endorsed or with duly executed stock powers.
4.4. Termination. Notwithstanding anything contained in this Agreement
to the contrary, this Agreement may be terminated at any time prior to the
Closing:
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(a) By the mutual written consent of Crossroads, the
Partnership, Companies and McNeill;
(b) By either Crossroads and the Partnership or the Companies
and McNeill if the Closing shall not have occurred on or before December 1, 1996
provided the party (or any of its Affiliates) so terminating this Agreement is
not in default of its obligations hereunder; or
(c) By either Crossroads and the Partnership or the Companies
and McNeill if there shall have been entered a final, nonappealable order or
injunction of any Governmental Authority restraining or prohibiting the
consummation of the transactions contemplated hereby or any material part
thereof.
In the event of termination of this Agreement under this Section 4.4, each party
hereto will pay all of its own fees and expenses. There will be no further
liability hereunder on the part of any party hereto if this Agreement is so
terminated, except by reason of a material breach of any covenant contained in
this Agreement.
V. SURVIVAL AND INDEMNIFICATION
5.1. Survival; Definitions. (a) Each of the representations and
warranties contained in Article II, will survive the Closing and remain in full
force and effect for the term of any or all of
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the Contracts, as amended and restated as contemplated by this Agreement. Any
claim for indemnification with respect to any of such matters which is not
asserted by notice given as herein provided within such specified period of
survival may not be pursued. Any claim for an Indemnifiable Loss asserted within
such period of survival as herein provided will be timely made for purposes
hereof.
(b) Unless a specified period is set forth in this Agreement (in which
event such specified period will control), the covenants contained herein will
survive the Closing and remain in effect indefinitely.
(c) In addition to any and all other remedies of the Partnership and
Crossroads, the Partnership may offset, set-off or deduct any Indemnifiable
Losses it may have against any and all amounts of stock to be transferred,
delivered or assigned to the companies under or pursuant to the Exchange
Agreement.
5.2. Indemnification. (a) Subject to Section 5.1, Companies and McNeill
will indemnify, defend and hold harmless Crossroads, the Partnership and their
Affiliates and their respective directors, officers, partners, employees, agents
and representatives from and against any and all Indemnifiable Losses relating
to, resulting from or arising out of:
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(i) Any breach by Companies or McNeill of any of the
representations or warranties of Companies or McNeill contained in this
Agreement;
(ii) Any breach by Companies or McNeill of any covenant
of Companies or McNeill contained in this Agreement;
(iii) Any Third Party Claim related to or arising out of
any matter described in Section 5.2(a) (i) or (ii) hereof or any
Excluded Liability;
(iv) Any and all Environmental Liabilities related to,
arising out of or resulting from the Hotels or the operations thereof,
any franchise agreement, any building code or life/safety code
violations, or any requirement or award relating to course of
employment, working conditions, wages and/or compensation or benefits
of employees or former employees at the Hotels; and/or
(v) Any and all violations of the ADA or WARN.
(b) Subject to Sections 5.1, Crossroads and the Partnership
will indemnify, defend and hold harmless Companies and McNeill and their
respective Affiliates, directors, officers, partners, employees, agents and
representatives from and against
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any and all Indemnifiable Losses relating to, resulting from or arising out of
any of the following:
(i) Any breach by Crossroads and the Partnership of any
of their representations or warranties contained in this Agreement;
(ii) Any breach by Crossroads and the Partnership of any
covenant of Crossroads and the Partnership contained in this Agreement;
and/or
(iii) Any Third Party Claim related to or arising out of
any matter described in Section 5.2(b) (i) or (ii).
