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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): OCTOBER 31, 1997
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HUDSON HOTELS CORPORATION
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(Exact Name of Registrant as Specified in Charter)
NEW YORK 33-26780-NY 16-1312167
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(State or Other Jurisdiction (Commission File (IRS Employer
of Incorporation) Number) Identification No.)
ONE AIRPORT WAY, SUITE 200, ROCHESTER, NEW YORK 14624
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (716)-436-6000
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(Former Name or Founder Address, if Changed Since Last Report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On October 31, 1997, the Company acquired 9 hotel properties operating as
Hampton Inns from Equity Inns Partnership, L.P., pursuant to a Hotel Asset
Purchase Agreement among the Company and its subsidiary, Hudson Hotels
Properties Corp. as Buyer and Equity Inns Partnership, L.P., as Seller. The
Company acquired the properties into its newly-formed subsidiary, HH Properties
- - II, Inc.
The purchase price for the properties was $46,250,000, determined by
arms-length negotiation with the Seller, after analysis and valuation by the
Company based upon historic and projected operating results of the properties.
The purchase price was paid by issuing a subordinated promissory note in the
amount of $3,884,052.23 (maturing October 31, 1999) from Hudson Hotels
Properties Corp. to the Seller, and by paying the remaining balance, after
adjustments, in cash. The cash portion of the purchase price was obtained a) by
placing a $30,000,000 mortgage issued by Nomura Asset Capital Corporation, on
the properties purchased by HH Properties - II, Inc. and b) by the Company
securing $18,000,000 of mezzanine financing from Nomura Asset Capital
Corporation. The new mezzanine debt was consolidated with mezzanine debt
obtained in 1996 from Nomura Asset Capital Corporation to form a single
mezzanine obligation of $35,000,000. The mezzanine debt is payable in interest
only for two years at the rate of six percent over one-month LIBOR, and matures
five years after Closing.
There were no material relationships between the Company and the Seller
prior to the consummation of the acquisition.
In addition to the consideration stated above, the Company's subsidiary,
Hudson Hotels Properties Corp., pledged 2,000,000 shares of common stock of the
Company as security for the payment of the Promissory Note to Seller.
The following properties were acquired. Each such property was operated as
a hotel prior to the acquisition, and the Company intends to continue to operate
each property as a hotel thereafter. Each of the properties has had substantial
renovation over the past three years.
HAMPTON INN IN ROSWELL (ATLANTA), GEORGIA. The Roswell Hampton Inn consists
of two, 3-story exterior corridor buildings with 129 rooms. The property's
amenities include complimentary continental breakfast in the lobby lounge,
meeting room, and outdoor swimming pool. The property was opened in 1987. The
hotel is located immediately off Georgia 400 in Roswell, a northern Atlanta
suburb. Roswell and other suburban areas north of Atlanta along the Georgia 400
corridor have experienced explosive growth over the past five years. The new
North Point Mall is less than three miles north of the subject hotel, and
downtown Atlanta is easily accessible within a 20-minute drive.
HAMPTON INN IN GREENSBORO, NORTH CAROLINA. The Greensboro Hampton Inn
consists of two, 2-story exterior corridor buildings with 121 guest rooms. The
hotel was opened in 1986. The property's amenities include complimentary
continental breakfast service in lobby lounge, meeting room, and outdoor
swimming pool. The property is located at the intersection of Interstate 40 and
Route 29A (High Point Road), a major highway interchange approximately four
miles southwest of downtown Greensboro. The Joseph S. Koury Convention Center,
offering 200,000 square feet of prime meeting space, and Four Seasons Town
Center, with 200 retail shops, are across High Point Road from the hotel.
Greensboro Airport is within a ten-minute drive west of the Hampton Inn.
THE HAMPTON INN IN GREENVILLE, SOUTH CAROLINA. The Greenville Hampton Inn
consists of one 4-story interior corridor building with 123 guest rooms. The
property was opened in 1985. The property's amenities include complimentary
continental breakfast service in lobby lounge, meeting room, and outdoor
swimming pool. The Greenville Hampton Inn is located off the Haywood Road exit
of Interstate 385, the spur which connects downtown Greenville to Interstate 85.
Adjacent to the hotel are Haywood Mall - Greenville's largest shopping center -
and several restaurants. The corporate campus of Fluor Daniel is less than one
mile from the Hampton Inn. Greenville-Spartanburg International Airport is
within a fifteen-minute drive.
THE HAMPTON INN IN SPARTANBURG, SOUTH CAROLINA. The Spartanburg Hampton
Inn consists of two, 2-story exterior corridor structures with 112 guest rooms.
The hotel opened in 1984. This hotel's amenities include complimentary
continental breakfast service in lobby lounge, meeting room, and outdoor
swimming pool. The Property is located along Interstate 85 west of its
intersection with Interstate 26. The Waccamaw Outlet Mall and Southwest
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Business Park are within a five-minute drive of the hotel.
Greenville-Spartanburg Airport is twelve miles southwest. Downtown Spartanburg
is approximately five miles southeast via Interstate 26.
THE HAMPTON INN IN DEWITT (SYRACUSE), NEW YORK. The Syracuse Hampton Inn
consists of one 4-story, interior corridor structure with 117 guest rooms. The
hotel was opened in 1985. The hotel's amenities include complimentary
continental breakfast service in lobby lounge and meeting room. The hotel is
situated northeast of downtown Syracuse, off Exit 35 of Interstate 90. The
surrounding neighborhood is Carrier Circle, an important industrial and
manufacturing area with major tenants including Carrier Corporation and Bristol
Myers Squibb. Hancock International Airport is approximately six miles
northwest of the Hampton Inn; downtown Syracuse is easily accessible within a
15-minute drive.
THE HAMPTON INN IN EDEN PRAIRIE, MINNESOTA. The Eden Prairie Hampton Inn
consists of one 3-story, 123 room, interior corridor building and was opened in
1987. Amenities include complimentary continental breakfast service in lobby
lounge, meeting room and transportation to nearby attractions. The hotel is
located at the intersection of Interstate 494 and Highway 169/212 in Eden
Prairie. The surrounding neighborhood is dominated by office, retail and
warehouse/flex developments. The Twin Cities of Minneapolis/St. Paul are within
a 20-minute drive of the Hampton Inn via major highway, as is Minneapolis/St.
Paul International Airport.
THE HAMPTON INN IN AMARILLO, TEXAS. The Amarillo Hampton Inn consists of a
2-story, interior corridor hotel with 116 guest rooms. The hotel was opened in
1985; its amenities include outdoor swimming pool and complimentary continental
breakfast service in lobby lounge. The hotel is centrally located on Amarillo's
major commercial corridor. The intersection of Interstates 40 and 27 is
approximately one mile west of the hotel, while Amarillo International Airport
is within a five-minute drive east. The neighborhood is characterized by
low-rise retail, hotel and restaurant buildings.
THE HAMPTON INN IN SAN ANTONIO, TEXAS. The San Antonio Hampton Inn
consists of a five-story 123 guest room interior corridor building which was
opened in 1987. The hotel's amenities include a complimentary continental
breakfast service in lobby lounge and meeting room. The hotel is located off
the Interstate 410 Loop near its intersection with Interstate 10, in northwest
San Antonio. The neighborhood is characterized by a proliferation of office
parks and buildings, including Koger Center and Crossroads. South Texas Medical
Center is also within the neighborhood, generating substantial hotel demand.
Six Flags Fiesta Texas and Seaworld are both near the Hampton Inn, while San
Antonio International Airport is six miles east.
THE HAMPTON INN IN ALBUQUERQUE, NEW MEXICO. The Albuquerque Hampton Inn
consists of two, 3-story exterior corridor structures with 125 guest rooms. The
property opened in 1987; its amenities include outdoor swimming pool,
complimentary continental breakfast service in lobby lounge, and meeting rooms.
The hotel is located at Exit 231 off Interstate 25. The intersection of
Interstates 40 and 25, a major regional commercial crossroads, is three miles
south. Downtown Albuquerque is within a five-minute drive, and the airport is
ten miles south. Numerous large high-technology and office parks is located
within the neighborhood.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA, FINANCIAL INFORMATION AND
EXHIBITS.
a) Financial Statements of Businesses Acquired.
It is impracticable to provide the required financial statements for
the properties acquired at this time. The required financial
statements will be filed as soon as practicable, but not later than
sixty days after this report is filed.
b) PRO FORMA Financial Information.
It is impracticable to provide the PRO FORMA financial information
which is required with respect to the acquisitions described in Item 2
above at this time. The required PRO FORMA financial information will
be filed as soon as practicable, but not later than sixty days after
this report is filed.
c) Exhibits.
Exhibit 10. Material Contracts
Exhibit 10.31 Hotel Asset Purchase Agreement as amended.
Exhibit 10.32 Promissory Note
Exhibit 10.33 Guaranty
Exhibit 10.34 Pledge Agreement
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HUDSON HOTELS CORPORATION
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(Registrant)
Date: NOVEMBER 14, 1997 /S/ TARAS KOLCIO
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Taras Kolcio, Chief Financial Officer
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EXHIBIT 10.31
HOTEL ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into the 12 day of July 1997, by and
between HUDSON HOTELS CORPORATION, a New York corporation ("Hudson") and HUDSON
HOTELS PROPERTIES CORP. ("Hudson Properties"), both with its principal office at
One Airport Way, Suite 200, Rochester, New York 14624, individually and as agent
for a New York corporation to be formed with offices at One Airport Way, Suite
200, Rochester, New York 14624 ("Buyer"), and EQUITY INNS PARTNERSHIP, L.P., A
TENNESSEE LIMITED PARTNERSHIP, with its principal office at 4735 Spottswood,
Suite 102, Memphis, Tennessee 36117 ("Seller").
RECITAL:
Seller desires to sell and Buyer desires to purchase certain properties and
assets of Seller consisting of nine (9) hotel properties operated as Hampton
Inns under franchises from Promus, as identified on SCHEDULE A attached hereto,
under the terms and conditions set forth below. Buyer will be upon formation an
indirect wholly-owned subsidiary of Hudson. Hudson and Hudson Properties shall
each be liable jointly and severally as guarantors of the obligations of the
Buyer under this Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
and agreements hereinafter contained, the parties hereto agree as follows:
TERMS AND CONDITIONS:
1. ASSETS SUBJECT TO SALE AND PURCHASE.
Buyer agrees to purchase and Seller agrees to sell the following assets of
Seller:
1.1. The nine parcels of real property more particularly described on
SCHEDULE A attached hereto, together with all buildings and
improvements thereon but excluding the sanitary sewer project
condemnation affecting the hotel property located at Greensboro,
North Carolina, all the awards or proceeds of which of whatever
character shall be divided equally between Buyer and Seller (each a
"hotel property" and together the "Premises");
1.2. All of Seller's interest in the tangible personal property, and
items of furnishings, fixtures, and equipment, owned by Seller with
respect to the several hotel businesses on the Premises
(collectively the "Personal Property");
1.3. All of Seller's rights in those licenses, permits and certificates
of occupancy held by Seller in connection with the ownership of
each hotel property, but only to the extent the same are legally
assignable to Buyer (the "Owner's Permits");
1.4 All of Seller's interest in any and all architectural, engineering
and other plans prepared in connection with the construction of the
building and improvements on the Premises and acquired by Seller in
its purchase thereof; and
1.5. All of Seller's interest in assignable warranties and guarantees
pertaining to the several hotel properties.
Buyer acknowledges that Crossroads Future Company, L.L.C. (the "Seller's
Tenant") owns all supplies and inventory used in the operation of the several
hotel businesses on the Premises, and Seller's Tenant and the managing agent of
the Seller's Tenant operate and manage the hotel properties located on the
Premises, and that the Seller does not participate in such operation and
management and does not own
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inventory and supplies or the Contracts related to the operation and management
of the hotel properties located on the Premises. Seller shall cause Seller's
Tenant to transfer to Buyer the following assets without any consideration:
1.6 All of Seller's Tenant's rights and obligations in those contracts,
leases, and service agreements to which Seller's Tenant is a party
and which relate to the operation of each hotel property, and which
are described in SCHEDULE B attached hereto, together with any
other contracts, leases and service agreements that the Seller or
Seller's Tenant give the Buyer written notice of prior to the
expiration of the Feasibility Period, as defined herein (the
"Contracts");
1.7. All of Seller's Tenant's interest in soft goods and other
inventory, and supplies used in the operation of the several hotel
businesses on the Premises located on the Premises at Closing (the
"Inventory");
1.8 All of Seller's Tenant's rights in those licenses, permits and
certificates of occupancy held by Seller's Tenant in connection
with the operation of each hotel property, but only to the extent
the same are legally assignable to Buyer (the "Operator's Permits")
1.9. All intangible property, guest ledgers, customer and mailing lists,
brochures, and telephone numbers used in connection with the
operation of the several hotel properties; and
1.10 All books and records relating to the operation and management of
the several hotel properties in Seller's Tenant's possession and
control.
All the real property and assets listed above shall be collectively referred to
herein as the "Purchased Assets."
2. PURCHASE PRICE, DEPOSIT, AND PAYMENT. The Purchase Price shall be
$47,250,000.
2.1. The Purchase Price shall be allocated for tax purposes only among
the several hotel properties, and between the Premises and Personal
Property relating to each hotel property, as Seller and Buyer shall
agree prior to the expiration of the "Feasibility Period" (as
hereafter defined).
2.2. The Purchase Price shall be payable as follows:
2.2.1. Buyer shall make a deposit in the amount of $225,000
(together with any interest earned thereon the
"Deposit"), to be delivered in cash, certified check or
bank draft to the national business unit of Chicago Title
Insurance Company, 1129 20th Street, N.W., Suite 300,
Washington, D.C. 20036 (Telephone Number: 202-466-2266)
(Attention: Douglas J. Mathis, Esquire) ("Escrow Agent")
within three (3) business days of the Contract Date by
Buyer and to be held by Escrow Agent in accordance with
this Agreement.
2.2.2. At closing, Buyer shall cause Hudson Properties to
deliver its Promissory Note to Seller in the amount of
$5,000,000, increased or decreased, as the case may be,
by the Prorations set out in Section 3 and the
Adjustments set out in Section 4, in substantially the
form attached hereto as EXHIBIT I. Payment of amounts
outstanding under the Note shall be secured by the grant
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of a security interest in 2,000,000 newly-issued shares
of Hudson common stock which shares shall be held in
escrow pursuant to a Pledge Agreement (the "Pledge
Agreement") in the form and substance to be agreed to by
Seller and Buyer prior to the expiration of the
Feasibility Period. Payment of the Note shall be
guaranteed by Hudson under a guaranty agreement in form
and substance acceptable to Seller executed and delivered
at Closing. The guarantee and payment of amounts
outstanding under the Note shall be subordinate to senior
debt of Hudson and Hudson Properties not to exceed
$30,000,000.
