-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DKyEyECOSturzksIVy1auaR1a5Vzq2F5//26je+l7wEWaIztX2s49/zSvlVW/gGn 3n6Fm7GjYQbnWD66/+5z6w== 0000950137-02-006057.txt : 20021108 0000950137-02-006057.hdr.sgml : 20021108 20021108164934 ACCESSION NUMBER: 0000950137-02-006057 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 20021107 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20021108 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ARLINGTON HOSPITALITY INC CENTRAL INDEX KEY: 0000778423 STANDARD INDUSTRIAL CLASSIFICATION: HOTELS & MOTELS [7011] IRS NUMBER: 363312434 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-15291 FILM NUMBER: 02814555 BUSINESS ADDRESS: STREET 1: 2355 SOUTH ARLINGTON HEIGHTS ROAD STREET 2: SUITE 400 CITY: ARLINGTON HEIGHTS STATE: IL ZIP: 60005 BUSINESS PHONE: 8472285400 MAIL ADDRESS: STREET 1: 2355 SOUTH ARLINGTON HEIGHTS ROAD STREET 2: SUITE 400 CITY: ARLINGTON HEIGHTS STATE: IL ZIP: 60005 FORMER COMPANY: FORMER CONFORMED NAME: AMERICA POP INC DATE OF NAME CHANGE: 19871111 FORMER COMPANY: FORMER CONFORMED NAME: AMERIHOST PROPERTIES INC DATE OF NAME CHANGE: 19920703 8-K 1 c72894e8vk.txt CURRENT REPORT SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) November 7, 2002 Arlington Hospitality, Inc. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 0-15291 36-3312434 - -------------------------------------------------------------------------------- (State of other (Commission (IRS Employer jurisdiction of File Number) Identification incorporation) Number) 2355 South Arlington Heights Road, Suite 400, Arlington Heights, Illinois 60005 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (847) 228-5400 N/A - -------------------------------------------------------------------------------- (Former name or former address, if changed since last report) ITEM 5. OTHER EVENTS. Arlington Hospitality, Inc. has announced that it has entered into a series of agreements with its outgoing CEO, Michael Holtz and his affiliates. For further details concerning these agreements, reference is made to the press release, attached hereto as Exhibit 99.1, and the agreements referred to therein, which also are attached as exhibits hereto. 2 ITEM 7. EXHIBITS 99. ADDITIONAL EXHIBITS. 1. Press Release dated November 7, 2002. 2. Omnibus Agreement between Arlington Hospitality, Inc. and Michael P. Holtz dated as of November 7, 2002. 3. Agreement of Sale between AP Properties of Mississippi, Inc. and MPH Investments of Mississippi, Inc. dated as of November 7, 2002. 4. Agreement of Sale between Freeport, IL 889 L.L.C. and MPH Investments of Illinois, Inc. dated as of November 7, 2002. 5. Indemnification Agreement by and among Michael P. Holtz, MPH Investments of Mississippi, Inc., MPH Investments of Illinois, Inc., AP Properties of Mississippi, Inc., Freeport, IL 899 L.L.C. and Arlington Hospitality, Inc. dated as of _________ __, 200_. 6. Contingent Purchase Price Participation Agreement by and among MPH Investment of Mississippi, Inc., AP Properties of Mississippi, Inc., MPH Investments of Illinois, Inc. and Freeport, IL 899 L.L.C. dated as of _________ __, 200_. 7. Mutual Release between Michael P. Holtz and Arlington Hospitality, Inc. dated as of ________ __, 200_. 8. Assignment and Assumption of Ground Lease between AP Properties of Mississippi, Inc. and MPH Investments of Mississippi, Inc. dated as of __________ __, 200_. 3 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. DATE: November 8, 2002 Arlington Hospitality, Inc. (Registrant) By: /s/ James B. Dale ----------------------------------------- Title: Senior Vice President and Chief Executive Officer 4 EX-99.1 3 c72894exv99w1.txt PRESS RELEASE [ARLINGTON HOSPITALITY, INC. LETTERHEAD] FOR IMMEDIATE RELEASE CONTACT: JAMES B. DALE, CHIEF FINANCIAL OFFICER 847-228-5401 x 361 jimdale@arlingtonhospitality.com ARLINGTON HOSPITALITY, INC. ANNOUNCES CEO SUCCESSION PROGRESS AND SALE OF TWO HOTELS CEO SEVERANCE AND SUCCESSION TIMING ISSUES FAVORABLY RESOLVED SALE OF TWO HOTELS FOR BOOK AND CASH GAINS PLUS CENDANT FEES ARLINGTON HEIGHTS, ILLINOIS, NOVEMBER 7, 2002. Arlington Hospitality, Inc. (NASDAQ: HOST) today announced that it has entered into a series of agreements with its outgoing CEO, Michael P. Holtz, (the "Settlement Agreements") designed to result in a smooth transition of the Company's leadership, a mutually beneficial severance settlement, and the profitable disposition of two of its AmeriHost Inn hotel properties. The Settlement Agreements have been filed as exhibits to a Form 8-K Current Report filed by the Company with the Securities and Exchange Commission. The Settlement Agreements contain terms and conditions in addition to those described in this release and stockholders are encouraged to review the Settlement Agreements in their entirety. The Company has agreed to pay Mr. Holtz one year's base salary of $325,000 plus approximately $58,000 in fringe benefits for a one-year period in accordance with the terms of his employment agreement, contingent upon the sale of two hotels (an 89-room hotel in Vicksburg, Mississippi, and a 64-room hotel in Freeport, Illinois) to Mr. Holtz for the aggregate amount of approximately $5.2 million, plus a contingent participation in the appreciation of the property values over certain specified amounts during the next five years, which may be prepaid by Mr. Holtz for $340,000 under certain circumstances. The Settlement Agreements, negotiated by a fully independent Ad Hoc Committee of the Board of Directors with the assistance of independent counsel, were approved unanimously by all the independent members of the Board. The parties have agreed to use their best efforts to effect the closing of these agreements on or before December 31, 2002. Upon closing, Mr. Holtz will resign as a director and officer of the Company. The Company has accrued $383,000 during the third quarter of 2002 for Mr. Holtz's severance. The base salary of $325,000 will be paid to Mr. Holtz, subject to withholding taxes, upon the closing of the anticipated sale of the aforementioned hotels with the fringe benefits paid during the one-year period after separation. As a result of these transactions, the Company expects to receive approximately $787,000 in cash proceeds during the fourth quarter of 2002, including net proceeds after the payoff of the related mortgage debt from the sale of the hotels and the related development incentive fees from the Company's agreement with Cendant Corporation, net of the Holtz severance payment. For book purposes, the Company expects to record pretax income of approximately $550,000 from the sale of the hotels during the fourth quarter of 2002. In the event the closing occurs in 2003, these amounts may vary, but not materially. These amounts are exclusive of any contingent purchase price appreciation payments and future royalty sharing fees from Cendant. The Board has also unanimously elected Kenneth M. Fell, currently Lead Director and one of the Company's largest shareholders, as Chairman of the Board-elect, with Chairmanship responsibilities effective upon the earlier of the hiring of a new CEO or closing of the Settlement Agreements. The Board has also appointed James B. Dale, its Chief Financial Officer, to serve as prospective interim CEO of the Company, if needed, upon the closing of the Settlement Agreements until a new CEO has been hired. The Company's CEO search remains on schedule, with the expected naming of a new CEO by the end of the year who, with the ensuing holidays, might not begin employment with the Company until the first quarter of 2003. According to Mr. Fell, "The agreements provide a win-win situation that is mutually beneficial to both parties. The Company has mapped a smooth path of management transition, while increasing shareholder value. Through the sale of two hotels to Mr. Holtz, the Company will not only generate profits, cash flow and the reduction of debt, but also development incentive fees and ongoing franchise royalty sharing fees, as part of our master AmeriHost Inn brand development and royalty agreements with Cendant." Fell continued, "On behalf of the entire Board, we would like to thank Mike for his contributions to the Company, and we welcome his ongoing assistance during the transition period. We are hopeful that he will continue to develop additional AmeriHost Inn hotels as an independent operator, which would enhance the AmeriHost Inn brand as well as create additional revenue streams for the Company." Outgoing Chairman and CEO Michael P. Holtz commented, "As a continuing significant shareholder, I have complete confidence that Arlington's continuing management team and Board are keenly focused on increasing the Company's return on assets through the continued development, construction, management and sale of additional AmeriHost Inn hotels. Although I am leaving the Company as its President and CEO, I will continue to support the Company and its associates in any way I can. Arlington Hospitality is stronger today than at any time in its history. This Company has a great future, and I'm proud to say that I was able to be a part of its success." The sale transactions are contingent upon the procurement of an independent appraisal of the hotels showing an aggregate value not greater than the total purchase price, mortgage financing commitments for the purchase of the hotels by Mr. Holtz, and the consent of the landlord to the assignment to Mr. Holtz of the leasehold in one of the properties. The Company and Mr. Holtz are diligently pursuing the consent of the landlord to the assignment of the leasehold. Upon closing, the Company and its subsidiaries will be released from all mortgage and leasehold obligations. Although the Company expects these contingencies to be satisfied, there is no assurance that the Settlement Agreements and the transactions therein will be successfully consummated. If the sale of both hotels does not close by February 15, 2003, then the Settlement Agreements will be deemed null and void. This press release contains certain forward looking statements which are subject to changing factors, risks and uncertainties, some of which are