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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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) June 3, 1998
Host Funding, Inc.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MARYLAND 1-14280 52-1907962
(STATE OR OTHER JURISDICTION) (COMMISSION (IRS EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
6116 N. Central Expressway, Suite 1313, Dallas, Texas 75206
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code: 214-750-0760
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(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
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Item 1. Change in Control of Registrant
Not Applicable.
Item 2. Acquisition or Disposition of Assets
OVERVIEW
Effective June 3, 1998, Host Funding, Inc. (the "Company") and its
wholly owned subsidiaries, CrossHost, Inc. ("CHI"), and Host Ventures, Inc.
("HVI") terminated certain leases (the "Crossroads Leases") with Crossroads
Hospitality, L.L.C. ("Crossroads") and Crossroads Hospitality Tenant Company,
L.L.C. ("CHTC") and, concurrently with such termination, CHI and HVI entered
into new leases (the "Buckhead Leases") with BAC Hotel Management, Inc.
("BAC"), an affiliate of Buckhead America Corporation ("Buckhead"). Buckhead
paid a gross price of approximately $1.25 million for the leasing rights
related to the Buckhead Leases. Buckhead is a proven hotel operator with
vast experience managing limited service properties in the majority of the
markets in which the Company and its affiliates own property.
TERMINATION OF CERTAIN AGREEMENTS WITH CROSSROADS
Effective June 3, 1998, the Company terminated the Crossroads Leases
pursuant to that certain Termination of Lease Agreements and Master
Agreements Related Thereto relating to hotel properties owned by Host
Ventures (the "Host Ventures Termination Agreement") and that certain
Termination of Lease Agreements and Master Agreements Related Thereto
relating to hotel properties owned by CrossHost (the "CrossHost Termination
Agreement"). The Host Ventures Termination Agreement terminated leases and
certain other agreements relating to the Sleep Inn properties owned by HVI
and located in Ocean Springs, Mississippi and Sarasota, Florida
(collectively, the "HVI Properties"). The CrossHost Termination Agreement
terminated the leases and certain other agreements relating to the Sleep Inn
properties owned by CHI and located in Tallahassee, Florida and Destin,
Florida and the Super 8 properties owned by CHI and located in Miner,
Missouri; Poplar Bluff, Missouri; Somerset, Kentucky; and Rock Falls,
Illinois (collectively, the "CHI Properties").
In consideration for the termination of the above agreements CHI and HVI
together paid approximately $349,000 in lease termination fees to Crossroads
(the "Termination Fees"). The Termination Fees were reduced by certain
working capital amounts previously funded by CHI and HVI; increased by
amounts advanced by CHTC and Crossroads relating to capital expenditure
items; and increased or reduced by certain other items pursuant to the lease
agreements. Additionally, the Company released the 60,000 shares of Host
Funding stock previously pledged by Crossroads as security under the leases
for the performance by CHTC of its obligations under the Crossroads Leases.
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AGREEMENT REGARDING LEASES WITH BUCKHEAD AMERICA CORPORATION
Concurrently with the execution of the Host Ventures Termination
Agreement and the CrossHost Termination Agreement, CHI and HVI entered into
separate Restated and Amended Agreements Regarding Hotel Leases with Buckhead
(separately, the "CHI Agreement" and the "HVI Agreement") pursuant to which
BAC agreed to lease the CHI Properties and the HVI Properties in accordance
with the terms and conditions of the Buckhead Leases.
The total purchase price paid in consideration of execution of the
Buckhead Leases is $1,250,000, paid as follows:
a) Cash of $488,000, reduced by Termination Fees of $349,000 and
$110,000 in working capital to be retained by Buckhead;
b) Buckhead's delivery of promissory notes in the collective amount of
$212,000 (the "Lease Acquisition Finance Notes"), bearing no
interest, and maturing on the first anniversary of the effective
date of the Buckhead Leases;
c) Buckhead's delivery, within 15 days of the execution of the
Buckhead Leases, of the number of unregistered shares of common
stock of Buckhead having an aggregate fair market value of $400,000
(the "Buckhead Stock"). The Buckhead Stock will be issued pursuant
to a private placement and subject to applicable restrictions
imposed upon stock which has not been registered under applicable
securities laws. Further, if in the future, Buckhead files a
registration statement with the Securities and Exchange Commission,
the Company, subject to certain restrictions set forth in the CHI
Agreement and the HVI Agreement, shall have the right to cause the
Buckhead Stock to be included in such registration statement;
d) Buckhead received a credit against the purchase price in the amount
of $150,000 to offset certain costs and expenses incurred by
Buckhead incident to this transaction.
e) The net cash received by the Company as a result of the transaction
was approximately $86,000.
Additionally, Buckhead agreed to purchase Class A Common Shares of Host
Funding with a total fair market value of $288,000 (the "Host Funding Stock")
and to deliver the Host Funding Stock to the Company as security deposits
pursuant to each of the Buckhead Leases. The purchase price of the Host
Funding Stock was paid by the delivery of a promissory note (the "Host
Funding Stock Note") by Buckhead to the Company, accruing no interest, with a
maturity date of the one year anniversary date of the effective date of the
Buckhead Leases. The Host Funding Stock will be issued pursuant to a private
placement and subject to applicable restrictions imposed upon stock, which
has not been registered under applicable securities laws. Further, subject to
certain restrictions set forth in the CHI Agreement and the HVI Agreement,
Buckhead has the right to
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cause the Host Funding Stock to be included in future registration statements
filed by the Company with the Securities and Exchange Commission.
The CHI Agreement and the HVI Agreement provide for certain capital
expenditures to be credited first, against the Host Funding Stock Notes, and
second, against the Lease Acquisition Finance Notes. The aggregate amount of
the Host Funding Stock Notes and the Lease Acquistion Finance Notes is
$500,000. Of this amount, $175,000 is allocated to the Sleep Inn Property
located in Destin, Florida (the "Destin Property"), with the remaining amount
spread among the remaining CHI Properties and HVI Properties. The capital
expenditures associated with the Destin Property must be completed by
September 3, 1998, with the capital expenditures associated with the
remaining properties to be completed by June 2, 1999. Any funds associated
with uncompleted work are required to be transferred to escrow accounts
currently existing and funded by CHI or HVI. Funds in excess of the work to
be completed are reimbursed to CHI or HVI.
NEW LEASES WITH BUCKHEAD AMERICA CORPORATION
Concurrently with the execution of the CHI Agreement and the HVI
Agreement, BAC entered into the Buckhead Leases with CHI for each of the CHI
Properties and with HVI for each of the HVI Properties. Except for certain
changes relating to termination rights, the Buckhead Leases are substantially
the same, in form and material content, as the Crossroads Leases.
The Crossroads Leases were terminable by the lessee after 5 years with
no lease cancellation fee, provided certain other conditions were met. To
the contrary, the Buckhead Leases provide for a 15 year lease term, with no
provision for terminating the leases without a cancellation fee.
Item 3. Bankruptcy or Receivership
Not Applicable.
Item 4. Changes in Registrant's Certifying Accountant
Not Applicable.
Item 5. Other Events
CERTAIN LOAN TRANSACTIONS
Effective May 12, 1998, the Company caused Host Ventures to enter into a
new loan agreement (the "HVI Modified Loan") with Credit Suisse First Boston
Mortgage Capital, LLC ("First Boston"), in which the principal amount of the
existing loan from First Boston to HVI (the "Original Loan") was increased
from $8,725,000 to $9,075,000. The additional proceeds of the loan were used
for general corporate purposes. The term of the Original Loan was
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modified so that all principal and outstanding interest is due and payable in
June, 2023. The annual interest rate was modified to 8.12%, with interest
and principal amortized over a 25 year term, payable monthly. The HVI
Modified Loan provides for a "Hyperamortization Date", after which the annual
interest rate increases substantially. The hyperamortization provision is
intended to provide incentive for the loan to be paid off on the 10 year
anniversary of the effective date of the HVI Modified Loan.
Also effective May 12, 1998, the Company entered into a new loan
agreement with First Boston (the "Mezzanine Loan") in which First Boston
loaned the Company $825,000. The proceeds of the loan were used for general
corporate purposes. Interest accrues at a floating rate of 30-day LIBOR plus
500 basis points. Interest and principal payments, based on a 5 year
amortization, are due monthly. The Company subsequently formed Host
Enterprises ("HEI"), as a wholly owned, REIT qualified subsidiary, for the
purpose of allowing HEI to assume the Mezzanine Loan. The Company
anticipates that HEI will assume the Mezzanine Loan in the near term, with
the Company simultaneously executing an agreement guaranteeing the
performance by HEI of the Mezzanine Loan. In connection with the Mezzanine
Loan, the Company pledged the stock of HVI (the "HVI Stock") as security for
the Mezzanine Loan. After the assumption of the Mezzanine Loan by HEI, the
HVI stock will remain as collateral for the Mezzanine Loan.
RESCHEDULING OF DATE OF ANNUAL MEETING OF SHAREHOLDERS
In order to complete the transactions disclosed on this form 8-K, the
Company has changed the date of the annual meeting of shareholders to July
16, 1998.
Item 6. Resignations of Registrant's Directors
Not Applicable.
Item 7. Financial Statements and Exhibits
(a) FINANCIAL STATEMENTS
Not Applicable
(b) PRO FORMA FINANCIAL INFORMATION
Not Applicable
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(c) EXHIBITS
<TABLE>
<CAPTION>
Exhibit Number Description
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<S> <C>
2.1 Termination of Certain Lease Agreements and
MasterAgreements Related Thereto (CrossHost Properties)
dated June 3, 1998 by and between CrossHost, Inc., Host
Funding, Inc., Crossroads Hospitality Tenant Company,
L.L.C., and Crossroads Hospitality Company, L.L.C.
2.2 Termination of Certain Lease Agreements and Master
Agreements Related Thereto (Host Ventures Properties)
dated June 3, 1998 by and between Host Ventures, Inc.,
Host Funding, Inc., Crossroads Hospitality Tenant
Company, L.L.C., and Crossroads Hospitality Company,
L.L.C.
2.3 Restated And Amended Agreement Regarding Hotel Leases
(CrossHost Properties) dated June 3, 1998 by and
between, Host Funding, Inc. and Buckhead America
Corporation
2.4 Restated And Amended Agreement Regarding Hotel Leases
(Host Ventures Properties) dated June 3, 1998 by and
between Host Funding, Inc, and Buckhead America
Corporation
</TABLE>
Item 8. Change in Fiscal Year
Not Applicable.
Item 9. Sales of Equity Securities Pursuant to Regulation S.
Not Applicable
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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.
Dated: June 12, 1998 Host Funding, Inc.
/s/ MICHAEL S. MCNULTY
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By: Michael S. McNulty, President and
Chief Executive Officer
/s/ BONA K. ALLEN
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By: Bona K. Allen, Chief Financial
Officer and Accounting Officer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Description
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<S> <C>
2.1 Termination of Certain Lease Agreements and
MasterAgreements Related Thereto (CrossHost Properties)
dated June 3, 1998 by and between CrossHost, Inc., Host
Funding, Inc., Crossroads Hospitality Tenant Company,
L.L.C., and Crossroads Hospitality Company, L.L.C.
2.2 Termination of Certain Lease Agreements and Master
Agreements Related Thereto (Host Ventures Properties)
dated June 3, 1998 by and between Host Ventures, Inc.,
Host Funding, Inc., Crossroads Hospitality Tenant
Company, L.L.C., and Crossroads Hospitality Company,
L.L.C.
2.3 Restated And Amended Agreement Regarding Hotel Leases
(CrossHost Properties) dated June 3, 1998 by and
between, Host Funding, Inc. and Buckhead America
Corporation
2.4 Restated And Amended Agreement Regarding Hotel Leases
(Host Ventures Properties) dated June 3, 1998 by and
between Host Funding, Inc, and Buckhead America
Corporation
</TABLE>
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TERMINATION OF CERTAIN LEASE AGREEMENTS AND
MASTER AGREEMENTS RELATED THERETO
(CROSSHOST PROPERTIES)
This Termination of Certain Lease Agreements and Master Agreements
Related Thereto (this "Agreement") is entered into effective as of the ___
day of June, 1998 (the "Effective Date"), by and between CrossHost, Inc., a
Maryland corporation ("CrossHost"), Host Funding, Inc., a Maryland
corporation ("Host Funding"), Crossroads Hospitality Tenant Company, L.L.C.,
a Delaware limited liability company ("Lessee"), and Crossroads Hospitality
Company, L.L.C., a Delaware limited liability company ("Crossroads"), and
with regard to the hotels commonly known as SLEEP INNS, and located at 1695
Capital Circle, NW, Tallahassee, Florida (the "Tallahassee Property"), and
10775 W. Emerald Coast Parkway, Destin, Florida (the "Destin Property") and
those hotels commonly known as SUPER 8 MOTELS, and located at 2609 East
Malone, Miner, Missouri (the "Miner Property"), 2381 North Westwood, Poplar
Bluff, Missouri (the "Poplar Bluff Property"), 302 US Highway 27, Somerset,
Kentucky (the "Somerset Property"), and 2100 First Avenue, Rock Falls,
Illinois (the "Rock Falls Property") (and with the Tallahassee Property, the
Destin Property, the Miner Property, the Poplar Bluff Property, the Somerset
Property, and the Rock Falls Property hereinafter sometimes collectively
referred to as the "CrossHost Properties").