2.2.3. Buyer shall pay to Seller the balance of the Purchase
Price by wire transfer of immediately available funds on
the Closing Date.
2.3. Escrow Agent shall hold the Deposit in an interest-bearing account.
In the event of a termination of this Agreement pursuant to
Sections 22.1-22.5, (unless the Buyer, Hudson Properties or Hudson
is in default under this Agreement or has made a material
misrepresentation or failed to obtain a consent or satisfy a
condition or contingency solely within the control of Hudson,
Hudson Properties or Buyer) the Escrow Agent shall release the
Deposit to Buyer, and Seller shall have no further liability
hereunder. In the event of Buyer's, Hudson Properties' or Hudson's
default hereunder, the Escrow Agent shall release the Deposit to
Seller, and Buyer's liability hereunder shall be limited to said
Deposit, which shall be deemed liquidated damages to Seller and
Seller's sole remedy for the loss of its bargain (provided such
limitation shall not be applicable to a default by Buyer, Hudson or
Hudson Properties of any covenants other than the obligation to
purchase the Premises, for which such other defaults the Seller
retains all of its rights and remedies at law and in equity). Any
interest earned on the Deposit prior to Closing shall be payable to
Buyer, unless Buyer, Hudson or Hudson Properties defaults
hereunder, in which case it shall be the property of Seller as
additional liquidated damages.
2.4. Seller will pay all existing assessments and installments of
assessments for local improvements due and payable as of the
Closing Date. Seller has no knowledge of any additional assessment
not appearing on the current tax roll or of record title.
3. PRORATIONS. The following accounts shall be prorated as of Closing between
Seller, Seller's Tenant and Buyer:
3.1. Real estate taxes and assessments and personal property taxes for
the current fiscal year.
3.2. Utility and telephone charges, water and sewer charges and rents.
3.3. All current rents and amounts payable under leases, service,
supply, operating and maintenance contracts assigned to and assumed
by Buyer, as set forth herein, to the extent same shall cover
periods prior to Closing.
3.4. Current rents, revenues and other payments due under any office,
shop, lounge and store leases, or under any license or concession
agreement assigned to and assumed by Buyer, as set forth herein.
3.5. Amounts paid or payable as fees for permits and licenses which are
assigned and assignable hereunder by Seller or Seller's Tenant to
Buyer.
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3.6. Prepaid advertising fees and charges, and other prepaid expenses.
4. ADJUSTMENTS. The following adjustments and purchases or credits shall be
made at Closing:
4.1. Buyer shall purchase from Seller's Tenant, accounts receivable of
registered guests who have not checked out and are occupying rooms
on the evening preceding Closing (the "Guest Tray Ledger"). All
other accounts receivable originating prior to Closing shall belong
to and be the responsibility of Seller or Seller's Tenant. Buyer
shall have no obligation to collect any such accounts receivable,
but in the event Buyer collects same, it shall remit such amount
collected to Seller's Tenant.
4.2. Seller shall cause Seller's Tenant to transfer advance deposits on
future room bookings to Buyer at Closing.
4.3. Room revenue from rooms occupied on the evening preceding the
Closing will be divided equally between Seller's Tenant and Buyer.
4.4. Cash on hand in the front desk bank at the each property will be
credited to Seller's Tenant.
4.5 To the extent that the Inventory fails to meet the standards set
forth in Section 17.14, Seller's Tenant shall pay to Buyer the
value of the deficiency. To the extent that the Inventory exceeds
those standards, Buyer shall pay to Seller's Tenant the value of
such excess. Buyer shall have a period of thirty (30) days
following Closing to verify the Inventory.
5. CONTINGENCIES.
The consummation of the transactions contemplated by this Agreement shall be
contingent upon the satisfaction of the following conditions (which
contingencies shall be deemed waived unless this Agreement is terminated by
written notice by the terminating party to the other party prior to the
expiration of the Feasibility Period), in addition to the conditions set forth
elsewhere in this Agreement:
5.1. That Buyer shall have received a written commitment for financing
of this purchase in the form and upon terms satisfactory to Buyer
in its sole and absolute discretion. This contingency shall be
deemed to be satisfied upon delivery of the evidence called for in
Section 6.11.
5.2. That Buyer shall not have exercised its right to terminate the
contract during the Feasibility Period, as defined in Section 6.
5.3. The respective Boards of Directors of Seller, of Buyer and of
Hudson shall have approved this transaction.
6. FEASIBILITY PERIOD.
6.1. Buyer shall have a period ending September 28, 1997 (the
"Feasibility Period") to review the Inspection Items and to
otherwise complete its due diligence investigation and inspection
of the Premises. Buyer shall have the right to terminate this
Agreement at any time prior to the expiration of the Feasibility
Period, by written notice to Seller and Escrow Agent (the
"Termination Notice"), if Buyer is dissatisfied with any aspect of
the
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Purchased Assets in Buyer's sole discretion. If Buyer shall
terminate this Agreement pursuant to this Section 6.1 on or before
the last day of the Feasibility Period, then Buyer shall be
entitled to a refund of the Deposit and all accrued interest
thereon. If Buyer shall not have provided notice of termination of
this Agreement pursuant to this Section 6.1 during the Feasibility
Period, then from and after the Feasibility Period Buyer shall be
deemed to have waived its right to terminate this Agreement as
permitted under this Section 6.1 and Section 5 and to accept the
Premises in their present condition.
6.2 The term "Inspection Items" shall mean copies of the following
documents (to the extent in the possession or control of the Seller
or Seller's Tenant):
(a) any title policies, environmental reports, engineering
studies, the PIP's referred to in Section 6.5 below, and
surveys of or with respect to any of the Premises;
(b) the Contracts;
(c) financial statements (the "Financial Statements") for each
hotel property prepared and certified by the owner thereof
(including balance sheets, income statements and statements
of changes in financial condition) for calendar years 1995
and 1996 and for the first and second calendar quarters of
1997, together with an itemized breakdown of room sales per
month, occupancy and ADR for such periods;
(d) the existing audited financial statements (the "Audited
Financials") for the properties in Seller's possession or
control, if any;
(e) any guest registration records (which shall be available at
the property), operating licenses and permits, certificates
of occupancy, municipal approvals and other governmental
permits;
(f) any books and records of the operations of the Premises
necessary to confirm the accuracy of the Financial
Statements and the Audited Financials;
(g) The leases currently in force with respect to each hotel
property; and
(h) All architectural, engineering and other plans relating to
any hotel property.
6.3 Buyer shall be responsible at its expense to obtain new Franchise
Agreements in connection with the sale of the Purchased Assets of
Buyer. Seller agrees, at no expense to itself, to assist Buyer in
obtaining Promus Hotels, Inc.'s cooperation in this regard. The
franchise application fees which are required to be paid by
franchisor in connection with obtaining new Franchise Agreements or
the sale of Purchased Assets shall be paid by Buyer to franchisor
at or prior to the Closing.
6.4 The Seller agrees to bring all hotel properties located on the
Premises up to Hampton Inn standards set forth in the Product
Improvement Plan ("PIP") issued by Promus Hotels, Inc. in
connection with the June, 1997 acquisition by Seller of such hotel
properties, provided, however, that Seller shall not be required to
spend more than an aggregate of $4,475,600 therefor (which amount
includes amounts expended by Seller's seller and reimbursed by
Seller on the properties for the June, 1997 PIP). Unless Buyer
has, on or before the expiration of the Feasibility Period,
terminated this Agreement, Buyer, at the expense of Hudson and the
Buyer, shall comply with the requirements of any PIP required by
Promus Hotels, Inc. with respect to the purchase of the Buyer of
the hotel and performing any work with respect to the June, 1997
PIP in excess of the work done by Seller for the aggregate sum of
$4,475,600 as set forth above.
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6.5 The franchise application fees which are required to be paid by
franchisor in connection with obtaining new Franchise Agreements or
the sale of Purchased Assets shall be paid by Buyer to franchisor
at or prior to the Closing.
6.6 Seller and Buyer shall cooperate and take all actions necessary, in
a diligent and expeditious manner, to effectuate the inspections
and reviews contemplated by this Section 6 during the Feasibility
Period. Subject to prior written notice to the Seller's Tenant and
the reasonable rules and regulations of the Seller's Tenant, Buyer
and its representatives and agents shall be provided with access to
the Premises at all reasonable times, in order to inspect the
Premises, including but not limited to, taking soil samples and
test borings and conducting environmental studies, engineering
studies and other such inspections and reviews reasonably necessary
to determine the condition and financial status of the Purchased
Assets.
6.7 Buyer, Hudson Properties and Hudson covenant and agree that the
Premises shall not be damaged or impaired in any way as the result
of its activities on the Premises during the Feasibility Period,
and hereby agree to indemnify and hold Seller and Seller's Tenant
harmless from and against any claims, causes of action, damages,
expenses (including attorneys' fees) or liabilities of whatsoever
nature to the extent incident to, resulting from or in any way
arising out of the presence in, on or about the Premises of Buyer,
or Buyer's agents or representatives, or out of any test or
inspection conducted by or any other act or omission of Buyer on
the Premises. Such indemnity shall survive the Closing or any
termination of this Agreement and shall not be limited to the
Deposit.
6.8 Buyer shall make all inspections provided for herein in good faith
and with due diligence. All inspection fees, appraisal fees,
engineering fees and other expenses of any kind (including, without
limitation, expenses related to environmental and engineering
studies) incurred by Buyer relating to the inspection of the
Premises will be solely Buyer's and Hudson's expenses and will be
paid timely by Buyer and Hudson, except that Buyer and Hudson shall
not become liable solely by virtue of this sentence for remediation
costs relating to Hazardous Materials (as defined below) discovered
by Buyer or Hudson on any hotel property. Seller hereby reserves
the right to have a representative of Seller or the Seller's Tenant
present at the time of making any such inspection. In making any
inspection hereunder, Buyer will, and will cause any representative
of Buyer to, use discretion so as to not disrupt the operations of
Seller's Tenant or any guest, tenant or customer of the Premises.
Buyer shall notify Seller's Tenant not less than one (1) business
day in advance of making any such inspection.
6.9 If Buyer shall validly terminate this Agreement during the
Feasibility Period pursuant to this Section 6, or if the Closing
shall otherwise fail to occur, Buyer shall return to Seller the
originals and all copies of all material relating to the Premises
furnished to Buyer by Seller pursuant to this Agreement and shall
not make or retain any copies thereof, together with copies of any
materials relating to the Premises obtained by Buyer, Hudson or
their consultants with respect to the Premises.
6.10 Buyer shall provide to Seller by August 15, 1997, evidence of
Buyer's unconditional ability to finance the acquisition of the
Premises and the payment of the Purchase Price pursuant to Section
2.2 of this Agreement. Seller agrees that for purposes hereof, a
comfort letter from Buyer's prospective lender which provides
reasonable assurances as to the availability of financing shall
constitute such evidence.
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6.11 It is understood that Buyer's lender will conduct its own due
diligence in connection with the lending and ultimate
securitization of the loan. Seller agrees to cooperate reasonably
with Buyer, Buyer's lender, and its agents, and to cause Seller's
Tenant to so cooperate, to provide the necessary access and
information to enable Buyer's lender to complete its due diligence.
6.12 If this Agreement is terminated pursuant to this Section 6 and the
Deposit is disbursed as set forth in this Section, then, except as
specifically set forth in this Agreement, neither party shall have
any further obligations or liabilities hereunder.
7. CONDUCT OF BUSINESS TO CLOSING. Seller covenants, represents and warrants,
until the completion of the Closing, unless otherwise agreed in writing by
Buyer, that:
7.1. Seller shall cause the Seller's Tenant to continue normal
maintenance and management of each such property and operation and
marketing of the hotel business in the ordinary course of business
consistent with prior practice.
7.2. Seller and Seller's Tenant shall not engage in any sale or enter
into any transaction, contract or commitment, or incur any
liability or obligation, other than in the ordinary course of
business, which would materially, adversely affect the Purchased
Assets and Seller shall not enter into any new contract, lease or
agreement regarding any hotel property unless such contract, lease
or agreement shall not be binding upon Buyer or shall be terminable
upon not more than 30 days' notice. Neither Seller nor Seller's
Tenant shall prepay expenses, whether under a contract or
otherwise, except in the ordinary course of business consistent
with prior practice;
7.3. Seller shall cause Seller's Tenant to carry and continue in force
through the Closing Date current levels of fire and extended
coverage insurance, as well as theft, liability and other current
insurance coverage, it being agreed that in the event of a casualty
prior to the Closing Date, the rights and liabilities of the
parties shall be determined in accordance with Paragraph 11 hereof;
7.4. Seller and Seller's Tenant shall not amend, modify or terminate any
Contract without Buyer's consent (which consent shall not be
required if such amendment, modification or termination would not
be binding upon the Buyer after Closing), except as provided in
Section 15 hereof;
7.5. Seller shall use its best efforts to preserve in good order all
papers and records in Seller's or Seller's Tenant's possession
relating to the Purchased Assets;
7.6. Seller shall cause Seller's Tenant to repair and maintain the
Purchased Assets in good state of repair through the Closing Date,
ordinary wear and tear excepted, and shall not dispose of any or
any part of same, or remove any or any part of same from the
Premises;
7.7. Seller shall cause Seller's Tenant to conduct its business in all
respects so as to be in compliance with all terms and conditions of
the Franchise Agreement relating to each hotel property.
<PAGE>
8. CLOSING.
The closing of the transactions contemplated herein (the "Closing") shall take
place in Memphis, Tennessee at the offices of Seller, on September 30, 1997 at
10:00 AM or such other date and place as the parties hereto shall mutually agree
upon (the "Closing Date"). Time shall be considered to be of the essence of
this Agreement.
9. CONDITIONS OF CLOSING.
Closing of the transactions hereunder shall take place provided:
9.1. The contingencies set forth in Paragraph 5 hereof shall have been
satisfied, waived or deemed to be waived due to the failure of this
Agreement to be terminated in a timely manner.
9.2. All of the covenants to be performed by Seller and Buyer contained
in this Agreement will have been performed on or before Closing.
9.3. The Purchased Assets shall be in substantially the same condition
as of the date hereof, ordinary wear and tear excluded.
9.4. Seller shall have received no notice of material violation with
respect to the Premises from any governmental authority.
9.5. The representations and warranties of Seller and of Buyer contained
herein shall be materially true and correct on and as of the
Closing Date, as though they had been made on and as of the Closing
Date.
9.6. Seller and Seller's Tenant have complied in all material respects
with all applicable laws, rules, regulations and ordinances
relating to the Purchased Assets.