5.3. Defense of Claims. (a) If any Indemnitee receives notice of the
assertion or commencement of any Third Party Claim against such Indemnitee with
respect to which an Indemnifying Party is obligated to provide indemnification
under this Agreement, the Indemnitee will give such Indemnifying Party
reasonably prompt written notice thereof, but in any event not later than 15
calendar days after receipt of such notice of such Third Party Claim. Such
notice will describe the Third Party Claim in reasonable detail, will include
copies of all material written evidence thereof and will indicate the estimated
amount, if reasonably practicable, of the Indemnifiable Loss that has been or
may be sustained by the Indemnitee. The Indemnifying
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Party will have the right to participate in, or, by giving written notice to the
Indemnitee, to assume, the defense of any Third Party Claim at such Indemnifying
Party's own expense and by such Indemnifying Party's own counsel (reasonably
satisfactory to the Indemnitee), and the Indemnitee will cooperate in good faith
in such defense.
(b) If, within 10 calendar days after giving notice of a Third
Party Claim to an Indemnifying Party pursuant to Section 5.3(a), an Indemnitee
receives written notice from the Indemnifying Party that the Indemnifying Party
has elected to assume the defense of such Third Party Claim as provided in the
last sentence of Section 5.3(a), the Indemnifying Party will not be liable for
any legal expenses subsequently incurred by the Indemnitee in connection with
the defense thereof; provided, however, that if the Indemnifying Party fails to
take reasonable steps necessary to defend diligently such Third Party Claim
within 10 calendar days after receiving written notice from the Indemnitee that
the Indemnitee believes the Indemnifying Party has failed to take such steps or
if the Indemnifying Party has not undertaken fully to indemnify the Indemnitee
in respect of all Indemnifiable Losses relating to the matter, the Indemnitee
may assume its own defense, and the Indemnifying Party will be liable for all
reasonable costs or expenses paid or incurred in connection therewith. Without
the prior written consent of the Indemnitee, the Indemnifying Party will not
enter into any
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settlement of any Third Party Claim which would lead to liability or create any
financial or other obligation on the part of the Indemnitee for which the
Indemnitee is not entitled to indemnification hereunder. If a firm offer is made
to settle a Third Party Claim without leading to liability or the creation of a
financial or other obligation on the part of the Indemnitee for which the
Indemnitee is not entitled to indemnification hereunder and the Indemnifying
Party desires to accept and agree to such offer, the Indemnifying Party will
give written notice to the Indemnitee to that effect. If the Indemnitee fails to
consent to such firm offer within 10 calendar days after its receipt of such
notice, the Indemnitee may continue to contest or defend such Third Party Claim
and, in such event, the maximum liability of the Indemnifying Party as to such
Third Party Claim will not exceed the amount of such settlement offer, plus
costs and expenses paid or incurred by the Indemnitee through the end of such 10
calendar day period.
(c) Any claim by an Indemnitee on account of an Indemnifiable
Loss which does not result from a Third Party Claim (a "Direct Claim") will be
asserted by giving the Indemnifying Party reasonably prompt written notice
thereof, but in any event not later than 15 calendar days after the Indemnitee
becomes aware of such Direct Claim, and the Indemnifying Party will have a
period of 15 calendar days within which to respond in writing to such Direct
Claim. If the Indemnifying Party does not so
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respond within such 15 calendar day period, the Indemnifying Party will be
deemed to have rejected such claim, in which event the Indemnitee will be free
to pursue such remedies as may be available to the Indemnitee on the terms and
subject to the provisions of this Article V.
(d) A failure to give timely notice or to include any specified
information in any notice as provided in Sections 5.2(a) or 5.2(b) will not
affect the rights or obligations of any party hereunder except and only to the
extent that such failure is actually prejudicial to the rights or obligations of
the Indemnifying Party.