W I T N E S S E T H:
WHEREAS, CrossHost (or its predecessor in interest, Host Funding) and
Lessee, have previously entered into those certain Lease Agreements
(hereinafter sometimes collectively referred to as the "CrossHost Lease
Agreements"), more particularly defined and described in EXHIBIT "A" attached
hereto and by reference incorporated herein, pursuant to which Lessee has
leased from CrossHost the CrossHost Properties; and
WHEREAS, CrossHost, or its predecessor in interest, Host Funding, Lessee
and Crossroads have previously entered into that certain Master Agreement
("Master Agreement I"), dated April 1, 1996, Master Agreement I relating to
certain rights and obligations of said parties with respect to the Miner
Lease, the Poplar Bluff Lease Agreement, the Somerset Lease Agreement and the
Rock Falls Lease Agreement; and
WHEREAS, CrossHost, Lessee and Crossroads have previously entered into
that certain Master Agreement ("Master Agreement II", and with Master
Agreement I hereinafter sometimes collectively referred to as the "Master
Agreements"), dated September 6, 1996, Master Agreement II relating, among
other things, to certain rights and obligations of said parties with respect
to the Tallahassee Lease Agreement and the Destin Lease Agreement; and
WHEREAS, CrossHost, Host Funding, Lessee and Crossroads desire to, upon the
terms and conditions set forth herein, terminate the CrossHost Lease Agreements,
Master Agreement I and
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Master Agreement II (but only as to the Tallahassee Lease Agreement and the
Destin Lease Agreement).
NOW, THEREFORE, in consideration of the mutual premises contained
herein, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged and confessed by the parties
hereto, CrossHost, Host Funding, Lessee and Crossroads, where and as
applicable, agree as follows:
1. CrossHost and Lessee acknowledge and agree that, as of the
Effective Date, the CrossHost Lease Agreements are hereby terminated and
declared to be of no further force or effect. Incident to such terminations,
CrossHost and Lessee acknowledge and agree that neither CrossHost nor Lessee
shall have any further obligations one to the other pursuant to the CrossHost
Lease Agreements, monetary, non-monetary, or otherwise, except as set forth
hereinafter in this Agreement. Notwithstanding anything contained herein to
the contrary, Lessee further agrees, at no expense to Lessee, to cooperate
fully with BAC Hotel Management, Inc. ("BAC"), the new operator of the
CrossHost Properties (except the Tallahassee Property), so as to facilitate
an orderly and effective transition of the ongoing operations thereof.
2. CrossHost, Lessee and Crossroads acknowledge and agree that Master
Agreement I is hereby terminated and declared to be of no further force or
effect. Incident to such termination, CrossHost, Lessee and Crossroads
acknowledge and agree that CrossHost, Lessee and Crossroads have any further
obligations one to the other pursuant to Master Agreement I, monetary,
non-monetary, or otherwise, except as set forth hereinafter in this Agreement.
3. CrossHost, Lessee and Crossroads agree that Master Agreement II
(but only as to the Tallahassee Lease Agreement and the Destin Lease
Agreement) is hereby terminated and declared to be of no further force and
effect. Incident to such termination, CrossHost, Lessee and Crossroads
acknowledge and agree that CrossHost, Lessee and Crossroads have no further
obligations one to the other pursuant to Master Agreement II (but only as to
the Tallahassee Lease Agreement and the Destin Lease Agreement), monetary,
non-monetary, or otherwise, except as hereinafter set forth in this Agreement.
4. In consideration for the termination of the CrossHost Lease
Agreements, Master Agreement I and Master Agreement II (but only as to the
Tallahassee Lease Agreement and the Destin Lease Agreement), Cross Host
and/or Host Funding agree to on the Effective Date pay or cause to be paid to
Lessee and/or Crossroads the sum of $236,000.00 in cash PLUS the sum of all
petty cash on site as of the Closing Date at the CrossHost Properties LESS
$109,168.00 (working capital deposits delivered by CrossHost, or its
predecessor-in-interest, Host Funding, to Lessee upon the commencement of the
CrossHost Lease Agreements) and LESS $45,147.00 (working capital deposits
delivered by CrossHost or its predecessor-in-interest, Host Funding, to
Lessee upon the commencement of the San Diego Lease Agreement).
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5. In consideration for the termination of the Lease Agreements,
Master Agreement I and Master Agreement II (but only as to the Tallahassee
Lease Agreement and the Destin Lease Agreement), and with respect to the
CrossHost Lease Agreements, Lessee agrees to as of the Effective Date
transfer and deliver to CrossHost (or, at the option of CrossHost, to BAC)
all assets (other than cash on hand, working capital and capital expenditure
reserves), inventory and equipment delivered by CrossHost (or its
predecessor-in-interest, Host Funding) to Lessee upon the commencement of the
CrossHost Lease Agreements, and CrossHost agrees, or agrees to cause BAC to
assume all assets (other than cash on hand, working capital and capital
expenditure reserves), liabilities (including, but not limited to, service
contracts, leases, and other similar liabilities existing at, or arising
after the commencement of the CrossHost Lease Agreements), inventory and
equipment delivered to Lessee by CrossHost (or its predecessor-in-interest,
Host Funding) upon the commencement of the CrossHost Lease Agreements (all
pursuant to Section 6.4 of the CrossHost Lease Agreements); provided,
CrossHost acknowledges that the four (4) personal computers and a van
purchased by Lessee incident to the operation of the CrossHost Properties is
and shall remain the property of Lessee.
6. With respect to the CrossHost Lease Agreements, CrossHost and
Lessee agree that all revenues and expenses for the CrossHost Properties
shall, in a manner reasonably acceptable to CrossHost and Lessee, be prorated
as of the Effective Date, such that the revenues and expenses for the period
of time preceding the Effective Date shall be for the account of Lessee, and
the revenues and expenses for the period of time from and after the Effective
Date shall be for the account of CrossHost or its designee.
7. CrossHost and Lessee, as to the CrossHost Lease Agreements,
acknowledge and agree that the indemnity obligations of CrossHost and Lessee
contained in Sections 8 and 23 of the CrossHost Lease Agreements (but, as to
Lessee, only for events described therein and arising after the commencement
of the CrossHost Lease Agreements and prior to the Effective Date, and, for
CrossHost, only for such events and arising prior to the commencement of the
CrossHost Lease Agreements or after the Effective Date) shall survive the
execution and closing of the transactions contemplated by this Agreement for
the benefit of CrossHost, Host Funding, Lessee and Crossroads, as applicable.
Further, and notwithstanding the existence of any insurance, and without
regard to the policy limits of any insurance, Lessee and Crossroads, jointly
and severally,, will protect, indemnify, hold harmless and defend CrossHost
and Host Funding, their affiliates, subsidiaries, members, officers,
directors, managers, agents and assigns ("Host Indemnified Persons"), from
and against all liabilities, obligations, claims, damages, penalties, causes
of action, costs and expenses (including, without limitation, reasonable
attorneys' fees and expenses) imposed upon or incurred by or asserted against
Host Indemnified Persons by reason of any failure on the part of Lessee to
hereafter, and if required, satisfy or comply with its hereinabove described
indemnity obligations. Additionally, and notwithstanding the existence of
any insurance, and without regard to the policy limits of any insurance, Host
Funding and CrossHost, jointly and severally, will protect, indemnify, hold
harmless and defend Lessee and Crossroads, their affiliates, subsidiaries,
members, officers, managers, agents and assigns ("Crossroads Indemnified
Persons"), from and against all liabilities, obligations, claims, damages,
penalties, causes of action, costs and expenses (including, without
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limitation, reasonable attorneys' fees and expenses) imposed upon or incurred
by or asserted against Crossroads Indemnified Persons by reason of any
failure on the part of CrossHost to hereafter, and if required, satisfy or
comply with its hereinabove described indemnity obligations.
8. With respect to the CrossHost Properties, Lessee and Crossroads
acknowledge and agree that any employees or personnel of Lessee involved in
the operation by Lessee of the CrossHost Properties will be terminated as of
the Effective Date, and any such employees which BAC elects not to
re-employee (the "Non-BAC Employees") shall not be deemed for any reason to
be the employees or personnel of BAC, CrossHost or Host Funding. Lessee and
Crossroads further acknowledges and agree that from and after the Effective
Date, neither BAC, CrossHost nor Host Funding shall be responsible or liable
for the Employee Costs (hereinafter defined) payable, accruing or otherwise
due to any Non-BAC Employees. Lessee and Crossroads jointly and severally
agree to defend, indemnify and hold harmless BAC, CrossHost and Host Funding
from and against each and every demand, claim, loss, cost and expense,
including, but not limited to, reasonable attorneys' fees, imposed or
incurred by any of said parties, which directly or indirectly, relate to,
result from or arise out of Employee Costs relating to the Non-BAC Employees.
Lessee and Crossroads further acknowledge and agree that Lessee shall be
responsible for the payment of any and all termination and exit payments or
the like payable, accruing or otherwise due to any Non-BAC Employee. For the
purposes hereof, "Employee Costs" shall mean any costs, expenses, salaries,
employee benefit, pension or incentive plans (including without limitation,
"ERISA" plans), insurance and medical plans, employment agreements, exit
payments (including without limitation, final payroll or accrued vacation
time) or the like payable, accruing or otherwise due to any Non-BAC Employee.
9. CrossHost, Host Funding, Lessee and Crossroads shall, in addition
to any consideration paid to Lessee and/or Crossroads pursuant to Section 4
hereof, and prior to the Effective Date, agree upon the appropriate
adjustments to be made between the parties as to cash advances of any nature
whatsoever made by CrossHost and/or Host Funding to Lessee pursuant to the
terms of the CrossHost Lease Agreements and the San Diego Lease Agreement
($63,000.00 with respect to the CrossHost Lease Agreements and $25,616.00
with respect to the San Diego Lease Agreement) (said sum in addition to the
$109,168.00 and $45,147.00 described in Section 4 hereof), payments made or
reserved by Lessee for capital expenditures funded by Lessee pursuant to the
CrossHost Lease Agreements ($58,731.00 with respect to the CrossHost Lease
Agreements, other than the Tallahassee Lease Agreement; $82,597.00 for the
San Diego Lease Agreement [plus $7,000.00 for a hot water heater]; and
$34,855.00 with respect to the Tallahassee Lease Agreement), and Negative
Base Rent ($35,000.00) (as defined in the CrossHost Lease Agreements), if
any, incurred in calendar year 1998 by Lessee incident to the operation of
the CrossHost Properties. In the event such adjustments result in CrossHost
and/or Host Funding owing monies to Lessee, said monies shall be paid to
Lessee on or before the Effective Date; provided, if such adjustments result
in Lessee owing monies to CrossHost and/or Host Funding, said monies shall be
paid to CrossHost and/or Host Funding on or before the Effective Date.
10. CrossHost, Host Ventures and Host Funding acknowledge and agree
that the 60,000 shares of Host Funding Class A Common Stock previously
pledged as security for the obligations
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of Lessee and Crossroads under the Master Agreements are and shall remain in
the control and possession of Lessee and/or Crossroads free and clear of such
security interest, subject to the terms and conditions of that certain letter
agreement, dated March __, 1998, and relating to the rights of Crossroads as
to the sale of such shares of Host Funding Class A Common Stock.
11. CrossHost, Lessee and Crossroads acknowledge and agree that
pursuant to that certain Lease Termination Agreement and that certain Partial
Termination of Master Agreement, both dated March __, 1998, (collectively,
the "Previous Tallahassee Termination Agreements"), CrossHost and Lessee
have, for certain agreed upon business reasons, heretofore terminated the
Tallahassee Lease Agreement and Master Agreement II (only as it relates to
the Tallahassee Lease Agreement), that the terms and conditions of this
Agreement are incorporated into the Previous Tallahassee Termination
Agreements as if originally included therein, and that to the extent any
conflict exists between this Agreement and the Previous Tallahassee
Termination Agreements, the applicable terms and conditions of this Agreement
shall control.
12. Capital Management Services, Inc. ("Capital Management") owes
Lessee and/or Crossroads $14,654.00 with respect to the Tallahassee Property.
Host Funding agrees to use its best faith efforts to cause Capital
Management to pay said sum to Lessee and/or Crossroads; provided, if Capital
Management has not paid such sum within forty-five (45) days after the
Effective Date, Host Funding agrees to pay same to Lessee and/or Crossroads.
13. Lessee also presently leases from CrossHost the hotel commonly
known as a Super 8 Motel located at 4540 Mission Bay Drive, San Diego,
California (the "San Diego Lease Agreement"). With regard to the San Diego
Lease, CrossHost and Lessee acknowledge and agree that the San Diego Lease
Agreement is not currently being terminated and remains in full force and
effect, but may, within one (1) year after the Effective Date, be terminated
by Lessee upon ninety (90) days prior written notice to CrossHost; provided,
upon such termination by Lessee (or upon termination of the San Diego Lease
Agreement by CrossHost) CrossHost shall owe an $84,400.00 lease cancellation
fee to Lessor. Additionally, Host Funding, Lessee and Crossroads further
acknowledge and agree that Master Agreement I, as hereby terminated, does not
survive after the Effective Date with respect to the San Diego Lease
Agreement, irrespective of the continuing existence of the San Diego Lease
Agreement.