outside the Company's control. The most significant of these is the risk that all the agreements referenced above may be rendered null and void if the conditions to closing are not met or the closings do not otherwise occur. There can be no assurances that the Company will be successful in locating a suitable replacement for Mr. Holtz, in continuing to dispose of hotels in a profitable manner or in closing the transactions as contemplated above. In addition, numerous other factors could occur which could adversely impact the above forward looking statements. Arlington Hospitality, Inc. is a publicly traded hotel management and development Company that builds, manages and sells mid-priced hotels throughout the United States, primarily under the AmeriHost brand, a trademark owned by Cendant. Currently, Arlington Hospitality owns or manages 76 properties in 17 states, including 65 AmeriHost Inn hotels, for a total of 5,629 rooms, with four additional AmeriHost Inn & Suites hotels under construction. Each hotel offers an amenities package not often found in other mid-priced hotels. For additional information on the Company, please visit us at http://www.arlingtonhospitality.com. EX-99.2 4 c72894exv99w2.txt OMNIBUS AGREEMENT OMNIBUS AGREEMENT Agreement this 7th day of November, 2002, by and between Arlington Hospitality, Inc., a Delaware corporation ("AHI") and Michael P. Holtz ("MPH"). RECITALS: A. AHI and MPH entered into an employment agreement dated April 7, 1995, which was subsequently amended by four separate amendments (the employment agreement as amended is hereinafter referred to as the "Employment Agreement"). B. On August 15, 2002, MPH delivered notice of his intent to resign from employment with AHI. The parties are desirous of setting forth the terms of MPH's severance from AHI as set forth below. C. AHI is desirous of retaining MPH to make himself available to consult with AHI, and MPH is willing to do so, as set forth below. D. AHI is desirous of selling to MPH (through designated affiliates of MPH - -- the "Purchasers") the hotels owned by wholly-owned subsidiaries of AHI and located in Vicksburg, Mississippi (the "Vicksburg Hotel") and Freeport, Illinois (the "Freeport Hotel" -- together with the Vicksburg Hotel, collectively, the "Hotels") and MPH is desirous of causing the Purchasers to purchase the Hotels in accordance with the forms of purchase and sale agreements set forth in Exhibit 1 and Exhibit 2 attached hereto and made a part hereof for the Vicksburg Hotel and the Freeport Hotel, respectively (the "Purchase Agreements"). E. The consummation of all of the transactions contemplated herein is contingent upon the simultaneous closing of the purchase and sales of the Hotels. NOW THEREFORE, in consideration of the premises and covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: 1. Recitals. The recitals set forth above are incorporated by reference herein and made a part hereof as if fully rewritten. 2. Purchase Agreements. The conditions precedent to the consummation of the transactions contemplated in this Agreement are the following; in the event any of the conditions set forth below are not satisfied on or before February 15, 2003 (or in the case of subparagraph (a) below, on or before November 30, 2002), then AHI may terminate this Agreement in its sole discretion, with no liability to MPH for such termination at such point this Agreement would be deemed null and void ab initio. (a) Procurement by AHI of appraisals on the Hotels by Cushman & Wakefield of a combined fair market value which is less than or equal to the aggregate purchase price called for in the Hotels' Purchase Agreements on or before November 30, 2002; and (b) Procurement by MPH of sufficient financing for the Hotels to cause the unconditional release of AHI and its subsidiaries of all mortgage debt and land lease obligations and all franchise agreement guarantees with respect to the Hotels; and (c) Procurement from Cendant, Inc. of certification that the sale of the Hotels to the Purchasers will entitle AHI to receive: (i) The development fee on each Hotel on the closing of the Purchase Agreements pursuant to the terms of the September 30, 2000 Development Agreement among AHI, AmeriHost Inn Franchising, Inc., AmeriHost Management, Inc., AmeriHost Development, Inc., Cendant Finance Holding Corporation ("CFHC") and AmeriHost Franchise Systems, Inc. ("AFSI"); and (ii) Royalty sharing with respect to each Hotel on closing of the Purchase Agreements pursuant to the September 30, 2000 Royalty Sharing Agreement among AHI, CFHC and AFSI. The aforesaid fees payable to AHI by Cendant with respect to the Hotels are hereinafter referred to as the "Cendant Fees." The Purchase Agreements contemplate a simultaneous sale of the Hotels by AHI's subsidiaries to the Purchasers on or before February 17, 2003 (the actual date of closing being the "Closing Date"). Absent written agreement between the parties hereto to the contrary, should the aforesaid sales of the Hotels by AHI to MPH or his designees not occur on or before February 17, 2003, then this entire agreement shall be null and void in its entirety, except for the terms of Section 4(d) below, provided however, if the reason for the closing(s) not occurring is the breach by AHI on the one hand, or one or both of the Purchasers on the other hand, of one or both of the Purchase Agreements, and subsequent to such breach the nonbreaching party(ies) effect the sale of the Hotels to the Purchasers, then effective on the closing of such sales, this Agreement shall be deemed reinstated in its entirety. 3. Representations and Warranties. (a) MPH represents, warrants and covenants that the Hotels will be operated following the Closing Date in a manner necessary to ensure that AHI will be entitled to the Cendant Fees for the period of seven (7) years following the Closing Date. Should AHI be required to refund any of the Cendant Fees it receives with respect to the Hotels or should Cendant refuse to pay any of the Cendant Fees with respect to the Hotels, due to the failure of the Hotels to continue to operate as AmeriHost Inns during the seven (7) year period following the Closing Date, then MPH agrees to reimburse AHI for the Cendant Fees that AHI would have received had the Hotels continued to operate as AmeriHost Inns for the full seven (7) years following the Closing Date (with AHI's royalty fees based upon the level of operations that each such Hotel operated for the last full year that it operated as an AmeriHost Inn). (b) MPH represents and warrants that to the best of his knowledge: 2 (i) The income statements for the Hotels as maintained by AHI through the Closing Date fairly represent the income and expenses of the Hotels for the periods indicated on the books and records of AHI; and (ii) The Vicksburg Hotel is not entitled to receive any direct or indirect participation in the profits or gross receipts of the casino to which it is immediately adjacent, except to the extent such revenues have been reflected on the financial statements of the Vicksburg Hotel. (c) MPH represents and warrants that except for the agreements contemplated in this Agreement and attached exhibits, neither he nor any of his affiliates have any contracts or agreements with AHI or any of its affiliates. In causing its wholly-owned subsidiary to enter into the Purchase Agreements for the sale of the Hotels to affiliates of MPH each of said subsidiaries and AHI have relied upon the aforesaid representations, warranties and covenants of MPH, and API shall be entitled to damages for all losses either it or either of its subsidiaries incur as a result of the breach by MPH of any of the aforesaid representations, warranties and covenants, which obligations shall survive the closing of this Agreement and the Purchase Agreements. 4. Employment Agreement and Severance Matters. On the Closing Date MPH's employment with the Company shall terminate and the Employment Agreement shall be terminated in all respects, with no further obligations under the Employment Agreement from MPH to AHI or from AHI to MPH with respect to the Employment Agreement or otherwise, except as expressly set forth in this Agreement or any of the Exhibits appended hereto. On the Closing Date, MPH shall resign as an officer and as a director from each of AHI, its subsidiaries and affiliates. (a) Severance Payment. On the Closing Date, in full settlement of AHI's severance obligations to MPH under the Employment Agreement, AHI shall tender a cash severance payment to MPH (subject to AHI deducting and remitting therefrom the withholding amounts delineated below) the sum of $325,000 as follows: Description Amount ----------- ------ Severance Amount.............................. $325,000 Less Federal Tax Withholding.................. (125,450) Less State Tax Withholding.................... (9,750) Less Medicare Tax Withholding................. (4,713) -------- NET CASH TO MPH: $185,087 ======== (b) Releases. On the Closing Date, the parties shall deliver mutual releases in the form of Exhibit 3. (c) Base Compensation and Bonuses. AHI shall pay to MPH his annualized salary payments through the Closing Date and shall reimburse MPH for all out-of-pocket expenses reasonably incurred in the course of his employment with respect to AHI matters through the Closing Date, subject to submittal of customary documentation in 3 accordance with AHI's policies and procedures. In addition, on the Closing Date, AHI shall pay to MPH the amount of base compensation plus accrued vacation MPH would have received per the terms of his Employment Agreement had he continued to serve as CEO of AHI from the Closing Date through February 15, 2003, subject to customary withholding. MPH agrees that on the Closing Date he shall be entitled to no bonus with respect to services rendered during any of 2002 (except to the extent already paid) or any rights to stock, stock options or any other direct or indirect equity interests in AHI or any of its affiliates, with the exception of stock or stock options which have already been issued to him by AHI prior to the date of execution of this Agreement. (d) Vehicle. The