UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
November 7, 1997
Date of Report (Date of earliest event reported)
PRIME MOTOR INNS LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Delaware 1-9311 22-2754689
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
c/o WHI
4243 Hunt Road
Cincinnati, Ohio 45242
(Address of principal offices, including zip code)
(513) 891-2920
(Registrant's telephone number, including area code)
<PAGE>
Item 5. Other Events.
On November 7, 1997, Registrant, Prime-American Realty Corp., the
general partner of Registrant (the "General Partner"), Servico, Inc.
("Servico") and Servico Acquisition Corp., a wholly-owned subsidiary of
Servico ("SAC"), entered into an Acquisition Agreement (the "Agreement")
pursuant to which SAC will acquire the 99% limited partnership interest of
Registrant in AMI Operating Partners, L.P. ("AMI") for a cash payment to
Registrant of $8,000,000 and certain undertakings by Servico. Under the
Agreement, SAC will take Registrant's limited partnership interest in AMI
subject to the existing indebtedness and other obligations of AMI. The price
and other terms of the transaction were arrived at by arms'-length
negotiations among the parties.
There are not any material affiliations between Servico or SAC, on the
one hand, and Registrant, AMI or the General Partner, on the other. However,
Registrant understands that Servico has agreed with Prime Hospitality, Inc.,
the parent company of the General Partner ("Prime"), to acquire the General
Partner's 1% general partnership interest in AMI in exchange for a warrant to
acquire stock of Servico. Registrant understands that as part of such
transaction, the General Partner and Prime will waive any rights that they
may have to receive any distributions by Registrant of the proceeds of the
sale of Registrant's limited partnership interest in AMI. Registrant also
understands that Servico has agreed to retain S. Leonard Okin, a Vice
President of the General Partner, as a consultant following the transaction.
AMI owns and operates 15 full-service motor hotels operated as part of
the "Holiday Inns" system (the "Inns"). By its acquisition of Registrant's
and the General Partner's interests in AMI, Servico (through SAC) will
acquire the Inns.
The transaction involves the sale of substantially all of the assets and
operations of Registrant. The transaction is subject to the approval of the
holders of a majority of the Depositary Units of Registrant. A meeting of
Unitholders will be scheduled to consider the transaction.
Item 8. Financial Statements and Exhibits.
There is filed herewith as an Exhibit to this Form, a photocopy of the
executed Acquisition Agreement dated as of November 7, 1997 among Servico,
Registrant, the General Partner and SAC.
<PAGE>
SIGNATURES
__________
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PRIME MOTOR INNS LIMITED PARTNERSHIP
____________________________________
(REGISTRANT)
By: Prime-American Realty Corp.
General Partner
Date: November 21, 1997 By: /s/ S. Leonard Okin
__________________________
S. Leonard Okin
Vice President
Exhibit 1
=============================================================================
ACQUISITION AGREEMENT
among
SERVICO, INC.,
PRIME MOTOR INNS LIMITED PARTNERSHIP,
PRIME-AMERICAN REALTY CORP.,
and
SERVICO ACQUISITION CORP.
Dated as of November 7, 1997
=============================================================================
TABLE OF CONTENTS
---------------
Page
----
ARTICLE I - ACQUISITION . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Purchase and Sale of the Limited Partnership
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF SERVICO AND SAC . . . . . . 2
2.1 Organization, Standing and Power . . . . . . . . . . . . . . . . 2
2.2 Legal, Valid and Binding Agreement . . . . . . . . . . . . . . . 2
2.3 No Violation or Conflict . . . . . . . . . . . . . . . . . . . . 2
2.4 Governmental Consents . . . . . . . . . . . . . . . . . . . . . . 3
2.5 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF PRIME AND THE GENERAL
PARTNER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.1 Organization, Standing and Power . . . . . . . . . . . . . . . . 3
3.2 Legal, Valid and Binding Agreement . . . . . . . . . . . . . . . 3
3.3 Authority to do Business . . . . . . . . . . . . . . . . . . . . 3
3.4 Certificate of Limited Partnership, Limited Partnership
Agreement and Records . . . . . . . . . . . . . . . . . . . . . . 4
3.5 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.6 No Violation or Conflict . . . . . . . . . . . . . . . . . . . . 4
3.7 Governmental Consents . . . . . . . . . . . . . . . . . . . . . . 4
3.8 Exchange Act Reports; Financial Statements . . . . . . . . . . . 5
3.9 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . 5
3.10 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . 6
3.11 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.12 Absence of Material Adverse Changes . . . . . . . . . . . . . . . 6
3.13 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.14 Rights, Warrants, Options . . . . . . . . . . . . . . . . . . . . 7
3.15 Title to Personal Property and Condition of Assets . . . . . . . 7
3.16 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.17 Intangible Property . . . . . . . . . . . . . . . . . . . . . . . 8
3.18 Governmental Authorizations . . . . . . . . . . . . . . . . . . . 9
3.19 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.20 Employment Matters . . . . . . . . . . . . . . . . . . . . . . . 9
3.21 Material Agreements . . . . . . . . . . . . . . . . . . . . . . 10
3.22 Related Party Transactions . . . . . . . . . . . . . . . . . . 11
3.23 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.24 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE IV - COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.1 Interim Operations of AMI . . . . . . . . . . . . . . . . . . . 12
4.2 Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.3 Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.4 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.5 Reasonable Efforts . . . . . . . . . . . . . . . . . . . . . . 14
4.6 Notification . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.7 No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . 15
4.8 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . 15
4.9 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.10 Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . 16
4.11 Special Meeting . . . . . . . . . . . . . . . . . . . . . . . . 16
4.12 Dissolution of Prime . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE V - ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . 17
5.1 Survival of the Representations, Warranties, Covenants and
Agreements . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.2 Investigation . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.3 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE VI - CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . 18
6.1 Mutual Conditions Precedent . . . . . . . . . . . . . . . . . . 18
6.2 Conditions Precedent to the Obligations of Servico . . . . . . 18
6.3 Conditions Precedent to the Obligations of Prime . . . . . . . 19
6.4 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE VII - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 21
7.1 Further Assurances . . . . . . . . . . . . . . . . . . . . . . 21
7.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.3 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . 21
7.4 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.5 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.6 No Third Party Beneficiary . . . . . . . . . . . . . . . . . . 22
7.7 Severability . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.8 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . 22
7.9 Section Headings . . . . . . . . . . . . . . . . . . . . . . . 23
7.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.11 Time of Essence . . . . . . . . . . . . . . . . . . . . . . . . 24
7.12 Litigation; Prevailing Party . . . . . . . . . . . . . . . . . 24
7.13 Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . 24
7.14 Injunctive Relief . . . . . . . . . . . . . . . . . . . . . . . 24
7.15 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.16 Certain Definitions . . . . . . . . . . . . . . . . . . . . . . 24
[CAPTION]
GLOSSARY OF DEFINED TERMS
-------------------------
<TABLE>
Defined Term Section Defined Term Section
<S> <C> <C> <C>
affiliate Section7.17(a) Limited Partnership Agreement Section3.4
Agreement Preamble Limited Partnership Interests Preamble
AMI Preamble multiemployer plan Section3.20(d)
AMI Material Agreements Section3.21 NYSE Section2.4
business day Section7.17(b) partnership interests Section7.17(e)
Closing Section1.3 Permitted Exceptions Section3.16
Code Section4.20 Personal Property Section3.15
Competing Transaction Section7.8(d) person Section7.17(f)
employee pension benefit plan Section3.20(d) Prime Preamble
employee welfare benefit plan Section3.20(d) Prime Financial Statements Section3.8(b)
End Date Section6.4(c) Prime Hospitality Section3.14
Environmental Law Section3.9(b) Prime Indemnified Party Section5.3(a)
Environmental Permit Section3.9(b) Prime Material Adverse Effect Section7.17(g)
ERISA Section4.20(d) Prime Pension Plan Section4.20(d)
Exchange Act Section2.4 Prime Plans Section3.20(d)
Furman Selz Section3.11 Prime Related Parties Section3.22
Governmental Entity Section2.4 Prime Related Party Section3.22
General Partner Preamble Prime SEC Reports Section3.8(a)
General Partner Prime Special Meeting Section4.10(a)
Purchase Agreement Section6.1(d) Prime Welfare Plan Section3.20(d)
GP Interest Preamble Proxy Statement Section4.10(a)
group health plan Section3.20 Real Property Section3.16
Improvements Section3.16 SAC Preamble
knowledge Section7.17(c) SEC Section3.8
Law Section7.17(d) Securities Act Section3.13
Licenses Section3.18 Servico Preamble
Liens Section1.1 subsidiaries Section7.17(h)
Limited Partners Preamble subsidiary Section7.17(h)
Tax Section7.17(i)
</TABLE>
ACQUISITION AGREEMENT
---------------------
THIS ACQUISITION AGREEMENT (the "Agreement") is made and entered into as
of the 7th day of November, 1997, by and among SERVICO, INC., a Florida
corporation ("Servico"), SERVICO ACQUISITION CORP., a Florida corporation and
a wholly-owned subsidiary of Servico ("SAC"), PRIME MOTOR INNS LIMITED
PARTNERSHIP, a Delaware limited partnership ("Prime") and PRIME-AMERICAN
REALTY CORP., a Delaware corporation (the "General Partner").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, Prime owns a 99% limited partnership interest (the "Limited
Partnership Interest") in AMI Operating Partners, L.P., a Delaware limited
partnership ("AMI");
WHEREAS, the General Partner owns a 1% general partnership interest (the
"GP Interest") in AMI, which, together with the Limited Partnership Interest,
constitutes 100% of all partnership interests in AMI;
WHEREAS, the General Partner is the sole general partner of each of
Prime and AMI;
WHEREAS, the board of directors of the General Partner has determined
that it is in the best interests of Prime and its limited partners (the
"Limited Partners") that Prime sell, assign and transfer to SAC the Limited
Partnership Interest on the terms set forth herein; and
WHEREAS, the board of directors of the General Partner has approved this
Agreement and agreed to recommend that the Limited Partners vote to approve
this Agreement and the transactions set forth herein as contemplated by this
Agreement;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
ACQUISITION
-----------
1.1 Purchase and Sale of the Limited Partnership Interest. Subject to
-----------------------------------------------------
the terms and conditions set forth herein, at the Closing, Prime shall sell,
assign and transfer to SAC and SAC shall purchase and acquire from Prime,
the Limited Partnership Interest free and clear of any and all claims,
liens, charges, security interests, pledges or encumbrances of any nature
whatsoever (whether absolute, accrued contingent or otherwise) ("Liens").
At the Closing, SAC shall, subject to the terms and conditions set
forth herein, and in consideration of the sale, assignment and transfer
of the Limited Partnership Interest as set forth herein, pay to Prime, the
sum of Eight Million Dollars ($8,000,000) (the "Purchase Price"), by
wire transfer of immediately available funds to such account as Prime
shall designate and make the indemnifications and undertakings provided
herein to survive the Closing.