VI. MISCELLANEOUS PROVISIONS
6.1. Notices. All notices and other communications required or
permitted hereunder will be in writing and, unless otherwise provided in this
Agreement, will be deemed to have been duly given when delivered in person or
when dispatched by telegram or electronic facsimile transfer (confirmed in
writing by mail simultaneously dispatched) or one business day after having been
dispatched by a nationally recognized overnight courier service to the
appropriate party at the address specified below:
(a) If to Crossroads and the Partnership, to:
Interstate Hotels Corporation
Foster Plaza Ten, 680 Andersen Drive
Pittsburgh, PA 15220-8216
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Facsimile: 412-937-3265
Attention: Kevin P. Kilkeary
With a copy to:
Interstate Hotels Corporation
Foster Plaza Ten, 680 Andersen Drive
Pittsburgh, Pennsylvania 15220-8216
Facsimile: 412-937-3116
Attention: Marvin I. Droz, Esquire, Vice
President and General Counsel
(b) If to Companies or McNeill, to:
4735 Spottswood #102
Memphis, TN 38117
Facsimile: 901-761-3945
Attention: Mr. Phillip H. McNeill, Sr.
With a copy to:
Bogatin Law Firm
860 Ridge Lake Blvd., Suite 360
Memphis, TN 38120
Facsimile: 901-767-1234
Attention: Patrick G. Arnoult, Esq.
or to such other address or addresses as any such party may from time to time
designate as to itself by like notice.
6.2. Successors and Assigns. This Agreement will be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns, but will not be assignable or delegable by any party without
the prior written consent of the other party.
6.3. Waiver. Crossroads and the Partnership on the one hand, and
McNeill and Companies on the other hand, by written notice to the other may (a)
extend the time for performance of
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any of the obligations or other actions of the other under this Agreement, (b)
waive any inaccuracies in the representations or warranties of the other
contained in this Agreement, (c) waive compliance with any of the conditions or
covenants of the other contained in this Agreement, or (d) waive or modify
performance of any of the obligations of the other under this Agreement;
provided, however, that no such party may, without the prior written consent of
such other party, make or grant such extension of time, waiver of inaccuracies
or compliance or waiver or modification of performance with respect to its (or
any of its Affiliates') representations, warranties, conditions or covenants
hereunder. Except as provided in the immediately preceding sentence, no action
taken pursuant to this Agreement will be deemed to constitute a waiver of
compliance with any representations, warranties or covenants contained in this
Agreement and will not operate or be construed as a waiver of any subsequent
breach, whether of a similar or dissimilar nature.
6.4. Entire Agreement. This Agreement (including the Schedules and
Exhibits hereto) and the Master Agreement (including the Schedules and Exhibits
thereto) supersede any other agreement, whether written or oral, that may have
been made or entered into by any party (or by any director, officer or
representative thereof) including that certain letter agreement dated September
18, 1996 relating to the matters contemplated hereby. This Agreement (together
with the Schedules and Exhibits
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hereto) and the Master Agreement (including the Schedules and Exhibits thereto)
constitute the entire agreement by and among the parties hereto and thereto and
there are no agreements or commitments by or among such parties or their
Affiliates except as expressly set forth herein and therein.
6.5. Amendments, Supplement. This Agreement may be amended or
supplemented at any time by additional written agreements signed by all of the
parties hereto.
6.6. Rights of the Parties. Except as provided in Article V, nothing
expressed or implied in this Agreement is intended or will be construed to
confer upon or give any person or entity other than the parties hereto and their
respective Affiliates any rights or remedies under or by reason of this
Agreement or any transaction contemplated hereby.
6.7. Further Assurances. From time to time, as and when requested by
any party hereto, the other parties will execute and deliver, or cause to be
executed and delivered, all such documents and instruments as may be reasonably
necessary to consummate the transactions contemplated by this Agreement.
6.8. Transfers. Crossroads, McNeill and Companies will cooperate and
take such action as may be reasonably requested by the other in order to effect
an orderly contribution of the
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Companies' Assets with a minimum of disruption to the operations and employees
of the Hotels.