vehicle leased by AHI for MPH's use is subject to a purchase option, which AHI shall exercise on December 1, 2002, or as soon as practicable thereafter and shall direct the leasing company to convey title to the vehicle to MPH or his designees. The purchase price for the car will be paid by MPH, subject to a contribution therefor by AHI equal to the lease payments that would have otherwise been made by AHI had the vehicle been leased for the period from the Closing Date through February 15, 2004 (prorated for partial months), based upon lease payments of $574.46 per month; notwithstanding anything to the contrary herein, the obligations of the parties with respect to this Section 4(d) shall survive the termination of this Agreement. (e) Legal Fees Reimbursement. On the Closing Date AHI shall reimburse MPH for up to $10,000 of legal fees incurred by him in connection with the negotiation and closing of this Agreement and the agreements referenced in the Exhibits hereto, upon proof of proper documentation to evidence aforesaid legal fees; this legal fee reimbursement has been allocated $5,000 to each Hotel (subject to rights of reallocation) as provided in the Purchase Agreements. (f) Nonsolicitation. MPH agrees on behalf of himself and each of his affiliates (collectively, the "MPH Group" and individually, each an "MPH Group Member"), that from the date of this Agreement until two years following the Closing Date, neither he nor any MPH Group Member shall directly or indirectly solicit for hire, hire or engage in any discussions which could lead to the hiring, whether hiring as an employee, independent contractor, consultant, service provider or otherwise any of the employees of AHI or any of its affiliates who either earn a base salary of at least $80,000 per year or presently serve or in the future at any time during the aforesaid two year period serve on the Operating Committee of AHI as of the time of such solicitation or hiring. For purposes of this Agreement the term "affiliate" shall have the same meaning as construed under Rule 405 promulgated under the Securities Act of 1933, as amended. (g) Consulting Agreement. MPH agrees to respond to telephonic inquiries at mutually convenient times not to exceed one hour per week for the one year period following the Closing Date to answer questions from AHI or its representatives regarding issues related to AHI officers. In consideration for these undertakings, AHI agrees that effective on the Closing Date, it shall take the following actions: (i) AHI shall continue coverage subject to applicable employee contributions to be paid by MPH or its employee health, dental and disability 4 plans for a period ending February 15, 2004, provided that to the extent MPH is no longer eligible to continue as an insured any of such plans for any reason, then it shall notify him promptly upon learning of such fact and shall thereafter for the remainder of the period (i.e., through February 15, 2004) remit to MPH a cash sum equal to the premiums (net of employee contributions) that would have been paid had he remained eligible for coverage under the latest plan then in effect. As of the date of execution of this Agreement, the applicable annual premiums and employee contributions are as follows: Insurance Company Payment Employee Payment --------- --------------- ---------------- Humana-Family Coverage (Health) $8,781.60 $1,054.30 Met Life (Dental) $ 919.56 $ 810.42 Guardian (Disability) $1,639.56 $ 0.00 (ii) On the Closing Date, AHI shall execute assignment forms for the Transamerica Life ($1,000,000 face amount) life insurance policy it maintains with the Holtz Family Trust as beneficiary, with the Company to agree to pay over to MPH the unpaid premiums thereon prorated through February 15, 2004, and MPH to be responsible for making all premium payments on said policy ($1,590 annual premium); and (iii) The parties agree to pay their respective shares of the premiums ($977.50 and $977.50 payable annually by AHI and MPH, respectively) on the Minnesota Life Insurance Company ($2,000,000 face amount) life insurance policy which presently names both AHI and MPH's designee as equal beneficiaries. On the Closing Date, the Company shall assign this policy in its entirety to MPH or his designees and shall provide him a check for one-half of the unpaid for portion of premium that would accrue on such policy for the period from closing through February 15, 2004. (iv) With respect to the Minnesota Life Insurance Company policy standing in the name of the Holtz Family Trust, on the Closing Date the Company shall tender to MPH a check in the amount of the unpaid portion of the premium that would accrue thereon through February 15, 2004. 5. Miscellaneous. (a) Survival. All representations, warranties and covenants of the parties contained in this Agreement or made pursuant hereto, shall survive the date of execution of this Agreement and remain in full force and effect, and shall survive the termination or expiration of this Agreement. (b) Counsel. All parties hereto have been represented by counsel, and no inference shall be drawn in favor of or against any party by virtue of the fact that such party's counsel was or was not the principal draftsman of this Agreement. 5 (c) Notices. All notices or other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given if delivered personally or sent by registered or certified mail, postage prepaid or via national courier, addressed to the party entitled to notice at the address set forth below, or such other address as is subsequently provided by written notice from such party to the other parties: IF TO AHI: WITH A COPY TO: Arlington Hospitality, Inc. Shefsky & Froelich Ltd. 2355 South Arlington Heights Road--Suite 400 444 North Michigan Avenue--Suite 2500 Arlington Heights, IL 60005 Chicago, IL 60611 Attention: James Dale, Chief Financial Officer Attention: Mitchell D. Goldsmith, Esq. Telephone: 847-228-5400 Telephone: 312-836-4006 Facsimile: 847-228-5409 Facsimile: 312-527-3194 IF TO MPH: WITH A COPY TO: Michael P. Holtz Piper Rudnick 490 East Route 22 203 North LaSalle Street--Suite 1800 North Barrington, IL 60010 Chicago, IL 60601 Telephone: 847-277-0068 Attention: David Glickstein, Esq. E-Mail: mpholtz@aol.com Telephone: 312-368-4000 Facsimile: 312-236-7516
(d) No Assignment. Except as expressly noted below, this Agreement and the rights of the parties under this Agreement may not be sold, assigned or otherwise transferred without the prior written consent of the other party. (e) Entire Agreement. This Agreement, and the documents appended hereto, sets forth the entire agreement and understanding of the parties hereto in respect of the subject matter contemplated hereby, and supersedes all prior agreements, arrangements and understandings relating to the subject matter hereof. (f) Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois. Should any dispute arise under this Agreement, it shall be litigated in the state or federal courts situated in Cook County, Illinois, to which jurisdiction and venue all parties consent. (g) Counterparts. This Agreement may be executed in two or more counterparts, each of which, whether photocopy, facsimile or ink, shall be deemed an original, but all of which together shall constitute one instrument. (h) Approval. This Agreement shall be binding upon the parties, their respective heirs, successors and assigns, and each entity party represents and warrants that this Agreement has been duly approved by proper corporate action. (i) Remedies. No party hereunder shall be entitled to consequential damages as a result of the breach by any other party of its obligations hereunder. Each party's 6 damages shall be limited to actual damages as a result of the breach of any obligation hereunder. IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first set forth above. AHI: MPH: ARLINGTON HOSPITALITY, INC., a Delaware Corporation MICHAEL P. HOLTZ By: /s/ James Dale /s/ Michael P. Holtz ------------------------------------- --------------------------------- James Dale, Secretary 7 EX-99.3 5 c72894exv99w3.txt AGREEMENT OF SALE AGREEMENT OF SALE THIS AGREEMENT OF SALE (this "Agreement") is made as of this 7th day of November, 2002, between AP Properties of Mississippi, Inc., a Mississippi corporation, having its office at 2355 South Arlington Heights Road, Suite 400, Arlington Heights, Illinois 60005 (hereinafter referred to as "Seller"), and MPH Investments of Mississippi, Inc., a Mississippi corporation (hereinafter referred to as "Buyer"). RECITALS: A. Seller is the leasehold tenant of a certain parcel of real estate located at 1350 Warrenton Road, in the City of Vicksburg, Warren County, State of Mississippi, commonly known as the AmeriHost Inn & Suites Rainbow Hotel Casino - Vicksburg, Mississippi, and more particularly described on Exhibit A attached hereto (the "Land"). B. Seller maintains its leasehold interest in the Land pursuant to a Ground Lease dated June 21, 1994, as amended (the "Ground Lease"). C. The Land is improved with a hotel building containing approximately 89 guest rooms and related facilities which Seller has constructed (the "Improvements") and of which Seller retains ownership during the term of the Ground Lease. D. Seller operates the Improvements and the related assets described below as a hotel (the "Hotel"). E. Seller has agreed to sell and assign, or cause to be sold and assigned, to Buyer, and Buyer has agreed to purchase and take from Seller, the Hotel and the leasehold interest in the Ground Lease, together with: (i) all of Seller's interest in all appliances, apparatus, furniture, furnishings, fixtures, equipment, machinery, fittings, working supplies, building supplies, maintenance and repair supplies, tools, inventory, towels, wash cloths, beds, sheets, pillow cases, bed spreads, blankets, television sets, radios and articles of personal property owned by Seller and used in connection with the occupancy and operation of the Hotel (the "Tangible Personal Property"); (ii) all deposits taken from any guests, groups, conventions or others, and any other amounts prepaid in connection with