1.2 Delivery. The sale, assignment and transfer of the Limited
--------
Partnership Interest at the Closing shall be effected by (i) the delivery to
SAC (in addition to any other deliveries required under this Agreement ) of
an instrument of transfer, duly executed on behalf of Prime, sufficient to
transfer such Limited Partnership Interest to SAC, free and clear of all
Liens and (ii) the execution and delivery by Prime or the General Partner of
such other documents necessary to admit SAC as a substitute limited partner
of AMI, having all the rights of a limited partner under the Delaware
Revised Uniform Limited Partnership Act and the Limited Partnership
Agreement of AMI with respect to the Limited Partnership Interest.
1.3 Closing. Unless this Agreement shall have been terminated pursuant
-------
to Section 6.4, the consummation of the transactions contemplated by this
Agreement shall take place as promptly as practicable (and in any event
within three business days) after satisfaction or waiver of the conditions
set forth in Article VI, at a closing (the "Closing") to be held at the
offices of Stearns Weaver Miller Weissler Alhadeff & Sitterson, P.A., 150
West Flagler Street, Suite 2200, Miami, Florida, 33130, unless another date,
time or place is agreed to by Prime and Servico.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SERVICO AND SAC
-------------------------------------------------
Servico and SAC hereby represent and warrant to Prime and the General
Partner as follows:
2.1 Organization Standing and Power. Each of Servico and SAC has been
--------------------------------
duly organized and is validly existing and in good standing under the laws
of the State of Florida and has all requisite right, power and authority to
enter into this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby.
2.2 Legal, Valid and Binding Agreement. The execution, delivery and
------------------------------------
performance of this Agreement by Servico and SAC and the consummation by
Servico and SAC of the transactions contemplated hereby have been duly and
effectively authorized by all requisite corporate action and no other
corporate proceedings on the part of Servico or SAC are necessary to
authorize this Agreement or to consummate the transactions contemplated
hereby. This Agreement has been duly executed and delivered by Servico and
SAC and, assuming the due authorization, execution and delivery by the other
parties hereto, constitutes the legal, valid and binding obligations of
Servico and SAC, enforceable against Servico and SAC in accordance with its
terms.
2.3 No Violation or Conflict. Except as set forth on Schedule 2.3, the
------------------------ ------------
execution, delivery and performance of this Agreement by Servico and SAC and
the consummation by Servico and SAC of the transactions contemplated hereby
do not and will not (i) conflict with or violate any provision of the
Articles of Incorporation or Bylaws of Servico or SAC, (ii) assuming that all
consents, approvals, authorizations and permits described in Section 2.4 have
been obtained and all filings and notifications described in Section 2.4 have
been made, violate or conflict with any Law applicable to Servico or SAC or
by which any property or asset of Servico or SAC is bound or affected, and
(iii) with or without the passage of time or the giving of notice, result in
the breach of, or constitute a default under, cause the acceleration of
performance under, permit the unilateral modification or termination of, or
require any consent under, or result in the creation of any liens or other
encumbrance upon any property or assets of Servico or SAC pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other obligation, except, with respect to clauses
(ii) and (iii), for any such conflicts, violations, breaches, defaults
or other occurrences which would not, individually or in the aggregate,
prevent or materially delay the performance by Servico or SAC of its
obligations pursuant to this Agreement or the consummation of the
transactions contemplated hereby.
2.4 Governmental Consents. The execution and delivery of this Agreement
---------------------
by each of Servico and SAC does not, and the performance by each of Servico
and SAC of its obligations hereunder and the consummation of the
transactions contemplated hereby will not, require any consent, approval,
authorization or permit of, or filing by Servico or SAC with or notification
by Servico or SAC to, any United States federal, state or local or any
foreign governmental, regulatory or administrative authority, agency or
commission or any court, tribunal or arbitral body (a "Governmental
Entity"), except (i) applicable requirements of the Securities Exchange Act
of 1934, as amended (together with the rules and regulations promulgated
thereunder, the "Exchange Act") and the rules and regulations of the New
York Stock Exchange (the "NYSE") and (ii) where failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not, individually or in the aggregate, prevent or
materially delay the performance by Servico or SAC of its obligations
pursuant to this Agreement and the consummation of the transactions
contemplated hereby.
2.5 Brokers. Except as indicated on Schedule 2.5, neither Servico nor
------- ------------
SAC has employed any financial advisor, broker or finder and has not
incurred and neither will, except as provided in Section 7.9, incur any
broker's, finder's, investment banking or similar fees, commissions or
expenses to any other party in connection with the transactions contemplated
by this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PRIME AND THE GENERAL PARTNER
---------------------------------------------------------------
Prime and the General Partner hereby represent and warrant to Servico
and SAC as follows:
3.1 Organization, Standing and Power. Each of Prime, AMI and the
----------------------------------
General Partner has been duly organized and is validly existing and in good
standing under the laws of the state of Delaware. Each of Prime and the
General Partner has all requisite right, power and authority to enter into
this Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby.
3.2 Legal, Valid and Binding Agreement. The execution, delivery and
------------------------------------
performance of this Agreement by Prime and the General Partner and the
consummation by Prime and the General Partner of the transactions
contemplated hereby have been duly and effectively authorized by all
requisite corporate or partnership, as the case may be, action and no other
corporate or partnership proceedings on the part of Prime or the General
Partner are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby (other than the approval of this Agreement
and the transactions contemplated hereby by the holders of at least a
majority of the units of limited partnership interest of Prime ("Prime
Units") at the Prime Special Meeting). This Agreement has been duly
executed and delivered by Prime and the General Partner and, assuming the
due authorization, execution and delivery by the other parties hereto,
constitutes the legal, valid and <PAGE> binding obligations of Prime and
the General Partner, enforceable against Prime and the General Partner in
accordance with its terms.
3.3 Authority to do Business. Except as provided on Schedule 3.3, each
------------------------ ------------
of Prime, the General Partner and AMI has all requisite power and authority
and all necessary governmental approvals to own, operate and lease its
properties and assets and to conduct its business as presently conducted.
Schedule 3.3 sets forth (i) those jurisdictions in which Prime, the
- ------------
General Partner or AMI manages or operates facilities and/or properties and
(ii) all jurisdictions in which Prime, the General Partner or AMI is
qualified to do business. Except as provided on Schedule 3.3, each
------------
of Prime, the General Partner and AMI is duly qualified or licensed to do
business and is in good standing in all jurisdictions where the ownership or
leasing of its properties or the conduct of its business requires such
qualification or license, except where the failure to be so qualified or
licensed, individually or in the aggregate, would not have a Prime Material
Adverse Effect.
3.4 Certificate of Limited Partnership, Limited Partnership Agreement
-----------------------------------------------------------------
and Records. Copies of the Amended and Restated Agreement of Limited
- -----------
Partnership of Prime and the Agreement of Limited Partnership of AMI (each a
"Limited Partnership Agreement"), in each case as in effect on the date
hereof, have been delivered to Servico and are complete and correct as of
the date hereof.
3.5 Subsidiaries. Except for Prime's ownership of AMI, neither Prime
------------
nor AMI has any equity investment in any other corporation, limited
liability company, association, partnership, joint venture or other entity.
3.6 No Violation or Conflict. Except as set forth on Schedule 3.6, the
---------------------- ------------
execution, delivery and performance of this Agreement by Prime and the
General Partner and the consummation by Prime and the General Partner of the
transactions contemplated hereby do not and will not (i) conflict with or
violate any provision of the Certificate of Limited Partnership or Limited
Partnership Agreement of Prime or AMI or the Certificate of Incorporation or
Bylaws of the General Partner, (ii) assuming that all consents, approvals,
authorizations and permits described in Section 3.7 have been obtained and
all filings and notifications described in Section 3.7 have been made,
violate or conflict with any Law applicable to Prime, the General Partner or
AMI or by which any property or asset of Prime, the General Partner or AMI is
bound or affected, and (iii) with or without the passage of time or the
giving of notice, result in the breach of, or constitute a default under,
cause the acceleration of performance under, permit the unilateral
modification or termination of, or require any consent under, or result in
the creation of any liens or other encumbrance upon any property or assets of
Prime or AMI pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other obligation, except,
with respect to clauses (ii) and (iii), for any such conflicts, violations,
breaches, defaults or other occurrences which would not, individually or in
the aggregate, (A) have a Prime Material Adverse Effect nor (B) prevent or
materially delay the performance by Prime or the General Partner of its
obligations pursuant to this Agreement or the consummation of the
transactions contemplated hereby.
3.7 Governmental Consents. Except as provided on Schedule 3.3, the
--------------------- -------------
execution and delivery of this Agreement by each of Prime and the General
Partner does not, and the performance by each of Prime and the General
Partner of its obligations hereunder and the consummation of the
transactions contemplated hereby will not, require any consent, approval,
authorization or permit of, or filing by Prime with or notification by
Prime or the General Partner to, any Governmental Entity, except (i)
applicable requirements of the Exchange Act and (ii) where failure to obtain
such consents, approvals, authorizations or permits, or to make such filings
or notifications, would not, individually or in the aggregate, (A) prevent
or materially delay the performance by Prime or the General Partner of its
obligations pursuant to this Agreement and the consummation of the
transactions contemplated hereby or (B) have a Prime Material Adverse Effect.
3.8 Exchange Act Reports; Financial Statements.
--------------------------------------
(a) Since January 1, 1995, Prime has timely filed all reports and
other documents required to be filed by it with the Securities and Exchange
Commission (the "SEC") under the Exchange Act, including but not limited to
proxy statements and reports on Form 10-K, Form 10-Q and Form 8-K
(collectively, the "Prime SEC Reports"). As of the respective dates they
were filed with the SEC, the Prime SEC Reports, including all documents
incorporated by reference into such reports, complied in all material
respects with the rules and regulations of the SEC and did not contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(b) The consolidated financial statements (the "Prime Financial
Statements") of Prime included in the Prime SEC Reports, as of the dates
thereof and for the periods covered thereby, present fairly, in all material
respects, the financial position, results of operations, and cash flows of
Prime and AMI on a consolidated basis (subject, in the case of unaudited
statements, to normal recurring year-end audit adjustments which were not and
are not expected, individually or in the aggregate, to have a Prime Material
Adverse Effect). Any supporting schedules included in the Prime SEC Reports
present fairly, in all material respects, the information required to be
stated therein. Such Prime Financial Statements and supporting schedules
were prepared: (A) in accordance with Regulation S-X promulgated by the SEC;
and (B) except as otherwise noted in the Prime SEC Reports, in conformity
with generally accepted accounting principles ("GAAP") applied on a
consistent basis. Other than as disclosed by the Prime Financial Statements
included in the Prime SEC Reports or on Schedule 3.8 hereto, none of Prime,
------------
the General Partner or AMI has any liabilities, commitments or obligations
of any nature whatsoever, whether accrued, contingent or otherwise that
would be required to be reflected on, or reserved against in, a balance
sheet or in notes thereto prepared in accordance with GAAP, other than
liabilities, commitments or obligations incurred since December 31, 1996 in
the ordinary course of business that would not, individually or in the
aggregate, have a Prime Material Adverse Effect. Except as set forth on
Schedule 3.8 and except for the Limited Partnership Interest, Prime
- -----------
has no assets of any nature whatsoever, and Prime has no liabilities
(whether accrued, contingent or otherwise), of any nature whatsoever, except
as specifically set forth in the Prime Financial Statements and specifically
designated therein as a liability of Prime and not of AMI.