14. CrossHost, Host Funding, Lessee and Crossroads understand and
agree that the performance of the obligations of each of said parties
hereunder is subject to the respective lenders and/or mortgagees of
CrossHost holding liens on the CrossHost Properties having approved this
Agreement and the terms and provisions hereof, and the respective
franchisors pursuant to any existing franchise agreements under which the
CrossHost Properties are operated, have approved the transition of the
operation thereof. Lessee and Crossroads also acknowledge and agree that the
performance of the obligations of CrossHost and Host Funding hereunder is
further subject to the execution by CrossHost and BAC, of the new operating
or lease agreements with respect to the CrossHost Properties.
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15. CrossHost, Host Funding, Lessee and Crossroads acknowledge and
agree that this Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware.
16. CrossHost, Host Funding, Lessee and Crossroads acknowledge and
agree that this Agreement shall inure to the benefit of and be binding upon
the parties hereto and their successors and assigns.
17. CrossHost, Host Funding, Lessee and Crossroads acknowledge and
agree that this Agreement may not be modified or changed orally but may be
modified or changed only by a written agreement signed by the parties hereto.
18. CrossHost, Host Funding, Lessee and Crossroads acknowledge and
agree that if any provision of this Agreement or the application thereof to
any person or circumstances shall be invalid or unenforceable to any extent,
the remainder of this Agreement and the application of such provisions to
other person or circumstances shall not be effected thereby and shall be
enforceable to the greatest extent permitted by law.
19. CrossHost, Host Funding, Lessee and Crossroads understand and
agree that should any party to this Agreement commence legal proceedings
against the other to enforce the terms and provisions of this Agreement, the
party losing in such legal proceeding should pay the attorney's fees and
other expenses of the party prevailing in such legal proceedings.
20. CrossHost, Host Funding, Lessee and Crossroads understand and agree
that this Agreement is the entire agreement of the parties hereto with regard
to the subject matter addressed herein and supersedes any prior written or
oral agreements between the parties hereto regarding same.
IN WITNESS WHEREOF, the parties have executed this Agreement by their
duly authorized officers as of the Effective Date.
CROSSHOST:
CROSSHOST, INC., a Maryland corporation
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
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HOST FUNDING:
HOST FUNDING, INC., a Maryland corporation
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
LESSEE:
CROSSROADS HOSPITALITY TENANT COMPANY,
L.L.C., an affiliate of Crossroads
Hospitality Company, L.L.C.
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
CROSSROADS:
CROSSROADS HOSPITALITY COMPANY, L.L.C.,
a Delaware limited liability company
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
7
<PAGE>
EXHIBIT "A"
CROSSHOST LEASE AGREEMENTS
1. Lease Agreement (as from time to time amended, the "Miner Lease
Agreement"), dated March 29, 1996, covering the Miner Property, and
executed by Host Funding, as lessor, and Lessee, as lessee, the rights of
Host Funding as lessor thereunder having been assigned by Host Funding to
CrossHost.
2. Lease Agreement (as from time to time amended, the "Poplar Bluff Lease
Agreement"), dated March 29, 1996, covering the Poplar Bluff Property, and
executed by Host Funding, as lessor, and Lessee, as lessee, the rights of
Host Funding as lessor thereunder having been assigned by Host Funding to
CrossHost.
3. Lease Agreement (as from time to time amended, the "Somerset Lease
Agreement"), dated March 29, 1996, covering the Somerset Property, and
executed by Host Funding, as lessor, and Lessee, as lessee, the rights of
Host Funding as lessor thereunder having been assigned by Host Funding to
CrossHost.
4. Lease Agreement (as from time to time amended, the "Rock Falls Lease
Agreement") dated March 29, 1996, covering the Rock Falls Property, and
executed by Host Funding, as lessor, and Lessee, as lessee, the rights of
Host Funding as lessor thereunder having been assigned by Host Funding to
CrossHost.
5. Lease Agreement (as from time to time amended, the "Tallahassee Lease
Agreement"), dated September 6, 1996, covering the Tallahassee Property,
and executed by CrossHost, as lessor, and Lessee, as lessee.
6. Lease Agreement (as from time to time amended, the "Destin Lease
Agreement"), dated September 6, 1996, covering the Destin Property, and
executed by CrossHost, as lessor, and Lessee, as lessee.
<PAGE>
TERMINATION OF CERTAIN LEASE AGREEMENTS AND
MASTER AGREEMENTS RELATED THERETO
(HOST VENTURES PROPERTIES)
This Termination of Certain Lease Agreements and Master Agreements
Related Thereto (this "Agreement") is entered into effective as of the ___
day of June, 1998 (the "Effective Date"), by and between Host Ventures, Inc.,
a Maryland corporation ("Host Ventures"), Host Funding, Inc., a Maryland
corporation ("Host Funding"), Crossroads Hospitality Tenant Company, L.L.C.,
a Delaware limited liability company ("Lessee"), and Crossroads Hospitality
Company, L.L.C., a Delaware limited liability company ("Crossroads"), and
with regard to the hotels commonly known as SLEEP INNS, and located at 7412
Tucker Road, Ocean Springs, Mississippi (the "Ocean Springs Property"), and
900 University Avenue, Sarasota, Florida (the "Sarasota Property") (and with
the Ocean Springs Property and the Sarasota Property hereinafter sometimes
collectively referred to as the "Host Ventures Properties").
W I T N E S S E T H:
WHEREAS, Host Ventures (or its predecessor-in-interest, CrossHost), and
Lessee, have previously entered into those certain Lease Agreements
(hereinafter sometimes collectively referred to as the "Host Ventures Lease
Agreements"), more particularly defined and described in EXHIBIT "A" attached
hereto and by reference incorporated herein, pursuant to which Lessee has
leased from Host Ventures the Host Ventures Properties; and
WHEREAS, CrossHost, Inc., a Maryland corporation ("CrossHost"), Lessee
and Crossroads have previously entered into that certain Master Agreement
("Master Agreement II"), dated September 6, 1996, Master Agreement II, among
other things, relating to certain rights and obligations of said parties with
respect to the Ocean Springs Lease Agreement and the Sarasota Lease
Agreement; and
WHEREAS, Crossroads has assigned to Host Ventures its rights under
Master Agreement II, and Host Ventures has assumed the obligations of
CrossHost thereto with regard to the Ocean Springs Lease Agreement and the
Sarasota Lease Agreement; and
WHEREAS, Host Ventures, Host Funding, Lessee and Crossroads desire to,
upon the terms and conditions set forth herein, terminate the Host Ventures
Lease Agreements and Master Agreement II (but only as it relates to the Ocean
Springs Property and the Sarasota Property).
NOW, THEREFORE, in consideration of the mutual premises contained
herein, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged and confessed by the parties
hereto, Host Ventures, Host Funding, Lessee and Crossroads, where and as
applicable, agree as follows:
<PAGE>
1. Host Ventures and Lessee acknowledge and agree that, as of the
Effective Date, the Host Ventures Lease Agreements are hereby terminated and
declared to be of no further force or effect. Incident to such terminations,
Host Ventures and Lessee acknowledge and agree that neither Host Ventures nor
Lessee shall have any further obligations one to the other pursuant to the
Host Ventures Lease Agreements, monetary, non-monetary, or otherwise, except
as set forth hereinafter in this Agreement. Notwithstanding anything
contained herein to the contrary, Lessee further agrees, at no expense to
Lessee, to cooperate fully with BAC Hotel Management, Inc. ("BAC"), the new
operator of the Host Ventures Properties, so as to facilitate an orderly and
effective transition of the ongoing operations thereof.
2. Host Ventures, Lessee and Crossroads agree that Master Agreement
II (but only as to the Ocean Springs Lease Agreement and the Sarasota Lease
Agreement) is hereby terminated and declared to be of no further force and
effect. Incident to such termination, Host Ventures, Lessee and Crossroads
acknowledge and agree that Host Ventures, Lessee and Crossroads (but only as
to the Ocean Springs Lease Agreement and the Sarasota Lease Agreement) have
no further obligations one to the other pursuant to Master Agreement II,
monetary, non-monetary, or otherwise, except as hereinafter set forth in this
Agreement.
3. In consideration for the termination of the Host Ventures Lease
Agreements and Master Agreement II (but only as to the Ocean Springs Lease
Agreement and the Sarasota Lease Agreement), Host Ventures and/or Host
Funding agree to on the Effective Date pay or cause to be paid to Lessee
and/or Crossroads the sum of $112,900.00 in cash PLUS the sum of all petty
cash on site as of the Closing Date at the Host Ventures Properties LESS
$47,111.00 (working capital deposits delivered by Host Ventures, or its
predecessor-in-interest, CrossHost, to Lessee upon the commencement of the
Host Ventures Leases) and LESS $19,911.00 (working capital deposits delivered
by Host Ventures to Lessee upon the commencement of the Flagstaff Lease
Agreement).
4. In consideration for the termination of the Host Ventures Lease
Agreements and Master Agreement II (but only as to the Ocean Springs Lease
Agreement and the Sarasota Lease Agreement), and with respect to the Host
Ventures Lease Agreements, Lessee agrees to on the Effective Date transfer
and deliver to Host Ventures (or, at the option of Host Ventures, to BAC)
all assets (other than cash on hand, working capital and capital expenditure
reserves), inventory and equipment delivered by Host Ventures (or its
predecessor-in-interest CrossHost), to Lessee upon the commencement of the
Host Ventures Lease Agreements and Host Ventures agrees, or agrees to cause
BAC to, assume all assets (other than cash on hand, working capital and
capital expenditure reserves), liabilities (including, but not limited to,
service contracts, leases and other similar liabilities existing at, or
arising after the commencement of the Host Ventures Lease Agreements),
inventory and equipment delivered to Lessee by Host Ventures (or its
predecessor-in-interest, CrossHost) upon the commencement of the Host
Ventures Lease Agreements (all pursuant to Section 6.4 of the Host Ventures
Lease Agreements).
5. With respect to the Host Ventures Lease Agreements, Host Ventures
and Lessee agree that all revenues and expenses for the Host Ventures
Properties shall, in a manner reasonably
2
<PAGE>
acceptable to Host Ventures and Lessee, be prorated as of the Effective Date,
such that the revenues and expenses for the period of time preceding the
Effective Date shall be for the account of Lessee, and the revenues and
expenses for the period of time from and after the Effective Date shall be
for the account of Host Ventures or its designee.
6. Host Ventures and Lessee, as to the Host Ventures Lease
Agreements, acknowledge and agree that the indemnity obligations of Host
Ventures and Lessee contained in Sections 8 and 23 of the Host Ventures Lease
Agreements (but, as to Lessee, only for events described therein and arising
after the commencement of the Host Ventures Lease Agreement and prior to the
Effective Date, and, as to Host Ventures, only for such events and arising
prior to the commencement of the Host Ventures Lease Agreements or after the
Effective Date) shall survive the execution and closing of the transactions
contemplated by this Agreement for the benefit of Host Ventures, Host
Funding, Lessee and Crossroads, as applicable. Further, and notwithstanding
the existence of any insurance, and without regard to the policy limits of
any insurance, Lessee and Crossroads, jointly and severally,, will protect,
indemnify, hold harmless and defend Host Ventures and Host Funding, their
affiliates, subsidiaries, members, officers, directors, managers, agents and
assigns ("Host Indemnified Persons"), from and against all liabilities,
obligations, claims, damages, penalties, causes of action, costs and expenses
(including, without limitation, reasonable attorneys' fees and expenses)
imposed upon or incurred by or asserted against Host Indemnified Persons by
reason of any failure on the part of Lessee to hereafter, and if required,
satisfy or comply with its hereinabove described indemnity obligations.
Additionally, and notwithstanding the existence of any insurance, and without
regard to the policy limits of any insurance, Host Funding and Host Ventures,
jointly and severally, will protect, indemnify, hold harmless and defend
Lessee and Crossroads, their affiliates, subsidiaries, members, officers,
directors, managers, agents and assigns ("Crossroads Indemnified Persons"),
from and against all liabilities, obligations, claims, damages, penalties,
causes of action, costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses) imposed upon or incurred by or
asserted against Crossroads Indemnified Persons by reason of any failure on
the part of Host Ventures to hereafter, and if required, satisfy or comply
with its hereinabove described indemnity obligations.
7. With respect to the Host Ventures Properties, Lessee and
Crossroads acknowledge and agree that any employees or personnel of Lessee
involved in the operation by Lessee of the Host Ventures Properties will be
terminated as of the Effective Date, and any such employees which BAC elects
not to re-employ (the "Non-BAC Employees") shall not be deemed for any reason
to be the employees or personnel of BAC, Host Ventures or Host Funding.
Lessee and Crossroads further acknowledges and agree that from and after the
Effective Date, neither BAC, Host Ventures nor Host Funding shall be
responsible or liable for the Employee Costs (hereinafter defined) payable,
accruing or otherwise due to any Non-BAC Employees. Lessee and Crossroads
jointly and severally agree to defend, indemnify and hold harmless BAC, Host
Ventures and Host Funding from and against each and every demand, claim,
loss, cost and expense, including, but not limited to, reasonable attorneys'
fees, imposed or incurred by any of said parties, which directly or
indirectly, relate to, result from or arise out of Employee Costs relating to
the Non-BAC Employees. Lessee and Crossroads further acknowledge and agree
that Lessee shall be responsible for the payment of any
3
<PAGE>
and all termination and exit payments or the like payable, accruing or
otherwise due to any Non-BAC Employee. For the purposes hereof, "Employee
Costs" shall mean any costs, expenses, salaries, employee benefit, pension or
incentive plans (including without limitation, "ERISA" plans), insurance and
medical plans, employment agreements, exit payments (including without
limitation, final payroll or accrued vacation time) or the like payable,
accruing or otherwise due to any Non-BAC Employee.