services to be rendered on or after the Closing Date (as hereinafter defined) now in the possession of Seller or hereinafter received by Seller in connection with the running and operation of the Hotel (the "Reservation Deposits"); (iii) all of Seller's interest in all contracts or agreements and/or leases for the furnishing of maintenance, repairs, supplies, equipment or other services to the Property (as hereinafter defined), which have a term expiring after the Closing Date, including Seller's interest in all transferable telephone numbers (the "Service Contracts"), a current list of the Service Contracts is included herein as Exhibit B attached hereto, which shall be updated through the Closing Date; (iv) to the extent assignable, all of Seller's interest in all building and other permits, certificates, licenses (except current franchise license agreement with AmeriHost Franchise Systems, Inc.), authorizations and approvals granted in connection with the Property (the "Licenses and Permits"); (v) all guest and customer lists for the Hotel owned by, and in possession of, Seller (the "Guest and Customer Lists"); (vi) all right, title and interest in any other leases encumbering or affecting the Property (the "Leases"); and (vii) all promotional advertising literature and materials, catalogs, booklets, stationery and manuals ("Promotional Material"). F. The Ground Lease, the Improvements, the Hotel, the Tangible Personal Property, the Reservation Deposits, the Service Contracts, the Licenses and Permits, the Guest and Customer Lists, the Leases and the Promotional Material are sometimes referred to herein, collectively, as the "Property." G. Simultaneous with the execution of this Agreement, Freeport IL 899, LLC (the "Freeport Seller"), a wholly-owned subsidiary of Arlington Hospitality, Inc. ("AHI"), has contracted to sell the hotel owned by it in Freeport, Illinois (the "Freeport Hotel") to MPH Investments of Illinois, Inc. (the "Freeport Buyer"); as noted below, the sale of the Property called for herein is contingent upon: (i) the Freeport Seller's simultaneous sale of the Freeport Hotel in accordance with the aforesaid agreement; and (ii) the closing of the transactions contemplated in that certain "Omnibus Agreement" of even date herewith between AHI and Michael P. Holtz. NOW THEREFORE, in consideration of the premises, and for other good and valuable consideration, the receipt and adequacy of which hereby are acknowledged, and intending to be legally bound hereby, Seller and Buyer covenant and agree as follows: 1. Purchase and Sale. Seller, on the Closing Date, shall sell, grant, convey, assign, transfer and deliver the Property to Buyer, and Buyer agrees to purchase, acquire and accept the Property from Seller. Seller shall (i) convey Seller's interest in the Improvements by Special Warranty Deed, and (ii) assign Seller's interest in the Ground Lease by an Assignment and Assumption of Ground Lease; each of which shall be subject to the deed restrictions attached hereto as Exhibit C, easements, covenants, conditions, restrictions and other matters of record as of the Closing Date, which will not materially adversely affect Buyer's use of the Property as a hotel, and the terms, provisions and conditions of the Ground Lease (collectively the "Permitted Exceptions"). 2. Consideration. Buyer will purchase the Property and pay therefor the sum (the "Purchase Price") of Four Hundred Sixty-Eight Thousand, Eighty Hundred Fifty and No/100 Dollars ($468,850.00) plus the amount of the first mortgage on the Property due at Closing in lawful currency of the United States of America, in cash or by cashier's or certified check, or by federal funds wire, subject to closing apportionment adjustments as hereinafter set forth, payable on the Closing Date. 3. Documents and Deliveries at Closing by Seller. Within thirty (30) days after the Effective Date (as hereinafter defined) of this Agreement, Seller shall provide to Buyer a commitment for leasehold title insurance (the "Title Commitment") issued by the Escrow Agent with respect to the Ground Lease and the Improvements. In the event that the Title Commitment sets forth exceptions (the "Unpermitted Exceptions") other than the Permitted Exceptions, Buyer shall notify Seller in writing of the Unpermitted Exceptions within ten (10) days after Buyer's receipt of the Title Commitment. Seller shall have until the Closing Date to either remove the Unpermitted Exceptions or arrange for the issuance by the Escrow Agent of an endorsement to the owner's policy to be issued to Buyer at the Closing insuring Buyer against any loss or 2 damage Buyer might incur as a result of the existence of any Unpermitted Exception which Seller cannot otherwise cause to be removed prior to the Closing Date. If any Unpermitted Exception over which such an endorsement has not been so issued remains unremoved as of the Closing Date, Buyer may terminate this Agreement and this Agreement shall become null and void, without further liability of either party to the other, except as otherwise expressly set forth herein. In the event that Buyer does not notify Seller in writing of any Unpermitted Exceptions within ten (10) days after Buyer's receipt of the Title Commitment, then Buyer shall be deemed to have waived any right it otherwise would have had to object to any Unpermitted Exceptions, and shall accept title to the Property at the Closing subject to such Unpermitted Exceptions. At the time and place of the Closing, upon payment in full of the Purchase Price and satisfaction of all of Buyer's obligations under this Agreement, Seller shall: (a) Convey and deliver title to the Improvements by Special Warranty Deed subject to the Permitted Exceptions. (b) Assign and deliver to Buyer all of Seller's interest in the Ground Lease subject to Permitted Exceptions by an Assignment and Assumption of Ground Lease, whereby Buyer assumes all obligations of Seller thereunder from and after the Closing Date; Buyer shall also cause the Ground Lease lessor to deliver a full release without recourse or other liability to Arlington Hospitality, Inc., f/k/a AmeriHost Properties, Inc. ("Guarantor") of its guarantee of Seller's obligations under the Ground Lease. (c) Assign and deliver to Buyer all of Seller's interest in the Reservation Deposits, the Tangible Personal Property (to the extent assignable), the Licenses and Permits and the Guest and Customer Lists by a Bill of Sale, provided Buyer agrees that, from and after the Closing Date, it will assume all of the obligations of Seller thereunder. (d) Assign and deliver to Buyer all of Seller's interest in the Service Contracts (to the extent assignable), by an Assignment and Assumption Agreement, whereby Buyer assumes the obligations thereof from and after the Closing Date. Seller shall be responsible for all obligations owing prior to Closing. Seller, as of the Closing Date, shall terminate the existing management contract for the Property. (e) Deliver to Buyer, if available, copies of the Licenses and Permits and the Service Contracts. (f) Assign and deliver to Buyer all of Seller's interest in any other Leases affecting the Property (to the extent assignable), by an Assignment and Assumption of Leases, whereby Buyer assumes the obligations thereof from and after the Closing Date. (g) Deliver to Buyer an affidavit originally executed by Seller to the effect that Seller is not a foreign person for purposes of 26 U.S.C. 1445 (b) (2). (h) Terminate the employment of all of its employees at the Property. Upon completion of the Due Diligence Period (as hereinafter defined), Seller will provide notice to all of its employees of the impending sale. Seller shall provide the employees an opportunity to submit applications for employment with Buyer, and Buyer may 3 discuss employment opportunities with the employees, provided that a representative of Seller is present during all communications with employees of Seller. (i) Deliver to Buyer possession of the Property pursuant to the terms of the Ground Lease, as modified to release Seller and AHI from all liability thereunder. The documents described in this Section 3 are hereinafter collectively referred to as the "Seller's Closing Documents." 4. Documents and Deliveries at Closing by Buyer. At the time and place of Closing, Buyer shall execute and deliver to: (a) Seller: (i) all such documents as may be necessary to effect an assumption by Buyer, and the consent of all relevant third parties thereto, if applicable, from and after the Closing Date, of all obligations of Seller under the Ground Lease, the Service Contracts, the Licenses and Permits and the Leases, all obligations with respect to the Reservation Deposits, and all other obligations or liabilities of Seller or the Property to be assumed by Buyer pursuant to the terms of this Agreement from and after the Closing Date, and (ii) a certified copy of a resolution of the controlling body of Buyer (in the event that Buyer is not an individual) authorizing Buyer to consummate the subject transaction upon the terms and conditions herein contained; (b) Documentation in form and content satisfactory to Seller establishing that effective as of the Closing Date: (i) Seller and Guarantor shall be released by the Ground Lease lessor from all of their respective obligations under the Ground Lease and guarantee of tenant's obligations under the Ground Lease accruing on or following the Closing Date; and (ii) Seller, together with any guarantor of Seller's obligations, shall be released by the holder of the first mortgage on the Property from all obligations under the note, mortgage and other documentation associated with the loan secured by the first mortgage on the Property; (c) AmeriHost Franchise Systems, Inc. ("AFSI"), or to Seller as AFSI's franchise document repository, all such documents as may be necessary to (i) effect a release of Seller and Guarantor by AFSI from any and all further liabilities and obligations under any franchise agreement between Seller and AFSI with respect to the Property and any guarantee thereof, and (ii) induce AFSI to enter into a franchise agreement granting to