3.9 Compliance with Laws.
--------------------
(a) Except as set forth on Schedule 3.9, each of Prime, the General
------------
Partner and AMI is in compliance with all federal, state, local and foreign
laws, ordinances, regulations, judgments, rulings, orders and other legal
requirements applicable to it, its operations or its properties, including,
without limitation, those relating to employment, building, zoning, safety
and health, and environmental matters, except where the failure to so
comply, individually or in the aggregate, would not have a Prime Material
Adverse Effect. Except as set forth on Schedule 3.9 or as could not
------------
reasonably be expected to have a Prime Material Adverse Effect, neither
Prime, the General Partner nor AMI has received written notification from
any Governmental Entity asserting that it may not be in compliance with, or
may have violated, any of the Laws which said Governmental Entity
enforces, or threatening to revoke any authorization, consent, approval,
franchise, license or permit, and neither Prime, the General Partner nor AMI
is subject to any agreement or consent decree with any Governmental Entity
arising out of previously asserted violations.
(b) Without limiting the generality of Section 3.9(a), except as
set forth on Schedule 3.9 or in the Prime SEC Reports, or as would not,
------------
individually or in the aggregate, have a Prime Material Adverse Effect: (i)
Prime, the General Partner and AMI are, to the best of their knowledge, in
compliance with all applicable Environmental Laws. All past noncompliance of
Prime or AMI with Environmental Laws or Environmental Permits has been
resolved without any pending, ongoing or future obligation, cost or
liability; and (ii) neither Prime, the General Partner nor AMI has, to the
best of their knowledge, released a Hazardous Material at, or transported a
Hazardous Material to or from, any real property currently or formerly
owned, leased or occupied by Prime or AMI in violation of any Environmental
Law.
For purposes of this Agreement: "Environmental Law" means any federal,
-----------------
state or local statute, law, ordinance, regulation, rule, code or order of
the United States or any other jurisdiction and any enforceable judicial
or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, relating to pollution or
protection of the environmental or natural resources, including, without
limitation, those relating to the use, handling, transportation, treatment,
storage, disposal, release or discharge of Hazardous Material, as in effect
as of the date of this Agreement. "Environmental Permit" means any
--------------------
permit, approval, identification number, license or other authorization
required under or issued pursuant to any applicable Environmental Law.
"Hazardous Material" means (i) any petroleum, petroleum products, by-products
------------------
or breakdown products, radioactive materials, asbestos-containing
materials or polychlorinated biphenyls or (ii) any chemical, material or
substance defined or regulated as toxic or hazardous or as a pollutant or
contaminant or waste under any applicable Environmental Law.
3.10 Legal Proceedings. Except as set forth on Schedule 3.10 or in the
----------------- -------------
Prime SEC Reports, neither Prime, the General Partner nor AMI is, nor during
the past three years has been, a party to any pending or, to the knowledge
of Prime, threatened, legal, administrative or other proceeding, arbitration
or investigation, that is or could have been reasonably expected to,
individually or in the aggregate, result in a Prime Material Adverse Effect.
Except as set forth on Schedule 3.10, Prime has no knowledge of any set of
-------------
facts which could reasonably be expected to result in any such legal,
administrative or other proceeding, arbitration or investigation involving
Prime, the General Partner or AMI. Except as set forth on Schedule 3.10,
-------------
neither Prime, the General Partner nor AMI is subject to any order, writ,
injunction, decree, judgment, stipulation, determination or award entered by
or with any Governmental Entity which could, individually or in the
aggregate, reasonably be expected to have a Prime Material Adverse Effect.
3.11 Brokers. Except for Furman Selz Incorporated ("Furman Selz"), who
-------
is acting as financial advisor to the General Partner and will be entitled
to a fee of up to $350,000 and expenses in compensation therefor, neither
Prime, the General Partner nor AMI has employed any financial advisor,
broker or finder and has not incurred and none will incur any broker's,
finder's, investment banking or similar fees, commissions or expenses to any
other party in connection with the transactions contemplated by this
Agreement.
3.12 Absence of Material Adverse Changes. Except as set forth on
-----------------------------------
Schedule 3.12 or in the Prime SEC Reports, since December 31, 1996:
- -------------
(i) each of Prime, the General Partner and AMI has conducted its business
only in the ordinary and usual course and in a manner consistent with past
practices; (ii) there has not been any Prime Material Adverse Effect, (iii)
there has not been any event that could reasonably be expected to prevent or
materially delay the performance of Prime's or the General Partner's
obligations pursuant to this Agreement and the consummation of the
transactions contemplated hereby by Prime or the General Partner; and (iv)
neither Prime nor AMI has engaged or agreed to engage in any of the actions
described in Section 4.1 (except as otherwise specifically permitted in
Section 4.1). All proceeds from any sales of any properties of AMI since
December 31, 1996 have been used solely to (a) pay costs and expenses of or
related to such sales, (b) pay prepayment penalties in connection with the
repayment of AMI's outstanding indebtedness to persons other than Prime
Related Parties, (c) repay such indebtedness or (d) fund renovations to
AMI's existing properties.
3.13 Capitalization. The only partnership interests in AMI are the
--------------
Limited Partnership Interest and the GP Interest. The Limited Partnership
Interest has been duly authorized, is validly issued and outstanding, and is
fully paid. The Limited Partnership Interest is owned beneficially and of
record by Prime, free and clear of all Liens. No interests or securities
issued by Prime or AMI from the date of its organization to the date hereof
were issued in violation of any statutory or common law preemptive rights or
the Securities Act of 1933, as amended (the "Securities Act") or the rules
and regulations of the SEC thereunder, or any state securities or "blue sky"
laws. There are no distributions which have accrued or been declared but are
unpaid on the partnership interests of AMI. All Taxes required to be paid in
connection with the issuance by AMI of its partnership interests have been
paid.
3.14 Rights, Warrants, Options. There are no outstanding:
---------------------------
(i) securities or instruments convertible into or exercisable for any
partnership interests of AMI; (ii) options, warrants, subscriptions or other
rights to acquire partnership interests of AMI; (iii) debt securities with
any voting rights or convertible into securities with voting rights; or
(iv) commitments, agreements or understandings of any kind, including
employee benefit arrangements, relating to any partnership interests of AMI,
or the issuance or repurchase by Prime, the General Partner or AMI of any
partnership interests of AMI, any such securities or instruments convertible
into or exchangeable for partnership interests of AMI or any such options,
warrants or rights. Neither Prime Hospitality, Inc., a Delaware corporation
("Prime Hospitality") nor AMI Management Corp., a subsidiary of Prime
Hospitality, nor any of their successors, assigns or affiliates have any
right under the Limited Partnership Agreement of Prime or otherwise to
acquire the Limited Partnership Interest or to receive notice of the
transactions contemplated hereby.
3.15 Title to Personal Property and Condition of Assets. Except as set
--------------------------------------------------
forth on Schedule 3.15, AMI is the legal and beneficial owner of each item of
-------------
personal property, tangible and intangible, as reflected on the September
30, 1997 Prime Financial Statements and to each item of personal property,
tangible and intangible, acquired by or on behalf of AMI since September 30,
1997 (other than non-material property disposed of in the ordinary course of
business consistent with past practice since September 30, 1997 to persons
who are not affiliates of Prime, the General Partner or AMI), free and clear
of any Liens, except as set forth on the September 30, 1997 Prime Financial
Statements or in Schedule 3.15 hereto (all such personal property being
-------------
hereinafter referred to as the "Personal Property"). Except as set forth on
Schedule 3.15, all equipment, machinery, fixtures and other Personal
- -------------
Property owned or utilized by AMI are in good operating condition and in a
good state of maintenance and repair and are adequate for the conduct of
their respective businesses. Except for leasehold interests and other leased
properties, and properties used under license or franchise agreements,
specifically identified in either Schedule 3.15 or 3.16 hereto, there are no
------------- ----
assets owned by any third party (including Prime and the General Partner)
which are used in the operations or the business of AMI, as presently
conducted or proposed to be conducted.
3.16 Real Property. Schedule 3.16 hereto sets forth a true and
-------------- -------------
complete list, with the legal description thereof, of all real property
owned or leased by AMI, together with a brief description of all structures,
fixtures or improvements ("Improvements") thereon (such real property and
Improvements, collectively, the "Real Property"). AMI owns good and
marketable title to, or holds a valid leasehold interest in, all of the Real
Property, free and clear of all Liens, mortgages, conditional sales
agreements, restrictions, reservations, covenants, encumbrances, charges,
restraints on transfer, or any other title defect of any nature, other than
liens for real property taxes not yet due and other than those matters
specifically disclosed on Schedule 3.16 or any title insurance policies or
-------------
commitments provided to Servico and listed on Schedule 3.16, which matters,
-------------
individually or in the aggregate, do not materially adversely impair the
marketability of the Real Property as it is now used by AMI (the "Permitted
Exceptions"). Except as disclosed on Schedule 3.16, all Improvements are in
-------------
good structural condition, free of any structural or other defect or
impairment which impairs in any material respect the value, utility, or life
expectancy of such Improvements, or which might otherwise adversely affect,
in any material respect, the operation thereof. Except as disclosed on
Schedule 3.16 or on any surveys delivered to Servico, none of the
- -----------
Improvements encroach onto adjoining land or onto any easements and there is
no encroachment of Improvements from adjoining land onto any of the Real
Property. None of the Real Property is located in an area identified by any
Governmental Entity as having special flood or mud slide hazards or wetlands.
There are no soil or geological conditions which might impair or adversely
affect in any material respect the current use of any of the Real Property.
Except as set forth on Schedule 3.16, neither the whole nor any portion
-------------
of the Real Property is being condemned or otherwise taken by any public
authority, nor is any such condemnation or taking, to the knowledge of
Prime, threatened or contemplated. No portion of any of the Real Property is
affected by any outstanding special assessments or impact fees imposed by
any Governmental Entity. Except for any Permitted Exceptions, no commitments
relating to the Real Property have been made to any Governmental Entity,
utility company, school board, church or other religious body or any
homeowner or homeowners association, merchant's association or any other
organization, group or individual which would impose an obligation upon
Prime, the General Partner or AMI or any of their successors or assigns to
make any contribution or dedication of money or land or to construct,
install or maintain any improvements of a public or private nature on or off
the Real Property; and no Governmental Entity has imposed any requirement
that any owner of the Real Property pay directly or indirectly any special
fees or contributions or incur any expenses or obligations in connection
with the Real Property. The parking facilities at each parcel of Real
Property are adequate to comply with all Laws and the conduct of business on
the respective properties as presently conducted or proposed to be
conducted. Neither Prime nor the General Partner has any information or
knowledge of (a) any change contemplated in any Law, (b) any judicial or
administrative action, (c) any action by adjacent landowners, or (d) any
other fact or condition of any kind or character which could materially
adversely affect the current use or operation of the Real Property. Neither
the General Partner nor any of its affiliates owns or leases, directly or
indirectly, any property adjacent to the Real Property. Neither the air
rights over the Real Property nor any other "development rights" with
respect to the Real Property has been assigned, transferred, leased or
encumbered.