8. Host Ventures, Host Funding, Lessee and Crossroads shall, in
addition to any consideration paid to Lessee and/or Crossroads pursuant to
Section 3 hereof, and prior to the Effective Date, agree upon the appropriate
adjustments to be made between the parties as to payments made or reserved by
Lessee for capital expenditures funded by Lessee pursuant to the Host
Ventures Lease Agreements ($34,837.00). In the event such adjustments result
in Host Ventures and/or Host Funding owing monies to Lessee, said monies
shall be paid to Lessee on or before the Effective Date.
9. CrossHost, Host Ventures and Host Funding acknowledge and agree
that the 60,000 shares of Host Funding Class A Common Stock previously
pledged as security for the obligations of Lessee and Crossroads under the
Master Agreements are and shall remain in the control and possession of
Lessee and/or Crossroads free and clear of such security interest, subject to
the terms and conditions of that certain letter agreement, dated March 25,
1998, and relating to the rights of Crossroads as to the sale of such shares
of Host Funding Class A Common Stock.
10. Host Ventures, Host Funding, Lessee and Crossroads understand and
agree that the performance of the obligations of each of said parties
hereunder is subject to the respective lenders and/or mortgagees of Host
Ventures holding liens on the Host Ventures Properties having approved this
Agreement and the terms and provisions hereof, and the respective
franchisors pursuant to any existing franchise agreements under which the
Host Venture Properties are operated have approved the transition of the
operations hereof. Lessee and Crossroads also acknowledge and agree that the
performance of the obligations of Host Ventures and Host Funding hereunder is
further subject to the execution by Host Ventures and BAC, of the new
operating or lease agreements with respect to the Host Ventures Properties.
11. Lessee also presently leases from Host Ventures the hotel commonly
known as a Super 8 Motel located at 3725 Kasper, Flagstaff, Arizona (the
"Flagstaff Lease Agreement"). With regard to the Flagstaff Lease Agreement,
CrossHost and Lessee acknowledge and agree that the Flagstaff Lease Agreement
is not currently being terminated and remains in full force and effect, but
may, within one (1) year after the Effective Date, be terminated by Lessee
upon ninety (90) days prior written notice to Host Ventures; provided, upon
such termination by Lessee (or upon termination of the Flagstaff Lease
Agreement Host Ventures), Host Ventures shall owe to Lessee a $71,700.00
lease cancellation fee and $35,000.00 for accrued Negative Base Rent (as
defined in the Flagstaff Lease Agreement).
4
<PAGE>
12. Host Ventures, Host Funding, Lessee and Crossroads acknowledge and
agree that this Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware.
13. Host Ventures, Host Funding, Lessee and Crossroads acknowledge and
agree that this Agreement shall inure to the benefit of and be binding upon
the parties hereto and their successors and assigns.
14. Host Ventures, Host Funding, Lessee and Crossroads acknowledge and
agree that this Agreement may not be modified or changed orally but may be
modified or changed only by a written agreement signed by the parties hereto.
15. Host Ventures, Host Funding, Lessee and Crossroads acknowledge and
agree that if any provision of this Agreement or the application thereof to
any person or circumstances shall be invalid or unenforceable to any extent,
the remainder of this Agreement and the application of such provisions to
other person or circumstances shall not be effected thereby and shall be
enforceable to the greatest extent permitted by law.
16. Host Ventures, Host Funding, Lessee and Crossroads understand and
agree that should any party to this Agreement commence legal proceedings
against the other to enforce the terms and provisions of this Agreement, the
party losing in such legal proceeding should pay the attorney's fees and
other expenses of the party prevailing in such legal proceedings.
17. Host Ventures, Host Funding, Lessee and Crossroads understand and
agree that this Agreement is the entire agreement of the parties hereto with
regard to the subject matter addressed herein and supersedes any prior
written or oral agreements between the parties hereto regarding same.
IN WITNESS WHEREOF, the parties have executed this Agreement by their
duly authorized officers as of the Effective Date.
HOST VENTURES:
HOST VENTURES, INC., a Maryland corporation
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
5
<PAGE>
HOST FUNDING:
HOST FUNDING, INC., a Maryland corporation
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
LESSEE:
CROSSROADS HOSPITALITY TENANT COMPANY,
L.L.C., an affiliate of Crossroads
Hospitality Company, L.L.C.
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
CROSSROADS:
CROSSROADS HOSPITALITY COMPANY, L.L.C.,
a Delaware limited liability company
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
6
<PAGE>
EXHIBIT "A"
HOST VENTURES LEASE AGREEMENTS
1. Lease Agreement (as from time to time amended, the "Ocean Springs Lease
Agreement"), dated September 6, 1996, covering the Ocean Springs Property,
and executed by CrossHost, as lessor, and Lessee, as lessee, the rights of
CrossHost as lessor thereunder having been assigned by CrossHost to Host
Ventures.
2. Lease Agreement (as from time to time amended, the "Sarasota Lease
Agreement"), dated September 6, 1996, covering the Sarasota Property, and
executed by CrossHost, as lessor, and Lessee, as lessee, the rights of
CrossHost as lessor thereunder having been assigned by CrossHost to Host
Ventures.
<PAGE>
RESTATED AND AMENDED
AGREEMENT REGARDING HOTEL LEASES
(CROSSHOST PROPERTIES)
This RESTATED AND AMENDED AGREEMENT REGARDING HOTEL LEASES (this
"Agreement") is made effective April 15, 1998 (the "Effective Date"), by and
between HOST FUNDING, INC., a Maryland corporation ("Host Funding"), and
BUCKHEAD AMERICA CORPORATION, a Delaware corporation ("BAC").
W I T N E S S E T H:
WHEREAS, CrossHost, Inc., a Maryland corporation ("CrossHost"), a
wholly owned subsidiary of Host Funding, holds clear and marketable title to
certain Sleep Inn or Super 8 hotel properties located in Destin, Florida (the
"Destin Property"), Miner, Missouri (the "Miner Property"), Poplar Bluff,
Missouri (the "Poplar Bluff Property"), Somerset, Kentucky (the "Somerset
Property"), and Rock Falls, Illinois (the "Rock Falls Property (and said
hotel properties hereinafter sometimes collectively referred to as the "Hotel
Properties"); and
WHEREAS, the Hotel Properties are presently leased to Crossroads
Hospitality Tenant Company, LLC, a Delaware limited liability company
("CHTC") pursuant to certain lease agreements being terminated by CrossHost
and CHTC pursuant to that certain Termination of Certain Lease Agreements and
Master Agreements Related Thereto - CrossHost Properties (the "Termination
Agreement"); and
WHEREAS, CrossHost, as "lessor," and BAC Hotel Management, Inc., a
Delaware corporation ("Lessee"), as "lessee," are entering into separate and
individual lease agreements (hereinafter sometimes collectively referred to
as the "Leases") pursuant to which CrossHost will lease to Lessee the Destin
Property (the "Destin Lease"), the Miner Property (the "Miner Lease"), the
Poplar Bluff Property (the "Poplar Bluff Lease"), the Somerset Property (the
"Somerset Lease"), and the Rock Falls Property (the "Rock Falls Lease"); and
WHEREAS, Host Funding and BAC have previously entered into that certain
Agreement Regarding Hotel Properties (the "Original Agreement"), dated
effective April 15, 1998, and desire to restate and amend the Original
Agreement such that this Agreement will be executed in partial replacement of
and substitution for the Original Agreement (and total replacement with
respect to the Lease).
NOW, THEREFORE, in consideration of the mutual premises contained
herein, and other good and valuable consideration, including the execution of
the Leases, the receipt and sufficiency of which is hereby acknowledged and
confessed by the parties hereto, Host Funding and BAC agree as follows:
<PAGE>
1. PURCHASE PRICE. BAC shall, in consideration of the execution of
the Leases, pay and/or deliver to Host Funding the sum of $789,375.00 (the
"Lease Rights Acquisition Fee"), as follows:
(a) BAC's delivery to Host Funding of the sum of $308,172.00 in cash
or other immediately available funds (the "Cash Portion of the Lease Rights
Acquisition Fee") upon the date the Leases are fully executed by all
parties thereto; provided, Host Funding acknowledges and agrees that the
actual Cash Portion of the Lease Rights Acquisition Fee to be delivered to
Host Funding is $308,172.00 LESS the approximate sum of $236,000.00
(approximate net sum to be delivered by BAC, Lessee and/or Host Funding to
CHTC pursuant to the Termination Agreement; and, provided further, Host
Funding acknowledges and agrees that a $63,150.00 portion of the Cash
Portion of the Lease Rights Acquisition Fee may, in lieu of delivery of
same to Host Funding, be used as working capital with respect to the Hotel
Properties;
(b) BAC's delivery to Host Funding of a promissory note (the "Lease
Acquisition Finance Note"), in the original principal amount of
$133,878.00, executed by BAC, payable to Host Funding, bearing no interest
prior to maturity, maturing on the first anniversary of the effective date
of the Leases, and otherwise upon such terms and conditions as are
reasonably acceptable to BAC and Host Funding (the "Finance Note Portion of
the Lease Rights Acquisition Fee"), upon the date the Leases are fully
executed by all parties thereto; and
(c) BAC's delivery to Host Funding, within fifteen (15) days after
the date the Leases are fully executed by all parties thereto, of the
number of unregistered shares of the common stock of BAC having an
aggregate value of $252,600.00 (the "BAC Stock"), for the purposes hereof
the value of the BAC Stock to be deemed to be the average selling price for
the common stock of BAC as reported on NASDAQ for the period of time
beginning ten (10) days prior to the date the Leases are fully executed by
all parties thereto, and ending ten (10) days after said date (the "BAC
Stock Portion of the Lease Rights Acquisition Fee").
With respect to the Lease Rights Acquisition Fee, Host Funding
acknowledges and agrees that BAC shall receive a $94,725.00 credit (the
"$94,725.00 Portion of the Lease Rights Acquisition Fee") against same for
legal, accounting and other professional fees incurred by BAC incident to the
transactions described herein. Further, BAC and Host Funding agree that, as
among the Hotel Properties and the Leases, the Lease Rights Acquisition Fee
shall be allocated as set forth on EXHIBIT A attached hereto and incorporated
herein by reference for all purposes.
2. LEASE RIGHTS ACQUISITION FEE DEPOSIT. Upon execution of this
Agreement, BAC shall deliver to Host Funding $63,150.00 (the "Lease Rights
Acquisition Fee Deposit"), which shall be paid and applied against the Cash
Portion of the Lease Rights Acquisition Fee; provided, in the event the
transactions contemplated hereby are not consummated for any reason
whatsoever, the Lease Rights Acquisition Fee Deposit will immediately be
returned to BAC by Host Funding, and,
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<PAGE>
if Host Funding fails to timely do so, BAC shall have the right to offset
against the next accruing installments of percentage rent due by BAC to BH -
Auburn, L.P. and BH - Findlay, L.P., pursuant to those certain Lease
Agreements with said parties, as applicable (and related to Country Heath Inn
hotel properties located in Auburn, Indiana and Findlay, Ohio), an amount
equal to the Lease Rights Acquisition Fee Deposit, together with interest
accruing thereon at the rate of twelve percent (12%) per annum from the date
the Lease Rights Acquisition Fee Deposit was to be returned by Host Funding
to BAC until the date such obligation of Host Funding is satisfied in full.
3. SECURITY DEPOSITS. Section 48.1 of all of the Leases requires the
delivery to CrossHost of security deposits (collectively, the "Security
Deposits") consisting of the number of shares of the Class A Common Stock of
Host Funding (the "Host Funding Stock") having an aggregate value as
designated by each of the Leases. In consideration of the execution of the
Leases, and with respect to the Security Deposits, BAC agrees to, on or
before fifteen (15) days after the Commencement Date (as defined in each of
the Leases), purchase from Host Funding the number of shares of Host Funding
Stock having an aggregate value of $181,872.00, said $181,872.00 in aggregate
value of shares of Host Funding Stock to be allocated among the Leases and
the Security Deposits as set forth in EXHIBIT B attached hereto and
incorporated herein by reference for all purposes. The price per share of
the Host Funding Stock shall be the average selling price for Host Funding
Stock as reported on the American Stock Exchange for the period of time
beginning ten (10) days prior to the date the Leases are fully executed by
all parties thereto, and ending ten (10) days after said date. The purchase
price for the Host Funding Stock shall be payable by BAC's delivery to Host
Funding of a promissory note (the "Host Funding Stock Note") in the amount of
the purchase price for the Host Funding Stock, executed by BAC, payable to
Host Funding, bearing no interest prior to maturity, maturing on the first
anniversary of the effective date of the Leases, and otherwise upon such
terms and conditions as are reasonably acceptable to BAC and Host Funding.
BAC acknowledges that the Host Funding Stock shall be issued to BAC pursuant
to a private placement and shall be subject to applicable restrictions
imposed upon stock which has not been registered under applicable laws.
Further, BAC understands that if Host Funding files a registration statement
for shares of Host Funding Stock with the United States Securities and
Exchange Commission (other than an S-8 registration or an S-4 registration),
then BAC shall have the right to cause the Host Funding Stock to be included
in such registration provided that: if the registration is filed in
connection with an underwritten public offering, the underwriters shall have
the right to reduce the number of shares of the Host Funding Stock in
proportion to other shares of Host Funding Stock subject to similar
"piggyback" registration rights, and these registration rights shall expire
as soon as, and to the extent that, BAC is eligible to publicly trade the
Host Funding Stock pursuant to Rule 144 of the Securities Act of 1933.