Buyer an exclusive license to operate the Property as an AmeriHost Inn(R) hotel within a specified territory, the form of which documents shall be agreed upon by AFSI and Buyer prior to the expiration of the Due Diligence Period, including, without limitation, payment to AFSI of a non-refundable application fee of One Thousand and No/100 Dollars ($1,000.00), an initial franchise fee of One Thousand and No/100 Dollars ($1,000.00), and issuance of a certificate of insurance meeting AFSI coverage requirements. In the event AFSI and Buyer cannot agree upon the form of the documents during the Due Diligence Period, Buyer at its sole discretion and upon written notice to Seller on or before expiration of the Due Diligence Period, may terminate this Agreement, whereupon the Escrow Agent shall return the Deposit and all interest earned thereon, but not the Non-refundable Deposit, to Buyer, and this Agreement shall become 4 null and void, without further liability of either party to the other, except as otherwise expressly set forth herein. If Buyer fails to notify Seller of its termination of this Agreement as set forth above, then Buyer shall be deemed to have waived its right of termination under this paragraph, whereupon the full amount of the Deposit shall be released to Seller upon Escrow Agent's receipt of unilateral written notice by Seller; (d) An indemnification agreement by Buyer and Michael P. Holtz in the form attached as Exhibit D, whereby they agree to indemnify and hold harmless AHI from certain losses they may incur with AFSI in the event the Property ceases to be operated under the AFSI system during the seven (7) year period following the Closing Date; and (e) A participation agreement in the form attached hereto as Exhibit E. The documents described in this Section 4 are hereinafter collectively referred to as the "Buyer's Closing Documents." The Seller's Closing Documents and the Buyer's Closing Documents are sometimes referred to herein, collectively, as the "Closing Documents." 5. Closing Expenses. Seller shall be responsible for Seller's and up to $5,000 of Buyer's attorneys' fees (and to the extent less than $5000, Seller shall apply such difference to any of the Freeport Buyer's attorneys fees not being paid by the Freeport Seller), the deed recording fees and the full cost of any leasehold owner's title insurance policy, excluding extended coverage and endorsements. Buyer shall be responsible for any survey expenses, any costs and expenses attendant to the investigation into any environmental conditions on or about the Property, the full cost of any lender's leasehold title insurance policy, including costs for extended coverage and/or endorsements to the owner's leasehold title insurance policy, and all costs, fees, taxes and other charges associated with any financing obtained by Buyer to finance the acquisition of, or improvements to, the Property. All real estate transfer taxes (i.e., the State and local recording taxes, including the State and County transfer taxes and the revenue stamps) shall be paid by the party designated in the transfer tax statue or ordinance, and if not so designated then by Buyer. Escrow fees and document preparation fees or any title insurance company fees for the use of the title company's offices for the Closing shall be borne equally by the parties. Except as provided elsewhere in this Agreement, all other costs in connection with the Closing shall be paid by the party incurring such cost. 6. Conditions to Obligations of Buyer. The obligations of Buyer to perform Buyer's obligations under this Agreement are, and shall be subject to, the satisfaction of each of the following conditions at or prior to the Closing: (a) Seller shall have executed, acknowledged (where applicable) and delivered the Seller's Closing Documents to be executed and delivered by Seller, and Seller shall have delivered to Buyer all of the agreements, documents and other items required under this Agreement. (b) All of the representations and warranties of Seller contained in this Agreement shall have been true and correct in all material respects when made, and shall be true and correct in all material respects on the Closing Date. 5 (c) Seller shall have performed, observed and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed, observed and complied with on its part prior to or as of the Closing. 7. Conditions to Obligations of Seller. The obligations of Seller to perform Seller's obligations under this Agreement are, and shall be subject to, the satisfaction of each of the following conditions at or prior to the Closing: (a) Buyer shall have executed, acknowledged (where applicable) and delivered the Buyer's Closing Documents to be executed and delivered by Buyer, and Buyer shall have delivered to Seller all of the agreements, documents and other items required under this Agreement. The Ground Lease and all Leases and Service Contracts affecting the Property will be assumed by Buyer from and after the Closing Date. In particular, with respect to: (i) AFSI franchise documents, Buyer shall have executed and delivered all required franchise documents to AFSI, or to Seller as AFSI's franchise document repository, one week prior to the Closing Date (except for a copy of the deed which shall be provided to AFSI immediately after the Closing) and AFSI shall have countersigned said documents so that effective on the Closing Date, Buyer shall become a franchisee of AFSI with respect to the Property; (ii) the first mortgage loan on the Property, Buyer shall either have obtained new financing sufficient to pay off the loan in full or a duly executed release in form and substance satisfactory to Seller releasing Seller and AHI, as guarantor of said loan, from all liability under said loan; and (iii) the Ground Lease, Buyer shall have obtained a full release of Seller and Guarantor by the Ground Lease lessor, in recordable form, releasing Seller and Guarantor from all liability under the Ground Lease. (b) All of the representations and warranties of Buyer contained in this Agreement shall have been true and correct in all material respects when made, and shall be true and correct in all material respects on the Closing Date. (c) Buyer shall have performed, observed and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed, observed and complied with on its part prior to or as of the Closing. (d) Seller shall have been released from any and all further liabilities and obligations under and any franchise agreement between Seller and AFSI with respect to the Property, including, without limitation, any termination fee(s) required to be paid in connection with such release. (e) The simultaneous closing of the sale of the Freeport Hotel from the Freeport Seller to the Freeport Buyer. (f) The appraised value of the Property and the Freeport Hotel collectively, pursuant to an appraisal to be conducted by Cushman & Wakefield after the date of this Agreement but prior to the Closing Date, shall not exceed the purchase price of the Property and the Freeport Property, collectively. 6 8. Casualty to Property. Seller shall maintain comprehensive insurance coverage of the Property until the Closing. Promptly after the occurrence of any fire or other casualty affecting the Property or any portion thereof occurring between the Effective Date and the Closing Date (a "Casualty"), Seller shall give Buyer written notice thereof (a "Casualty Notice"), which Casualty Notice shall state the type, location and amount of damage to the Property. If, prior to the Closing, such a Casualty shall occur and the cost to complete repairs of such Casualty shall equal $500,000 or more, then, in any such event, either party, at its sole option, may terminate this Agreement by written notice to the other (a "Casualty Termination Notice"), within ten (10) days after Buyer has received the Casualty Notice; provided, however, that if the Closing is scheduled for a date which is less than ten (10) days after Buyer's receipt of the Casualty Notice the Closing shall be adjourned until ten (10) days after Buyer's receipt of the Casualty Notice; and provided, further, however, that Seller shall have the sole option to terminate this Agreement, if the insurance proceeds payable to Seller on account of such Casualty would exceed the Purchase Price, in which event the Deposit and all interest earned thereon and the Non-refundable Deposit shall be returned to Buyer, this Agreement shall become null and void without further liability of either party to the other, except as otherwise expressly set forth herein (other than the obligation of Buyer to keep confidential all documents and other materials furnished to Buyer pursuant to the transaction contemplated by this Agreement). If neither Buyer nor Seller elect to terminate this Agreement, then the Closing shall take place as provided herein, without credit to the Purchase Price. 9. Condemnation. In the event of any taking of all or any part of the Property by eminent domain proceedings, or the commencement of any such proceedings from the Effective Date to the Closing Date, Seller promptly shall give Buyer written notice of such proceeding stating the amount, type and location of such taking or proposed taking and Buyer shall proceed as follows: (a) Should all of the Property, or a portion of the Property which materially interferes with the present use thereof, be condemned, Buyer shall be permitted to terminate this Agreement by written notice to that effect to Seller on or before the date fixed for the Closing, and the Deposit and all interest earned thereon and the Non-refundable Deposit shall be returned to Buyer. Thereafter, this Agreement shall become null and void without further liability of either party to the other, except as otherwise expressly set forth herein (other than the obligation of Buyer to keep confidential all documents and other materials furnished to Buyer pursuant to the transaction contemplated by this Agreement). (b) If only a portion of the Property is condemned, which would not materially interfere with the present use thereof, Buyer will be liable and obligated to take title to the remaining portion of the Property at the Purchase Price, in which event Seller shall assign to Buyer all of Seller's right, title and interest in and to any award resulting from such condemnation. 