3.17 Intangible Property. Except as set forth on Schedule 3.17 or as
-------------------- -------------
would not, individually or in the aggregate, have a Prime Material Adverse
Effect, AMI owns or possesses adequate licenses or other valid rights to use
all patents, patent rights, trademarks, trademark rights, trade names, trade
dress, trade name rights, copyrights, service marks, trade secrets,
applications for trademarks and for service marks, know-how and other
proprietary rights and information used or held for use in connection with
its business as currently conducted or proposed to be conducted, and neither
Prime nor the General Partner is aware of any assertion or claim challenging
the validity of any of the foregoing. The conduct of the respective
businesses of Prime, the General Partner and AMI as currently conducted does
not conflict in any way with any patent, patent right, license, trademark,
trademark right, trade dress, trade name, trade name right, service mark or
copyright of any third party that, individually or in the aggregate, would
have a Prime Material Adverse Effect. To the knowledge of Prime, there are
no infringements of any proprietary rights owned by or licensed by or to AMI
that, individually or in the aggregate, would have a Prime Material Adverse
Effect.
3.18 Governmental Authorizations. Except as set forth on Schedule 3.18,
--------------------------- -------------
Prime, the General Partner and AMI have in full force and effect all
authorizations, consents, approvals, franchises, certificates, operating
authorities, licenses and permits required under applicable Law
(collectively referred to as "Licenses") for the ownership of Prime's, the
General Partner's and AMI's properties and operation of their businesses as
presently operated, except where the failure to have any such Licenses could
not reasonably be expected to have a Prime Material Adverse Effect. Except
as set forth on Schedule 3.18, none of the transactions contemplated hereby
-------------
could reasonably be expected to have a material adverse effect on the status
of any such License or require Prime, the General Partner or AMI to obtain
any additional License to continue to operate their respective businesses as
presently conducted.
3.19 Insurance. Schedule 3.19 sets forth a list and description of all
--------- -------------
insurance policies existing as of the date hereof providing insurance
coverage of any nature to Prime, the General Partner or AMI. All such
policies are in full force and effect, are valid and enforceable in
accordance with their terms and are sufficient for compliance with all Laws
and all AMI Material Agreements.
3.20 Employment Matters.
------------------
(a) Labor Relations. Except as set forth on Schedule 3.20(a), the
--------------- ----------------
employees of Prime, the General Partner and AMI are not represented by any
labor union and are not subject to a collective bargaining agreement.
Neither Prime, the General Partner nor AMI have experienced any strike, work
stoppage or labor disturbance with any group of employees and to Prime's
knowledge, no set of facts exists which could reasonably be expected to lead
to any of the foregoing events.
(b) Employment Agreements. Except as set forth on Schedule 3.20(b)
--------------------- ----------------
there are no employment, consulting, severance or indemnification
arrangements, agreements, or to the knowledge of Prime, material
understandings between Prime, the General Partner or AMI and any officer,
director, consultant or employee. Except as set forth on Schedule 3.20(b),
----------------
the terms of employment or engagement of all employees, agents, consultants
and professional advisors of Prime, the General Partner or AMI are such that
their employment or engagement may be terminated by not more than two weeks'
notice given at any time without liability for payment of compensation or
damages.
(c) Winegarden & Hammons Agreements. Set forth as Schedule 3.20(c)
------------------------------- ----------------
are true and correct copies of the agreements with Winegarden & Hammons,
Inc. for the management of AMI's properties and the administration of Prime.
(d) Employee Benefit Plans. Except as set forth on Schedule
---------------------- --------
3.20(d), there are no pension, retirement, stock or equity purchase, stock
- -------
or equity bonus, stock or equity ownership, stock or equity option, profit
sharing, savings, medical, disability, hospitalization, insurance,
deferred compensation, bonus, incentive, welfare or any other employee
benefit plan, policy, agreement, commitment or arrangement maintained by or
binding upon Prime, the General Partner or AMI for any of their partners,
directors, officers, consultants, employees or former employees (the "Prime
Plans"). Schedule 3.20(d) also identifies each Prime Plan which constitutes
--------------
an "employee pension benefit plan" ("Prime Pension Plan") or an "employee
welfare benefit plan" ("Prime Welfare Plan"), as such terms are defined in
the Employee Retirement Income Security Act of 1974, as amended, and the
rules and regulations promulgated thereunder ("ERISA"). None of the Prime
Plans is a "multiemployer plan," as such term is defined in ERISA, or is
subject to Title IV of ERISA.
Each Prime Pension Plan has been determined to be qualified under
Section 401(a) of the Code, and each such Plan remains so qualified; and
to Prime's knowledge, no facts or circumstances exist which could result in
the revocation of such qualification. Each Prime Welfare Plan which is
intended to meet the requirements for tax-favored treatment under
Subchapter B of Chapter 1 of the Code meets such requirements. Each
Prime Plan has been administered in all material respects in accordance
with its terms and the Code, and each Prime Pension Plan and Prime
Welfare Plan has been administered in all material respects in
accordance with ERISA. The assets of each Prime Plan are at least equal
in value to the present value of the accrued benefits of participants of
such Plan. No facts or circumstances exist which could reasonably be
expected to give rise to any liability of any Prime Plan, Prime, AMI, the
General Partner, Servico, SAC or to any other person. Prime or AMI has
paid all amounts required under applicable Law, any Prime Pension Plan and
any Prime Welfare Plan to be paid as a contribution to each Prime Pension
Plan and Prime Welfare Plan through the date hereof. To the extent
required by Law, Prime has set aside adequate reserves to meet
contributions which are not yet due under any Prime Pension Plan or
Prime Welfare Plan. Neither Prime, the General Partner, AMI nor any other
person acting for or on behalf of any of them has engaged in any
transaction or taken any other action with respect to any Prime Plan which
would subject Prime, AMI or the General Partner to: (i) any Tax, penalty or
liability for prohibited transactions under ERISA or the Code; (ii) any
Tax under Code Sections 4971, 4972, 4976, 4977 or 4979; or (iii) a
penalty under ERISA Sections 502(c) or 502(l). Neither Prime, the
General Partner nor AMI, nor any director, partner, officer or employee
of Prime, the General Partner or AMI, to the extent it or he is a fiduciary
with respect to any Prime Pension Plan or Prime Welfare Plan, has breached
any of its or his responsibilities or obligations imposed upon
fiduciaries under ERISA or the Code or which could result in any claim
being made under, by or on behalf of any Prime Pension Plan or Prime
Welfare Plan or any participant or beneficiary thereof. Each Prime Welfare
Plan which is a group health plan within the meaning of Code Section
5000(b)(1) complies in all material respects with and in each and
every case has complied in all material respects with the applicable
requirements of Code Section 4980B and Part 6 of Title I of ERISA and does
not benefit retirees, except as otherwise required by law. As of the date
thereof, there was no accrued vacation or sick leave payable to the
directors or employees of Prime, the General Partner or AMI which is not
reflected in the Prime Financial Statements.
(e) Personnel. Schedule 3.20(e) sets forth: (i) the names of all
--------- ----------------
officers of Prime, the General Partner and AMI; and (ii) the names and job
designations of all employees of Prime, the General Partner and AMI whose
cash compensation exceeds $75,000 per annum. Except as disclosed in the
Prime Financial Statements and except for unpaid base compensation accrued
in the ordinary course of business consistent with past practice since
September 30, 1997, there are no material sums due to any employees of
Prime, the General Partner or AMI.
3.21 Material Agreements.
-------------------
(a) Schedule 3.21 sets forth a list of all written and oral
-------------
agreements, arrangements or commitments (collectively, the "AMI Material
Agreements") to which any of Prime, the General Partner or AMI is a party or
by which it or any of its respective assets are bound which are or could
reasonably be expected to be material to the financial position or results
of operations of Prime, the General Partner or AMI, including, but not
limited to, any: (i) contract, commitment, agreement or relationship
resulting in a commitment or potential commitment for expenditure or other
obligation or potential obligation, or which provides for the receipt or
potential receipt, involving in excess of $100,000, or a series or related
contracts, commitments, agreements or relationships that in the aggregate
give rise to rights or liabilities exceeding such amounts; (ii) indenture,
mortgage, promissory note, loan agreement, guarantee or other agreement or
commitment relating to the borrowing of money, encumbrance of assets or
guaranty of any obligation; (iii) licensing, franchise or royalty agreements
or agreements providing for other similar rights or agreements with third
parties; (iv) agreements which restrict Prime, the General Partner or AMI
from engaging in any line of business or from competing with any other
person or entity anywhere in the world; (v) agreements or arrangements for
the sale of any of the assets, property or rights owned or utilized by AMI
in the operation of its business or requiring the consent of any party to
the transfer and assignment of such assets, property and rights, except for
agreements or arrangements to sell products or services in the ordinary
course of business consistent with past practices; (vi) agreement, contract
or arrangement with any affiliate of Prime, the General Partner or AMI or
any affiliate of any partner, officer, director or employee of Prime, the
General Partner or AMI; (vii) lease of or agreement to purchase real
property; (viii) indemnification, contribution or similar agreement or
arrangement pursuant to which Prime, the General Partner or AMI may be
required to make any indemnification or contribution to any other person
except to the extent provided in the Certificate of Limited Partnership or
Limited Partnership Agreement of Prime or AMI or the Certificate of
Incorporation or bylaws of the General Partner, as in effect on the date
hereof; or (ix) other material contract, agreement or instrument which
cannot be terminated without penalty to Prime, the General Partner or AMI,
upon the provision of not greater than 30 days notice.
(b) Except as set forth on Schedule 3.21, all AMI Material
-------------
Agreements have been entered into on an "arms-length" basis with parties who
are not affiliates of Prime, the General Partner or AMI. Except as set
forth on Schedule 3.21, the Material Agreements are each in full force
-------------
and effect and are the valid and legally binding obligations of AMI, Prime
or the General Partner, as the case may be, and, to the best of Prime's
knowledge (without independent inquiry), have not been breached by any of
the other parties thereto and are valid and binding obligations of the other
parties thereto. Neither Prime, the General Partner nor AMI is in default
under the Certificate of Limited Partnership or Limited Partnership
Agreement of Prime or AMI or the Certificate of Incorporation or bylaws of
the General Partner or in default or alleged default under any AMI Material
Agreement and no event has occurred which with the giving of notice or lapse
of time or both would constitute such a default.
3.22 Related Party Transactions. Except as set forth on Schedule 3.22
-------------------------- -------------
or reflected in the Prime Financial Statements, neither Prime nor the
General Partner nor any director, officer, partner or shareholder of Prime,
the General Partner or AMI, nor to Prime's knowledge, any employee of Prime,
AMI or the General Partner (individually a "Prime Related Party" and
collectively the "Prime Related Parties") or any affiliate of any Prime
Related Party: (i) owns, directly or indirectly, in whole or in part, any
material property, asset (other than cash) or right, real, personal or
mixed, tangible or intangible, which is associated with or necessary in the
operation of the business of AMI, as presently conducted or (ii) has an
interest in or is, directly or indirectly, a party to any AMI Material
Agreement or any other contract, agreement, lease or arrangement to which
AMI is bound or is a party.