4. AGREEMENTS WITH REGARD TO THE BAC STOCK. With regard to the BAC
Stock delivered to Host Funding pursuant to Paragraph 1(c) hereof, Host
Funding acknowledges that the BAC Stock shall be issued to Host Funding
pursuant to a private placement and shall be subject to applicable
restrictions imposed upon stock which has not been registered under
applicable securities laws. Further, Host Funding understands that if BAC
files a registration statement for shares of its common stock with the United
States Securities and Exchange Commission (other than an S-8
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<PAGE>
registration or an S-4 registration), then Host Funding shall have the right
to cause the BAC Stock to be included in such registration PROVIDED that: if
the registration is filed in connection with an underwritten public offering,
the underwriters shall have the right to reduce the number of shares of the
BAC Stock in proportion to other shares of BAC common stock subject to
similar "piggyback" registration rights, and these registration rights shall
expire as soon as, and to the extent that, Host Funding is eligible to
publicly trade the BAC Stock pursuant to Rule 144 of the Securities Act of
1933.
5. EXTRAORDINARY CAPITAL EXPENDITURES. BAC and Host Funding agree
that an amount equal to the aggregate sum of the Lease Acquisition Finance
Note and the Host Funding Stock Note (approximately $315,000.00) shall be
used for the renovation and/or refurbishment of all or certain of the Hotel
Properties, and in amounts and with respect to the Hotel Properties
reasonably agreed upon by BAC and Host Funding pursuant to the applicable
Capital Expenditures Budgets prepared for said Hotel Properties pursuant to
Section 40.1 of the Lease Agreements (the "Extraordinary Capital
Expenditures"); provided, the "Extraordinary Capital Expenditures" shall be
in addition to any capital expenditures made through use of monies reserved
or deposited by CrossHost or Host Ventures, as applicable, pursuant to
Section 40.1 of the Lease Agreements. BAC and Host Funding also agree that
$175,000.00 of the Extraordinary Capital Expenditures shall be allocated to
the Destin Property for the repair and/or renovation of out of service rooms,
the replacement of windows, and to provide a nonporous exterior with regard
to same (all pursuant to the Schedule of Repairs attached hereto as EXHIBIT C
and incorporated herein by reference for all purposes), Host Funding
further agreeing to undertake and use its best efforts to complete the
repair and renovation of the Destin Property no later than September __,
1998, and that Host Funding will be responsible for the costs of any such
repairs and renovations in excess of $175,000.00; provided further, that if
the Destin Property repair and renovation is not completed by September __,
1998, BAC agrees or agrees to cause Lessee to reserve said $175,000.00 (or
the portion thereof remaining unspent as of September __, 1998), with the
holder of the mortgage encumbering the Hotel Properties, and if the
anticipated renovation and/or refurbishment of the Hotel Properties, other
than the Destin Property, is not completed (and allocable funds are not
utilized) prior to the first anniversary of the effective date of the Leases,
BAC agrees or agrees to cause Lessee to deliver said funds not previously
utilized to Host Funding. BAC also agrees or agrees to cause Lessee to, upon
the request of the holder of the mortgage encumbering the Hotel Properties,
furnish such holder with periodic status and payment reports with respect to
all such Extraordinary Capital Expenditures. All Extraordinary Capital
Expenditures so made pursuant to this Section 6 shall automatically become
dollar-for-dollar reductions, first to the Host Funding Stock Note, and next,
to the Lease Acquisition Finance Note; provided, to the extent an amount
equal to the aggregate original sum of the Lease Acquisition Finance Note and
the Host Funding Stock Note are not utilized for Extraordinary Capital
Expenditures prior to the first anniversary of the effective date of the
Leases, any sums remaining unpaid on the Lease Acquisition Finance Note
and/or the Host Funding Stock Note (after all appropriate credits and/or
reductions have been applied against same pursuant to the provisions of this
Section 5) shall, and as applicable, immediately become due and payable by
BAC to Host Funding. Notwithstanding anything contained herein to the
contrary, BAC acknowledges that all personal property purchased by Lessee
through use of funds provided pursuant to this Section 5 or
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<PAGE>
Section 40.1 of the Leases, and all personal property purchased with monies
provided to Lessee by CrossHost or from monies generated through operation of
the Hotel Properties, shall be purchased solely in the name of CrossHost, and
shall remain the property of CrossHost (and not BAC or Lessee).
6. REPRESENTATIONS AND WARRANTIES OF HOST FUNDING. Host Funding, for
itself, and CrossHost, represents and warrants to BAC and/or Lessee, as
applicable, as follows:
(a) ORGANIZATION AND GOOD STANDING. Host Funding and CrossHost are
corporations duly organized, validly existing and in good standing
under the laws of the State of Maryland, as applicable, qualified to
do business and in good standing in the states in which the Hotel
Properties are located, and CrossHost has all right, power and
authority, together with all governmental licenses, authorizations,
consents and approvals, required to own, operate or lease the Hotel
Properties.
(b) AUTHORITY OF HOST FUNDING; ENFORCEABILITY. Host Funding has all
necessary power and authority to enter into this Agreement, to carry
out its obligations hereunder and to consummate the transactions
contemplated hereby. This Agreement has been duly authorized,
executed and delivered by Host Funding and this Agreement (and the
obligations of Host Funding set forth herein), assuming due
authorization, execution and delivery by BAC, constitutes the legal,
valid and binding obligation of Host Funding, enforceable against Host
Funding in accordance with its terms, subject to the effect, if any,
of bankruptcy, insolvency, reorganization, moratorium and other
similar laws affecting the rights of creditors generally and the
effect, if any, of general principles of equity.
(c) AUTHORITY OF CROSSHOST; ENFORCEABILITY. CrossHost has all necessary
power and authority to enter into the Leases, to carry out its
obligations thereunder and to consummate the transactions contemplated
thereby. The Leases have been duly authorized, and, subject to the
provisions hereof, will be executed and delivered by CrossHost, and
the Leases (and the obligations of CrossHost set forth therein),
assuming due authorization, execution and delivery by all other
parties thereto, will constitute the legal, valid and binding
obligation of CrossHost, enforceable against CrossHost in accordance
with their terms, subject to the effect, if any, of bankruptcy,
insolvency, reorganization, moratorium and other similar laws
affecting the rights of creditors generally and the effect, if any, of
general principles of equity.
(d) NO CONFLICTS; CONSENTS (HOST FUNDING). The execution, delivery and
performance of this Agreement by Host Funding and the transactions
contemplated hereby do not and will not:
(i) violate or conflict with the certificate of incorporation or
bylaws or other organizational documents of Host Funding;
5
<PAGE>
(ii) conflict with or violate any law, rule or regulation of, or any
order, writ, judgment, injunction, decree, stipulation,
determination or award entered by or with, any foreign, federal,
state or local governmental authority, body, agency official,
regulatory or administrative agency, body or official, or
governmental commission, court, tribunal, body, agency official
or arbitral body (singularly and collectively, "Governmental
Authority") applicable to Host Funding or its business;
(iii) conflict with, result in any breach of, constitute a material
default (or constitute an event which with the giving of notice
or lapse of time, or both, would become or result in a conflict,
breach or default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or
result in the creation of any security interest, pledge,
mortgage, lien, charge, adverse claim of ownership or use or any
encumbrance of any kind (collectively, "Encumbrance") on Host
Funding or its assets pursuant to any agreement, contract or
other instrument, to which Host Funding is a party or by which
any of its assets or properties are bound or affected; or
(iv) require the consent of any third party reasonably necessary to
consummate the transactions contemplated hereby, or, if so
required, has or will be obtained by Host Funding at its sole
cost and expense;
(e) NO CONFLICTS; CONSENTS (CROSSHOST). The execution, delivery and
performance of the Leases by CrossHost, the operation of the Hotel
Properties as hotels, and the transactions contemplated thereby will
not:
(i) violate or conflict with the certificate of incorporation or
bylaws or other organizational documents of CrossHost;
(ii) conflict with or violate any law, rule or regulation of, or any
order, writ, judgment, injunction, decree, stipulation,
determination or award entered by or with, any Governmental
Authority applicable to CrossHost or its business;
(iii) conflict with, result in any breach of, constitute a material
default (or constitute an event which with the giving of notice
or lapse of time, or both, would become or result in a conflict,
breach or default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or
result in the creation of any security interest, pledge,
mortgage, lien, charge, adverse claim of ownership or use or any
Encumbrance on CrossHost, or its assets pursuant to any
agreement, contract or other instrument, to which CrossHost is a
party or by which any of its assets or properties, including,
without limitation, the Hotel Properties, are bound or affected;
or
6
<PAGE>
(iv) require the consent of any third party reasonably necessary to
consummate the transactions contemplated hereby, or, if so
required, has or will be obtained by CrossHost, at its sole cost
and expense.
(f) HOTEL PROPERTIES. CrossHost has good, clear and marketable title to
the Hotel Properties. Except as otherwise disclosed in writing to
BAC, including without limitation, with regard to the Destin Property,
the Hotel Properties are free from any material defect. Each of the
Hotel Properties is zoned, and all governmental approvals have been
obtained, for the current use of each of the Hotel Properties as
hotels.
(g) ADA COMPLIANCE. To the best knowledge of Host Funding, each of the
Hotel Properties is in full compliance with the Americans With
Disabilities Act and all rules and regulations promulgated thereunder
or in connection therewith (the "ADA Act") and neither Host Funding
nor CrossHost has received notice from any Governmental Authority, or
complaint for allegation from any third party asserting that any of
the Hotel Properties is not in full compliance with the ADA Act.
(h) LITIGATION. There are no pending (or to the best knowledge of Host
Funding, threatened) claims, disputes, actions, suits, arbitrations,
inquiries, audits, proceedings or investigations (or any basis
therefor) by or against Host Funding or CrossHost or any of their
respective assets or properties, including any of the Hotel
Properties.
(i) BROKERS. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated under this Agreement or the Leases and Host
Funding will indemnify and hold harmless BAC and Lessee from any such
payments alleged to be due through Host Funding or CrossHost.
(j) ENVIRONMENTAL MATTERS. Other than as found or contained in normal and
customary materials and supplies used in connection with the operation
of the Hotel Properties, there has been no presence, use, generation,
release, discharge, storage, disposal, or transportation of any
Hazardous Materials (as hereinafter defined) on, under, in, about, to,
or from the Hotel Properties. As used herein, the term "Hazardous
Materials" means any hazardous or toxic substances, material or
wastes, including, but not limited to, those substances, materials,
and wastes listed in the United States Department of Transportation
Hazardous Materials Table (49 C.F.R. Section 172.101) or by the
Environmental Protection Agency's hazardous substances (40 CRIER Part
302) and amendments thereto, or such substances, materials,
constituents, and wastes which are currently regulated under any
applicable local, state, or federal law including, without limitation:
(i) petroleum, gasoline or other petroleum derivatives, or additives
to gasoline or other petroleum derivative; (ii) asbestos or asbestos-
containing materials; (iii) polychlorinated biphenyls; (iv) designated
as a "hazardous
7
<PAGE>
substance" pursuant to section 307 of the Clean Water Act (33 U.S.C.
Section 1317); (v) defined as "hazardous waste" pursuant to section
1004 of the Resource Conservation and Recovery Act, 42 U.S.C. Section
6903); (vi) defined as a "hazardous substance" pursuant to section
101 of the Comprehensive Environmental Response, Compensation, and
Liability Act, 2 U.S.C. Section 9601 ET SEQ. (42 U.S.C. Section
9601); or (vii) any substance the nature, use, manufacture, or
effect of which render it subject to federal, state, or local
regulation, investigation, removal, or remediation as potentially
hazardous or toxic, injurious to human health or welfare, or
injurious to the environment.
(k) EMPLOYEE MATTERS. Any employees associated with the operations of the
Hotel Properties are employees of CHTC and/or an affiliate of CHTC,
and are not the employees of Host Funding or CrossHost.
(l) COMPLIANCE WITH LAWS. To the best knowledge of Host Funding, neither
Host Funding nor CrossHost is in violation of, or has violated, any
applicable Federal, state, local or foreign or other law, regulation
or order or any other requirement of any Governmental Authority. Host
Funding is not now charged with, and to the best knowledge of Host
Funding, neither Host Funding nor CrossHost is now under investigation
with respect to, any possible violation of any applicable law,
regulation or order, and Host Funding and CrossHost have filed all
reports required to be filed with any Governmental Authority on or
before the Effective Date.
7. REPRESENTATIONS AND WARRANTIES OF BAC. BAC, for itself and
Lessee, as applicable, represents and warrants to Host Funding and CrossHost,
as applicable, as follows:
(a) ORGANIZATION AND GOOD STANDING. BAC is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware. Lessee is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, and has
all right, power and authority, together with all governmental
licenses, authorizations, consents and approvals, required to operate
or lease the Hotel Properties.
(b) AUTHORITY OF BAC; ENFORCEABILITY. BAC has all necessary power and
authority to enter into this Agreement, to carry out its obligations
hereunder and to consummate the transactions contemplated hereby.
This Agreement has been duly authorized, executed and delivered by BAC
and this Agreement (and the obligations of BAC set forth herein),
assuming due authorization, execution and delivery by Host Funding,
constitutes the legal, valid and binding obligation of BAC,
enforceable against BAC in accordance with its terms, subject to the
effect, if any, of bankruptcy, insolvency, reorganization, moratorium
and other similar laws affecting the rights of creditors generally and
the effect, if any, of general principles of equity.