10. Closing. Settlement of this transaction shall be held no later than February 17, 2003, at a location to be mutually agreed upon by Seller and Buyer, time being of the essence thereof; provided however, Buyer agrees to use its best efforts to consummate the Closing on or 7 about December 11, 2002 and shall permit Seller and its representatives to contact Buyer's financing sources and to participate in conversations with them and Buyer for purposes of verifying that Buyer is using Buyer's best efforts in this regard. The settlement of this transaction and the date of such settlement are referred to herein, respectively, as the "Closing" and the "Closing Date." Seller and Buyer may mutually agree upon an earlier date for settlement of this transaction or fix another place for settlement of this transaction. Notwithstanding anything to the contrary contained in this Agreement, the Closing of this Agreement is contingent upon the simultaneous closing of the sale of the Freeport Hotel from the Freeport Seller to the Freeport Buyer. 11. Apportionments and Additional Payments. The following apportionments and payments are to be made as of the Closing Date: (a) All taxes attributable to the Property, including, but not limited to, real estate taxes and personal property taxes, if any, shall be apportioned on the basis of the tax year (or other period for which assessed) whether due or payable. If the current year taxes are not available as of the Closing Date, the amounts from the last-issued tax bill shall be used. All tax refunds from prior years shall remain the property of Seller. If a refund is received for a period after the Closing, Buyer shall be entitled to the same, after deduction of any expenses incurred by Seller in order to obtain such refund. If a refund is received for a period prior to Closing, Seller shall be entitled to the same, after deduction of any expenses incurred by Buyer in order to obtain such refund. The parties agree to cooperate fully to assist each other in providing such information in their possession or control as may be necessary to assist in obtaining any such refunds. In no event shall Seller pay or be apportioned real estate taxes and personal property taxes attributable to the Property for any period after the Closing Date. (b) All assessments attributable to the Property, including, but not limited to, sewer rents, water charges, and all other municipal charges, if any, which have become a lien upon the Land or the Hotel, whether or not recorded at the Effective Date of this Agreement, shall be apportioned for the year in which the Closing occurs. In no event shall Seller pay or be apportioned assessments attributable to the Property for any period after the Closing Date. (c) All income of any type arising from the Hotel and the Service Contracts, including, but not limited to, commissions, shall be apportioned (except with respect to room rentals for the night preceding the Closing Date, which is covered by Section 11(f) below and vending machine monies, which is covered by Section 11(j) below). (d) Charges for the consumption of electricity, fuel oil on the Property, steam, gas, telephone services and other utility services, if any, shall be apportioned, unless final readings therefor can be established as of the Closing Date. Further, payments under the Service Contracts, the Leases and any other executory contracts assigned to Buyer will be apportioned. (e) At the Closing and, in addition to the Purchase Price, Buyer shall pay to Seller, in cash or by cashier's or certified check, or by Federal funds wire transfer a sum 8 equivalent to all monies in house banks, petty cash and cash registers, which monies shall be counted jointly by representatives of Seller and Buyer. Seller shall notify accounts receivable of change of ownership and any address change of account processing. (f) The final night's room revenue (revenue from rooms occupied on the evening preceding the Closing Date), including any sales tax (the "Guest Ledger"), will be retained by Seller. (g) The fees for Licenses and Permits assigned hereby shall be apportioned. (h) Refundable deposits made by Seller under the Leases or other agreements transferred to Buyer hereunder shall be added to the cash portion of the Purchase Price, and Buyer shall thereupon acquire all of Seller's rights and obligations, if any, in and to such deposits. (i) All prepaid rents, room rental deposits, and all other deposits for advance reservations, banquets or future services shall be paid over to Buyer. Seller agrees to provide to Buyer at the Closing a then current list of all advance reservations, banquets or services for the period after the Closing Date (and to update said list thereafter). Seller agrees that any pricing for advanced reservations must be in accordance with past practices. Buyer agrees to provide rooms and services for persons and organizations who or which made advance reservations, and Buyer agrees to indemnify and hold harmless Seller against any claim brought against Seller as a result of Buyer's failure to honor any such reservations. (j) All vending machine monies received from the first opening of and collection from such machines subsequent to Closing shall be paid to Seller without apportionment. Except as herein otherwise provided, all apportionments provided for in this agreement shall be made as of 12:01 a.m. CT on the Closing Date and based upon the actual number of days in the period covered by the sum being apportioned. Closing adjustments and apportionments made pursuant to the foregoing provisions shall be determined jointly by representatives of Buyer and Seller tentatively at the Closing (or as otherwise set forth herein). 12. Inspection of Property. From the Effective Date of this Agreement and continuing thereafter for a period of fifteen (15) days (the "Due Diligence Period"), Seller shall permit and, to the extent reasonably required by Buyer (but at no cost or expense to Seller), assist Buyer in the making of (a) a complete physical inspection of the Property, and (b) investigations of all financial data, records, insurance policies, utility bills, tax bills, Leases, contracts, Service Contracts and all documents or papers (including copies of recorded plats of the Property and copies of building plans for the improvements thereon) in the possession of Seller, its agents or other parties pertaining to the ownership, condition and operation of the Property. The costs and expenses of Buyer's review shall be borne solely by Buyer. 9 If, at any time prior to the expiration of the Due Diligence Period, Buyer, in its sole and absolute discretion, determines that it is unwilling to proceed with this transaction for any reason whatsoever, then Buyer, at its sole discretion and upon written notice to Seller on or before the expiration of the Due Diligence Period, may terminate this Agreement, whereupon the Escrow Agent shall return the Deposit and all interest earned thereon, but not the Non-refundable Deposit, to Buyer, and this Agreement shall become null and void, without further liability of either party to the other, except as otherwise expressly set forth herein. Seller shall retain the Non-refundable Deposit. If Buyer fails to notify Seller of its termination of this Agreement as set forth above, then Buyer shall be deemed to have waived its right of termination under this paragraph, in which event Buyer shall accept title to the Property in its then "as-is" and "where-is" condition, subject to the representations and warranties of Seller expressly set forth herein. All information furnished by Seller to Buyer in accordance with this Agreement or obtained by Buyer in the course of its review or Closing preparation shall be treated as confidential information by Buyer and shall be returned to Seller. In addition, until the Closing has been consummated, Buyer will not, without Seller's written consent, disclose or discuss with any employee of Seller, or any other member of the staff of the Hotel, any of the following: (i) this Agreement or any of the terms hereof, (ii) the transaction contemplated by this Agreement, or (iii) any aspect of the Hotel's operations or finances. Furthermore, copies of all reports, engineering studies, analyses and other documents and information resulting from investigations under this paragraph by Buyer, or any of its employees, agents or representatives, also shall be treated as confidential information by Buyer (although Buyer need not deliver copies of the same to Seller). Buyer shall maintain a policy of comprehensive general liability insurance in order to insure against any damage, claim, loss or injury which Buyer, or any of its employees, agents or representatives, may cause in conducting such studies, analyses or investigations, which policy shall name Seller as an additional insured thereunder. Buyer shall defend, indemnify and hold Seller harmless from and against any liabilities, claims, demands or actions incident to, resulting from, or in any way arising out of, such test, inspection or entry by or on behalf of Buyer onto the Property. The foregoing indemnity shall survive the Closing and not be merged therein. Buyer's feasibility study shall include all steps necessary to determine whether substances regarded as hazardous by any applicable law, solid wastes, or other substances known or suspected to pose a threat to health or the environment (collectively, "Hazardous Substances") have been disposed of or otherwise released on or to the Property or exist on or within any portion of the Property. Buyer's failure to indicate disapproval based on such feasibility study shall relieve Seller of any liability to Buyer as a result of any environmental hazard on or to the Property subsequently discovered. 