10. CLOSING OBLIGATIONS OF THE PARTIES.
10.1 At Closing, Seller shall execute and deliver, cause Seller's Tenant
to execute and deliver, or deliver, as appropriate, to Buyer the
following items:
10.1.1 The several Deeds with respect to the Premises;
10.1.2 The several Bills of Sale to transfer the Personal
Property in the form attached hereto as EXHIBIT III;
10.1.3 The several Bills of Sale for Inventory in the form
attached hereto as EXHIBIT IV;
10.1.4 Assignments and Assumptions of Contracts from Seller's
Tenant in the form attached hereto as EXHIBIT V;
10.1.5 Assignment of Owner's Permits, intangible rights and
warranties and guarantees relating to the condition of
the several hotel properties;
10.1.6 Assignment of Operator's Permits, intangible property,
guest ledgers, customer and mailing lists, brochures and
telephone numbers;
10.1.7 Originals, if available, or otherwise copies of Contracts
and Permits, which may be delivered at the respective
hotel property;
10.1.8 Any and all business records and papers related to the
ownership of each hotel property not previously provided,
which may be delivered at the respective hotel property;
10.1.9 Any and all architectural, engineering and other plans
prepared for or used in connection with the construction
of the building and improvements on the Premises in
Seller's or Seller's Tenant's possession or control which
may be delivered at the respective hotel;
10.1.10 Certified copies of resolutions of Seller authorizing the
execution of this Agreement and the consummation of the
transactions contemplated herein;
<PAGE>
10.1.11 An opinion of Seller's counsel, dated as of the Closing
Date, stating (a) Seller's corporate existence and good
standing are as stated in Section 17.1 hereof; (b) except
as may be specified by such counsel, they do not know or
have any reasonable grounds to know of any litigation,
proceeding, suit, action, controversy or claim existing,
pending or threatened against Seller challenging the
validity of this Agreement; (c) the instruments executed
and delivered to by Seller to Buyer have been duly
authorized, executed and delivered (subject only to
bankruptcy, creditors rights and general principles of
equity);
10.1.12 All necessary releases or payoff letters of lien or
financing statements, pursuant to Paragraph 13.1 hereof;
10.1.13 Tenancy and title affidavit as may be reasonably and
customarily required by the title company;
10.1.14 Proof of payment of all current taxes due which, if
unpaid, would constitute a lien on the Premises;
10.1.15 Terminations of all management agreements and the
Crossroads lease affecting any hotel property; and
10.1.16 Such other documents and instruments as are required by
this Agreement to effectuate the sale of property similar
to the Purchased Assets.
10.2 At Closing, Buyer shall execute and deliver to Seller the following
items:
10.2.1 Certified copies of resolutions of Buyer's Board of
Directors authorizing the execution of this Agreement and
the consummation of the transactions contemplated herein;
10.2.2 The cash portion of the balance of the Purchase Price and
such other payments provided for herein;
10.2.3 The Note;
10.2.4 Written evidence reasonably satisfactory to Seller that
the scheduled repayment of the mezzanine debt (the
"Mezzanine Debt") of Hudson and Hudson Properties to
Nomura Asset Capital Corporation ("Nomura") does not
provide for the payment of principal, in whole or in
part, prior to the repayment of the principal amount of
the Note.
10.2.5 Assignment and Assumption of Contracts;
10.2.6 Checks to the order of the appropriate officers in
payment of all applicable real and personal property
transfer tax and copies of any required tax returns
executed therefor by Buyer;
10.2.7 An opinion of Buyer's counsel dated as of the Closing
Date, stating (a) Buyer's corporate existence and good
standing are as stated in Section 19 hereof; (b) except
as may be specified by such counsel, they do not know or
have any reasonable grounds to know of any litigation,
proceeding, suit, action, controversy or claim existing,
pending or threatened against Buyer challenging the
validity of this Agreement; (c) the instruments executed
and
<PAGE>
delivered by Buyer to Seller have been duly authorized,
executed and delivered and are valid and enforceable in
accordance with their terms, (subject only to bankruptcy,
creditors rights and general principles of equity); and
(d) such other opinions reasonably requested by Seller
which are customarily required by institutional lenders
in loan transactions such as that which is contemplated
by this Agreement and the Note.
10.2.8 Such other documents and instruments as are required by
this Agreement from the Buyer.
10.3 At Closing, Hudson shall execute and deliver or cause to be
executed and delivered to Seller:
10.3.1 Certified copies of resolutions of Hudson's Board of
Directors authorizing the execution of this Agreement and
the consummation of the transactions contemplated herein;
10.3.2 Its Guaranty of the Note;
10.3.3 The Pledge Agreement;
10.3.4 An opinion of Hudson's counsel that the Guaranty, and the
Pledge Agreement have been duly authorized, executed and
delivered by Hudson and are the valid and binding
obligation of Hudson enforceable in accordance with their
terms (subject only to bankruptcy, creditors rights and
general equitable principles) and such other opinions
reasonably requested by Seller which are customarily
required by institutional lenders in loan transactions
such as that which is contemplated by this Agreement and
the Note including, without limitation, opinions
substantially setting forth each of the representations
contained in Section 3 of the Pledge Agreement (other
then those contained in paragraph (K) thereof), provided
that such opinion of counsel may be appropriately
qualified as to knowledge with respect to certain of such
representations and may expressly state its reliance upon
a certificate of Hudson and Hudson Properties to counsel
setting forth the underlying factual basis for such
opinions.
10.3.5 Its covenant and agreement not to make any voluntary
prepayment, in whole or in part, of the Mezzanine Debt or
to amend the documentation with respect to the Mezzanine
Debt which would require the scheduled payment, in whole
or in part, of the principal amount of such Debt prior to
the payment in full of the principal balance of the Note.
10.3.6 Such other documents and instruments as are required by
this Agreement to effectuate the sale of property similar
to the Purchased Assets.
10.4 At Closing, Hudson Properties shall execute and deliver or cause to
be executed and delivered to Seller:
10.4.1 Certified copies of resolutions of Hudson Properties
Board of Directors authorizing the execution of this
Agreement and the consummation of the transactions
contemplated herein;
<PAGE>
10.4.2 Its Guaranty of the Note;
10.4.3 The Pledge and Irrevocable Proxy Security Agreement; and
10.4.4 An opinion of Hudson Properties' counsel as to the due
authorization, issuance and non-assessibility of the
pledged Shares and that the Guaranty and the Pledge and
Irrevocable Proxy Security Agreement have been duly
authorized, executed and delivered by Hudson Properties
and are the valid and binding obligations of Hudson
Properties enforceable in accordance with their
respective terms (subject only to bankruptcy, creditors'
rights and general equitable principles) and such other
opinions reasonably requested by Seller which are
customarily required by institutional lenders in loan
transactions such as that which is contemplated by this
Agreement and the Note including, without limitation,
opinions substantially setting forth each of the
representations contained in Section 3 of the Pledge
Agreement (other then those contained in paragraph (K)
thereof), provided that such opinion of counsel may be
appropriately qualified as to knowledge with respect to
certain of such representations and may expressly state
its reliance upon a certificate of Hudson and Hudson
Properties to counsel setting forth the underlying
factual basis for such opinions.
10.4.5 Its covenant and agreement not to make any voluntary
prepayment, in whole or in part, of the Mezzanine Debt or
to amend the documentation with respect to the Mezzanine
Debt which would require the scheduled payment, in whole
or in part, of the principal amount of such Debt prior to
the payment in full of the principal balance of the Note.
11. RISK OF LOSS.
The risk of material loss or damage to the Purchased Assets by fire or other
casualty or by taking by eminent domain, shall be assumed by Seller and, upon
the happening of such event, Buyer shall have the election of terminating this
Agreement with respect to the damaged property or properties and proceeding on
the remainder without further liability hereunder or of completing this purchase
and receiving the insurance monies collectible by Seller for such loss or damage
or the award for such taking by eminent domain; provided, however, that Buyer
shall not be entitled to elect to terminate this Agreement if the amount of the
loss or damage to the Purchased Assets is less than $500,000.00.
<PAGE>
12. TITLE TO PREMISES.
12.1. Conveyance of the Premises shall be made by special warranty deed
(or its equivalent), duly executed and acknowledged so as to convey
to Seller, Buyer good and marketable fee simple title to the
Premises free and clear of all liens and encumbrances except as
provided herein. Such title shall be marketable without exception
other than the usual printed form exceptions as would be set forth
on a policy of fee title insurance issued by a recognized title
insurance company licensed to do business in the state in which the
particular hotel property is located, and those exceptions agreed
to in Section 12.3.
12.2. Buyer shall at its cost prepare current instrument survey of each
hotel which is dated after the date hereof and certified to Seller,
Buyer and Buyer's lender, prepared and certified in accordance with
the ALTA/ACSM standards by a licensed land surveyor and provide a
copy to Seller.
12.3 Buyer shall accept title subject to the following conditions and
exceptions (the "Permitted Exceptions"):
12.3.1 any facts revealed by the redated and recertified
instrument survey, so long as such facts do not render
title unmarketable, disclose material encroachments upon
or over any boundary either by an abutting landowner or
an improvement on the Premises, disclose violations of
zoning ordinances or other applicable land use
restrictions, or indicate a condition which may interfere
with the use of the Premises as a hotel, which
determination must be made by Buyer by written notice
thereof to the Seller prior to the expiration of the
Feasibility Period;
12.3.2 encumbrances, restrictions and easements of record,
applicable municipal or other ordinances, laws, rules and
regulations, including, without limitation, all
buildings, zoning and planning rules, regulations and
ordinances, provided the same do not render title
unmarketable, or will not interfere with the intended use
of the Premises as a hotel, which determination must be
made by Buyer by written notice thereof to the Seller
prior to the expiration of the Feasibility Period;
12.3.3 liens of unpaid real estate taxes not yet due;
12.3.4 Such other matters not objected to by the Buyer by
written notice thereof to the Seller prior to the
expiration of the Feasibility Period.
12.4 During the Feasibility Period, in the event Buyer learns of the
existence of a title defect which would render title unmarketable
(other than those which it agrees hereby to accept), Buyer shall
promptly notify Seller with all information Buyer has about the
<PAGE>
same. In such event, Seller shall, within two (2) business days
following its receipt of such notice from Buyer, give notice to
Buyer as to which of such defects it deems to be material. Buyer
may, within two (2) business days following its receipt of Seller's
notice (regardless of whether the Feasibility Period has expired or
not), elect to terminate this Contract by giving written notice
thereof to Seller. If Buyer does not terminate this Contract
within such two (2) day period, (a) Seller shall use its reasonable
efforts to cure or correct, at or prior to Closing, (i) all title
defects which it has identified in its notice to Buyer as being
material, and (ii) any other such defects which Seller agrees in
writing to undertake to cure or correct, and (b) Seller shall, at
or prior to Closing, cure or correct all title defects which were
created between the date of Seller's acquisition of the premises
and the Closing (whether or not the same have been identified by
Buyer in its notice to Seller). With respect to all remaining
title defects, Seller shall, at no material expense to it,
cooperate with Buyer in undertaking any efforts to cure or correct
the same. If Seller is unable to cure or correct to Buyer's
reasonable satisfaction any title defect it is required by the
terms hereof to use reasonable efforts to cure or correct or is
required by the terms hereof to cure or correct, Seller shall
undertake to obtain at its expense for any additional premium
required to insure over such specific defect (Buyer remaining
liable for the basic premium) a policy of title insurance by a
recognized title insurance company licensed to do business in the
state in which the Premises is located and acceptable to Buyer
which shall insure the title to the Premises without exception
other than the Permitted Exceptions. Should Seller fail to obtain
such title insurance, Buyer may terminate this Agreement by giving
Seller written notice thereof, such termination to become effective
upon the giving of such notice, and neither party shall be
responsible for damages to the other hereunder.
13. PERSONAL PROPERTY AND INVENTORY.
13.1. Buyer shall obtain state and local UCC searches to the Closing Date
against Seller, Seller's Seller and Seller's Tenant with respect to
Purchased Assets. Buyer shall promptly notify Seller of any
financing statements found to be filed with respect to the
Purchased Assets, together with a copy of such report, and Seller
shall undertake to obtain releases or payoff letters of them unless
subject to capital leases to be assumed by Buyer hereunder.
13.2. At a mutually convenient time or times during the Feasibility
Period, a representative of Buyer and Seller's Tenant may inspect
and inventory all items of Personal Property and Inventory. A
representative of Seller and Seller's Tenant may be present during
the inspection and inventory.
13.3 With respect to any item of Personal Property or Inventory for
which Seller cannot obtain releases as provided in Section 13.1
Buyer may elect not to purchase the item, but the Purchase Price
shall not be adjusted accordingly.
13.4 The Personal Property and Inventory shall be sold and purchased in
"as is" condition, and Seller makes no representations whatsoever,
express or implied, in relation to same.
13.5 With respect to all items of Personal Property which are subject of
warranties, guaranties or service agreements, Seller shall assign
all of its rights under the same to Buyer to the extent possible,
and will cooperate with Buyer in the enforcement of the same.
<PAGE>
14 INDEMNITY AGAINST CREDITORS' CLAIMS.
The parties agree to waive the requirements of the bulk transfer provisions of
the applicable Uniform Commercial Code or other applicable law, statue or rule.
Seller will indemnify Buyer and hold it harmless against all claims made by
creditors of Seller, including, but not limited to, reasonable attorneys' fees
and costs of defending such claims. Seller warrants that there are no
liabilities of any nature (accrued, absolute, contingent or otherwise), liens,
encumbrances or security interests on any of the Purchased Assets except as
expressly provided herein.
15 CONTRACTS.
On the Closing Date, Seller shall cause Seller's Tenant to assign to Buyer and
Buyer shall assume the Contracts, all of which Buyer shall have an opportunity
to review before the Closing Date. Seller shall cause Seller's Tenant to
perform all Contracts, insofar as they are required by their terms to be
performed by Seller before the Closing Date and shall indemnify Buyer against
any liability or expense arising out of any breach or default occurring before
the Closing Date. Buyer shall indemnify Seller and Seller's Tenant against any
liability or expense arising out of any breach of such Contracts occurring after
the Closing Date. Buyer shall assume no liability for any contract made by
Seller which is not listed in Schedule B. In addition, and not by way of
limitation of the foregoing disclaimer, Buyer shall assume no liability for any
employee, employed by Seller or Seller's Tenant or at the Premises, and
regardless of whether the employment of such employee was pursuant to written
agreement or otherwise. Further, Seller shall terminate as of Closing the lease
with Seller's Tenant relating to each hotel property.
16 POSSESSION.
Possession of the Purchased Assets as described herein shall be delivered by
Seller to Buyer at Closing subject to the Permitted Exceptions.