3.23 Tax Matters.
-----------
(a) All federal, state, local and foreign Tax returns and Tax
reports, if any, required to be filed with respect to the business or assets
of Prime, AMI or the General Partner have been filed with the appropriate
governmental agencies in all jurisdictions in which such returns and reports
are required to be filed; all of the foregoing as filed are true, correct and
complete in all material respects, and in all material respects reflect
accurately all liability for Taxes of Prime, AMI and the General Partner for
the periods for which such returns relate; and all amounts shown as owing
thereon have been paid. Except as set forth on Schedule 3.23, none of such
-------------
returns or reports have been audited by any Governmental Authority.
(b) Except as set forth in Section 3.23, none of Prime, AMI or the
------------
General Partner will have any liability with respect to Taxes, if any,
payable by them or relating to or chargeable against any of their assets,
revenues or income through September 30, 1997, including, but not limited
to, interest and/or penalties, in excess of the amounts paid through the
date hereof or provided for by adequate reserves on the books of Prime, AMI
or the General Partner, as the case may be; and none of Prime, AMI or the
General Partner will have any liability with respect to any such Taxes
through the Closing in excess of the amounts paid through the date thereof
or then provided for by adequate reserves on the books of Prime, AMI or the
General Partner, as the case may be.
(c) None of Prime, AMI nor the General Partner has waived any
restrictions on assessment or collection of Taxes or consented to the
extension of any statute of limitations relating to federal, state, local or
foreign taxation.
(d) Set forth on Schedule 3.23 is a summary of all disputes,
-------------
claims and appeals by Prime, AMI, the General Partner or any governmental
authority with respect to Taxes.
3.24 Disclosure. No representation or warranty of Prime or the General
----------
Partner herein (including the exhibits and schedules hereto), and no
certificate furnished or to be furnished by or on behalf of Prime or the
General Partner to Servico or its agents pursuant to this Agreement,
contains or will, at the time it is made, contain any untrue statement of a
material fact or omits or will, at the time it is made, omit to state a
material fact necessary in order to make the statements contained herein or
therein, in light of the circumstances under which they were made, not
misleading.
ARTICLE IV
COVENANTS
----------
4.1 Interim Operations of AMI. Except as set forth on Schedule 4.1,
-------------------------- ------------
during the period from the date of this Agreement to the Closing, the
General Partner shall use its best efforts to cause each of AMI and Prime to
operate its business only in the usual and ordinary course consistent with
past practices and (i) preserve intact its business organization and
goodwill in all respects, (ii) continuously maintain insurance coverage
substantially equivalent to the insurance coverage in existence on the date
hereof, and (iii) maintain its relationships with franchisors, licensors,
distributors, suppliers and others with which it has business relations.
Additionally, the General Partner shall cause any proceeds from the sales of
any properties of AMI to be used solely to (a) pay costs and expenses of or
related to such sales, (b) pay any prepayment penalties in connection with
the repayment of AMI's outstanding indebtedness to persons other than Prime
Related Parties, (c) repay such indebtedness, or (d) fund renovations to
AMI's existing properties. Except as otherwise expressly contemplated herein
or set forth on Schedule 4.1, without the written consent of Servico (which
------------
shall not be unreasonably withheld or delayed and shall be deemed to have
been given if not expressly denied within ten (10) days after written
request therefor), Prime shall not, nor shall it cause or permit AMI to, (i)
amend or otherwise change its Certificate of Limited Partnership or Limited
Partnership Agreement; (ii) issue, sell or authorize for issuance or sale,
any partnership interests or shares of any class of its securities or other
equity interests or any subscriptions, options, warrants, rights or
convertible securities or enter into any agreements or commitments of any
character obligating it to issue or sell any such partnership interests,
securities or other equity interests; (iii) redeem, purchase or otherwise
acquire, directly or indirectly, any of its partnership interests or other
equity interests or any option, warrant or other right to purchase or
acquire any such partnership interests or other equity interests or return
all or any portion of any capital contributions; (iv) enter into any
commitment or transaction (including, but not limited to, any capital
expenditure or sale of assets), other than in the ordinary course of
business consistent with past practices; provided, however, that, except as
set forth on Schedule 4.1, no commitment or transaction involving the
------------
receipt or potential receipt of in excess of One Hundred Thousand Dollars
($100,000) or payment or potential payment of in excess of One Hundred
Thousand Dollars ($100,000) shall be entered into without the prior written
consent of Servico; (v) create, incur, assume, maintain or permit to exist
any long-term indebtedness or short-term indebtedness or indebtedness for
borrowed money (including purchase money financing), except in the ordinary
course of business consistent with past practices under an existing loan
availability, or any lien, pledge, mortgage or other encumbrance affecting
any of its assets; (vi) pay, discharge or satisfy claims, liabilities or
obligations (absolute, accrued, contingent or otherwise) which involve
payments or commitments to make payments which exceed normal business
operating requirements, consistent with past practice; (vii) cancel any
debts or waive any claims or rights; (viii) make any loans, advances or
capital contributions to, or investments in financial instruments of, any
person or entity; (ix) assume, guarantee, endorse or otherwise become liable
or responsible (whether directly, contingently or otherwise) for the
obligations of any other person or entity; (x) grant any increase in the
compensation payable or to become payable to any of its partners, officers,
employees or consultants or establish, adopt or increase any bonus,
insurance or other employee benefit plan, payment or arrangement made to,
for or with any such persons or pay any bonus to any manager, partner,
officer, director or employee, except to persons other than officers,
directors or consultants of AMI or Prime pursuant to existing plans in
amounts and at times in conformity with such plans and consistent with past
practices; (xi) enter into any employment agreement or grant any severance
or termination pay with or to any partner, officer, director or employee,
except to persons other than officers, directors or consultants of AMI or
Prime pursuant to existing plans in amounts and at times in conformity with
such plans and consistent with past practices; (xii) declare or pay any
distribution (whether in cash or other property) with respect to its
partnership interests; (xiii) alter in any way the manner of keeping its
books, accounts or records or its accounting practices therein reflected;
(xiv) enter into any agreement which would be an AMI Material Agreement or
amend, terminate, renew or modify any existing AMI Material Agreement; (xv)
enter into any indemnification, contribution or similar agreement requiring
it to indemnify any other person or entity or make contributions to any
other person or entity; (xvi) do any act, or omit to do any act, or permit,
to the extent within Prime's or AMI's control, any act or omission to act
which would cause a violation or breach of any of the representations,
warranties or covenants of Prime or the General Partner set forth in this
Agreement; (xvii) sell, transfer, surrender, abandon or dispose of any of
its assets or property rights (tangible or intangible), other than in the
ordinary course of business consistent with past practices or, with respect
to any hotel properties, only pursuant to AMI Material Agreements currently
in effect and disclosed on Schedule 3.21 or as otherwise set forth on
-------------
Schedule 4.1; (xviii) enter into any agreement or take any action which
- ------------
could have a Prime Material Adverse Effect (financial or otherwise); or
(xix) agree, whether in writing or otherwise, to do any of the foregoing.
4.2 Access. Prime and the General Partner shall: (i) afford to Servico
------
and its agents and representatives full access to the properties, books,
records and other information of Prime, AMI and the General Partner,
provided that such access shall be granted upon reasonable notice and at
reasonable times during normal business hours in such a manner as to not
unreasonably interfere with normal business operations; (ii) use its
reasonable efforts to cause Prime's, the General Partner's and AMI's
personnel, without unreasonable disruption of normal business operations, to
assist Servico in its investigation of Prime, AMI and the General Partner
pursuant to this Section 4.2; and (iii) promptly make available to Servico
such information and documents concerning the business, assets, liabilities,
properties and personnel of Prime, AMI and the General Partner as Servico
may from time to time reasonably request and as can be provided without
unreasonable expense or disruption of normal business operations. Prime and
the General Partner shall use their best efforts to cause their advisors,
consultants, contractors and managers to cooperate with Servico and its
agents and representatives, and to make available to Servico and its agents
and representatives, information and documents, on terms and subject to
conditions similar to those provided in the preceding sentence and subject
to the reimbursement by Servico or its agents and representatives of the
reasonable out-of-pocket costs or expenses (but not fees) of such advisors,
consultants, contractors and managers associated with making available such
information and documents.
4.3 Schedules. Immediately following the execution and delivery of
---------
this Agreement, Prime, AMI and the General Partner, together with their
advisors, representatives, and counsel, shall commence, and proceed as
promptly as practicable with, the preparation of the Schedules hereto, which
Schedules shall be delivered to Servico not later than three (3) weeks after
the execution and delivery hereof. Servico or its advisors, representatives
and counsel may participate in such process (as part of their review
contemplated by Section 4.2 and not as the preparers of such Schedules).
4.4 Consents. Each of Prime, the General Partner and Servico agrees to
--------
cooperate with each other, file, submit or request promptly after the date of
this Agreement and to prosecute diligently any and all applications or
notices required to be filed or submitted to any Governmental Entity,
including those specified in Sections 2.4 and 3.7. Each of Prime, the
General Partner and Servico shall promptly make available to the other such
information as each of them may reasonably request relating to its business,
assets, liabilities, properties and personnel as may be required by each of
them to prepare and file or submit such applications and notices and any
additional information requested by any Governmental Entity, and shall update
by amendment or supplement any such information given in writing. Each of
Prime, the General Partner and Servico represents and warrants to the other
that such information, as amended or supplemented, shall be an accurate and
complete description of the information or data purported to be shown. Each
of Prime and Servico shall promptly provide the other with copies of all
filings made with Governmental Entities in connection with this Agreement.
4.5 Reasonable Efforts. Subject to the terms and conditions of this
------------------
Agreement, each of the parties shall use its reasonable efforts in good
faith to take or cause to be taken as promptly as practicable all reasonable
actions that are within its control to cause to be fulfilled those
conditions precedent to its obligations to consummate the transactions
contemplated by this Agreement. The parties shall use reasonable efforts to
obtain all consents and approvals required in connection with the
consummation of the transactions contemplated by this Agreement.
4.6 Notification. Each party to this Agreement shall promptly notify
------------
the other parties in writing of the occurrence, or threatened occurrence, of
(i) any event that, with the lapse of time or notice or both, would
constitute a violation or breach of this Agreement by such party, (ii) any
event that would cause any representation or warranty made by such party in
this Agreement to be false or misleading in any respect; and (iii) any other
matter which may occur from and after the date of this Agreement which, if
existing on the date of such Agreement, would have been required to be
disclosed herein. The updating of any schedule pursuant to this Section 4.6
shall not be deemed to release any party for the breach of any
representation, warranty or covenant hereunder or of any other liability
arising hereunder.