6.9. Applicable Law. This Agreement and the legal relations among the
parties hereto will be governed by and construed in accordance with the
substantive Laws of the Commonwealth of Pennsylvania, without giving effect to
the principles of conflict of laws thereof. Any action arising out of this
Agreement may be brought in the state or federal courts of Pennsylvania. The
parties hereby irrevocably submit to the exclusive jurisdiction of the
appropriate state or federal court in Pennsylvania for the purpose of any suit,
action, proceeding or judgement relating to or arising out of this Agreement.
Each of Crossroads, the Partnership, McNeill and Companies further agrees that
service of any process, summons, notice or document by U.S. registered mail to
such party's respective address set forth above shall be effective service of
process for any action, suit or proceeding in Pennsylvania with respect to any
matters to which it has submitted to jurisdiction as set forth above in the
immediately preceding sentence. Each of Crossroads, the Partnership, McNeill and
Companies irrevocably and unconditionally waives any objection to the laying of
venue of any action, suit or proceeding arising out of this Agreement or the
transactions contemplated hereby in (a) the Supreme Court of the Commonwealth of
Pennsylvania, or (b) the United States District Court for the Western District
of Pennsylvania, and hereby further irrevocably
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and unconditionally waives and agrees not to plead or claim in any such court
that any such action, suit or proceeding brought in any such court has been
brought in an inconvenient forum. In addition, the parties hereby
unconditionally waive trial by jury in any action or proceeding arising out of
this Agreement or the transactions contemplated hereby.
6.10. Execution in Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same agreement.
6.11. Titles and Headings. Titles and headings to Sections herein are
inserted for convenience of reference only, and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement.
6.12. Certain Interpretive Matters and Definitions. (a) Unless the
context otherwise requires, (i) all references to Sections, Articles, Schedules
or Exhibits are to Sections, Articles, Schedules or Exhibits of or to this
Agreement, (ii) each term defined in this Agreement has the meaning assigned to
it, (iii) each accounting term not otherwise defined in this Agreement has the
meaning assigned to it in accordance with GAAP, (iv) "or" is disjunctive but not
necessarily exclusive and (v) words in the singular include the plural and vice
versa. All
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references to "$" or dollar amounts will be to lawful currency of the United
States of America.
(b) No provision of this Agreement will be interpreted in
favor of, or against, any of the parties hereto by reason of the extent to which
any such party or its counsel participated in the drafting thereof or by reason
of the extent to which any such provision is inconsistent with any prior draft
hereof or thereof.
6.13. Survival. To the extent that any obligations of Crossroads, the
Partnership, Companies or McNeill under this Agreement requires action or
involves liability or obligation after the Closing, such obligation shall
survive the Closing.
6.14. Joint and Several. The obligations of McNeill and the Companies
hereunder shall be joint and several in all respects.
6.15. Invalid Provisions. If any provision hereof is held to be
illegal, invalid or unenforceable under present or future laws, such provision
shall be fully severable; this Agreement shall be construed and enforced as if
such illegal, invalid or unenforceable provision has never comprised a part
hereof; and the remaining provisions hereof shall remain in full force and
effect and shall not be affected by the illegal,
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invalid or unenforceable provision or by its severance herefrom. In lieu of such
illegal, invalid or unenforceable provision there shall be added automatically
as a part hereof a provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible and be legal, valid and enforceable.
6.16. Time of the Essence. Time is of the essence with respect to each
provision of this Agreement.
6.17. Risk of Loss/Insurance/Condemnation. (a) Risk of loss of the
Companies' Assets will remain upon Companies until Closing. Companies shall
maintain in effect until the date of Closing insurance policies with respect to
the Companies' Assets in an amount and type consistent with Companies' past
practice. Companies shall notify Crossroads in writing promptly (and in no event
later than five (5) days after the occurrence) of any casualty to the Companies'
Assets, or any portion thereof. Crossroads will then, at Crossroads' sole option
and discretion, either: (i) terminate this Agreement by giving notice to
Companies within thirty (30) days after Companies' notifying Crossroads in
writing of such casualty; or (ii) proceed with this Agreement, in which case any
and all insurance proceeds not previously applied shall be assigned to the
Partnership and any uninsured damage or deductible shall be paid by the
Companies to the Partnership at Closing and the Companies shall fully enforce
their rights under the Leases with respect to such casualty which
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rights will be assigned to Partnership at Closing; or (iii) proceed with this
Agreement, but exclude from the Companies' Assets the Hotel or Hotels which
suffered the casualty and reduce the value associated with the Companies' Assets
by the mutually agreed upon allocated value of such excluded Hotel or Hotels.