13. Covenants of Seller. Seller hereby agrees that during the period between the Effective Date and the Closing Date that: (a) Seller will (i) manage the Property or cause the Property to be managed in accordance with past practices and shall continue to offer services and amenities, including the pricing of such services and amenities in accordance with such past practices, and (ii) continue past normal practice with respect to reasonable maintenance and repairs of the Property and the Property will be at least in the same condition on the Closing Date as on the Effective Date, except for normal wear and tear and damage by any Casualty; provided, however, that nothing herein shall obligate Seller to undertake 10 any major repairs or major renovations or make capital improvements to the Property, except for that required to operate the Property in the course of its day to day business. (b) Seller shall allow Buyer or Buyer's representatives access to the Property, and to any books, records for the Hotel and other documents required to be delivered under this Agreement, upon reasonable prior notice at reasonable times. Buyer shall hold in strict confidence all matters pertaining to the Property. (c) Seller will operate the business in the ordinary course and will not significantly change rates and salaries without Buyer's approval. 14. Buyer's Representations and Warranties. Buyer represents and warrants to Seller as follows, which representations and warranties shall be true and correct in all material respects as of the Effective Date and as of the Closing Date, and which shall survive the Closing for a period of seven (7) years thereafter: (a) In the event that Buyer is not an individual, Buyer is duly organized, validly existing and in good standing under the laws of the State in which it has been formed. (b) Buyer has full power and authority to enter into this Agreement and to perform its obligations hereunder. (c) The person executing this Agreement on behalf of Buyer has been duly authorized to do so and, when so executed, this Agreement shall constitute a valid obligation of Buyer, binding upon and enforceable against Buyer in accordance with its terms. Buyer will indemnify and hold harmless Seller, its successors and assigns, from and against any and all loss, liability, damage, cost or expense, including, without limitation, reasonable attorneys' fees, suffered or incurred by Seller due to a breach of any of the foregoing representations and warranties. No claim for a breach of any representation or warranty of Buyer shall be actionable after Closing if the breach in question was actually known to Seller prior to Closing. 15. Seller's Representations and Warranties. Seller represents and warrants to Buyer as follows, which representations and warranties shall be true and correct in all material respects as of the Effective Date and as of the Closing Date, and which shall survive the Closing for a period of seven (7) years thereafter that except as set forth on Exhibit F as attached hereto and as may be amended from time to time by Seller through the Closing Date: (a) To Seller's knowledge, no notice of any material violation of any zoning, building or other law, ordinance, regulation, requirement or directive of any type against the Property or any portion thereof has been received by Seller from a governmental body. 11 (b) To Seller's knowledge, no notice of a pending condemnation, expropriation, eminent domain or similar proceeding affecting all or any portion of the Property has been received by Seller. (c) Seller will not enter into any employment contracts or deferred compensation agreements with employees of Seller, if any, at the Property, which will be binding upon Buyer after the Closing, without the prior consent of Buyer. (d) All of the Property to be transferred on the Closing Date shall be in the same condition as on the Effective Date of this Agreement, except for reasonable wear and tear. (e) Seller is a corporation duly constituted, validly existing, and in good standing under the laws of the State of Mississippi. (f) To Seller's knowledge, Seller's income tax returns have not been audited by the Internal Revenue Service or the State of Mississippi. (g) As of the Closing Date, Seller will hold good and marketable title to all of the Property, subject to no mortgage, pledge, lien, encumbrance, security interest or charge, that will not be discharged prior to Closing, other than the Permitted Exceptions. (h) The Property is and will be adequately insured against fire and casualty to the Closing Date, and valid policies therefor are and will be outstanding and duly enforced, and the premiums to become due thereon to the Closing Date will be paid when due by Seller. Seller has not received any notice of any cancellation of policies pertaining to the foregoing. Seller will indemnify and hold harmless Buyer, its successors and assigns, from and against any and all loss, liability, damage, cost or expense, including, without limitation, reasonable attorneys' fees, suffered or incurred by Buyer due to a breach of any of the foregoing representations and warranties. No claim for a breach of any representation or warranty of Seller shall be actionable after Closing if the breach in question was actually known to Buyer prior to Closing. 16. Indemnity and Survival. Seller agrees to and does hereby indemnify, defend, exonerate and save Buyer harmless of and from any and all liability, loss, damage, claim and expense incurred or suffered by Buyer arising out of or incidental to the operation of the Property by Seller prior to the conveyance of the Property to Buyer and for liability incurred by it relating to Hazardous Substances during the time it owned the Property prior to the Closing, except for any liability attributable to actions or omissions by Buyer, or any of its employees, agents or representatives, in connection with the studies, analyses or investigations to be conducted by or at the direction of Buyer in accordance with the provisions of Section 12 hereof. Buyer agrees to and does hereby indemnify, defend exonerate and save Seller harmless of and from any and all liability, loss, damage, claims and expense incurred or suffered by Seller arising out of or incidental to the operation of the Property by Buyer after the conveyance of the Property to Buyer, including liability for Hazardous Substances, from and after the Closing, except for any 12 liability attributable to actions or omissions by Seller before the Closing. All obligations of the parties called for herein shall survive the Closing of Buyer's purchase of the Property. 17. AS IS, WHERE IS. THE PROPERTY IS BEING SOLD "AS IS, WHERE IS" AND, EXCEPT AS SPECIFIED ANYWHERE IN THIS AGREEMENT, SELLER MAKES NO REPRESENTATION OR WARRANTY OF ANY KIND AS TO THE CONDITION THEREOF, AND BUYER ACKNOWLEDGES THAT BUYER IS RELYING ON ITS DUE DILIGENCE REVIEW IN PURCHASING THE PROPERTY. IT IS UNDERSTOOD AND AGREED THAT BUYER ASSUMES FULL AND COMPLETE RESPONSIBILITY FOR COMPLIANCE WITH ALL TITLES OF THE FEDERAL AMERICANS WITH DISABILITIES ACT ("ADA") AND THE REGULATIONS PROMULGATED PURSUANT THERETO, AS WELL AS ANY AND ALL STATE OR LOCAL ACCESSIBILITY STANDARDS. 18. Deposit. [INTENTIONALLY DELETED] 19. Broker. Seller and Buyer each represent and warrant to the other that it has not utilized the services of any real estate broker, salesperson or finder in connection with this Agreement or the purchase and sale of the Property contemplated hereby. Seller and Buyer each agree to indemnify, defend and hold harmless the other and their respective successors and assigns from and against all claims for brokerage commissions and finder's fees arising from or attributable to the acts or omissions of the indemnifying party or any person or entity purportedly acting on behalf of the indemnifying party. The foregoing indemnifications shall survive the Closing for a period of two (2) years thereafter. 20. Termination, Default and Remedies. (a) Default by Seller. If Seller shall be in default hereunder, Buyer's sole remedy shall be to terminate this Agreement by written notice delivered to Seller at or prior to the Closing whereupon this Agreement shall become null and void, without further liability of either party to the other. (b) Default by Buyer. In the event of a default by Buyer hereunder, Seller's sole remedy shall be to terminate this Agreement by notice to Buyer, whereupon this Agreement shall become null and void, without further liability of either party to the other. 21. Special Conditions. [INTENTIONALLY DELETED] 22. Supplemental Documents. The parties agree to execute all documents which may reasonably be required to effectuate the terms and provisions of this Agreement. 23. Notices. Any notices given or required to be given hereunder shall be by hand delivery, by overnight courier or by telecopy confirmed by answerback received. Notices shall be deemed given on the date sent for hand delivery and telecopy, and the day after the date sent for overnight courier. All notices shall be sent to the following addresses, or such other addresses as the party may direct by written notice: 13 IF TO SELLER: WITH A COPY TO: Arlington Hospitality, Inc. Shefsky & Froelich Ltd. 2355 South Arlington Heights Road--Suite 400 444 North Michigan Avenue--Suite 2500 Arlington Heights, IL 60005 Chicago, IL 60611 Attention: James Dale, Chief Financial Officer Attention: Mitchell D. Goldsmith, Esq. Telephone: 847-228-5400 Telephone: 312-836-4006 Facsimile: 847-228-5409 Facsimile: 312-527-3194 IF TO BUYER: WITH A COPY TO: Michael P. Holtz Piper Rudnick 490 East Route 22 203 North LaSalle Street--Suite 1800 North Barrington, IL 60010 Chicago, IL 60601 Telephone: 847-277-0068 Attention: David Glickstein, Esq. E-Mail: mpholtz@aol.com Telephone: 312-368-4000 Facsimile: 312-236-7516 IF TO ESCROW AGENT: First American Title Insurance Company 30 N. LaSalle Street Chicago, Illinois 60602 Attention: Greg Chaparro, Esq.