4.7 No Solicitation. Except for the transactions contemplated by this
---------------
Agreement, unless and until this Agreement shall have been terminated, Prime
and the General Partner shall not (nor shall they permit AMI or any of its or
their partners, shareholders, officers, directors, agents or affiliates to)
directly or indirectly (i) solicit, encourage (including by furnishing
information to any third party or group), initiate or, except as provided in
the proviso to this sentence, participate in any negotiations or discussions
with respect to any offer or proposal to acquire all or substantially all of
the business and assets or capital stock or partnership interests of Prime,
AMI or the General Partner, whether by merger, purchase of assets or
otherwise, or (ii) except as required by Law, disclose any non-public
information or any other information not customarily disclosed to any person
or entity concerning the business and assets of Prime, the General Partner
and AMI, afford to any person or entity (other than Servico and its
designees) access to the books or records of Prime, the General Partner or
AMI or otherwise assist or encourage any person or entity in connection with
any of the foregoing; provided, however, that Prime, AMI and/or the General
Partner may entertain, participate in negotiations or discussions with
respect to, and accept, any unsolicited offer or proposal that Prime, AMI
and/or the General Partner reasonably determines, considering all of the
terms and conditions of the transactions contemplated by this Agreement and
all of the terms and conditions of such offer or proposal, is more favorable
to the Limited Partners. In the event that Prime, AMI or the General Partner
shall receive or become aware of any offer or proposal of the type referred
to in clause (i) above or the proviso to the preceding sentence, Prime shall
promptly inform Servico of such offer or proposal and the terms and
provisions thereof.
4.8 Confidentiality. The parties acknowledge that all confidential or
---------------
proprietary information with respect to the business and operations of the
other party and their respective subsidiaries is valuable, special and
unique. The parties shall not disclose, directly or indirectly, to any
person or entity, or use or purport to authorize any person or entity to use
any confidential or proprietary information with respect to the other party
or any of their respective subsidiaries for any purpose other than the
evaluation of the transactions contemplated by this Agreement, without the
prior written consent of the other party, including without limitation,
information as to the financial condition, results of operations, customers,
suppliers, products, products under development, services, services under
development, inventions, sources, leads or methods of obtaining new business,
pricing methods or formulas, costs, marketing strategies or any other
information relating to Prime, the General Partner, AMI, SAC or Servico or
any of their respective subsidiaries, which could reasonably be regarded as
confidential or proprietary (whether such data is obtained from such party or
its affiliates, from advisors or consultants to, or managers for, or
representatives of such party or its affiliates, or from other parties in a
relationship of confidentiality with such party or its affiliates, and
without regard to the form or medium in which such information is embodied),
but not including information which (i) is or shall become generally
available to the public other than as a result of an unauthorized disclosure
by any of the parties or any of its affiliates, (ii) becomes available to the
other party on a nonconfidential basis from a source other than a party to
this Agreement, provided such source is not in violation of a confidentiality
agreement with the party providing such information or (iii) is required to
be disclosed by law or by the rules and regulations of the NYSE. The
covenants of the parties contained in this Section 4.8 shall survive any
termination of this Agreement. In the event that the transactions
contemplated by this Agreement are consummated, Servico's obligations under
this Section 4.8 with respect to Prime, the General Partner and AMI shall
terminate.
4.9 Publicity. The parties agree to reasonably corporate in issuing
---------
any press release or other public announcement or making any governmental
filing concerning this Agreement or the transactions contemplated hereby.
Nothing contained herein shall prevent any party from at any time furnishing
any information to any Governmental Entity which it is by Law or pursuant to
the rules and regulations of the NYSE so obligated to disclose or from
making any disclosure which its independent outside counsel (which may be
such party's regularly engaged outside counsel) deems (in the case of
non-governmental filings, in writing) necessary in order to fulfill such
party's disclosure obligations under applicable law, or the rules and
regulations of the NYSE; provided, however, that such party shall afford the
other parties prompt notice of the proposed disclosure and the opportunity
to seek a protective order or other relief. If such order or other relief
is denied, or the provisions of the foregoing proviso are waived, the
disclosing party shall disclose only so much of any confidential or
proprietary information as is required under the circumstances to be
disclosed.
4.10 Proxy Statement.
---------------
(a) As promptly as practicable after the execution of this
Agreement, Prime shall prepare and file with the SEC a proxy statement with
respect to the transactions contemplated by this Agreement relating to the
special meeting of Prime's Limited Partners (the "Prime Special Meeting") to
be held to consider the approval of this Agreement and the transactions
contemplated hereby (such document, together with any amendments thereto, the
"Proxy Statement"). Servico shall furnish all information concerning
Servico, its offer contemplated by this Agreement, and, to the extent
required by applicable Law, its analysis of and plans for AMI's properties,
as Prime may reasonably request in connection with the preparation of the
Proxy Statement. The Proxy Statement shall be mailed to the Limited Partners
of Prime as promptly as practicable. Prime shall cause the Proxy Statement
to comply as to form and substance in all material respects with the
applicable requirements of the Exchange Act and all other applicable Law and
shall ensure that none of the information included in the Proxy Statement
shall, at (i) the time the Proxy Statement (or any amendment thereof or
supplement thereto) is first mailed to the Limited Partners of Prime or (ii)
the time of the Prime Special Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(b) The Proxy Statement shall include the recommendation of the
General Partner to Prime's Limited Partners that they vote in favor of
approval of this Agreement and the transactions contemplated hereby.
(c) No amendment or supplement to the proxy statement filed with
the SEC, shall be made without the approval of Servico, which approval shall
not be unreasonably withheld or delayed. Prime shall promptly advise Servico
of any request by the SEC for amendment of such proxy statement or comments
thereon and responses thereto or requests by the SEC for additional
information.
4.11 Special Meeting. Prime shall call and hold the Prime Special
---------------
Meeting as promptly as practicable for the purpose of voting upon the
approval of this Agreement pursuant to the Proxy Statement and the
transactions contemplated hereby. Prime shall use its best efforts to
solicit from its Limited Partners, proxies in favor of the approval of this
Agreement and the transactions contemplated hereby pursuant to the Proxy
Statement and shall take such other action as is reasonably necessary or
advisable to secure the vote or consent of Limited Partners required by
applicable Law.
4.12 Dissolution of Prime. Immediately after the Closing, Prime
---------------------
shall wind up its affairs, dissolve and distribute the Purchase Price to its
Limited Partners in accordance with the terms of its Limited Partnership
Agreement and the Delaware Revised Uniform Limited Partnership Act.
ARTICLE V
ADDITIONAL AGREEMENTS
---------------------
5.1 Survival of the Representations, Warranties, Covenants and
----------------------------------------------------------
Agreements. The representations and warranties of Prime, the General
- ----------
Partner and Servico contained in this Agreement shall terminate at the
Closing.
5.2 Investigation. The representations, warranties, covenants and
-------------
agreements of this Agreement shall not be affected or diminished in any way
by the receipt of any notice pursuant to Section 4.6 or by any investigation
(or failure to investigate) at any time by or on behalf of the party for
whose benefit such representations, warranties, covenants and agreements
were made. All statements contained herein or in any schedule, certificate,
exhibit, list or other document delivered pursuant hereto or in connection
with the transactions contemplated hereby shall be deemed to be
representations and warranties for purposes of this Agreement.
5.3 Indemnification.
-------------
(a) For a period of six years after the Closing, Servico shall,
subject to applicable Law, indemnify, defend and hold harmless the present
directors and officers of the General Partner (each a "Prime Indemnified
Party") against all losses, claims, demands, costs, damages, liabilities,
expenses, judgments, fines, settlements and other amounts arising out of
actions or omissions occurring at or prior to the Closing to the same extent
(including mandatory advancement of expenses) but without limitation as to
amount as provided under the Limited Partnership Agreements of Prime and AMI
and the Certificate of Incorporation and bylaws of the General Partner.
During such period, Servico shall obtain or maintain in effect a directors'
and officers' liability insurance policy or a noncancellable runoff policy
insuring the Prime Indemnified Parties, with coverage in amount and scope
substantially equivalent to the General Partner's existing coverage, for
events or occurrences prior to the Closing.
(b) For purposes of the foregoing, (i) any claim against S. Leonard
Okin in his capacity as a consultant to Prime, AMI or the General Partner
shall be deemed to be a claim against him as an officer of the General
Partner and (ii) any claim against Paul H. Rich or Siegel Rich Inc. as a
consultant to Prime, AMI or the General Partner shall be deemed to be a claim
against Seymour G. Siegel as a director of the General Partner.
(c) The indemnification provided for above shall (i) include any
claim against any Prime Indemnified Party arising directly or indirectly out
of this Agreement and (ii) if litigation is commenced against such Prime
Indemnified Party which has not finally concluded within six (6) years after
the Closing, continue until such litigation is finally concluded.
(d) If a claim under this Section 5.3 is not paid in full by
Servico within sixty (60) days after a written claim has been received by
Servico, the indemnified party may at any time thereafter bring suit against
Servico to recover the unpaid amount of the claim. If successful in whole or
in part in any such suit, or in a suit brought by Servico to recover an
advancement of expenses pursuant to an undertaking, such person shall be
entitled to be paid also the expenses of prosecuting or defending such suit.
(e) In any suit brought by an indemnified party to enforce a right
to indemnification or to an advancement of expenses pursuant to the terms of
an undertaking, the burden of providing that such person is not entitled to
be indemnified, or to such advancement of expenses, shall be on Servico.
(f) For a period of six (6) years after the Closing, Servico shall,
subject to applicable law, indemnify, defend and hold harmless Furman Selz to
the same extent, and on the same terms and subject to the same conditions,
that Prime and the General Partner had agreed to indemnify and hold harmless
Furman Selz. A complete and correct copy of such agreement shall be provided
to Servico with the Schedules contemplated in Section 4.3.
(g) During the term of this Agreement, Servico shall pay all
reasonable expenses (including reasonable attorneys' fees) incurred by any
Prime Indemnified Party in defending any proceeding brought by any of the
Limited Partners against such Prime Indemnified Party as a consequence of the
execution and delivery of this Agreement and the proposed sale of the Limited
Partnership Interest to SAC pursuant to this Agreement. Servico's
obligations under this paragraph 5.3(g) shall terminate upon termination of
this Agreement.
ARTICLE VI
CONDITIONS PRECEDENT
--------------------
6.1 Mutual Conditions Precedent. The respective obligations of the
----------------------------
parties to consummate the transactions contemplated by this Agreement are
subject to the satisfaction at or prior to the Closing of the following
conditions:
(a) Governmental Consents. All material consents and approvals
---------------------
required by Governmental Entities for the consummation of the
transactions contemplated by this Agreement shall have been obtained.
(b) No Litigation. No litigation, arbitration or other proceeding
-------------
shall be pending or, to the knowledge of the parties, threatened by or
before any court, arbitration panel or governmental authority, and no law or
regulation shall have been enacted after the date of this Agreement; and no
judicial or administrative decision shall have been rendered, which, in each
case, enjoins, prohibits or materially restricts, or seeks to enjoin,
prohibit or materially restrict, the consummation of the transactions
contemplated by this Agreement.
(c) Partnership Approvals. The Limited Partners of Prime shall
---------------------
have approved this Agreement and the transactions contemplated hereby in
accordance with its Certificate of Limited Partnership and Limited
Partnership Agreement.
(d) General Partner Purchase Agreement. Servico shall have entered
----------------------------------
into a binding agreement with the General Partner pursuant to which Servico
will acquire the GP Interest and Servico or its designee will be substituted
and admitted as the sole general partner of AMI.