(b) In the event that, during the period between the date
hereof and the Closing, any part of the Hotels is taken in condemnation
proceedings or by exercise of any right of eminent domain or by agreement,
Crossroads and Partnership shall have the right, at their option, either (i) to
terminate this Agreement by notice to Companies without any further obligation
or liability to Companies hereunder; or (ii) to proceed with the transactions
set forth herein with respect to those Hotels (or portions thereof) remaining
following such taking and the Companies shall fully enforce their rights under
the Leases with respect to such condemnation which rights will be assigned to
Partnership at Closing; or (iii) proceed with this Agreement, but exclude from
the Companies' Assets the Hotel or Hotels which were condemned and reduce the
value associated with the Companies' Assets by the mutually agreed upon
allocated value of such excluded Hotel or Hotels. If Crossroads and Partnership
shall proceed with the transactions in accordance with this Section 6.17(b)
following such taking, any and all condemnation awards shall be assigned to
Partnership.
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VII. DEFINITIONS
Unless otherwise expressly defined herein, the following terms shall
have the following meanings:
"Accounts Payable" shall mean the trade accounts payable of the
Companies related to the operations of the Hotels which existed as of the Cutoff
Time and which were incurred in the ordinary course of business and in arm's
length commercial transactions.
"Affiliate" shall have the meaning given to such term in Rule 1-02 of
Regulation S-X under the Securities Act of 1933.
"Assumed Liabilities" shall mean only the liabilities and obligations
of the Companies arising after the Closing Date under the Contracts (other than
liabilities or obligations to the extent related to or attributable to any act,
omission or failure by Companies or the prior lessee or manager to comply with
the terms thereof) and the liability to satisfy the Accounts Payable.
"Booking" shall mean a contract or reservation for the use of guest
rooms, banquet facilities or meeting rooms in a Hotel.
"Contamination" shall mean the intentional or unintentional emission,
discharge, release or threatened emission, discharge or release of any Hazardous
Substance to, on, onto or into the
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environment in any concentration that now or in the future could pose a hazard
or threat to human health or the environment, and the past, current and future
effects of such intentional or unintentional emission, discharge, release or
threatened emission, discharge or release of Hazardous Substances to, on, onto
or into the environment.
"Contracts" shall have the meaning ascribed to such term in Section 1.3
(b).
"Cutoff Time" shall mean 12:01 a.m. on the Closing Date.
"Environmental Laws" shall mean all Laws (including, without
limitation, Permits, directives, guidelines, standards or the equivalent issued
by any Governmental Authority and relating to or addressing Contamination,
protection of the environment and/or occupation or human health and safety.
"Environmental Liability" shall mean any and all liabilities, losses,
claims, penalties, damages, expenses or costs (including, without limitation,
reasonable attorneys, consultants and engineers fees and expenses) arising from
or relating to compliance with any Environmental Law or arising under any theory
of Law or in equity relating to or arising from any Contamination or the use,
treatment, storage, disposal, transport, generation or handling of any Hazardous
Substances.
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"Franchise Agreements" shall mean those certain franchise agreements
designated as such on Schedule 1.3(b) hereof.
"GAAP" Shall mean United States generally accepted accounting
principles.
"Governmental Authority" shall mean any nation, or any political
subdivision thereof, or any agency, court or body of any such government
exercising executive, legislative, judicial, regulatory or administrative
functions
"Guest Ledger Receivables" shall mean amounts, including, without
limitation, room charges, accrued to the accounts of guests occupying rooms in
the Hotels as of the Cutoff Time.