17 WARRANTIES AND REPRESENTATIONS OF SELLER.
Seller represents and warrants to Buyer as follows:
17.1 Seller is a limited partnership duly organized, validly existing
and in good standing under the laws of the State of Tennessee and
has qualified to do business and is in good standing in each state
where a hotel property is located, and has full power and authority
to carry on its current business and to own, use and sell its
assets and properties.
17.2 Seller has full power and authority and all necessary approvals to
enter into this Agreement. The execution and delivery of this
Agreement and the transactions contemplated hereby do not and will
not violate any provision of any agreement, document, or instrument
to which Seller is a party or by which Seller is bound, except as
otherwise noted in this Agreement. Seller has made no other
agreements with any other party with respect to the Purchased
Assets which would adversely affect the transactions contemplated
hereby.
17.3 There is as of the date hereof no litigation, proceeding, suit,
action, controversy, or claim existing, pending, or, to the best of
Seller's knowledge, threatened against Seller which might
materially, adversely affect the transfer of the Purchased Assets
to Buyer. At Closing, Seller will have complied with all laws,
regulations, and ordinances applicable to the transfer of the
Purchased Assets. There are at the date hereof and at Closing
there will be no judgments existing, whether or not filed, against
Seller or Seller's Tenant which might affect the Purchased Assets,
except as herein set forth.
<PAGE>
17.4 Seller has received no written notices of any violations of any
laws, ordinances, regulations, rules or orders issued by any
federal, state, or local governmental authority adversely affecting
the Premises, except as noted in this Agreement.
17.5 To Seller's knowledge, there are no options to purchase, rights of
first refusal or other similar agreements with respect to the
Premises which give anyone the right to purchase the Premises or
any part thereof. Neither Seller nor to the knowledge of Seller,
Seller's Tenant is a party to any contracts, leases, or agreements,
written or oral, including without limitation sales representation
contracts, purchase contracts or restrictive agreements which
prohibit the consummation of this Agreement, except as reflected in
the preliminary title report and Schedule C attached hereto.
17.6 There are as of the date hereof no taxes outstanding against the
Purchased Assets, other than those for which adjustment in the
Purchase Price are to be made. For purposes of this paragraph,
taxes shall include any and all business-related taxes, including,
but not limited to, sales tax, employee income tax and F.I.C.A.
withholding, employment taxes, and business or license fees.
17.7 Seller is not a foreign entity, foreign corporation, foreign
partnership, foreign trust or foreign estate (as those terms are
defined in the Internal Revenue Code and Income Tax regulations).
17.8 To Seller's knowledge, Seller has filed all federal, estate, county
and local tax returns required to be filed by Seller and has paid
all taxes, interest and penalties that have become due and payable
by Seller. To Seller's knowledge, there is no tax deficiency or
penalty owing with respect to Seller.
17.9 The Seller has no knowledge of, nor has it received any written
notice of, any special taxes or assessments relating to any hotel
property or any part thereof or any planned public improvements
that may result in a special tax or assessment against any hotel
property which is not of public record.
17.10 Each hotel property contains, as of the Closing Date, not less
than:
17.10.1 A sufficient amount of furniture, furnishings, color
television sets, carpets, drapes, rugs, floor coverings,
mattresses, pillows, bedspreads and the like, to furnish
each guest room, so that each such guest room is, in
fact, fully furnished in accordance with current
Franchisor standards at the time of Seller's purchase;
and
17.10.2 A sufficient amount of towels, washcloths and bed linens,
together with a sufficient supply of paper goods, soaps,
cleaning supplies and other such supplies and materials,
as are reasonably adequate for the current operations of
the Hotel in accordance with current Franchisor standards
at the time of Seller's purchase.
17.11 The Seller has not received written notice that any Contract is in
default.
18. WARRANTIES AND REPRESENTATIONS OF BUYER.
Hudson hereby represents and warrants to Seller as follows:
<PAGE>
18.1 Prior to the expiration of the Feasibility Period, Buyer will be a
corporation duly organized, validly existing and in good standing
under the laws of the State of New York and have full power and
authority to carry on its current business and to own, use and sell
its assets and properties.
18.2 Prior to the expiration of the Feasibility Period, Buyer will have
full power and authority and all necessary approvals to enter into
this Agreement. Execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will have been
duly authorized by Buyer's Board of Directors prior to expiration
of the Feasibility Period. The execution and delivery of this
Agreement and the transactions contemplated hereby do not and will
not violate any provision of any agreement, document, or instrument
to which Buyer is a party or by which Buyer is bound, except as
otherwise noted in this Agreement. Buyer has made no other
agreements with any other party with respect to the Purchased
Assets which would adversely affect the transactions contemplated
hereby.
18.3 There is as of the date hereof no litigation, proceeding, suit,
action, controversy, or claim existing, pending, or, to the best of
Buyer's knowledge, threatened against Buyer which might affect the
Purchased Assets or the transfer thereof to Buyer, and there is no
basis known to Buyer for any such litigation, proceeding, suit,
action, controversy, or claim. At Closing, Buyer will have
complied with all laws, regulations, and ordinances applicable to
the transfer of Purchased Assets. There are at the date hereof and
at Closing there will be no judgments or liens existing, whether or
not filed, against Buyer which might affect the Purchased Assets,
except as herein set forth.
18.4 Buyer is not a foreign entity, foreign corporation, foreign
partnership, foreign trust or foreign estate (as those terms are
defined in the Internal Revenue Code and Income Tax regulations).
18.5 The representations and warranties made by Buyer in this Agreement
shall be true and correct in all material respects on and as of the
Closing Date, with the same force and effect as though they had
been made on and as of the Closing Date, except to the extent that
such representations and warranties shall be incorrect because of
events or changes (not materially and adversely affecting the
Purchased Assets) occurring or arising after the date hereof.
19. WARRANTIES AND REPRESENTATIONS OF HUDSON
Hudson hereby represents and warrants to Seller as follows:
19.1 Hudson is a corporation duly organized, validly existing and in
good standing under the laws of the State of New York and has full
power and authority to carry on its current business and to own,
use and sell its assets and properties.
19.2 Hudson has full power and authority and all necessary approvals to
enter into this Agreement. Execution and delivery of this
Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by Hudson's Board of Directors.
The execution and delivery of this Agreement and the transactions
contemplated hereby do not and will not violate any provision of
any agreement, document, or instrument to which Hudson is a party
or by which Hudson is bound,
<PAGE>
except as otherwise noted in this Agreement. Hudson has made no
other agreements with any other party with respect to the Purchased
Assets which would adversely affect the transactions contemplated
hereby.
19.3 There is as of the date hereof no litigation, proceeding, suit,
action, controversy, or claim existing, pending, or, to the best of
Hudson's knowledge, threatened against Hudson which might affect
the Purchased Assets or the transfer thereof to Hudson, and there
is no basis known to Hudson for any such litigation, proceeding,
suit, action, controversy, or claim. At Closing, Hudson will have
complied with all laws, regulations, and ordinances applicable to
the transfer of Purchased Assets. There are at the date hereof and
at Closing there will be no judgments or liens existing, whether or
not filed, against Hudson which might affect the Purchased Assets,
except as herein set forth.
19.4 Hudson is not a foreign entity, foreign corporation, foreign
partnership, foreign trust or foreign estate (as those terms are
defined in the Internal Revenue Code and Income Tax regulations).
19.5 The representations and warranties made by Hudson in this Agreement
shall be true and correct in all material respects on and as of the
Closing Date, with the same force and effect as though they had
been made on and as of the Closing Date, except to the extent that
such representations and warranties shall be incorrect because of
events or changes (not materially and adversely affecting the
Purchased Assets) occurring or arising after the date hereof.
20. WARRANTIES AND REPRESENTATIONS OF HUDSON PROPERTIES
Hudson Properties hereby represents and warrants to Seller as follows:
20.1 Hudson Properties is a corporation duly organized, validly existing
and in good standing under the laws of the State of New York and
has full power and authority to carry on its current business and
to own, use and sell its assets and properties.
20.2 Hudson Properties has full power and authority and all necessary
approvals to enter into this Agreement. Execution and delivery of
this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by Hudson Properties'
Board of Directors. The execution and delivery of this Agreement
and the transactions contemplated hereby do not and will not
violate any provision of any agreement, document, or instrument to
which Hudson Properties is a party or by which Hudson Properties is
bound, except as otherwise noted in this Agreement. Hudson
Properties has made no other agreements with any other party with
respect to the Purchased Assets which would adversely affect the
transactions contemplated hereby.
20.3 There is as of the date hereof no litigation, proceeding, suit,
action, controversy, or claim existing, pending, or, to the best of
Hudson Properties' knowledge, threatened against Hudson Properties
which might affect the Purchased Assets or the transfer thereof to
Hudson Properties, and there is no basis known to Hudson Properties
for any such litigation, proceeding, suit, action, controversy, or
claim. At Closing, Hudson Properties will have complied with all
laws, regulations, and ordinances applicable to the transfer of
Purchased Assets. There are at the date hereof and at Closing
there will be no judgments
<PAGE>
or liens existing, whether or not filed, against Hudson Properties
which might affect the Purchased Assets, except as herein set
forth.
20.4 Hudson Properties is not a foreign entity, foreign corporation,
foreign partnership, foreign trust or foreign estate (as those
terms are defined in the Internal Revenue Code and Income Tax
regulations).
20.5 The representations and warranties made by Hudson Properties in
this Agreement shall be true and correct in all material respects
on and as of the Closing Date, with the same force and effect as
though they had been made on and as of the Closing Date, except to
the extent that such representations and warranties shall be
incorrect because of events or changes (not materially and
adversely affecting the Purchased Assets) occurring or arising
after the date hereof.
<PAGE>
21. BROKERAGE.
The parties hereto agree that any broker's commission payable to any agent,
broker or realtor as a result of the Contract shall be paid by Seller, and
Seller agrees to hold Purchaser harmless from any claim or cost for such a
commission. Purchaser covenants that it has had no dealings in this transaction
with any agent, realtor, or broker other than Hotel Partners.
22. TERMINATION.
This Agreement may be terminated for the following reasons only:
22.1 Mutual written consent of Buyer and Seller.
22.2 At the sole discretion of Buyer for any reason prior to the
expiration of the Feasibility Period.
22.3 Valid objection to marketability of title to the Premises made by
written notice thereof from the Buyer to the Seller prior to the
expiration of the Feasibility Period and not cured by satisfactory
title insurance or otherwise, as provided in Section 12.4 hereof.
22.4 If any material representation or warranty contained herein shall
be untrue, so as to materially and adversely affect this Agreement,
then the party to whom such representation or warranty has run may
elect either to terminate this Agreement or waive in writing such
breach.
22.5 Failure to satisfy the conditions or contingencies set forth
herein.
22.6 Default by either party in the performance of any material term or
condition of this Agreement to be performed by that party.
23. TAX STATUS.
It is understood that neither of the parties hereto has made any representations
to the others as to the tax status or effect of the transactions contemplated by
this Agreement, and each is taking separate counsel as to such matters.
24. LIMITATIONS AND SURVIVAL OF REPRESENTATIONS.
The Buyer and Hudson each acknowledges that it has or will conduct its own due
diligence with respect to the Purchased Assets, and, except as otherwise
expressly provided herein, shall accept the Purchased Assets "as is, where is"
and in its present condition, subject to reasonable use, wear, tear and natural
deterioration between date hereof and the date of closing, without any reduction
in the purchase price for any change in such condition. Except as expressly
provided in this Agreement, neither Seller nor Seller's Tenant has made and does
not make any representations or warranties, either express or implied, with
respect to the Seller, Seller's Tenant or the Purchased Assets, including,
without limitation, the financial performance of the Purchased Assets, the
operations of the Purchased Assets, the physical condition, fitness for a
particular purpose or merchantability of any of the Purchased Assets, the status
of title and survey with respect to the Purchased Assets, or the compliance of
the Seller or Seller's Tenant or the Purchased Assets with any law, ordinance or
regulation, including, without limitation, those related to the environment,
zoning, land use, subdivision laws, handicap access or building codes. In
entering into this Agreement, Buyer nor Hudson has not been induced by and has
not relied upon any representations, warranties or statements, whether express
or implied, made by any third party, including, without limitation, the Seller,
the broker or their agents, employees or other representatives of the Seller,
Seller's Tenant or by any broker or any other person representing or purporting
to represent the Seller or Seller's Tenant, which are not expressly set forth
herein.
<PAGE>
The representations, warranties, covenants, and agreements herein contained on
the part of each of the parties shall be deemed and construed to be continuing
representations, warranties, covenants, and agreements that shall survive the
Closing for the period of one (1) year after Closing. Seller and Buyer each
agree respectively to indemnify and hold harmless the other against and with
respect to all damages, deficiencies or liabilities resulting from any
misrepresentations, breach of warranty or nonfulfillment of any covenant or
agreement on the part of each respective party hereunder, or from any
misrepresentation in or occasioned by any certificate or other instrument
furnished or to be furnished by each of them, respectively, hereunder, and any
and all assessments, judgments, costs and legal and other reasonable expenses
incidental to any of the foregoing.
25. COVENANT OF FURTHER ASSURANCES.
From time to time, before and for the period of six (6) months after Closing,
Seller will execute and deliver such further instruments of conveyance and
transfer reasonably requested and take such other action as Buyer reasonably may
require to more effectively convey and transfer to Buyer any of the Purchased
Assets and otherwise fulfill its agreements hereunder, and will assist Buyer in
its reduction to possession of the Purchased Assets. From time to time before
and for a period of six (6) months after Closing, Buyer, Hudson Properties and
Hudson will execute and deliver such further instruments and take such other
actions as Seller reasonably may require with respect to this Agreement, the
Note, the Guaranty and the Security Agreement.
26. SALES TAX.
Any sales tax payable in connection with the transfer of the Personal Property
shall be borne by Buyer.
27. EXPENSES.
27.1 Except as otherwise specifically provided herein, each party shall
pay its own expenses in connection with this Agreement and the
consummation of the transactions contemplated herein. In
particular, Buyer shall pay all transfer taxes, conveyance fees,
documentary stamps and other similar taxes and charges imposed by
any governmental authority in connection with the conveyance of the
Premises to Buyer regardless of customary practice in each
jurisdiction. Buyer shall pay any recording fees relating to the
deeds and other instruments of conveyance and any mortgage or deed
of trust recording taxes or fees in connection with the financing
obtained by Buyer.
27.2 Unless Seller is required to obtain title insurance because of the
existence of a title defect which would render title to the
Premises unmarketable as provided in Section 12.4 hereof, and
except to the extent of such title insurance obtained by Seller,
Buyer shall pay the premiums for fee or mortgagee title insurance
with respect to the Premises.