8
<PAGE>
(c) AUTHORITY OF LESSEE; ENFORCEABILITY. Lessee has all necessary power
and authority to enter into the Leases, to carry out its obligations
thereunder and to consummate the transactions contemplated thereby.
The Leases have been duly authorized, executed and delivered by
Lessee, and the Leases (and the obligations of Lessee set forth
therein), assuming due authorization, execution and delivery by
CrossHost, constitute the legal, valid and binding obligation of
Lessee enforceable against Lessee in accordance with their terms,
subject to the effect, if any, of bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting the rights
of creditors generally and the effect, if any, of general principles
of equity.
(d) NO CONFLICTS; CONSENTS (BAC). The execution, delivery and performance
of this Agreement by BAC and the transactions contemplated hereby do
not and will not:
(i) violate or conflict with the certificate of incorporation or
bylaws or other organizational documents of BAC;
(ii) conflict with or violate any law, rule or regulation of, or any
order, writ, judgment, injunction, decree, stipulation,
determination or award entered by or with, any Governmental
Authority applicable to BAC or its business;
(iii) conflict with, result in any breach of, constitute a material
default (or constitute an event which with the giving of notice
or lapse of time, or both, would become or result in a conflict,
breach or default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or
result in the creation of any security interest, pledge,
mortgage, lien, charge, adverse claim of ownership or use or any
encumbrance of any Encumbrance on BAC or its assets pursuant to
any agreement, contract or other instrument, to which BAC is a
party or by which any of its assets or properties are bound or
affected; or
(iv) require the consent of any third party reasonably necessary to
consummate the transactions contemplated hereby, or, if so
required, has or will be obtained by BAC at its sole cost and
expense.
(e) NO CONFLICTS; CONSENTS (LESSEE). The execution, delivery and
performance of the Leases by Lessee, the operation of the Hotel
Properties as hotels, and the transactions contemplated thereby do no
and will not:
(i) violate or conflict with the articles of organization or other
organizational documents of Lessee;
9
<PAGE>
(ii) conflict with or violate any law, rule or regulation of, or any
order, writ, judgment, injunction, decree, stipulation,
determination or award entered by or with, any Governmental
Authority applicable to Lessee or its business;
(iii) conflict with, result in any breach of, constitute a material
default (or constitute an event which with the giving of notice
or lapse of time, or both, would become or result in a conflict,
breach or default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or
result in the creation of any security interest, pledge,
mortgage, lien, charge, adverse claim of ownership or use or any
Encumbrance on Lessee or its assets pursuant to any agreement,
contract or other instrument, to which Lessee is a party or by
which any of its assets or properties are bound or affected; or
(iv) require the consent of any third party reasonably necessary to
consummate the transactions contemplated hereby, or, if so
required, has or will be obtained by Lessee at its sole cost and
expense.
(f) LITIGATION. There are no pending (or to the best knowledge of BAC,
threatened) claims, disputes, actions, suits, arbitrations, inquiries,
audits, proceedings or investigations (or any basis therefor) by or
against BAC or Lessee or any of their respective assets or properties
which would have a material affect on the ability of BAC to perform
its obligations under this Agreement.
(g) BROKERS. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated under this Agreement or the Leases and BAC
will indemnify and hold harmless Host Funding and CrossHost from any
such payments alleged to be due through BAC or Lessee.
(h) COMPLIANCE WITH LAWS. To the best knowledge of BAC, neither BAC nor
Lessee is in violation of, and has not violated, any applicable
Federal, state, local or foreign or other law, regulation or order or
any other requirement of any Governmental Authority. BAC is not now
charged with, and to the best knowledge of BAC, neither BAC nor Lessee
is not now under investigation with respect to, any possible violation
of any applicable law, regulation or order, and BAC and Lessee have
filed all reports required to be filed with any Governmental Authority
on or before the Effective Date.
10
<PAGE>
8. MISCELLANEOUS.
(a) This Agreement shall be governed by and construed in accordance
with the laws of the state in which the Hotel Property in question is
located.
(b) This Agreement shall inure to the benefit of and be binding upon
the parties hereto and their successors and assigns.
(c) This Agreement may not be modified or changed orally, but may be
modified or changed only by a written agreement signed by the parties
hereto.
(d) No waiver of any breach of any covenant, condition or agreement
contained herein shall be construed to be a subsequent waiver of that
covenant, condition or agreement or of any subsequent breach thereof or of
this Agreement.
(e) If any provision of this Agreement or the application thereof to
any person or circumstances shall be invalid or unenforceable to any
extent, the remainder of this Agreement and the application of such
provisions to other persons or circumstances shall not be affected thereby
and shall be enforceable to the greatest extent permitted by law.
(f) To the extent that any conflict exists between this Agreement and
any of the Leases, this Agreement shall control the understandings and
agreements among the parties respecting the within subject matter.
(g) It us understood and agreed that should any party to this
Agreement commence legal proceedings against the other to enforce the terms
and provisions of this Agreement, the party losing in such legal proceeding
should pay the attorneys' fees and other expenses of the party prevailing
in such legal proceedings.
(h) Host Funding and BAC understand and agree that the performance of
the obligations of said parties hereunder is subject to (i) the respective
lenders and/or mortgagees of CrossHost holding liens on any of the Hotel
Properties having approved this Agreement and the terms and provisions
hereof, and (ii) the execution of the Leases by CrossHost and Lessee. BAC
also acknowledges and agrees that the performance of the obligations of
Host Funding hereunder is further subject to the execution by Host Funding,
CHTC, CHC, CrossHost and Host Ventures, Inc., a Maryland corporation, of
that certain document called Termination of Certain Lease Agreements and
Master Agreements Related Thereto (CrossHost Properties), reflecting
therein, among other subjects, various agreements between said parties
relating to the termination of the leases presently in existence with
respect to the Hotel Properties.
(i) In consideration of the expenses to be incurred by BAC in
pursuing the transactions described herein and in conducting its due
diligence, neither Host Funding nor
11
<PAGE>
CrossHost, nor any of their officers, employees, representatives
and agents shall for a period of forty (40) days hereafter enter into
any negotiations or discussions with any third party relating to the
sale or lease of the Hotel Properties. During such forty (40) day
period, BAC and Host Funding will negotiate in good faith in order to
execute the Leases and related documents contemplated by this Agreement.
(j) It is understood and agreed that this Agreement is the entire
agreement of the parties hereto with regard to the subject matter addressed
herein and supersedes any prior written or oral agreements between the
parties hereto regarding same.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Effective Date.
HOST FUNDING:
HOST FUNDING, INC., a Maryland corporation
By:
--------------------------------------
Michael S. McNulty, President
BAC:
BUCKHEAD AMERICA CORPORATION, a
Delaware corporation
By:
---------------------------------------
Douglas C. Collins, President
12
<PAGE>
EXHIBIT A
ALLOCATION OF LEASE RIGHTS ACQUISITION FEE
<TABLE>
<CAPTION>
HOTEL PROPERTY AND LEASE LEASE RIGHTS CASH PORTION OF FINANCE NOTE BAC STOCK PORTION $94,725.00
ACQUISITION FEE THE LEASE RIGHTS PORTION OF THE OF THE LEASE PORTION OF THE
ACQUISITION FEE LEASE RIGHTS RIGHTS ACQUISITION LEASE RIGHTS
ACQUISITION FEE FEE (BY VALUE) ACQUISITION FEE
<S> <C> <C> <C> <C> <C>
1. Destin Property and Destin $322,656.00 $125,965.00 $54,723.00 $103,250.00 $38,719.00
Lease
2. Miner Property and Miner $194,818.00 $ 76,057.00 $33,041.00 $62,342.00 $23,378.00
Lease
3. Poplar Bluff Property and $117,682.00 $ 45,943.00 $19,959.00 $37,658.00 $14,122.00
Poplar Bluff Lease
4. Somerset Property and $119,714.00 $ 46,736.00 $20,303.00 $38,308.00 $14,366.00
Somerset Lease
5. Rock Falls Property and $ 34,505.00 $ 13,471.00 $ 5,852.00 $11,042.00 $ 4,141.00
Rock Falls Lease
</TABLE>
13
<PAGE>
EXHIBIT B
ALLOCATION IN VALUE OF HOST
FUNDING STOCK AND SECURITY DEPOSITS
<TABLE>
<CAPTION>
LEASE SECURITY DEPOSIT
(Value in Shares of
Host Funding Stock)
--------------------
<S> <C>
1. Destin Lease $74,340.00
2. Miner Lease $44,886.00
3. Poplar Bluff Lease $27,114.00
4. Somerset Lease $27,582.00
5. Rock Falls Lease $ 7,950.00
</TABLE>
14
<PAGE>
RESTATED AND AMENDED
AGREEMENT REGARDING HOTEL LEASES
(HOST VENTURES PROPERTIES)
This RESTATED AND AMENDED AGREEMENT REGARDING HOTEL LEASES (this
"Agreement") is made effective April 15, 1998 (the "Effective Date"), by and
between HOST FUNDING, INC., a Maryland corporation ("Host Funding"), and
BUCKHEAD AMERICA CORPORATION, a Delaware corporation ("BAC").
W I T N E S S E T H:
WHEREAS, Host Ventures, Inc., a Maryland corporation ("CrossHost"), a
wholly owned subsidiary of Host Funding, holds clear and marketable title to
certain Sleep Inn hotel properties located in Ocean Springs, Mississippi (the
"Ocean Springs Property") and Sarasota, Florida (the "Sarasota Property")
(and said hotel properties hereinafter sometimes collectively referred to as
the "Hotel Properties"); and
WHEREAS, the Hotel Properties are presently leased to Crossroads
Hospitality Tenant Company, LLC, a Delaware limited liability company
("CHTC") pursuant to certain lease agreements being terminated by CrossHost
and CHTC pursuant to that certain Termination of Certain Lease Agreements and
Master Agreements Related Thereto - Host Ventures Properties (the
"Termination Agreement"); and
WHEREAS, Host Ventures, as "lessor," and BAC Hotel Management, Inc., a
Delaware corporation ("Lessee"), as "lessee," are entering into separate and
individual lease agreements (hereinafter sometimes collectively referred to
as the "Leases") pursuant to which Host Ventures will lease to Lessee the
Ocean Springs Property (the "Ocean Springs Lease") and the Sarasota Property
(the "Sarasota Lease"); and
WHEREAS, Host Funding and BAC have previously entered into that certain
Agreement Regarding Hotel Properties (the "Original Agreement"), dated
effective April 15, 1998, and desire to restate and amend the Original
Agreement such that this Agreement will be executed in partial replacement of
and substitution for the Original Agreement.
NOW, THEREFORE, in consideration of the mutual premises contained
herein, and other good and valuable consideration, including the execution of
the Leases, the receipt and sufficiency of which is hereby acknowledged and
confessed by the parties hereto, Host Funding and BAC agree as follows:
<PAGE>
1. PURCHASE PRICE. BAC shall, in consideration of the execution of
the Leases, pay and/or deliver to Host Funding the sum of $460,625.00 (the
"Lease Rights Acquisition Fee"), as follows:
(a) BAC's delivery to Host Funding of the sum of $179,828.00 in cash
or other immediately available funds (the "Cash Portion of the Lease Rights
Acquisition Fee") upon the date the Leases are fully executed by all
parties thereto; provided, Host Funding acknowledges and agrees that the
actual Cash Portion of the Lease Rights Acquisition Fee to be delivered to
Host Funding is $179,828.00 LESS the approximate sum of $112,900.00
(approximate net sum to be delivered by BAC, Lessee and/or Host Funding to
CHTC pursuant to the Termination Agreement; and, provided further, Host
Funding acknowledges and agrees that a $36,850.00 portion of the Cash
Portion of the Lease Rights Acquisition Fee may, in lieu of delivery of
same to Host Funding, be used as working capital with respect to the Hotel
Properties;
(b) BAC's delivery to Host Funding of a promissory note (the "Lease
Acquisition Finance Note"), in the original principal amount of $78,122.00,
executed by BAC, payable to Host Funding, bearing no interest prior to
maturity, maturing on the first anniversary of the effective date of the
Leases, and otherwise upon such terms and conditions as are reasonably
acceptable to BAC and Host Funding (the "Finance Note Portion of the Lease
Rights Acquisition Fee"), upon the date the Leases are fully executed by
all parties thereto; and
(c) BAC's delivery to Host Funding, within fifteen (15) days after
the date the Leases are fully executed by all parties thereto, of the
number of unregistered shares of the common stock of BAC having an
aggregate value of $147,400.00 (the "BAC Stock"), for the purposes hereof
the value of the BAC Stock to be deemed to be the average selling price for
the common stock of BAC as reported on NASDAQ for the period of time
beginning ten (10) days prior to the date the Leases are fully executed by
all parties thereto, and ending ten (10) days after said date (the "BAC
Stock Portion of the Lease Rights Acquisition Fee").
With respect to the Lease Rights Acquisition Fee, Host Funding
acknowledges and agrees that BAC shall receive a $55,275.00 credit (the
"$55,275.00 Portion of the Lease Rights Acquisition Fee") against same for
legal, accounting and other professional fees incurred by BAC incident to the
transactions described herein. Further, BAC and Host Funding agree that, as
among the Hotel Properties and the Leases, the Lease Rights Acquisition Fee
shall be allocated as set forth on EXHIBIT A attached hereto and incorporated
herein by reference for all purposes.