"Hazardous Substances" shall mean any substance or material that,
whether by its nature or use, could be considered toxic or hazardous or the
exposure to which could pose a hazard or threat to human health or the
environment, or which is or contains petroleum, gasoline, diesel fuel or another
petroleum hydrocarbon product or friable asbestos or asbestos containing
materials or PCBs.
"Hotel Leases" shall have the meaning ascribed hereto in Section
1.3(b).
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"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as the same may be amended from time to time.
"Indemnifiable Losses" shall mean any and all claims, demands or suits
(by any person or entity, including without limitation any Governmental
Authority), losses (including, direct, indirect, consequential or actual),
liabilities, damages, costs and expenses, including without limitation the costs
and expenses of any and all actions, suits, proceedings, demands, assessments,
judgments, settlements and compromises relating thereto and reasonable
attorneys', accountants', expert witness' or consultants' fees and expenses in
connection therewith.
"Indemnifying Party" shall mean any person or entity required to
provide indemnification under this Agreement.
"Indemnitee" shall mean any person or entity entitled to
indemnification under this Agreement.
"Indemnity Payment" shall mean any amount of Indemnifiable Losses
required to be paid pursuant to this Agreement.
"Laws" shall mean any law, decree, rule, order, regulation or other
governmental requirement of any governmental department, commission, board,
agency or instrumentality, domestic or
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foreign, having jurisdiction over it or its assets or business or operations.
"Liens" shall mean any mortgages, liens, security interests, leases,
pledges, encumbrances, equities, claims, charges, options, restrictions, rights
of first refusal, title retention agreements or other exceptions to title.
"Master Agreement" shall have the meaning ascribed to such term in
Section 4.1.
"Permits" shall mean any and all Licenses, franchises, approvals,
permits and other governmental authorizations.
"Subsidiary" shall have the meaning ascribed to such term in Rule 1-02
of Regulation S-X under the Securities Act of 1933.
"Third Party Claim" shall mean any claim, action or proceeding made or
brought by any person or entity who or which is not a party to this Agreement or
an Affiliate of a party to this Agreement.
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the day and year first above written.
CROSSROADS/MEMPHIS COMPANY, L.L.C.
By: /s/ Kevin P. Kilkeary
----------------------------------------
Title: President and Chief
-------------------------------------
Operating Officer
-------------------------------------
CROSSROADS/MEMPHIS PARTNERSHIP, L.P.
By: CROSSROADS/MEMPHIS COMPANY,
L.L.C., its general partner
By: /s/ Kevin P. Kilkeary
----------------------------------------
Title: President and Chief
-------------------------------------
Operating Officer
-------------------------------------
TRUST LEASING, INC.
By:
----------------------------------------
Title:
-------------------------------------
TRUST MANAGEMENT INC.
By:
----------------------------------------
Title:
-------------------------------------
--------------------------------------------
Phillip H. McNeill, Sr.
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the day and year first above written.
CROSSROADS/MEMPHIS COMPANY, L.L.C.
By:
----------------------------------------
Title:
-------------------------------------
CROSSROADS/MEMPHIS PARTNERSHIP, L.P.
By:
----------------------------------------
Title:
-------------------------------------
By: CROSSROADS/MEMPHIS COMPANY,
L.L.C., its general partner
By:
----------------------------------------
Title:
-------------------------------------
TRUST LEASING, INC.
By: /s/ Phillip H. McNeill, Sr.
----------------------------------------
Title: President
-------------------------------------
TRUST MANAGEMENT INC.
By: /s/ David L. Levine
----------------------------------------
Title: President and Chief
-------------------------------------
Operating Officer
-------------------------------------
/s/ Phillip H. McNeill, Sr.
--------------------------------------------
Phillip H. McNeill, Sr.
67