28. MISCELLANEOUS.
28.1 This Agreement shall be binding upon and inure to the benefit of
the respective heirs, personal representatives, fiduciaries and
successors of Seller and Buyer.
28.2 This Agreement may not be assigned by either party without the
prior written consent of the other party.
28.3 Any and all notices or communications required or desired to be
given in connection with this Agreement shall be in writing, sent
by registered or certified mail, postage prepaid, return receipt
requested, or by overnight courier to the parties at the address
set forth above or to such other address as either party may from
time to time designate in writing to the other party, and shall be
effective upon receipt.
<PAGE>
28.4 This Agreement shall be construed and enforced in accordance with
the laws of the state where the applicable hotel property is
located, but the Note, the Pledge Agreement and the Escrow
Agreement shall be governed by New York law;
28.5 A waiver by either party of a breach of any provision of this
Agreement shall not operate as or be construed as a waiver of any
other subsequent breach thereof or of any other provision.
28.6 This Agreement and the Schedules and Exhibits hereto annexed
represent the entire agreement between the parties hereto with
respect to the transactions contemplated hereby and may be modified
only by a subsequent written document executed by the party to be
charged therewith.
28.7 The headings of the paragraphs of this Agreement are inserted for
convenience only and do not constitute a part of this Agreement.
28.8 This Agreement may be signed in counterparts, each of which shall
be deemed to be an original and all of which together shall
constitute one and the same instrument.
28.9 Seller and Buyer agree to structure the transactions contemplated
by this Agreement as a tax-deferred exchange of real estate by
Seller, and Buyer agrees to execute and deliver any documents
reasonably requested by Seller to effectuate such exchange.
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the day
and year first written above.
BUYER:
HUDSON HOTELS CORPORATION
as agent for a New York Corporation to
be formed
Date: 8-12-97 By: /s/ E. Anthony Wilson
--------------- --------------------------------
Name: E. Anthony Wilson
-----------------------------
Title: Pres-CEO
------------------------------
HUDSON HOTELS PROPERTIES CORP.
as agent for a New York corporation to
be formed
By: /s/ Bruce A. Sahs
--------------------------------
Name: Bruce A. Sahs
-----------------------------
Title: Pres
------------------------------
SELLER:
EQUITY INNS PARTNERSHIP, L.P.
Date: 8-12-97 By: EQUITY INNS TRUST,
--------------- General Partner
By: /s/ Ronald Cooper
--------------------------------
Name: Ronald Cooper
-----------------------------
Title: Asst. Secretary
------------------------------
HUDSON:
HUDSON HOTELS CORPORATION
Date: 8-12-97 By: /s/ E. Anthony Wilson
--------------- --------------------------------
Name: E. Anthony Wilson
-----------------------------
Title: Pres-CEO
------------------------------
HUDSON HOTELS
PROPERTIES CORP.
Date: By: /s/ Bruce A. Sahs
--------------- --------------------------------
Name: Bruce A. Sahs
-----------------------------
Title: Pres
------------------------------
<PAGE>
Crossroads Future Company, L.L.C., Seller's Tenant, joins in the execution
hereof for the purpose of consenting to the provisions hereof relating to
Seller's Tenant and agreeing to reasonably cooperate with Seller and Buyer in
consummation of this Agreement and to execute and deliver the documents required
to be delivered by Seller's Tenant hereunder.
CROSSROADS FUTURE
COMPANY, L.L.C.
By: /s/ Timothy Q. Hudak
--------------------------------
Assistant Secretary
List of Schedules
- -----------------
A - Legal Descriptions
B - Schedule of Contracts
List of Exhibits
- ----------------
I - Note
II - [Reserved]
III - Bill of Sale (Personal Property)
IV - Bill of Sale (Inventory)
V - Assignment and Assumption of Contracts
<PAGE>
EXHIBIT 10.32
THIS PROMISSORY NOTE IS SUBJECT TO THE TERMS, COVENANTS AND CONDITIONS OF A
CERTAIN CONFIRMATION OF SUBORDINATION AGREEMENT OF EVEN OR NEAR DATE HEREWITH IN
FAVOR OF NOMURA ASSET CAPITAL CORPORATION (the "Subordination Agreement")
PROMISSORY NOTE
---------------
$3,884,052.23 New York, New York
Dated as of October 31, 1997
FOR VALUE RECEIVED, HUDSON HOTEL PROPERTIES CORP., a New York corporation
with offices at One Airport Way, Suite 200, Rochester, New York, 14624
("Borrower") promises to pay to the order of EQUITY INNS PARTNERSHIP, L.P., a
Tennessee limited partnership ("Lender"), at 4735 Spottswood, Suite 201,
Memphis, Tennessee or at such other place in the United States of America as may
be designated in writing by the holder of this note (this "Note"), the sum of
Three Million Eight Hundred Eighty Four Thousand Fifty Two and 23/100 Dollars
($3,884,052.23), together with Interest as hereinafter provided, until the said
principal sum shall be fully paid, and to be due and payable as hereinafter
provided.
1. DEFINITIONS. The following terms, as used in this Note, shall have
the following meanings, which shall be applicable equally to the singular and
the plural of the terms defined:
"BUSINESS DAY" shall mean any day other than a Saturday, a Sunday or a day
on which federally insured depository institutions in the State of New York are
authorized or obligated by law, governmental decree or executive order to be
closed.
"EVENT OF DEFAULT" shall mean (i) any failure of Borrower to pay any
amounts due and payable pursuant to this Note within five (5) Business Days
after the due date thereof, (ii) any default by Borrower under the Senior
Indebtedness (as hereinafter defined) which shall entitle Nomura Asset Capital
Corporation (together with its successors or assigns, "Senior Lender") to
accelerate all principal indebtedness evidenced by the Senior Indebtedness,
(iii) financial difficulties of Borrower or of Guarantor as evidenced by (x) the
filing of a voluntary or involuntary petition in bankruptcy or under any
chapters of the Bankruptcy Code or under any federal or state statute providing
for relief of debtors, (y) the making of an assignment for the benefit of
creditors or (z) the appointment of a receiver or trustee for all or a major
part of its property or (iv) default under the Security Agreement (as defined
herein).
"MATURITY DATE" shall mean October 31, 1999.
2. INTEREST.
(a) Interest at the rate of ten percent (10%) per annum on the unpaid
principal ("Interest") shall be due and payable in arrears on the first day of
each month following the date of this Note. Interest after an Event of Default
shall accrue at eighteen percent (18%) per year. Borrower shall pay Lender a
<PAGE>
late fee of five percent (5%) of any late payment. Interest accruing under this
Note shall be computed on the basis of a 365-day year for the actual number of
days elapsed.
(b) It is not intended hereby to charge interest at a rate in excess of
the maximum legal rate of interest permitted to be charged to Borrower under
applicable law, but if, notwithstanding the foregoing, interest in excess of
said maximum legal rate shall be paid hereunder, the excess shall be applied by
Lender to the payment of the unpaid principal due hereunder.
3. VOLUNTARY PREPAYMENT. Borrower shall have the right to prepay any
unpaid principal or other unpaid sums in connection herewith in whole or in part
without penalty or premium. Any such prepayment of unpaid principal shall be
accompanied by an amount equal to unpaid Interest to the date of such prepayment
on the amount of principal being so prepaid.
4. PRINCIPAL PAYMENTS.
(a) Borrower shall, unless sooner prepaid, pay the principal sum of
$2,500,000 on the date one year from the date hereof.
(b) The remaining balance of principal, plus accrued but unpaid interest,
shall be due on the Maturity Date.
5. GUARANTEE. The payment of principal, interest and any other sums
under this Note has been guaranteed by Hudson Hotels Corporation, a New York
corporation ("Guarantor") of which Borrower is a wholly-owned subsidiary.
6. SECURITY. Payment of the amounts due and to become due hereunder has
been secured by the pledge of 2,000,000 shares of common stock of Guarantor
pursuant to that certain Pledge Agreement of even date herewith (the "Security
Agreement") by Borrower and Guarantor in favor of Lender.
7. ACCELERATION. In the case of the occurrence of any Event of Default
under this Note, Lender may, upon giving written notice to Borrower, and in
addition to exercising any other available rights or remedies, accelerate all or
any part of the principal due hereunder, which shall therewith be immediately
due and payable by Borrower, together with Interest accrued to date at the rate
specified hereunder, together with all fees and other charges payable by
Borrower hereunder.
8. WAIVER.
(a) Borrower and any indorser, sureties and guarantor hereof or hereon
hereby waive presentment for payment, demand, protest, notice of non-payment or
dishonor and of protest, and agree to remain bound until the unpaid principal,
all accrued interest and all other sums payable hereunder are paid in full,
notwithstanding any extensions of time for payment which may be granted even
though the period of extension be indefinite, and notwithstanding any inaction
by, or failure to assert any legal right available to Lender.
(b) It is further expressly agreed that any waiver by Lender, other than a
waiver in writing signed by Lender, of any term or provision hereof or of any
right, remedy or option under this Note shall not be controlling, nor shall it
prevent or estop Lender from thereafter enforcing such term, provision, right,
remedy or option, and the failure or refusal of Lender to insist in any one or
more
<PAGE>
instances upon the strict performance of any of the terms or provisions of this
Note shall not be construed as a waiver or relinquishment for the future of any
such term or provision, but the same shall continue in full force and effect, it
being understood and agreed that Lender's rights, remedies and options under
this Note are and shall be cumulative and are in addition to all other rights,
remedies and options of Lender in law or in equity or under any other agreement.
9. COSTS OF COLLECTION. Borrower shall pay, when such costs are incurred
by Lender, all third party costs of collecting any amount which is not paid by
Borrower when due pursuant to the terms of this Note, including, without
limitation, the attorneys' fees and disbursements of Lender's counsel, which
costs may be added to the indebtedness evidenced by this Note and paid promptly
on demand.
10. SUBORDINATION. The term "Senior Indebtedness" shall mean: the
principal in an amount not to exceed $35,000,000, plus any premiums, unpaid
interest and any other sums, charges or amounts which are or may become due and
payable by Guarantor and/or Borrower to Senior Lender, whether outstanding on
the date of execution of this Note or thereafter created, incurred, assumed,
issued or guaranteed relating to such principal, which indebtedness is, among
other things, for all or part of the consideration for the acquisition of
certain hotels being transferred from Lender to HH Properties-II, Inc. on even
date herewith pursuant to that certain Hotel Asset Purchase Agreement dated July
12, 1997 and executed and delivered by E. Anthony Wilson on August 12, 1997,
among Borrower and Lender and any and all deferrals, renewals or extensions of
any such indebtedness or obligations.
This Note, including the principal hereof and Interest hereon, is
subordinate and junior in right of payment to the Senior Indebtedness, all as
more particularly set forth in the Subordination Agreement. Without limiting
anything set forth in the Subordination Agreement, in the case of any
bankruptcy, insolvency, receivership, conservatorship, reorganization, or
arrangement with, or assignment for the benefit of creditors, readjustment of
debt, marshaling of assets and liabilities or similar proceeding or any
liquidation or winding-up of, or relating to, Borrower, whether voluntary or
involuntary, all such Senior Indebtedness shall be entitled to be paid in full
before any payment shall be made on account of the principal, or Interest or
premium, if any, on this Note.
10. WAIVER OF TRIAL BY JURY. Borrower hereby irrevocably waives all right
to trial by jury in any action, proceeding or counterclaim arising out of or
relating to this Note.
11. MISCELLANEOUS.
(a) APPLICABLE LAW. Borrower agrees that this Note shall be governed by
and construed and enforced in accordance with the procedural and substantive
laws of the State of New York. Any legal action or proceeding with respect to
this Note may be brought in the courts of the State of New York within Monroe
County, or of the United States of America for the Western District of New York,
and, by execution and delivery of this Note, Borrower hereby accepts for itself
and in respect of its property, generally and unconditionally, the jurisdiction
of the aforesaid courts. Borrower further irrevocably consents to the service
of process out of any of the aforementioned courts in any such action or
proceeding by the delivery of copies thereof to Borrower to the address of
Borrower specified in the Preamble hereof. Nothing herein shall affect the
right of Lender to serve process in any other manner permitted by law or to
commence legal proceedings or otherwise proceed against Borrower in any other
jurisdiction.
<PAGE>
(b) AMENDMENT IN WRITING. No amendment or waiver of any provision of this
Note, nor consent to any departure by Borrower therefrom, shall in any event be
effective unless the same shall be in writing and signed by Lender and Borrower
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.
(c) PARTIAL INVALIDITY. In the event that any provision of this Note or
the application thereof to Borrower or any circumstance in any jurisdiction
governing this Note shall, to any extent, be invalid or unenforceable under any
applicable statute, regulation, or rule of law then such a provision shall be
deemed inoperative to the extent that it may conflict therewith and shall be
deemed modified to conform to such statute, regulation or rule of law, and the
remainder of this Note and the application of any such invalid or unenforceable
provision to parties, jurisdictions, or circumstances other than to whom or to
whom it is held invalid or unenforceable, shall not be affected thereby nor
shall the same affect the validity or enforceability of any other provision of
this Note.
(d) AUTHORITY. Borrower has executed this note with due and proper
authority to do so. This Note is valid and enforceable against Borrower and
evidences Borrower's lawful indebtedness to Lender.
IN WITNESS WHEREOF, Borrower has caused this Promissory Note to be executed
as of the date first above written.
ATTEST: HUDSON HOTELS PROPERTIES CORP.
/s/ Alan S. Lockwood By: /s/ Bruce A. Sahs
- ------------------------------ ----------------------------
Alan S. Lockwood, Secretary Bruce A. Sahs, President
<PAGE>
Exhibit 10.33
THIS GUARANTY AGREEMENT IS SUBJECT TO THE TERMS, COVENANTS AND CONDITIONS OF A
CERTAIN CONFIRMATION OF SUBORDINATION AGREEMENT OF EVEN OR NEAR DATE HEREWITH IN
FAVOR OF NOMURA ASSET CAPITAL CORPORATION.
GUARANTY AGREEMENT
THIS GUARANTY, dated as of October 31, 1997 by HUDSON HOTELS CORPORATION, a
New York corporation ("Hudson" or "Guarantor"), and EQUITY INNS PARTNERSHIP,
L.P., a Tennessee limited partnership ("Lender") recites and provides:
RECITALS.