2. LEASE RIGHTS ACQUISITION FEE DEPOSIT. Upon execution of this
Agreement, BAC shall deliver to Host Funding $36,850.00 (the "Lease Rights
Acquisition Fee Deposit"), which shall be paid and applied against the Cash
Portion of the Lease Rights Acquisition Fee; provided, in the event the
transactions contemplated hereby are not consummated for any reason
whatsoever, the Lease Rights Acquisition Fee Deposit will immediately be
returned to BAC by Host Funding, and,
2
<PAGE>
if Host Funding fails to timely do so, BAC shall have the right to offset
against the next accruing installments of percentage rent due by BAC to BH -
Auburn, L.P. and BH - Findlay, L.P., pursuant to those certain Lease
Agreements with said parties, as applicable (and related to Country Heath Inn
hotel properties located in Auburn, Indiana and Findlay, Ohio), an amount
equal to the Lease Rights Acquisition Fee Deposit, together with interest
accruing thereon at the rate of twelve percent (12%) per annum from the date
the Lease Rights Acquisition Fee Deposit was to be returned by Host Funding
to BAC until the date such obligation of Host Funding is satisfied in full.
3. SECURITY DEPOSITS. Section 48.1 of all of the Leases requires the
delivery to CrossHost of security deposits (collectively, the "Security
Deposits") consisting of the number of shares of the Class A Common Stock of
Host Funding (the "Host Funding Stock") having an aggregate value as
designated by each of the Leases. In consideration of the execution of the
Leases, and with respect to the Security Deposits, BAC agrees to, on or
before fifteen (15) days after the Commencement Date (as defined in each of
the Leases), purchase from Host Funding the number of shares of Host Funding
Stock having an aggregate value of $106,128.00, said $106,128.00 in aggregate
value of shares of Host Funding Stock to be allocated among the Leases and
the Security Deposits as set forth in EXHIBIT B attached hereto and
incorporated herein by reference for all purposes. The price per share of
the Host Funding Stock shall be the average selling price for Host Funding
Stock as reported on the American Stock Exchange for the period of time
beginning ten (10) days prior to the date the Leases are fully executed by
all parties thereto, and ending ten (10) days after said date. The purchase
price for the Host Funding Stock shall be payable by BAC's delivery to Host
Funding of a promissory note (the "Host Funding Stock Note") in the amount of
the purchase price for the Host Funding Stock, executed by BAC, payable to
Host Funding, bearing no interest prior to maturity, maturing on the first
anniversary of the effective date of the Leases, and otherwise upon such
terms and conditions as are reasonably acceptable to BAC and Host Funding.
BAC acknowledges that the Host Funding Stock shall be issued to BAC pursuant
to a private placement and shall be subject to applicable restrictions
imposed upon stock which has not been registered under applicable laws.
Further, BAC understands that if Host Funding files a registration statement
for shares of Host Funding Stock with the United States Securities and
Exchange Commission (other than an S-8 registration or an S-4 registration),
then BAC shall have the right to cause the Host Funding Stock to be included
in such registration provided that: if the registration is filed in
connection with an underwritten public offering, the underwriters shall have
the right to reduce the number of shares of the Host Funding Stock in
proportion to other shares of Host Funding Stock subject to similar
"piggyback" registration rights, and these registration rights shall expire
as soon as, and to the extent that, BAC is eligible to publicly trade the
Host Funding Stock pursuant to Rule 144 of the Securities Act of 1933.
4. AGREEMENTS WITH REGARD TO THE BAC STOCK. With regard to the BAC
Stock delivered to Host Funding pursuant to Paragraph 1(c) hereof, Host
Funding acknowledges that the BAC Stock shall be issued to Host Funding
pursuant to a private placement and shall be subject to applicable
restrictions imposed upon stock which has not been registered under
applicable securities laws. Further, Host Funding understands that if BAC
files a registration statement for shares of its common stock with the United
States Securities and Exchange Commission (other than an S-8
3
<PAGE>
registration or an S-4 registration), then Host Funding shall have the right
to cause the BAC Stock to be included in such registration PROVIDED that: if
the registration is filed in connection with an underwritten public offering,
the underwriters shall have the right to reduce the number of shares of the
BAC Stock in proportion to other shares of BAC common stock subject to
similar "piggyback" registration rights, and these registration rights shall
expire as soon as, and to the extent that, Host Funding is eligible to
publicly trade the BAC Stock pursuant to Rule 144 of the Securities Act of
1933.
5. EXTRAORDINARY CAPITAL EXPENDITURES. BAC and Host Funding agree
that an amount equal to the aggregate sum of the Lease Acquisition Finance
Note and the Host Funding Stock Note (approximately $184,000.00) shall be
used for the renovation and/or refurbishment of all or certain of the Hotel
Properties, and in amounts and with respect to the Hotel Properties
reasonably agreed upon by BAC and Host Funding pursuant to the applicable
Capital Expenditures Budgets prepared for said Hotel Properties pursuant to
Section 40.1 of the Lease Agreements (the "Extraordinary Capital
Expenditures"); provided, the "Extraordinary Capital Expenditures" shall be
in addition to any capital expenditures made through use of monies reserved
or deposited by CrossHost or Host Ventures, as applicable, pursuant to
Section 40.1 of the Lease Agreements; provided further, if the anticipated
renovation and/or refurbishment of the Hotel Properties is not completed (and
allocable funds are not utilized) prior to the first anniversary of the
effective date of the Leases, BAC agrees or agrees to cause Lessee to deliver
said funds not previously utilized to Host Funding. BAC also agrees or
agrees to cause Lessee to, upon the request of the holder of the mortgage
encumbering the Hotel Properties, furnish such holder with periodic status
and payment reports with respect to all such Extraordinary Capital
Expenditures. All Extraordinary Capital Expenditures so made pursuant to
this Section 6 shall automatically become dollar-for-dollar reductions, first
to the Host Funding Stock Note, and next, to the Lease Acquisition Finance
Note; provided, to the extent an amount equal to the aggregate original sum
of the Lease Acquisition Finance Note and the Host Funding Stock Note are not
utilized for Extraordinary Capital Expenditures prior to the first
anniversary of the effective date of the Leases, any sums remaining unpaid on
the Lease Acquisition Finance Note and/or the Host Funding Stock Note (after
all appropriate credits and/or reductions have been applied against same
pursuant to the provisions of this Section 5) shall, and as applicable,
immediately become due and payable by BAC to Host Funding. Additionally,
Credit Suisse First Boston Mortgage Capital LLC, holder of the existing
mortgage loan with respect to the Ocean Springs Property and the Sarasota
Property, has required Host Ventures to reserve approximately $185,000.00 for
capital expenditures related to the Ocean Springs Property and the Sarasota
Property, and, incident to same, BAC agrees to immediately pay to Host
Funding, for application to the Host Funding Stock Note, $100,000.00 of the
amount required to be so reserved. Notwithstanding anything contained herein
to the contrary, BAC acknowledges that all personal property purchased by
Lessee through use of funds provided pursuant to this Section 5 or Section
40.1 of the Leases, and all personal property purchased with monies provided
to Lessee by Host Ventures or from monies generated through operation of the
Hotel Properties, shall be purchased solely in the name of Host Ventures, and
shall remain the property of Host Ventures (and not BAC or Lessee).
4
<PAGE>
6. REPRESENTATIONS AND WARRANTIES OF HOST FUNDING. Host Funding, for
itself, and Host Ventures, represents and warrants to BAC and/or Lessee, as
applicable, as follows:
(a) ORGANIZATION AND GOOD STANDING. Host Funding and Host Ventures are
corporations duly organized, validly existing and in good standing
under the laws of the State of Maryland, as applicable, qualified to
do business and in good standing in the states in which the Hotel
Properties are located, and Host Ventures has all right, power and
authority, together with all governmental licenses, authorizations,
consents and approvals, required to own, operate or lease the Hotel
Properties.
(b) AUTHORITY OF HOST FUNDING; ENFORCEABILITY. Host Funding has all
necessary power and authority to enter into this Agreement, to carry
out its obligations hereunder and to consummate the transactions
contemplated hereby. This Agreement has been duly authorized,
executed and delivered by Host Funding and this Agreement (and the
obligations of Host Funding set forth herein), assuming due
authorization, execution and delivery by BAC, constitutes the legal,
valid and binding obligation of Host Funding, enforceable against Host
Funding in accordance with its terms, subject to the effect, if any,
of bankruptcy, insolvency, reorganization, moratorium and other
similar laws affecting the rights of creditors generally and the
effect, if any, of general principles of equity.
(c) AUTHORITY OF HOST VENTURES; ENFORCEABILITY. Host Ventures has all
necessary power and authority to enter into the Leases, to carry out
its obligations thereunder and to consummate the transactions
contemplated thereby. The Leases have been duly authorized, and,
subject to the provisions hereof, will be executed and delivered by
Host Ventures, and the Leases (and the obligations of Host Ventures
set forth therein), assuming due authorization, execution and delivery
by all other parties thereto, will constitute the legal, valid and
binding obligation of Host Ventures, enforceable against Host Ventures
in accordance with their terms, subject to the effect, if any, of
bankruptcy, insolvency, reorganization, moratorium and other similar
laws affecting the rights of creditors generally and the effect, if
any, of general principles of equity.
(d) NO CONFLICTS; CONSENTS (HOST FUNDING). The execution, delivery and
performance of this Agreement by Host Funding and the transactions
contemplated hereby do not and will not:
(i) violate or conflict with the certificate of incorporation or
bylaws or other organizational documents of Host Funding;
(ii) conflict with or violate any law, rule or regulation of, or any
order, writ, judgment, injunction, decree, stipulation,
determination or award entered by or with, any foreign, federal,
state or local governmental authority, body,
5
<PAGE>
agency official, regulatory or administrative agency, body or
official, or governmental commission, court, tribunal, body,
agency official or arbitral body (singularly and collectively,
"Governmental Authority") applicable to Host Funding or its
business;
(iii) conflict with, result in any breach of, constitute a material
default (or constitute an event which with the giving of notice
or lapse of time, or both, would become or result in a conflict,
breach or default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or
result in the creation of any security interest, pledge,
mortgage, lien, charge, adverse claim of ownership or use or any
encumbrance of any kind (collectively, "Encumbrance") on Host
Funding or its assets pursuant to any agreement, contract or
other instrument, to which Host Funding is a party or by which
any of its assets or properties are bound or affected; or
(iv) require the consent of any third party reasonably necessary to
consummate the transactions contemplated hereby, or, if so
required, has or will be obtained by Host Funding at its sole
cost and expense;
(e) NO CONFLICTS; CONSENTS (HOST VENTURES). The execution, delivery and
performance of the Leases by Host Ventures, the operation of the Hotel
Properties as hotels, and the transactions contemplated thereby will
not:
(i) violate or conflict with the certificate of incorporation or
bylaws or other organizational documents of Host Ventures;
(ii) conflict with or violate any law, rule or regulation of, or any
order, writ, judgment, injunction, decree, stipulation,
determination or award entered by or with, any Governmental
Authority applicable to Host Ventures or its business;
(iii) conflict with, result in any breach of, constitute a material
default (or constitute an event which with the giving of notice
or lapse of time, or both, would become or result in a conflict,
breach or default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or
result in the creation of any security interest, pledge,
mortgage, lien, charge, adverse claim of ownership or use or any
Encumbrance on Host Ventures, or its assets pursuant to any
agreement, contract or other instrument, to which Host Ventures
is a party or by which any of its assets or properties,
including, without limitation, the Hotel Properties, are bound or
affected; or
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<PAGE>
(iv) require the consent of any third party reasonably necessary to
consummate the transactions contemplated hereby, or, if so
required, has or will be obtained by Host Ventures, at its sole
cost and expense.
(f) HOTEL PROPERTIES. Host Ventures has good, clear and marketable title
to the Hotel Properties. Except as otherwise disclosed in writing to
BAC, the Hotel Properties are free from any material defect. Each of
the Hotel Properties is zoned, and all governmental approvals have
been obtained, for the current use of each of the Hotel Properties as
hotels.
(g) ADA COMPLIANCE. To the best knowledge of Host Funding, each of the
Hotel Properties is in full compliance with the Americans With
Disabilities Act and all rules and regulations promulgated thereunder
or in connection therewith (the "ADA Act") and neither Host Funding
nor Host Ventures has received notice from any Governmental Authority,
or complaint for allegation from any third party asserting that any of
the Hotel Properties is not in full compliance with the ADA Act.
(h) LITIGATION. There are no pending (or to the best knowledge of Host
Funding, threatened) claims, disputes, actions, suits, arbitrations,
inquiries, audits, proceedings or investigations (or any basis
therefor) by or against Host Funding or Host Ventures or any of their
respective assets or properties, including any of the Hotel
Properties.
(i) BROKERS. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated under this Agreement or the Leases and Host
Funding will indemnify and hold harmless BAC and Lessee from any such
payments alleged to be due through Host Funding or Host Ventures.