6.2 Conditions Precedent to the Obligations of Servico. The
----------------------------------------------------------
obligations of Servico to consummate the transactions contemplated by this
Agreement are subject to the satisfaction at or prior to the Closing of the
following conditions:
(a) Representations and Warranties True. Each of the
-----------------------------------------
representations and warranties of Prime and the General Partner contained
herein or in any certificate or other document delivered pursuant to the
provisions hereof or in connection with the transactions contemplated hereby
shall be true and correct in all material respects (except for such
representations and warranties qualified by materiality which shall be true
and correct in all respects) as of the Closing with the same force and
effect as though made on and as of such date, except that representations as
to agreements, licenses, franchises, rights, conditions, facts or
relationships that will terminate or be altered at the Closing by virtue of
the Closing or changes in relationships caused by the Closing shall be
understood to have no force, or validity beyond the Closing.
(b) Performance. Prime and the General Partner shall have
-----------
performed and complied in all material respects with all of the agreements,
covenants and obligations required under this Agreement to be performed or
complied with by them prior to or at the Closing.
(c) No Material Adverse Effect. There shall not have occurred any
--------------------------
event or condition which has adversely affected or is reasonably likely to
adversely affect in any material respect the condition (financial or
otherwise) of AMI or its assets, liabilities (whether absolute, accrued,
contingent or otherwise), earnings, business, prospects or operations.
(d) Consents and Agreements. Prime and the General Partner shall
-----------------------
have obtained all material authorizations, consents, waivers and approvals
required in connection with the consummation of the transactions
contemplated hereby.
(e) Opinion of Counsel. Servico shall have received from Brown &
------------------
Wood LLP, legal counsel to Prime, an opinion letter, dated as of the
Closing, in form and substance reasonably satisfactory to Servico, with
respect to the matters set forth in Exhibit 6.2(e) to this Agreement.
--------------
(f) Certificates. Prime shall have delivered to Servico a
------------
certificate executed by the principal executive officer of the General
Partner, dated as of the Closing, certifying in such detail as Servico may
reasonably request, that (i) the conditions specified in Sections 6.2(a) and
(b) (insofar as they are to be performed by Prime or the General Partner)
have been fulfilled and (ii) attached to such certificate is a true and
correct copy of the resolutions or consents of the Board of Directors of the
General Partner authorizing the execution, delivery and performance of this
Agreement by Prime and the General Partner. Servico shall also have
received (i) a certificate from the Secretary of the General Partner as to
the incumbency and signatures of the officers of Prime and the General
Partner executing this Agreement, and (ii) a certificate issued by the
Secretary of State of Delaware and of each state in which the General
Partner or AMI is qualified to do business, as of a date reasonably
acceptable to Servico, as to the good standing of the General Partner and
AMI in those states.
(g) Consulting Agreement. Servico shall enter into a Consulting
--------------------
Agreement with Mr. Leonard Okin in the form attached as Exhibit 6.2(e) hereto.
--------------
6.3 Conditions Precedent to the Obligations of Prime and the General
-------------------------------------------------------------------
Partner. The obligations of Prime and the General Partner to consummate the
- -------
transactions contemplated by this Agreement are subject to the satisfaction
at or prior to the Closing of the following conditions:
(a) Representations and Warranties True. Each of the
----------------------------------------
representations and warranties of Servico contained herein or in any
certificate or document delivered pursuant to the provisions hereof or in
connection with the transactions contemplated hereby shall be true and
correct in all material respects (except for such representations and
warranties qualified by materiality which shall be true and correct in all
respects) on and as of the Closing with the same force and effect as though
made on and as of such date.
(b) Performance. Servico shall have performed and complied in all
-----------
material respects with all of the agreements, covenants and obligations
required under this Agreement to be performed or complied with by it prior to
or at the Closing.
(c) Consents and Agreements. Servico shall have obtained all
------------------------
material authorizations, consents, waivers and approvals required in
connection with the consummation of the transactions contemplated hereby.
(d) Opinion of Counsel. Prime and the General Partner shall have
------------------
received from Stearns Weaver Miller Weissler Alhadeff & Sitterson, P.A., legal
counsel to Servico, an opinion letter, dated as of the Closing, in form and
substance reasonably satisfactory to Prime and the General Partner, with
respect to the matters set forth in Exhibit 6.3(d) to this Agreement.
--------------
(e) Servico's Certificates. Servico shall have delivered to Prime
----------------------
a certificate executed by its Chairman and President, dated as of the
Closing, certifying in such detail as Prime may reasonably request, that:
(i) the conditions specified in Sections 6.3(a) and (b) (insofar as they are
to be performed by Servico) have been fulfilled; and (ii) attached to such
certificate is a true and correct copy of the resolutions of the Board of
Servico authorizing the execution, delivery and performance of this
Agreement by Servico. Prime and the General Partner shall also have
received (i) a certificate from the Secretary of Servico as to the
incumbency and signatures of the officers of Servico executing this
Agreement and (ii) a certificate issued by the Secretary of State of Florida
as to the due formation, valid existence and good standing of Servico in
Florida.
6.4 Termination. This Agreement may be terminated at any time prior to
-----------
the date of Closing, as follows:
(a) by mutual written consent of Servico and Prime;
(b) by either Servico or Prime, if any Governmental Entity shall
have issued an order, decree or ruling or taken any other action permanently
enjoining, restraining or otherwise prohibiting the transactions contemplated
hereby, and such order, decree, ruling or other action shall have become
final and nonappealable;
(c) by either Servico or Prime, if the Closing has not occurred by
June 1, 1998 (such date or such later date mutually agreed to in writing by
the parties hereto referred to as the "End Date") (other than due to the
failure of the party seeking to terminate this Agreement to perform its
obligations under this Agreement required to be performed at or prior to the
Closing);
(d) by either Servico or Prime, if the Prime Special Meeting shall
have been held, and the Limited Partners shall have failed to approve this
Agreement;
(e) by Servico at any time in its sole discretion if any of the
representations or warranties of Prime or the General Partner in this
Agreement are not in all material respects true and correct, or if Prime or
the General Partner breach in any material respect any covenant contained in
this Agreement, provided that if such misrepresentation or breach is curable,
it is not cured within ten (10) business days after notice thereof, but in
any event prior to the End Date;
(f) by Prime at any time in its sole discretion if any of the
representations or warranties of Servico or SAC in this Agreement are not in
all material respects true and correct, or if Servico or SAC breach in any
material respect any covenant contained in this Agreement, provided that if
such misrepresentation or breach is curable, it is not cured within ten (10)
business days after notice thereof, but in any event prior to the End Date;
(g) by Servico, in Servico's sole discretion, at any time prior to
the passage of seven (7) days after delivery to Servico of the Schedules
contemplated in Section 4.3; or
(h) by Prime, if Prime has not obtained prior to seven (7) days
after execution and delivery of this Agreement, the required approval of the
holders of AMI's outstanding secured indebtedness to the application of AMI's
available funds to the payment of up to $700,000 of the fees and expenses of
this transaction, including the fees and expenses of Furman Selz, the fees
and expenses of Brown & Wood LLP, the costs of preparing, filing, printing
and distributing the Proxy Statement, and the cost of holding the Prime
Special Meeting.
If this Agreement is terminated pursuant to this Section 6.4, written
notice thereof shall promptly be given by the party electing such termination
to the other party and, subject to the expiration of the cure periods
provided in clauses (e) and (f) above, if any, this Agreement shall terminate
without further actions by the parties and no party shall have any further
obligations under this Agreement except to the extent provided in Section
7.8; provided that any termination of this Agreement pursuant to this Section
6.4 shall not relieve any party from any liability for the willful or
intentional breach of any of its representations or warranties or the
willful or intentional breach of any of its covenants or agreements
contained in this Agreement. Notwithstanding the termination of this
Agreement, the respective obligations of the parties under Sections 4.8
(Confidentiality), 4.9 (Publicity), 7.8 (Fees and Expenses), 7.12
(Litigation; Prevailing Party), 7.14 (Injunctive Relief) and 7.15 (Governing
Law) shall survive the termination of this Agreement. Subject to Section
4.7 hereof, upon termination of this Agreement, each party shall return all
documents and other materials of any other party relating to the
transactions contemplated by this Agreement, whether so obtained before or
after the execution of this Agreement, to the party furnishing the same.
ARTICLE VII
MISCELLANEOUS
-------------
7.1 Further Assurances. The parties hereto shall deliver any and all
------------------
other instruments or documents required to be delivered pursuant to, or
necessary or proper in order to give effect to, all of the terms and
provisions of this Agreement including, without limitation, all necessary
bulk of sale, assignments and such other instruments of transfer as may be
necessary or desirable to transfer ownership.
7.2 Notices. Any notice or other communication under this Agreement
-------
shall be in writing and shall be delivered personally or sent by registered
mail, return receipt requested, postage prepaid, or sent by facsimile or
prepaid overnight courier to the parties at the addresses set forth below
their names on the signature pages of this Agreement (or at such other
addresses as shall be specified by the parties by like notice). Such
notices, demands, claims and other communications shall be deemed given when
actually received or (a) in the case of delivery by overnight service with
guaranteed next day delivery, the next day or the day designated for
delivery, (b) in the case of registered U.S. mail, five days after deposit
in the U.S. mail, or (c) in the case of facsimile, the date upon which the
transmitting party received confirmation of receipt by facsimile, telephone
or otherwise. A copy of any notices delivered to Servico or SAC shall also
be sent to Stearns Weaver Miller Weissler Alhadeff & Sitterson, P.A., 150
West Flagler Street, Suite 2200, Miami, Florida 33130, Attention: Alison W.
Miller, Esq. A copy of any notices delivered to Prime or the General Partner
shall also be sent to Brown & Wood LLP, One World Trade Center, New York,
New York 10048-0557, Attention: Michael G. Wolfson, Esq.
7.3 Entire Agreement. This Agreement, along with the Schedules and
----------------
Exhibit hereto, constitutes the entire agreement among the parties hereto
and supersedes all prior agreements, understandings, negotiations and
discussions, both written and oral, among the parties hereto with respect to
the subject matter hereof. This Agreement may not be amended or modified in
any way except by a written instrument executed by all of the parties hereto.
7.4 Assignment. Neither this Agreement nor any of the rights,
----------
interests or obligations hereunder may be assigned by any party without the
written consent of the other parties hereto (whether by operation of Law or
otherwise). Subject to the preceding sentence, this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors, heirs, personal representatives, legal
representatives, and assigns.
7.5 Waiver. At any time prior to the date of Closing, any
------
representation, warranty, covenant, term or condition of this Agreement
which may legally be waived, may be waived, or the time of performance
thereof extended, at any time by the party hereto entitled to the benefit
thereof, and any term, condition or covenant hereof may be amended by the
parties hereto at any time. Any such waiver, extension or amendment shall
be evidenced by an instrument in writing duly executed on behalf of the
appropriate party by a person who has been authorized by its Board of
Directors, in the case of Servico and the General Partner, or the General
Partner, on behalf of Prime, to execute waivers, extensions or amendments on
its behalf. No waiver by any party hereto, whether express or implied, of
its rights under any provision of this Agreement shall constitute a waiver
of such party's rights under such provisions at any other time or a waiver
of such party's rights under any other provision of this Agreement or any
other agreement. No failure by any party hereto to take any action against
any breach of this Agreement or default by another party shall constitute a
waiver of the former party's right to enforce any provision of this
Agreement or to take action against such breach or default or any subsequent
breach or default by such other party.