HUDSON HOTELS PROPERTIES CORP., a New York corporation all of whose issued
and outstanding capital stock is wholly owned by Hudson ("Borrower"), has
simultaneously with the execution and delivery of this Agreement received a
$3,884,052.23 loan (the "Loan") from the Lender to finance the purchase by HH
Properties-II, Inc., a New York corporation all of whose issued and outstanding
capital stock is owned by the Borrower, from Lender of nine Hampton Inn Hotels
(collectively, the "Project"). The Loan is evidenced and secured by, among
other instruments and documents, (i) a note of even date herewith (the "Note"),
made by Borrower and payable to the order of Lender, (ii) a pledge agreement of
even date herewith (the "Pledge") whereby Borrower has pledged 2,000,000 newly
issued shares of the capital stock of Hudson. (The Note, the Pledge and all
other documents and instruments executed on behalf of Borrower or the Guarantor
in connection with the Loan are hereinafter collectively called the "Loan
Documents.")
Lender has agreed to make the Loan to Borrower on the condition, among
others, that Guarantor guarantee the payment of all amounts due, and the
performance of all obligations, under the Loan Documents. Because of the
benefits accruing to Guarantor by virtue of Lender making the Loan to Borrower,
Guarantor desire to guarantee such payment and performance, all on the following
terms and conditions.
GUARANTY.
For and in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Guarantor hereby represent, warrant and agree as follows:
ARTICLE I.
REPRESENTATIONS AND WARRANTIES OF GUARANTOR
To induce Lender to make the Loan, Guarantor makes the following
representations and warranties, upon each of which Lender, its successors,
assigns and participants are entitled to rely and have relied, notwithstanding
any investigation heretofore or hereafter made by Lender and such successors,
assigns and participants. All such representations and warranties are true and
complete in all respects and do not omit any material fact necessary to make
such representations and warranties not misleading.
Section 1.1. NO CONFLICTS, DEFAULTS. The execution and delivery of
this Guaranty and the performance by the Guarantor of their obligations
hereunder and the consummation of the transactions contemplated herein are
within the corporate powers of the Guarantor and will not conflict with or
constitute a breach of the Guarantor's articles of incorporation or
by-laws. Neither the execution, acknowledgment and delivery of, nor the
performance of their obligations under this Guaranty will conflict with or
violate, or constitute a default or require any consent or waiver under,
any provision of any mortgage, deed of trust, evidence of indebtedness,
order, decree or agreement to which Guarantor are a party or by which they
or any substantial part of their property is bound, which consent or waiver
has not been obtained.
<PAGE>
Section 1.2. ENFORCEABILITY. This Guaranty is a legal, valid and
binding instrument enforceable against Guarantor in accordance with its
terms.
Section 1.3. BORROWER'S REPRESENTATIONS AND WARRANTIES. Guarantor
have examined the representations and warranties made by Borrower in the
Loan Documents and, having complete access to the information necessary to
make such a determination, has determined that each of those
representations and warranties is true and complete and does not omit any
material fact necessary to make each such representation and warranty not
misleading. Guarantor have made their own independent investigation of the
financial condition and affairs of the Borrower prior to entering into this
Guaranty and will continue to make their appraisal of the creditworthiness
of the Borrower and in entering into this Guaranty they have not relied
upon any representation of the Lender as to the financial condition,
operation or creditworthiness of the Borrower. Guarantor agree that the
Lender shall have no duty or responsibility now or hereafter to make any
investigation or appraisal of the Borrower on behalf of the Guarantor or to
provide the Guarantor with any credit or other information which may come
to Lender's attention.
Section 1.4. LITIGATION, VIOLATIONS OF LAW. Except as disclosed in
reports filed with the Securities and Exchange Commission ("SEC"), there
are no actions, suits or proceedings of a material nature pending or
overtly threatened against or affecting Guarantor, and no event has
occurred (including, without limitation, the execution, acknowledgment and
delivery of this Guaranty and the consummation of the transactions
contemplated hereby) which will violate, be in conflict with, result in the
breach of or constitute (with or without notice or the passage of time, or
both) a default under any judicial decision, statute, ruling, direction,
rule, regulation, permit, certificate or ordinance of any governmental
authority in any way applicable to Guarantor. Guarantor are not in default
with respect to any judgment, order, writ, injunction, decree or demand of
any court, arbitrator, administrative agency or other governmental or
quasi-governmental authority.
Section 1.5. FINANCIAL INFORMATION. All financial information
furnished to Lender by Guarantor is true and complete in all respects and
fully and accurately presents the financial condition of the subjects
thereof as of the dates thereof, and no material adverse change has
occurred in the financial conditions reflected therein since the dates
thereof. Guarantor agree to submit to Lender, promptly after each request
therefor, updated financial statements of Guarantor, which statements shall
be (a) compiled by an accountant who is reasonably satisfactory to Lender
and is a member of the American Institute of Certified Public Accountants
and (b) reasonably satisfactory to Lender in form and substance.
Section 1.6. [Intentionally Deleted.]
Section 1.7. INSOLVENCY MATTERS. No bankruptcy, reorganization,
arrangement, readjustment of debt, insolvency or other proceeding has been
commenced or threatened by or against Guarantor or consented to or
acquiesced in by Guarantor, and no judgment has been entered against
Guarantor which has not been satisfied or otherwise discharged.
Section 1.8. CORPORATE STATUS. Guarantor is a corporation duly
organized, validly existing, and in good standing under the laws of New
York, and by proper corporate action has duly authorized the execution and
delivery of this Guaranty and the performance of its obligations hereunder.
Section 1.9. NO DEFAULT. The Guarantor is not in default in the
payment of the principal of or interest on any of its indebtedness for
borrowed money and is not in default under any instrument under and
-2-
<PAGE>
subject to which any indebtedness has been incurred, and no event has
occurred and is continuing under the provisions of any such agreement which
with the lapse of time or the giving of notice, or both, would constitute
an event of default thereunder.
Section 1.10. DISCLOSURES. Neither this Guaranty nor any written
statements furnished by or on behalf of the Guarantor in connection with
the issuance of the Note contain any untrue statement of a material fact or
omit a material fact necessary to make the statements contained therein or
herein not misleading. There is no fact that the Guarantor has not
disclosed in writing to the Lender that materially affects adversely the
properties, business, prospects, profits or condition (financial or
otherwise) of Guarantor and its consolidated subsidiaries, if any, taken as
a whole, or the ability of such Guarantor to perform Guarantor's
obligations under this Guaranty.
ARTICLE II.
COVENANTS OF GUARANTOR
Section 2.1. DEFINITION OF "INDEBTEDNESS," "OBLIGATIONS".
(a) The term "Indebtedness" shall include all amounts due and to become due
from Borrower to Lender under the Loan Documents, whether such amounts are
direct or indirect, fixed or contingent, or liquidated or unliquidated
obligations of Borrower regardless how such amounts may be evidenced including,
without limitation, principal, interest, service, finance and other charges,
Lender's fees and other charges, costs of collection, attorneys' fees and
expenses, other expenses of Lender due it under the Loan Documents and amounts
advanced by Lender to discharge obligations of Borrower, whether such amounts
are from time to time reduced, thereafter increased or entirely extinguished and
thereafter reincurred and whether such amounts may accrue or become due under a
Loan Document that may, by its terms, provide for exculpation from personal
liability for such amounts to any party.
(b) The term "Obligations" shall mean all obligations, agreements,
covenants, conditions and liabilities of Borrower set forth in the Loan
Documents.
Section 2.2. GUARANTY OF PAYMENT AND PERFORMANCE. Guarantor hereby
unconditionally guarantees payment of all Indebtedness and performance of
all Obligations of Borrower to Lender under and in accordance with the
terms and conditions hereof. The obligations of the Guarantor under this
Guaranty are subordinate to indebtedness in a principal amount not to
exceed $35,000,000, plus interest, default interest, yield maintenance
and/or all costs and expenses, including, without limitation, attorneys
fees from Nomura Asset Capital Corporation (or its successor or assign) to
Guarantor.
Section 2.3. NATURE OF GUARANTY. This is a guaranty of payment and
not merely of collection.
Section 2.4. ENFORCEMENT OF GUARANTY IN FIRST INSTANCE. Lender may
collect the Indebtedness, or any part thereof, from Guarantor without first
exercising its rights against Borrower, any other guarantor or any
collateral that Lender may hold or have access to, and Guarantor hereby
waives any right to require Lender to attempt to collect the Indebtedness
or any part thereof from Borrower or any other guarantor or to attempt to
realize upon any collateral that Lender may hold or have access to before
enforcing the obligations of Guarantor hereunder.
-3-
<PAGE>
Section 2.5. LENDER'S ELECTION TO PERFORM OBLIGATIONS. After a
default by Borrower in the performance of one or more of the Obligations
and the expiration of any notice and cure period expressly provided for in
the Loan Documents, Lender, at its option, may elect to perform or cause to
be performed any or all of the Obligations without first exercising its
rights against Borrower, any other guarantor or any collateral that Lender
may hold or have access to, and Guarantor hereby waives any right to
require Lender to attempt to collect the Indebtedness or any part thereof
from Borrower or any other guarantor or to attempt to realize upon any
collateral that Lender may hold or have access to before performing or
causing the performance of any of the Obligations or enforcing the
obligations of Guarantor hereunder.
Section 2.6. NO SUBROGATION OR CONTRIBUTION. Until all of the
Indebtedness has been paid in full and all of the Obligations have been
duly and punctually performed to the satisfaction of Lender, Guarantor
shall not be subrogated to any right of Lender against the Borrower, any
other guarantor or any collateral, and any moneys, property or other
consideration received at any time by Guarantor from Borrower prior to
payment in full of the Indebtedness and prior to the performance by
Borrower of all of the Obligations shall be held in trust for Lender and
shall be paid or transferred to Lender upon demand therefor. Guarantor
agrees that they will not assert any right of contribution against any
other Guarantor of the Indebtedness, whether the obligations of such other
Guarantor are evidenced by this Guaranty or other agreement, until such
time as all of the Indebtedness has been paid in full to the Lender and all
of the Obligations have been performed.
Section 2.7. WAIVER OF DEFENSES. Guarantor hereby: (a) waives
notice of acceptance of this Guaranty; (b) waives presentment, demand,
notice of dishonor, protest and notice of protest; (c) agrees that the
Indebtedness or any part thereof may be renewed, extended, accelerated,
modified or compromised and the Obligations may be modified or delegated
and that any collateral or other security held for the payment of the
Indebtedness or the performance of the Obligations may be released,
exchanged, sold, applied or otherwise dealt with by Lender without notice
to the Guarantor and without thereby releasing the Guarantor from any
obligation under this Guaranty; (d) waives notice of the financial
condition or other status of Borrower and any other party obligated for the
payment of the Indebtedness or the performance of the Obligations; and (e)
waives the benefit of the homestead exemption as to its obligations set
forth herein. This Guaranty is intended to be a full, complete and perfect
guaranty and indemnity to the Lender to the extent of and for any
Indebtedness and to be valid and enforceable without other or further
notice to the Guarantor. The liability of the Guarantor is absolute and
unconditional and is not conditioned or contingent upon any other party
signing this Guaranty or the obtaining of any security upon any of the
Indebtedness or the obtaining of the guaranty of any other party upon any
of the Indebtedness or any other matter.
Section 2.8. RELEASES. Lender shall have the right to waive its
rights against and to release any guarantor or other person or entity that
is liable for payment of the Indebtedness or performance of the Obligations
without affecting (a) the enforceability of this Guaranty against the
Guarantor or (b) any other right or remedy that Lender may have against
Guarantor.
Section 2.9. COSTS AND EXPENSES. Guarantor hereby agrees to pay to
Lender all costs and expenses, including court costs and reasonable
attorneys' fees and expenses, incurred by Lender in seeking advice with
regard to, or in seeking to enforce, any of the obligations of Guarantor
hereunder.
Section 2.10. BANKRUPTCY. In the event that any part of the
Indebtedness is collected by Lender and because of bankruptcy or other laws
relating to debtors' relief Lender is required to repay all or any
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portion of the amount so collected to Borrower or to any trustee, receiver
or otherwise, then the amount or amounts so repaid shall become part of the
Indebtedness.
Section 2.11. MAINTENANCE OF EXISTENCE. The Guarantor shall maintain
its corporate existence and shall not, without the prior consent of the
Lender, voluntarily reduce its net worth below its net worth as shown on
the last annual financial report of the Guarantor issued prior to the date
of the Note, or dissolve or otherwise dispose of all or substantially all
of its business and assets, or consolidate with or merge into another
corporation or permit one or more other corporations to consolidate with or
merge into it.
Section 2.12. RESTRICTED PAYMENTS. At any time while an "Event of
Default" (as defined in the Note) shall have occurred and be continuing,
the Guarantor shall not (a) pay or declare, or set aside any sum for the
payment of, any dividends or make any other distribution (except dividends
payable in shares of its common stock) upon any shares of its capital stock
of any class or (b) purchase, redeem or otherwise acquire for value, or set
aside any sum therefor, or permit any subsidiary to purchase or acquire for
value, or set aside any sum therefor, any shares of its capital stock of
any class.
Section 2.13. INSOLVENCY. The Guarantor agrees that in the event of
(i) dissolution or insolvency of the Borrower; (ii) the inability of the
Borrower to pay debts as they mature; (iii) an assignment by the Borrower
or the Guarantor for the benefit of creditors; (iv) the institution of any
proceeding by or against the Borrower or the Guarantor in bankruptcy or a
reorganization or an arrangement with creditors; or (v) the appointment of
a receiver, trustee or custodian for the Borrower or any of its property or
for the Guarantor or any of its property, and if any such event shall occur
at a time when any of the Indebtedness may not then be due and payable, all
indebtedness shall, for the purpose of this Guaranty, be deemed, at the
Lender's election, to have become immediately due and payable.
Section 2.14. APPLICATION OF PROCEEDS. All payments, whether
voluntary or involuntary, received from the Borrower or on account of the
Indebtedness from any other source, including income from and amounts
realized on security and appropriated bank balances, may be applied by the
Lender toward the payment of the Indebtedness and in such order of
application as the Lender may from time to time elect. All payments shall
be conclusively presumed to have been made by the Borrower and no payments
shall operate to reduce the liability of the Guarantor hereunder, unless at
the time such payments are made, express written notice is served upon the
Lender that such payments are made by the Guarantor in reduction of the
liability hereunder.
ARTICLE III.
MISCELLANEOUS PROVISIONS
Section 3.1. GOVERNING LAW. This Guaranty, the rights of Lender and
the obligations of Guarantor shall be governed by and construed in
accordance with the laws of the State of New York (excluding, however,
those dealing with conflicts of law) except to the extent that such laws
are preempted by United States federal law, in which case such federal law
shall govern.
Section 3.2. SUCCESSORS AND ASSIGNS. The representations,
warranties, covenants and conditions set forth herein shall be binding upon
the heirs, executors, administrators, representatives,
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successors and assigns of Guarantor and shall inure to the benefit of
Lender, its successors, assigns, endorsees, transferees and participants.