(j) ENVIRONMENTAL MATTERS. Other than as found or contained in normal and
customary materials and supplies used in connection with the operation
of the Hotel Properties, there has been no presence, use, generation,
release, discharge, storage, disposal, or transportation of any
Hazardous Materials (as hereinafter defined) on, under, in, about, to,
or from the Hotel Properties. As used herein, the term "Hazardous
Materials" means any hazardous or toxic substances, material or
wastes, including, but not limited to, those substances, materials,
and wastes listed in the United States Department of Transportation
Hazardous Materials Table (49 C.F.R. Section 172.101) or by the
Environmental Protection Agency's hazardous substances (40 CRIER Part
302) and amendments thereto, or such substances, materials,
constituents, and wastes which are currently regulated under any
applicable local, state, or federal law including, without limitation:
(i) petroleum, gasoline or other petroleum derivatives, or additives
to gasoline or other petroleum derivative; (ii) asbestos or asbestos-
containing materials; (iii) polychlorinated biphenyls; (iv) designated
as a "hazardous substance" pursuant to section 307 of the Clean Water
Act (33 U.S.C. Section 1317); (v)
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<PAGE>
defined as "hazardous waste" pursuant to section 1004 of
the Resource Conservation and Recovery Act, 42 U.S.C. Section
6903); (vi) defined as a "hazardous substance" pursuant to section
101 of the Comprehensive Environmental Response, Compensation, and
Liability Act, 2 U.S.C. Section 9601 ET SEQ. (42 U.S.C. Section
9601); or (vii) any substance the nature, use, manufacture, or
effect of which render it subject to federal, state, or local
regulation, investigation, removal, or remediation as potentially
hazardous or toxic, injurious to human health or welfare, or
injurious to the environment.
(k) EMPLOYEE MATTERS. Any employees associated with the operations of the
Hotel Properties are employees of CHTC and/or an affiliate of CHTC,
and are not the employees of Host Funding or Host Ventures.
(l) COMPLIANCE WITH LAWS. To the best knowledge of Host Funding, neither
Host Funding nor Host Ventures is in violation of, or has violated,
any applicable Federal, state, local or foreign or other law,
regulation or order or any other requirement of any Governmental
Authority. Host Funding is not now charged with, and to the best
knowledge of Host Funding, neither Host Funding nor Host Ventures is
now under investigation with respect to, any possible violation of any
applicable law, regulation or order, and Host Funding and Host
Ventures have filed all reports required to be filed with any
Governmental Authority on or before the Effective Date.
7. REPRESENTATIONS AND WARRANTIES OF BAC. BAC, for itself and Lessee,
as applicable, represents and warrants to Host Funding and Host Ventures, as
applicable, as follows:
(a) ORGANIZATION AND GOOD STANDING. BAC is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware. Lessee is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, and has
all right, power and authority, together with all governmental
licenses, authorizations, consents and approvals, required to operate
or lease the Hotel Properties.
(b) AUTHORITY OF BAC; ENFORCEABILITY. BAC has all necessary power and
authority to enter into this Agreement, to carry out its obligations
hereunder and to consummate the transactions contemplated hereby.
This Agreement has been duly authorized, executed and delivered by BAC
and this Agreement (and the obligations of BAC set forth herein),
assuming due authorization, execution and delivery by Host Funding,
constitutes the legal, valid and binding obligation of BAC,
enforceable against BAC in accordance with its terms, subject to the
effect, if any, of bankruptcy, insolvency, reorganization, moratorium
and other similar laws affecting the rights of creditors generally and
the effect, if any, of general principles of equity.
8
<PAGE>
(c) AUTHORITY OF LESSEE; ENFORCEABILITY. Lessee has all necessary power
and authority to enter into the Leases, to carry out its obligations
thereunder and to consummate the transactions contemplated thereby.
The Leases have been duly authorized, executed and delivered by
Lessee, and the Leases (and the obligations of Lessee set forth
therein), assuming due authorization, execution and delivery by Host
Ventures, constitute the legal, valid and binding obligation of Lessee
enforceable against Lessee in accordance with their terms, subject to
the effect, if any, of bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting the rights of creditors
generally and the effect, if any, of general principles of equity.
(d) NO CONFLICTS; CONSENTS (BAC). The execution, delivery and performance
of this Agreement by BAC and the transactions contemplated hereby do
not and will not:
(i) violate or conflict with the certificate of incorporation or
bylaws or other organizational documents of BAC;
(ii) conflict with or violate any law, rule or regulation of, or any
order, writ, judgment, injunction, decree, stipulation,
determination or award entered by or with, any Governmental
Authority applicable to BAC or its business;
(iii) conflict with, result in any breach of, constitute a material
default (or constitute an event which with the giving of notice
or lapse of time, or both, would become or result in a conflict,
breach or default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or
result in the creation of any security interest, pledge,
mortgage, lien, charge, adverse claim of ownership or use or any
encumbrance of any Encumbrance on BAC or its assets pursuant to
any agreement, contract or other instrument, to which BAC is a
party or by which any of its assets or properties are bound or
affected; or
(iv) require the consent of any third party reasonably necessary to
consummate the transactions contemplated hereby, or, if so
required, has or will be obtained by BAC at its sole cost and
expense.
(e) NO CONFLICTS; CONSENTS (LESSEE). The execution, delivery and
performance of the Leases by Lessee, the operation of the Hotel
Properties as hotels, and the transactions contemplated thereby do no
and will not:
(i) violate or conflict with the articles of organization or other
organizational documents of Lessee;
9
<PAGE>
(ii) conflict with or violate any law, rule or regulation of, or any
order, writ, judgment, injunction, decree, stipulation,
determination or award entered by or with, any Governmental
Authority applicable to Lessee or its business;
(iii) conflict with, result in any breach of, constitute a material
default (or constitute an event which with the giving of notice
or lapse of time, or both, would become or result in a conflict,
breach or default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or
result in the creation of any security interest, pledge,
mortgage, lien, charge, adverse claim of ownership or use or any
Encumbrance on Lessee or its assets pursuant to any agreement,
contract or other instrument, to which Lessee is a party or by
which any of its assets or properties are bound or affected; or
(iv) require the consent of any third party reasonably necessary to
consummate the transactions contemplated hereby, or, if so
required, has or will be obtained by Lessee at its sole cost and
expense.
(f) LITIGATION. There are no pending (or to the best knowledge of BAC,
threatened) claims, disputes, actions, suits, arbitrations, inquiries,
audits, proceedings or investigations (or any basis therefor) by or
against BAC or Lessee or any of their respective assets or properties
which would have a material affect on the ability of BAC to perform
its obligations under this Agreement.
(g) BROKERS. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated under this Agreement or the Leases and BAC
will indemnify and hold harmless Host Funding and Host Ventures from
any such payments alleged to be due through BAC or Lessee.
(h) COMPLIANCE WITH LAWS. To the best knowledge of BAC, neither BAC nor
Lessee is in violation of, and has not violated, any applicable
Federal, state, local or foreign or other law, regulation or order or
any other requirement of any Governmental Authority. BAC is not now
charged with, and to the best knowledge of BAC, neither BAC nor Lessee
is not now under investigation with respect to, any possible violation
of any applicable law, regulation or order, and BAC and Lessee have
filed all reports required to be filed with any Governmental Authority
on or before the Effective Date.
8. EXISTING OBLIGATION. Host Funding (i) acknowledges and agrees that
it owes BAC $20,000.00 for franchise fees related to the Country Hearth Inn
hotel properties described in Section 2 hereof, and (ii) that in order to
satisfy such indebtedness, said $20,000.00 sum may be
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<PAGE>
withheld from the first accruing Percentage Rent payments (as defined in the
Leases) due and payable pursuant to the terms of the Leases.
9. POTENTIAL ACQUISITION OF FLORIDA HOLIDAY INN PROPERTIES. Host
Funding has entered into two (2) Agreements of Sale and Purchase
(collectively, the "Agreements of Sale and Purchase") to acquire a Holiday
Inn Hotel & Suites located in Clearwater, Florida, and a Holiday Inn Express
located in Port Richey, Florida (collectively, the "Florida Hotel
Properties"), copies of the Agreements of Sale and Purchase having been
delivered to BAC by Host Funding. In consideration for Host Funding granting
to BAC the first right of refusal to be the operator and/or lessee of the
Florida Hotel Properties, which right of first refusal is hereby granted, BAC
shall, upon execution of this Agreement, deliver to the Title Company (as
defined in the Agreements of Sale and Purchase) on behalf of Host Funding,
the $25,000.00 Initial Deposits (as defined in the Agreements of Sale and
Purchase) required pursuant to each of the Agreements of Sale and Purchase.
Host Funding will simultaneously with such delivery provide to BAC predated
letters terminating the Agreements of Sale and Purchase twenty-four (24)
hours prior to the expiration of the Due Diligence Period (as defined in the
Agreements of Sale and Purchase). Notwithstanding the foregoing, if for any
reason the transactions contemplated with respect to the Florida Hotel
Properties are not consummated, and, incident thereto, the $25,000.00 Initial
Deposits are forfeited or otherwise not returned to Host Funding, Host
Funding will immediately pay to BAC the sum of $50,000.00, and if Host
Funding fails to timely do so, BAC shall have the right to offset against the
next accruing installments of any percentage rent due by BAC to BH - Auburn,
L.P., and BH -Findlay, L.P., pursuant to those certain Lease Agreements with
said parties, as applicable (and related to Country Hearth Inn hotel
properties located in Auburn, Indiana, and Findlay, Ohio), an amount equal to
$50,000.00, together with interest accruing thereon at the rate of twelve
percent (12%) per annum from the date the $50,000.00 was to be returned by
Host Funding to BAC until the date such obligation of Host Funding is
satisfied in full.
10. MISCELLANEOUS.
(a) This Agreement shall be governed by and construed in accordance
with the laws of the state in which the Hotel Property in question is
located.
(b) This Agreement shall inure to the benefit of and be binding upon
the parties hereto and their successors and assigns.
(c) This Agreement may not be modified or changed orally, but may be
modified or changed only by a written agreement signed by the parties
hereto.
(d) No waiver of any breach of any covenant, condition or agreement
contained herein shall be construed to be a subsequent waiver of that
covenant, condition or agreement or of any subsequent breach thereof or of
this Agreement.
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<PAGE>
(e) If any provision of this Agreement or the application thereof to
any person or circumstances shall be invalid or unenforceable to any
extent, the remainder of this Agreement and the application of such
provisions to other persons or circumstances shall not be affected thereby
and shall be enforceable to the greatest extent permitted by law.
(f) To the extent that any conflict exists between this Agreement and
any of the Leases, this Agreement shall control the understandings and
agreements among the parties respecting the within subject matter.
(g) It us understood and agreed that should any party to this
Agreement commence legal proceedings against the other to enforce the terms
and provisions of this Agreement, the party losing in such legal proceeding
should pay the attorneys' fees and other expenses of the party prevailing
in such legal proceedings.
(h) Host Funding and BAC understand and agree that the performance of
the obligations of said parties hereunder is subject to (i) the respective
lenders and/or mortgagees of Host Ventures holding liens on any of the
Hotel Properties having approved this Agreement and the terms and
provisions hereof, and (ii) the execution of the Leases by Host Ventures
and Lessee. BAC also acknowledges and agrees that the performance of the
obligations of Host Funding hereunder is further subject to the execution
by Host Funding, CHTC, CHC, Host Ventures and CrossHost, Inc., a Maryland
corporation, of that certain document called Termination of Certain Lease
Agreements and Master Agreements Related Thereto (Host Ventures
Properties), reflecting therein, among other subjects, various agreements
between said parties relating to the termination of the leases presently in
existence with respect to the Hotel Properties.
(i) In consideration of the expenses to be incurred by BAC in
pursuing the transactions described herein and in conducting its due
diligence, neither Host Funding nor Host Ventures, nor any of their
officers, employees, representatives and agents shall for a period of forty
(40) days hereafter enter into any negotiations or discussions with any
third party relating to the sale or lease of the Hotel Properties. During
such forty (40) day period, BAC and Host Funding will negotiate in good
faith in order to execute the Leases and related documents contemplated by
this Agreement.
(j) It is understood and agreed that this Agreement is the entire
agreement of the parties hereto with regard to the subject matter addressed
herein and supersedes any prior written or oral agreements between the
parties hereto regarding same.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Effective Date.
HOST FUNDING:
HOST FUNDING, INC., a Maryland corporation
By:
---------------------------------------
Michael S. McNulty, President
BAC:
BUCKHEAD AMERICA CORPORATION, a
Georgia corporation
By:
---------------------------------------
Douglas C. Collins, President
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<PAGE>
EXHIBIT A
ALLOCATION OF LEASE RIGHTS ACQUISITION FEE
<TABLE>
<CAPTION>
FINANCE NOTE BAC STOCK PORTION $55,275.00
CASH PORTION OF PORTION OF THE OF THE LEASE PORTION OF THE
LEASE RIGHTS THE LEASE RIGHTS LEASE RIGHTS RIGHTS ACQUISITION LEASE RIGHTS
HOTEL PROPERTY AND LEASE ACQUISITION FEE ACQUISITION FEE ACQUISITION FEE FEE (BY VALUE) ACQUISITION FEE
<S> <C> <C> <C> <C> <C>
1. Ocean Springs Property and $313,516.00 $122,397.00 $53,172.00 $100,325.00 $37,622.00
Ocean Springs Lease
2. Sarasota Property and $147,109.00 $57,432.00 $24,950.00 $47,075.00 $17,653.00
Sarasota Lease
</TABLE>
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<PAGE>
EXHIBIT B
ALLOCATION IN VALUE OF HOST
FUNDING STOCK AND SECURITY DEPOSITS
<TABLE>
<CAPTION>
LEASE SECURITY DEPOSIT
(Value in Shares of
Host Funding Stock)
--------------------
<S> <C>
1. Ocean Springs Lease $72,234.00
2. Sarasota Lease $33,894.00
</TABLE>
15