7.6 No Third Party Beneficiary. Nothing expressed or implied in this
--------------------------
Agreement is intended, or shall be construed, to confer upon or give any
person other than the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and permitted assigns,
any rights or remedies under or by reason of this Agreement other than the
Limited Partners with respect to the provisions of Section 4.12 hereto.
7.7 Severability. In the event that any one or more of the provisions
------------
contained in this Agreement shall be declared invalid, void or unenforceable,
the remainder of the provisions of this Agreement shall remain in full force
and effect, and such invalid, void or unenforceable provision shall be
interpreted as closely as possible to the manner in which it was written.
7.8 Fees and Expenses.
-----------------
(a) Except as provided below, all fees and expenses incurred in
connection with this Agreement and the transactions contemplated by this
Agreement shall be paid by the party incurring such fees or expenses. In no
event shall the aggregate fees and expenses incurred by or on behalf of AMI
in connection with this Agreement and any of the transactions contemplated
herewith exceed $700,000 in the aggregate.
(b) If this Agreement shall be terminated pursuant to Section
6.4(e) as the result of an intentional or willful breach by Prime or the
General Partner of any representation, warranty or covenant contained herein,
then Prime shall pay Servico an amount equal to all costs and out-of-pocket
expenses (including reasonable attorneys' and advisors' fees) of up to
$300,000 incurred by Servico in connection with this Agreement and the
transactions contemplated by this Agreement.
(c) If this Agreement shall be terminated pursuant to Section 6.4
(f) as the result of an intentional or willful breach by Servico of any
representation, warranty or covenant contained herein, then Servico shall pay
Prime an amount equal to all costs and out-of-pocket expenses (including
reasonable attorneys' and advisors' fees, including the fees and expenses of
Furman Selz) of up to $700,000 incurred by Prime in connection with this
Agreement and the transactions contemplated by this Agreement.
(d) If this Agreement shall be terminated by Prime for any reason
other than pursuant to Section 6.4(f) and, at the time of such termination,
there shall exist or be proposed a Competing Transaction then, promptly after
the execution of any agreement with respect to the Competing Transaction or,
if no agreement is executed, the consummation of the Competing Transaction,
Prime shall pay to Servico $1 million. A "Competing Transaction" means any
of the following involving Prime or AMI, as the case may be (other than the
transactions contemplated by this Agreement): (i) a merger, consolidation,
exchange, business combination or other similar transaction, (ii) any sale,
lease, exchange, transfer or other disposition of 15% or more of the assets
of such party other than sales of properties pursuant to AMI Material
Agreements currently in effect and disclosed on Schedule 3.21 or as agreed
-------------
to in writing by Servico, or (iii) a tender offer or exchange offer for 15%
or more of the outstanding limited partnership interests of Prime.
(e) If this Agreement is terminated other than pursuant to Sections
6.4(e) and (g) (in which case no amounts will be payable by Servico
hereunder), Servico shall, within five (5) business days after such
termination, reimburse Prime and the General Partner for up to $100,000 of
the fees and reasonable expenses of Furman Selz.
(f) Each party agrees that the actual damages accruing from
termination of this Agreement pursuant to the termination provisions
referenced in Section 7.8(b), (c) or (d) are incapable of precise estimation
and would be difficult to prove, and that the damages stipulated herein bear
a reasonable relationship to the potential injury likely to be sustained in
the event of termination pursuant to such occurrence. The payments
stipulated in Section 7.8(b), (c) or (d) are intended by the parties to
provide just compensation in the event of termination pursuant to said
termination provision referenced in Section 7.8(b), (c) or (d), and are not
intended to compel performance or to constitute a penalty for nonperformance.
(g) Any payment required to be made pursuant to Section 7.8(b), (c)
or (d) shall be made not later than five (5) business days after the
occurrence of the event for which a party is entitled to payment and delivery
by such party to the other party of a notice of demand for payment, provided
that such notice shall include an itemization setting forth in reasonable
detail all expenses of such party for which it is entitled to reimbursement
hereunder (which itemization may be supplemented and updated from time to
time by such party until the sixtieth day after such party delivers such
notice of demand for payment). All payments required to be made pursuant to
this Section 7.8 shall be made by wire transfer of immediately available
funds to an account designated by such party in the notice of demand for
payment delivered pursuant to this Section 7.8(g).
(h) In the event a party shall fail to make any payment required
pursuant to Section 7.8(b), (c), (d) or (e), the amount of any such required
payment shall be increased to include the costs and expenses actually
incurred or accrued by the other party (including, without limitation, fees
and expenses of counsel) in connection with the collection under and
enforcement of this Section 7.8, together with interest on such unpaid
amounts commencing on the date that such payment under Section 7.8(b),
(c),(d) or (e) became due, at a rate equal to the rate of interest publicly
announced by Citibank, N.A., from time to time, in The City of New York, from
time to time, as such bank's base rate plus 2.00%.
7.9 Section Headings. The section and other headings contained in this
----------------
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of any provisions of this Agreement.
7.10 Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the several parties hereto in separate counterparts,
each of which shall be deemed to be one and the same instrument.
7.11 Time of Essence. Wherever time is specified for the doing or
---------------
performance of any act or the payment of any funds, time shall be considered
of the essence.
7.12 Litigation; Prevailing Party. In the event of any litigation
----------------------------
with regard to this Agreement, the prevailing party shall be entitled to
receive from the non-prevailing party and the non-prevailing party shall pay
upon demand all reasonable fees and expenses of counsel for the prevailing
party.
7.13 Remedies Cumulative. No remedy made available by any of the
-------------------
provisions of this Agreement is intended to be exclusive of any other
remedy, and each and every remedy shall be cumulative and shall be in
addition to every other remedy given hereunder or now or hereafter existing
at law or in equity.
7.14 Injunctive Relief. It is possible that remedies at law may be
-----------------
inadequate and, therefore, the parties hereto shall be entitled to equitable
relief including, without limitation, injunctive relief, specific
performance or other equitable remedies in addition to all other remedies
provided hereunder or available to the parties hereto at law or in equity.
7.15 Governing Law. This Agreement has been entered into and shall
-------------
be construed and enforced in accordance with the laws of the State of New
York without reference to the choice of law principles thereof.
7.16 Certain Definitions. For purposes of this Agreement, the
--------------------
following terms have the following meanings:
(a) "affiliate" has the meaning specified in Rule 144 promulgated
---------
by the SEC under the Securities Act;
(b) "business day" means any day on which the principal offices of
------------
the SEC in Washington, D.C. are open to accept filings, or, in the case of
determining a date when any payment is due, any day on which banks are not
required or authorized by law or executive order to close in The City of New
York, USA;
(c) "knowledge" means, with respect to any matter in question, that
---------
such party (i) has actual knowledge of such matter or (ii) after due
investigation, should have known of such matter. Where reference is made to
the knowledge of Prime, such reference shall be deemed to include only the
directors and executive officers of the General Partner, all of whom shall
have been deemed to have conducted the investigation required by this
definition;
(d) "Law" means any federal, state or local statute, law,
---
ordinance, regulation, rule, code, order or other requirement or rule of law
of the United States or any other jurisdiction;
(e) "partnership interests" means all of the partners' rights in
----------------------
the subject partnership, including, but not limited to, the profits and
losses of the partnership and the right to receive distributions of the
partnership's assets;
(f) "person" means an individual, corporation, partnership, limited
------
partnership, limited liability company, syndicate, person (including, without
limitation, a "person" as defined in Section 13(d)(3) of the Exchange Act),
------
trust, association, entity or government or political subdivision, agency or
instrumentality of a government;
(g) "Prime Material Adverse Effect" means any change in or effect
-----------------------------
on the business of AMI that is, or is reasonably likely to be, materially
adverse to the business, assets (including intangible assets), liabilities
(contingent or otherwise), condition (financial or otherwise), results of
operations or prospects of AMI;
(h) "subsidiary" or "subsidiaries" of any person means any
---------- ------------
corporation, limited liability company, partnership, joint venture or other
legal entity of which such person (either alone or through or together with
any other subsidiary of such person) owns, directly or indirectly, more than
fifty percent of the stock or other equity interests, the holders of which
are generally entitled to vote for the election of the board of directors or
other governing body of such corporation, partnership or other legal entity;
and
(i) "Tax" means any federal, state, local or foreign income, gross
---
receipts, franchise, estimated, alternative minimum, add-on minimum, sales,
use, transfer, transportation, transportation excise, registration, value
added, documentary stamp, excise, natural resources, severance, stamp,
occupation, premium, windfall profit, environmental, customs, duties, real
property, personal property, capital stock, social security, unemployment,
disability, payroll, license, employee or other withholding, or other tax or
governmental charge, of any kind whatsoever, including any interest,
penalties or additions to tax or additional amounts in respect of the
foregoing; the foregoing shall include any transferee or secondary liability
for a Tax and any liability assumed by agreement or arising as a result of
being (or ceasing to be) a member of any affiliated group (or being included
(or required to be included) in any tax return relating thereto).
IN WITNESS WHEREOF, the parties hereto have each executed and
delivered this Agreement as of the day and year first above written.
SERVICO, INC., a Florida corporation
By: /s/ David Buddemeyer
-----------------------------
Name: David Buddemeyer
Title: President & CEO
Address: 1601 Belvedere Road
West Palm Reach, Florida 33406
SERVICO ACQUISITION CORP.,
a Florida corporation
By: /s/ David Buddemeyer
-----------------------------
Name: David Buddemeyer
Title: President & CEO
Address: 1601 Belvedere Road
West Palm Reach, Florida 33406
PRIME MOTOR INNS LIMITED PARTNERSHIP,
a Delaware limited partnership
By: PRIME-AMERICAN REALTY CORP.,
a Delaware corporation,
its General Partner
By: ______________________________
Name:
Title:
Address:
PRIME-AMERICAN REALTY CORP.,
a Delaware corporation
By: ______________________________
Name:
Title:
Address:
IN WITNESS WHEREOF, the parties hereto have each executed and
delivered this Agreement as of the day and year first above written.
SERVICO, INC., a Florida corporation
By: ______________________________
Name:
Title:
Address: 1601 Belvedere Road
West Palm Reach, Florida 33406
SERVICO ACQUISITION CORP.,
a Florida corporation
By: ______________________________
Name:
Title:
Address: 1601 Belvedere Road
West Palm Reach, Florida 33406
PRIME MOTOR INNS LIMITED PARTNERSHIP,
a Delaware limited partnership
By: PRIME-AMERICAN REALTY CORP.,
a Delaware corporation,
its General Partner
By: /s/ S. Leonard Okin
-------------------------------
Name: S. Leonard Okin
Title: V.P. & CEO
Address: 21-00 Route 208 South
Fairlawn, NJ 07410
PRIME-AMERICAN REALTY CORP.,
a Delaware corporation
By: /s/ S. Leonard Okin
-------------------------------
Name: S. Leonard Okin
Title: V.P. & CEO
Address: 21-00 Route 208 South
Fairlawn, NJ 07410