Section 3.3. NOTICES. All notices, requests, demands and other
communications with respect hereto shall be in writing and shall be
delivered by hand, sent prepaid by Federal Express (or a comparable
overnight delivery service) or sent by United States mail, certified,
postage prepaid, return receipt requested, at the following addresses:
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If to Lender, to -
Equity Inns Partnership, L.P.
4735 Spottswood, Suite 102
Memphis, Tennessee 38117
Attn: Mr. Phillip H. McNeill, Sr.
With a copy to -
Hunton & Williams
1751 Pinnacle Drive, Suite 1700
McLean, Virginia 22102
Attn: Gerald R. Best, Esquire
If to Guarantor, to -
Hudson Hotels Corporation
One Airport Way, Suite 200
Rochester, New York 14624
Attn: Mr. E. Anthony Wilson
Any notice, request, demand or other communication delivered or sent in the
manner aforesaid shall be deemed given or made, as the case may be, upon the
earlier of the date it is actually received or (a) on the business day after the
day on which it is delivered by hand, (b) on the business day after the day on
which it is properly delivered to Federal Express (or a comparable overnight
delivery service) or (c) on the third business day after the day on which it is
deposited in the United States mail. Any addressee may change its address by
notifying the other addressees of the new address in any manner permitted by
this Section.
Section 3.4. CAPTIONS; GENDER; NUMBER. The captions hereof are for
convenience of reference only and shall neither limit nor enlarge the
provisions hereof. All pronouns used herein, whether used in the
masculine, feminine or neuter gender, shall include all other genders. The
singular shall include the plural and vice versa unless the context
requires otherwise.
Section 3.5. SEVERABILITY. If any provision of this Guaranty, or
the application thereof to any person or circumstance, shall to any extent
be invalid or unenforceable, the remainder of the provisions hereof, or the
application thereof to other persons or circumstances, shall not be
affected thereby, and each provision hereof shall be valid and enforceable
to the fullest extent permitted by law.
Section 3.6. AMENDMENTS. No provision of this Guaranty may be
amended, waived, discharged or terminated orally, but only by an instrument
in writing signed by the party against whom enforcement of the amendment,
waiver, discharge or termination is sought. No subsequent guaranty by the
Guarantor or any other person with respect to the Indebtedness or the
Obligations shall be deemed in lieu of or to supersede this Guaranty, but
such guaranty shall be construed as an additional or supplementary guaranty
unless otherwise expressly provided for in such subsequent guaranty.
Furthermore, this Guaranty shall be construed to be an additional or
supplementary guaranty to any guaranty previously executed by the Guarantor
or any other
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guarantor of the Indebtedness or the Obligations and shall not terminate
any prior guaranty unless such termination is expressly provided for
herein. The Guarantor's obligation hereunder shall be in addition to any
obligation of the Guarantor as endorsers of any obligation of the Borrower.
Section 3.7. ASSIGNMENTS. Guarantor shall neither assign nor
delegate to any other person or entity its rights or obligations hereunder
without the prior written consent of Lender, which consent Lender may
withhold in its absolute discretion. Any such attempted assignment or
delegation without such prior written consent shall be void.
WITNESS the following signatures.
[SIGNATURES ON FOLLOWING PAGES]
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GUARANTOR:
---------
HUDSON HOTELS CORPORATION,
a New York corporation
By: /s/ E. Anthony Wilson
------------------------------------
Title: President
---------------------------------
STATE OF NEW YORK
----------------
CITY/COUNTY OF NEW YORK, to-wit:
--------
The foregoing instrument was duly acknowledged before me this 30th day of
October, 1997, in the forgoing jurisdiction by E. Anthony Wilson
as President of Hudson Hotels Corporation, a New York
Corporation, on behalf of the corporation, by E. Anthony Wilson, President.
My commission expires: 12/31/97.
--------
/s/ Alan S. Lockwood
-------------------------------
Notary Public
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<PAGE>
Exhibit 10.34
THIS PLEDGE AGREEMENT IS SUBJECT TO THE TERMS, COVENANTS AND CONDITIONS OF A
CERTAIN CONFIRMATION OF SUBORDINATION AGREEMENT OF EVEN OR NEAR DATE HEREWITH IN
FAVOR OF NOMURA ASSET CAPITAL CORPORATION.
PLEDGE AGREEMENT
----------------
THIS PLEDGE AGREEMENT (as amended, modified or supplemented from time to
time, the "Agreement"), dated as of October 31, 1997 is made by HUDSON HOTELS
CORPORATION, a New York corporation (the "Company"), HUDSON HOTEL PROPERTIES
CORP., a New York corporation (the "Pledgor"), in favor of EQUITY INNS
PARTNERSHIP, L.P., a Tennessee limited partnership (the "Lender").
RECITALS
--------
Pursuant to the terms of a promissory note of even date herewith, made by
the Pledgor, payable to the order of the Lender, in the original principal
amount of $3,884,052.23 (as amended, modified, supplemented or replaced from
time to time, the "Note"), the Lender made a loan (the "Loan") to the Pledgor.
The Note and the Loan are guaranteed by a guaranty agreement of even date
herewith (the "Guaranty") from the Company in favor of the Lender. Pledgor is a
wholly owned subsidiary of the Company.
The Lender agreed to the Loan, provided, however, that the Pledgor execute
and deliver this Agreement to the Lender.
AGREEMENT
---------
Accordingly, to induce the Lender to make the Loan, and for other valuable
consideration, the receipt and sufficiency of which are acknowledged, the
Pledgor agrees as follows:
1. DEFINED TERMS. The following terms shall have the following meanings,
unless otherwise defined or unless the context otherwise requires:
"Collateral": 2,000,000 shares of common stock, par value $.001, of
the Company (the "Common Stock"), issued in the name of the Pledgor, together
with (a) all certificates, options, rights or other distributions issued as an
addition to, in substitution of or in exchange for, or on account of, any such
shares, (b) all shares, securities or other property described in Paragraph
2.(b) below, and (c) all proceeds of all of the foregoing, now or hereafter
owned or acquired by the Pledgor.
"Loan Documents": collectively, the Note, the Guaranty, this
Agreement, and any other instrument or document executed in connection with the
Guaranty, this Agreement, the
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Loan and the Note, in evidence thereof or as security therefor, as any of the
same may be amended, modified or supplemented from time to time.
"Obligations": all indebtedness, liabilities and obligations of the
Pledgor to the Lender (including, but not limited to, the obligations of the
Pledgor under the Note, the Pledgor or any other Loan Document), whether now
existing or hereafter incurred, direct or indirect, fixed or contingent, secured
or unsecured, due or to become due, joint, several or joint and several,
including, without limitation, any costs and expenses incurred by the Lender in
connection with the enforcement of this Agreement.
"Rule 144": Rule 144 of the Securities and Exchange Commission (the
"SEC"), and all amendments, modifications, supplements, replacements and
successors to, of or for Rule 144.
2. GRANT OF SECURITY INTEREST.
(a) As collateral security for the prompt and complete payment and
performance when due of all of the Obligations, the Pledgor hereby pledges the
Collateral to the Lender, and grants to the Lender a lien on and a security
interest in the Collateral and in all proceeds arising therefrom.
(b) If the Pledgor shall become entitled to receive or shall receive,
in connection with any of the Collateral, any: (1) stock certificate,
including, without limitation, any certificate representing a stock dividend or
received in connection with any increase or reduction of capital,
reclassification, merger, share exchange, consolidation, sale of assets,
combination of shares, stock split, spin-off or split-off, (2) option, warrant
or right, whether as an addition to or in substitution or in exchange for any of
the Collateral, or otherwise, (3) dividend or distribution payable in property,
including securities issued by any entity other than the issuer of any of the
Collateral, or (4) dividends or distributions of any sort, then the Pledgor
shall accept the same as the agent of the Lender, in trust for the Lender, and
shall deliver them forthwith to the Lender in the exact form received with, as
applicable, the Pledgor's endorsement when necessary, or appropriate stock
powers duly executed in blank, to be held by the Lender, subject to the terms
hereof, as part of the Collateral.
(c) Upon and at any time after the occurrence of an Event of Default
(as defined in Paragraph 7 below), the Lender, at its option, may have any or
all of the Collateral registered in its name or that of its nominee, and the
Pledgor hereby covenants and agrees that, upon the Lender's request, the Pledgor
shall cause the issuer of, or the transfer agent for, the Collateral to effect
such registration. Upon and at any time after the occurrence of an Event of
Default, the Lender shall have the right to exercise all voting rights as to all
of the Collateral, all other corporate rights and all conversion, exchange,
subscription or other rights, privileges or options pertaining thereto as if it
were the absolute owner thereof, including, without limitation, the right to
exchange any or all of the Collateral upon the merger, consolidation,
reorganization, recapitalization or other readjustment of the issuer thereof, or
upon the exercise by such issuer of
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any right, privilege or option pertaining to any of the Collateral, and, in
connection therewith, to deliver any of the Collateral to any committee,
depository, transfer agent, registrar or other designated agency upon such terms
and conditions as it may determine, all without liability except to account for
property actually received by it; but the Lender shall have no duty to exercise
any of the aforesaid rights, privileges or options and shall not be responsible
for any failure to do so or any delay in so doing.
(d) Until an Event of Default the Lender shall have no rights to (i)
vote at any shareholders meeting or (ii) receive dividends or distributions, as
if such shares were held by the Company as treasury shares, but such shares
shall have the same rights as all other outstanding shares of the Company upon
an Event of Default.
3. REPRESENTATIONS AND WARRANTIES OF THE PLEDGOR AND THE COMPANY. Each
of the Pledgor and the Company represent and warrants to the Lender that:
(a) It has, and has duly exercised, all requisite power and authority
to enter into, execute and deliver this Agreement, to pledge the Collateral for
the purposes described in this Agreement, and to carry out the transactions
contemplated by this Agreement.
(b) The Pledgor is the legal and beneficial owner of all of the
Collateral, and the Collateral is not subject to any right or option on the part
of any Person, other than the Lender, to purchase or acquire the Collateral or
any part thereof. The term "Person" shall mean any individual, partnership,
corporation, business trust, joint venture, governmental authority or other
entity of any nature whatsoever.
(c) The Common Stock has been duly and validly issued, is fully paid
and nonassessable, and all of the Collateral is owned by the Pledgor free of any
pledge, mortgage, hypothecation, lien, charge, encumbrance or security interest
in such shares or the proceeds thereof, other than the lien and security
interest granted to the Lender hereunder. There are no outstanding options,
warrants, or similar rights to subscribe for or purchase any of the Collateral.
All of the issued and outstanding capital stock of the Pledgor is owned by the
Company.
(d) None of the Collateral is subject to any restriction on transfer
other than those imposed by applicable federal and state securities laws.
Pledgor has beneficially owned the Common Stock since September 19, 1997, within
the meaning of Rule 144.
(e) The execution and delivery of this Agreement and the other Loan
Documents, and the performance of their respective terms, will not violate or
constitute a default under the terms of any agreement, indenture or other
instrument, license, judgment, decree, order, law, statute, ordinance or other
governmental rule or regulation, applicable to the Pledgor, the Company, or any
of their property, or result in the creation or imposition of any lien, charge
or encumbrance of any nature upon any of the Pledgor's or the Company's
properties or assets, except as created hereby.
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(f) Upon delivery of this Agreement and the certificates evidencing
the Common Stock to the Lender, this Agreement shall create a valid first
priority lien upon and perfected security interest in the Collateral and the
proceeds thereof, and is not subject to any prior security interest, lien,
charge or encumbrance or agreement purporting to grant to any Person a security
interest in the property or assets of the Pledgor that would include any of the
Collateral.
(g) The Loan does not constitute "purpose credit" as defined in
Regulation U of the Board of Governors of the Federal Reserve System.
(h) The Loan Documents have been duly executed and delivered by the
Pledgor and the Company and constitute the legal, valid and binding obligations
of the Pledgor and the Company enforceable in accordance with their respective
terms.
(i) Except as disclosed by filings with the SEC, there are no suits,
actions, or proceedings pending, or to the knowledge of the Pledgor, threatened,
before any court or administrative agency, against the Pledgor or the Company or
affecting any of their respective assets or properties that, if adversely
determined, would individually or in the aggregate materially and adversely
affect the financial condition of the Pledgor or the Pledgor's ability to
observe and perform any provisions of the Loan Documents.
(j) Neither Pledgor nor the Company is in default in respect of any
indebtedness for borrowed money, and no holder of any such indebtedness has
given notice of any asserted default hereunder, and no bankruptcy or similar
proceedings relative to the Pledgor or the Company are pending or, to the
Pledgor's knowledge, threatened against the Pledgor or the Company.
(k) All financial statements and information concerning the Pledgor
furnished to the Lender by the Pledgor are complete and correct and fairly
present the financial condition of the Pledgor as of the dates shown thereon,
and since such dates, there has been no material adverse change in the financial
condition of the Pledgor. All financial statements and information concerning
the Company furnished to the Lender by the Pledgor are complete and correct and
fairly present the financial condition of the Company as of the dates shown
thereon, and since such dates, to the Pledgor's knowledge, there has been no
material adverse change in the financial condition of the Company. Neither the
Pledgor nor the Company has any contingent liabilities, liabilities for taxes,
unusual forward or long-term commitments or unrealized or unanticipated losses
from any unfavorable commitments that are not disclosed their respective
financial statements, which, either individually or in the aggregate, would be
material.
(l) No authorization, consent, approval or other action by, and no
notice to or filing with, any governmental authority or regulatory authority or
of stockholders is required for the Pledgor or the Company to grant a security
interest in the Collateral, to pledge the Collateral or to perform their
respective obligations of the Pledgor under the Loan Documents.
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<PAGE>
(m) Each of the Pledgor and the Company (1) is a corporation duly
organized, validly existing and in good standing under the laws of the state of
New York, (2) is duly qualified to transact business as a foreign corporation
and is in good standing in each jurisdiction in which the ownership of assets or
the conduct of its business requires such qualification and (3) has all
requisite corporate power and authority, and all necessary consents,
authorizations, approvals, orders, licenses, certificates and permits of and
from, and has made all declarations and filings with, all federal, state, local
and other governmental authorities, and all courts and tribunals, necessary to
own, lease, license or use its properties and assets, and to carry on its
business as presently being conducted.
(n) All of the Company's registration statements and periodic reports
filed with the SEC are true, correct and accurate and do not contain any
misstatement of a material fact or omit to state any material fact necessary, to
make the statements therein not misleading.
The foregoing representations and warranties shall be deemed to have been made
and given by the Pledgor with respect to any additional property forming part of
the Collateral subsequent to the date of this Agreement.
4. COVENANTS OF THE PLEDGOR. The Pledgor hereby covenants and agrees
that, during the term of this Agreement:
(a) Subject to the terms of Paragraph 21 below, and without the prior
written consent of the Lender, the Pledgor shall not, and the Company shall not
permit the Pledgor to sell, convey or otherwise dispose of any of the Collateral
or any interest therein, or create, incur or permit to exist any pledge,
mortgage, lien, charge, encumbrance or any security interest whatsoever in or
with respect to any of the Collateral or the proceeds thereof, other than that
created hereby.
(b) The Pledgor warrants and shall defend, at his own expense, the
Lender's right, title, special property and security interest in and to the
Collateral against the claims of any Person.
(c) The Pledgor and the Company shall cooperate fully, to the extent
requested by the Lender, in the completion of any notice, form, schedule or
other document filed by the Lender on its own behalf or on behalf of the Pledgor
pursuant to the power of attorney granted in Paragraph 5 below, including,
without limitation, any required notice or statement of beneficial ownership or
of the acquisition of beneficial ownership of equity securities constituting
part of the Collateral and any notice of proposed sale of any such securities
pursuant to Rule 144. Without limiting the generality of the foregoing, the
Pledgor shall furnish to the Lender any and all information that the Lender
reasonably may request, for the purposes of any such filing, regarding the
Pledgor, the Company, the Collateral and any issuer of any of the Collateral.
(d) Upon any sale of the Collateral made by the Lender pursuant to
this Agreement, the Lender is authorized by the Pledgor to comply with any
limitation or restriction if
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such compliance is necessary, in the view of the Lender's counsel, in order to
avoid any violation of applicable law or in order to obtain any required
approval of the purchaser or purchasers by any applicable governmental
authority.
(e) The Pledgor or the Company shall furnish to the Lender (1) as
soon as available, a copy of the Company's Form 10-Q filed with the SEC with
respect to each fiscal quarter, (2) as soon as publicly available each year, the
annual report on Form 10-K and the annual report to stockholders of the Company
and (3) any other report or registration statement filed by the Company with the
SEC.
(f) If this Agreement is executed prior to the Lender's receipt of
the stock certificates evidencing the Collateral, together with appropriate
stock powers required by the Lender, the Pledgor shall deliver such certificates
and stock powers to the Lender as soon as possible thereafter, and, in any
event, within ten business days of the date hereof.
(g) Except for loan from Nomura Asset Capital Corporation of even
date herewith, during the term of this Agreement, the Pledgor, without the prior
written consent of the Lender, shall not assume, incur or permit to exist any
additional debt, contingent liabilities, liabilities for taxes, unusual forward
or long-term commitments or unrealized or unanticipated losses that, either
individually or in the aggregate, would be material.
(h) So long as the Company or the Pledgor shall have any obligations
to the Lender under this Agreement, the Note or the Guaranty, the Pledgor shall
deliver to the Lender within a reasonable time, such additional information and
documentation respecting the condition or operations, financial or otherwise, of
the Pledgor or the Company as the Lender from time to time reasonably may
request.
(i) During the term of this Agreement, the Pledgor shall not grant
any options, warrants or other rights to purchase all or any part of the
Collateral.
5. POWER OF ATTORNEY. The Pledgor appoints the Lender as the Pledgor's
attorney-in-fact to sign or endorse the Pledgor's name on any Collateral or
instruments relating to the Collateral as may be necessary or desirable in
connection with any transaction that the Pledgor or the Lender is authorized or
required to perform pursuant to this Agreement. Such power of attorney, being
coupled with an interest, shall not terminate as long as this Agreement is in
effect and any Obligations remain outstanding. The Lender agrees that it shall
not exercise its rights under this Paragraph 5 prior to the occurrence of an
Event of Default.
6. REGISTRATION STATEMENT.
(a) If the Lender shall elect to exercise its right to sell or
otherwise dispose of all or any part of the Collateral, and if, in the opinion
of counsel to the Lender, it is necessary to have the Collateral or that portion
thereof to be sold registered under the Securities Act of 1933,
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as amended (the "Securities Act"), or if the Securities Act otherwise requires
registration of the Collateral for the sale of all or any portion of the
Collateral, the Company will:
(1) Take all action necessary to register the Collateral or that
portion thereof to be disposed of under the provisions of the Securities Act, at
the Company's expense;
(2) The registration statement relating thereto to become
effective and to remain so for not less than two years from the effective date
and to make all amendments thereto and to the related prospectus that, in the
opinion of the Lender or its counsel, are necessary or advisable, all in
conformity with the requirements of the Securities Act and the rules and
regulations of the SEC applicable thereto;
(3) To comply with the provisions of the "Blue Sky" law of any
jurisdiction that the Lender shall designate;
(4) To make available to its security holders, as soon as
practicable, an earnings statement covering a period of at least 12 months but
not more than 18 months, beginning with the first month after the effective date
of any such registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act; and
(5) To file on or before each respective due date all reports
required under the Securities Exchange Act of 1934, as amended (the "Exchange
Act").
(b) The Pledgor acknowledges that a breach of any of the covenants
contained in Paragraph 6.(a) above may cause irreparable injury to the Lender;
that the Lender will have no adequate remedy at law with respect to such breach;
and, as a consequence, that the Pledgor's covenants in Paragraph 6.(a) shall be
specifically enforceable against the Pledgor; and the Pledgor hereby waives, to
the extent such waiver is enforceable under law, and shall not assert, any
defenses against an action for specific performance of such covenants, except
for a defense that no Event of Default has occurred.
(c) Notwithstanding the foregoing, the Pledgor recognizes that the
Lender may be unable to effect a public sale of all or a part of the Collateral
and may be compelled to resort to sales pursuant to Rule 144 or to one or more
private sales to a restricted group of purchasers who will be obligated to
agree, among other things, to acquire the Collateral for their own account, for
investment only and not with a view to the distribution or resale thereof. The
Pledgor acknowledges that any such sales may be at prices and on terms less
favorable to the Lender than those of public sales of all of the Collateral, and
agrees that such sales shall be deemed to have been made in a commercially
reasonable manner and that the Lender has no obligation to delay sale of any
Collateral to permit the issuer thereof to register it for public sale under the
Securities Act. On any sale of the Collateral, the Lender is hereby authorized
to comply with any limitation or restriction, compliance with which is
necessary, in the view of the Lender's counsel, in order to avoid any violation
of applicable law or in order to obtain any required approval of the purchaser
or purchasers by any applicable governmental authority.
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7. EVENTS OF DEFAULT. An Event of Default hereunder shall occur:
(a) if the Pledgor or the Company shall fail to perform any of the
covenants or agreements contained herein within 30 days after receipt of notice
from the Lender specifying such failure, or the failure of the Pledgor or the
Company to perform any other covenants or agreements in any other Loan Document
after the expiration of any applicable grace periods; or
(b) if any warranty, representation or other statement by or on
behalf of the Pledgor contained herein or in any other Loan Document shall prove
to have been false or misleading in any material respect at the time it was made
or delivered; or
(c) if an Event of Default shall occur under the Note, the Guaranty
Agreement or any other Loan Document after the expiration of any applicable
grace periods.
8. REMEDIES, RIGHTS UPON DEFAULT.
(a) Upon and after the occurrence of an Event of Default, the Lender,
without demand of performance or other demand, advertisement or notice of any
kind (except the notice specified below of time and place of any public or
private sale) to or upon the Pledgor or any other Person (all of which are, to
the extent permitted by law, hereby expressly waived), forthwith may realize
upon the Collateral or any part thereof, and may sell forthwith, or agree to
sell or otherwise dispose of and deliver, the Collateral or any part thereof or
interest therein, in one or more parcels at public or private sale or sales, at
any exchange, broker's board or at any of the Lender's offices or elsewhere, at
such prices and on such terms (including, without limitation, any terms required
by a sale described in Paragraph 6 above) as it may deem best, for cash or on
credit, or for future delivery without assumption of any credit risk, with the
right of the Lender or any purchaser to purchase upon any such sale the whole or
any part of the Collateral free of any right or equity of redemption in the
Pledgor, which right or equity is hereby expressly waived and released. The
Lender may purchase all or any part of the Collateral at any public or private
sale. Any excess of the Collateral after payment in full of the obligations
shall be delivered to the Pledgor.
(b) The proceeds of any such disposition or other action by the
Lender shall be applied as follows:
(1) First, to the costs and expenses incurred in connection
therewith or incidental thereto or to the care or safekeeping of any of the
Collateral or in any way relating to the rights of the Lender hereunder,
including reasonable attorneys' fees and legal expenses;
(2) Second, to the satisfaction of the Obligations;
(3) Third, to the payment of any other amounts required by
applicable law (including, without limitation, Section 9-504(1)(c) of the
Uniform Commercial Code); and
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(4) Fourth, to the Pledgor to the extent of any surplus
proceeds.
(c) The Lender need not give more than 15 days' notice of the time
and place of any public sale or of the time after which a private sale may take
place, which notice the Pledgor hereby deems reasonable.
9. NOTICES CONCERNING COLLATERAL. The Pledgor shall promptly deliver to
the Lender all written notices, and shall promptly give the Lender written
notice of any other notices received by the Pledgor with respect to any
Collateral.
10. FURTHER ASSURANCES. The Pledgor and the Company, at any time, and
from time to time, upon the written request of the Lender, shall execute and
deliver such further documents and do such further acts and things as the Lender
reasonably may request to effect the purposes of this Agreement, including,
without limitation, stock certificates, stock powers, financing statements, and,
upon the occurrence of an Event of Default, executed irrevocable proxies with
respect to the Collateral in form satisfactory to the Lender. Until receipt
thereof, this Agreement shall constitute the Pledgor's proxy to the Lender or
its nominee to vote all shares of Collateral then registered in the Pledgor's
name upon or at any time after an occurrence of an Event of Default.
11. TERMINATION. Upon the satisfaction in full of all of the Obligations,
this Agreement shall terminate, and the Lender shall deliver to the Pledgor, at
the Pledgor's expense, such of the Collateral as shall not have been sold or
otherwise applied pursuant to this Agreement.
12. LIMITATION ON THE LENDER'S DUTY IN RESPECT OF COLLATERAL.
(a) Beyond the exercise of reasonable care to assure the safe custody
of the Collateral while held hereunder, the Lender shall have no duty or
liability to preserve rights pertaining thereto and shall be relieved of all
responsibility for the Collateral upon surrendering it or tendering surrender of
it to the Pledgor.
(b) No course of dealing between the Pledgor and the Lender, nor any
failure to exercise, nor any delay in exercising, any right, power or privilege
of the Lender hereunder, under the Note or under any other Loan Document shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, power or privilege hereunder or thereunder preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.
(c) The rights and remedies provided herein, in the Note and in all
other Loan Documents are cumulative and are in addition to, and not exclusive
of, any rights or remedies provided by law, including, without limitation, the
rights and remedies of a secured party under the Uniform Commercial Code.
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13. SEVERABILITY. The provisions of this Agreement are severable, and if
any clause or provision shall be held invalid or unenforceable in whole or in
part in any jurisdiction, then such invalidity or unenforceability shall affect
only such clause or provision or part thereof in such jurisdiction and shall not
in any manner affect such clause or provision in any other jurisdiction or any
other clause or provision in this Agreement in any jurisdiction.
14. NOTICES. All notices, requests, demands and other communications with
respect hereto shall be in writing and shall be delivered by hand, sent prepaid
by Federal Express (or a comparable overnight delivery service) or sent by the
United States mail, certified, postage prepaid, return receipt requested, to the
following addresses:
If to the Pledgor or the Company,
c/o Hudson Hotels Corporation
One Airport Way
Suite 200
Rochester, New York 14624
Attn: Mr. E. Anthony Wilson
With copies to
Boylan, Brown, Code, Fowler,
Vigdor & Wilson, L.L.P.
2400 Chase Square
Rochester, New York 14610
Attn: Alan S. Lockwood, Esquire
If to the Lender,
Equity Inns Partnership, L.P.
4735 Spottswood
Suite 102
Memphis, Tennessee 38117
Attn: Phillip H. McNeill, Sr.
With copies to
Hunton & Williams
1751 Pinnacle Drive
Suite 1700
McLean, Virginia 22102
Attn: Gerald R. Best, Esquire
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Any notice, request, demand or other communication delivered or sent in the
manner aforesaid shall be deemed given or made (as the case may be) upon the
earliest of (a) the date it is actually received, (b) the business day after the
day on which it is delivered by hand, (c) the business day after the day on
which it is properly delivered to Federal Express (or a comparable overnight
delivery service), or (d) the third business day after the day on which it is
deposited in the United States mail. Any party may change such party's address
by notifying the other parties of the new address in any manner permitted by
this Paragraph 14.
15. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
and shall be binding upon the parties hereto and their respective heirs,
personal representatives, successors and assigns.
16. CAPTIONS. The captions of the various sections and paragraphs of this
Agreement have been inserted only for the purposes of convenience. Such
captions are not a part of this Agreement and shall not be deemed in any manner
to modify, explain, enlarge or restrict any of the provisions of this Agreement.
17. SURVIVAL OF AGREEMENTS. All agreements, representations and
warranties made herein shall survive the delivery of this Agreement.
18. GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the state of New York, without reference to conflict of laws
principles.
19. MODIFICATION. No modification, amendment or waiver of any provision
of this Agreement, nor consent by the Lender to any departure by the Pledgor
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Lender, and then such waiver or consent shall be effective
only in the specific instance and for the purpose for which given.
20. EXPENSES. The Pledgor and the Company agree to pay all costs and
expenses incurred by the Lender in connection with this Agreement or the
enforcement of the Lender's rights hereunder, including, but not limited to,
reasonable attorneys' fees and expenses.
21. SUBSTITUTION OF COLLATERAL. Subject to the prior written consent of
the Lender, which consent may be given or withheld in the Lender's sole and
absolute discretion, the Pledgor may substitute the Collateral, or any portion
thereof, with other collateral of equal or greater value consisting of publicly
traded securities listed on a national or regional securities exchange (the
"Substitute Collateral"). Such Substitute Collateral, if accepted by the Lender
in its sole and absolute discretion, shall be subject to, and shall be delivered
in accordance with, the terms of a pledge agreement substantially in the form of
this Agreement.
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IN WITNESS WHEREOF, the Pledgor has caused this Agreement to be executed as
of the day and year first above written.
PLEDGOR:
HUDSON HOTELS PROPERTIES CORP.
By: /s/ E. Anthony Wilson
----------------------------
Name: E. Anthony Wilson
--------------------------
Title: Chairman
-------------------------
COMPANY:
HUDSON HOTELS CORPORATION
By: /s/ E. Anthony Wilson
----------------------------
Name: E. Anthony Wilson
--------------------------
Title: President
-------------------------
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