24. Section Headings. The section headings used herein are inserted solely for the convenience of reference and shall not affect the construction or interpretation of this Agreement. 25. Entire Contract. This Agreement constitutes the entire sale and purchase contract between the parties hereto and there are no other understandings, oral or written, relating to the subject matter hereof. This Agreement may not be changed, modified or amended, in whole or in part, except in writing, signed by all parties. 26. Invalid Provisions. If any one or more the provisions of this Agreement, or the applicability or any such provision to a specific situation, shall be held invalid or unenforceable, such provision shall be modified to the minimum extent necessary to make it or its application valid and enforceable, and the validity and enforceability of all other provisions of this Agreement and all other applications of any such provision shall not be affected thereby. 27. Construction. The words "include" or "including" shall be construed as incorporating, also "but not limited to" or "without limitation." The word "day" means a calendar day, unless otherwise specified. The words "herein," "hereof," "hereunder" and other similar compounds of the words "here" when used in this Agreement shall refer to the entire Agreement and not to any particular provision or section. If the last day of any time period stated herein shall fall on a Saturday, Sunday or legal holiday, then the duration of such time period shall be extended so that it shall end on the next succeeding day which is not a Saturday, Sunday or legal holiday. Whenever used in this Agreement, the singular shall include the plural, the plural the singular, and the use of any gender shall be applicable to all genders. Marginal 14 notes are inserted for convenience only and shall not form part of the text of this Agreement. No inference in favor or against either party shall be drawn based upon which party or which party's counsel served as principal draftsman of this Agreement. 28. Covenant Not to Record. Buyer will not record this Agreement. Any attempted recording of this Agreement by Buyer shall constitute a default hereunder on the part of Buyer and shall cause forfeiture by Buyer of the Deposit and all interest thereon and the Non-refundable Deposit. 29. Binding Effect. This Agreement and the terms and conditions hereof shall extend to and be binding upon the parties hereto and their successors and assigns; provided, that Buyer only may assign this Agreement (with written notice to Seller) to an entity controlled by Buyer, and in such event, Buyer shall remain liable hereunder. 30. Counterparts and Copies. This Agreement may be executed in several counterparts, all of which, when taken together, shall be deemed to be one original. Each fully executed copy also shall be deemed to be an original. 31. Governing Law. This Agreement shall be governed by and construed in accordance with substantive laws of the State of Mississippi. 32. Notice to Third Parties. Buyer and Seller jointly shall inform all contractors, suppliers, and required others (all as mutually agreed to by Buyer and Seller) of the sale of the Property to Buyer. The form and substance and timing of such notice and the persons to whom such notices are to be sent are to be mutually agreed upon by Buyer and Seller, but in no event shall such notice be sent prior to expiration of the Due Diligence Period, or sooner than seven (7) days prior to the Closing. 33. Like Kind Exchange. Notwithstanding anything contained herein to the contrary, in the event that Seller desires to complete the sale of the Property contemplated hereby as part of a "like-kind exchange" in accordance with Internal Revenue Code Section 1031, Buyer agrees to execute and deliver any and all documents and instruments reasonably required in order to accomplish the foregoing. 34. Gift Certificates. Buyer must honor whirlpool gift certificates ("Certificates") for a period of one (1) year after the Closing Date. Seller shall reimburse Buyer $25.00 for each Certificate if redeemed when the Hotel was not sold-out and $50.00 for each Certificate if redeemed when the Hotel was sold-out. This provision shall survive the Closing. 35. Effective Date. The date of formation of this Agreement shall for all purposes be the date of the last party to execute this Agreement between Buyer and Seller (the "Effective Date"). If not effective by ten (10) days following the date of counterpart execution of this Agreement by Seller, this Agreement shall be null and void. [SIGNATURE PAGE IMMEDIATELY FOLLOWS] 15 IN WITNESS WHEREOF, the parties have executed this Agreement as of the later of the dates written below. BUYER: SELLER: MPH INVESTMENTS OF MISSISSIPPI, INC., AP PROPERTIES OF MISSISSIPPI, INC. By: /s/ Michael P. Holtz By: /s/ James B. Dale -------------------------------- ------------------------------ Michael P. Holtz, President James B. Dale, Secretary Dated: November 7, 2002 Dated: November 7, 2002 -------------------------------- --------------------------- 16 EX-99.4 6 c72894exv99w4.txt AGREEMENT OF SALE AGREEMENT OF SALE THIS AGREEMENT OF SALE (this "Agreement") is made as of this 7th day of November, 2002, between Freeport, IL 899 L.L.C., an Illinois liability company, having its office at 2355 South Arlington Heights Road, Suite 400, Arlington Heights, Illinois 60005 (hereinafter referred to as "Seller"), and MPH Investments of Illinois, Inc., a Illinois corporation (hereinafter referred to as "Buyer"). RECITALS: A. Seller is the owner of a certain parcel of real estate located at 1060 Riverside Drive, in the City of Freeport, Stephenson County, State of Illinois, commonly known as the AmeriHost Inn & Suites - Freeport, Illinois, and more particularly described on Exhibit A attached hereto (the "Land"). B. The Land is improved with approximately 64 hotel guest rooms and related facilities (the "Hotel"). C. Seller has agreed to sell and assign, or cause to be sold and assigned, to Buyer, and Buyer has agreed to purchase and take from Seller, the Land, and the Hotel, together with: (i) all of Seller's interest in all appliances, apparatus, furniture, furnishings, fixtures, equipment, machinery, fittings, working supplies, building supplies, maintenance and repair supplies, tools, inventory, towels, wash cloths, beds, sheets, pillow cases, bed spreads, blankets, television sets, radios and articles of personal property owned by Seller and used in connection with the occupancy and operation of the Hotel (the "Tangible Personal Property"); (ii) all deposits taken from any guests, groups, conventions or others, and any other amounts prepaid in connection with services to be rendered on or after the Closing Date (as hereinafter defined) now in the possession of Seller or hereinafter received by Seller in connection with the running and operation of the Hotel (the "Reservation Deposits"); (iii) all of Seller's interest in all contracts or agreements and/or leases for the furnishing of maintenance, repairs, supplies, equipment or other services to the Property (as hereinafter defined), which have a term expiring after the Closing Date, including Seller's interest in all transferable telephone numbers (the "Service Contracts"), a current list of the Service Contracts is included herein as Exhibit B attached hereto, which shall be updated through the Closing Date; (iv) to the extent assignable, all of Seller's interest in all building and other permits, certificates, licenses (except current franchise license agreement with AmeriHost Franchise Systems, Inc.), authorizations and approvals granted in connection with the Property (the "Licenses and Permits"); (v) all guest and customer lists for the Hotel owned by, and in possession of, Seller (the "Guest and Customer Lists"); (vi) all right, title and interest in any other leases encumbering or affecting the Property (the "Leases"); and (vii) all promotional advertising literature and materials, catalogs, booklets, stationery and manuals ("Promotional Material"). D. The Land, the Hotel, the Tangible Personal Property, the Reservation Deposits, the Service Contracts, the Licenses and Permits, the Guest and Customer Lists, the Leases and the Promotional Material are sometimes referred to herein, collectively, as the "Property." E. Simultaneous with the execution of this Agreement, AP Properties of Mississippi, Inc. (the "Mississippi Seller"), a wholly-owned subsidiary of Arlington Hospitality, Inc. ("AHI"), has contracted to sell the hotel owned by it in Vicksburg, Mississippi (the "Mississippi Hotel") to MPH Investments of Mississippi, Inc. (the "Mississippi Buyer"); as noted below, the sale of the Property called for herein is contingent upon: (i) the Mississippi Seller's simultaneous sale of the Mississippi Hotel in accordance with the aforesaid agreement; and (ii) the closing of the transactions contemplated in that certain "Omnibus Agreement" of even date herewith between AHI and Michael P. Holtz. NOW THEREFORE, in consideration of the premises, and for other good and valuable consideration, the receipt and adequacy of which hereby are acknowledged, and intending to be legally bound hereby, Seller and Buyer covenant and agree as follows: 1. Purchase and Sale. Seller, on the Closing Date, shall sell, grant, convey, assign, transfer and deliver the Hotel to Buyer, and Buyer agrees to purchase, acquire and accept the Hotel from Seller, by Special Warranty Deed, subject to the deed restrictions attached hereto as Exhibit C, easements, covenants, conditions, restrictions and other matters of record as of the Closing Date, which will not materially adversely affect Buyer's use of the Property as a hotel (the "Permitted Exceptions"). 2. Consideration. Buyer will purchase the Property and pay therefor the sum (the "Purchase Price") of One Hundred Thirty-Two Thousand Two Hundred Thirty-Seven and No/100 Dollars ($132,237.00) plus the amount of the first mortgage on the Property due at Closing in lawful currency of the United States of America, in cash or by cashier's or certified check, or by federal funds wire, subject to closing apportionment adjustments as hereinafter set forth, payable on the Closing Date. 3. Documents and Deliveries at Closing by Seller. Within thirty (30) days after the Effective Date (as hereinafter defined) of this Agreement, Seller shall provide to Buyer a commitment for title insurance (the "Title Commitment") issued by the Escrow Agent with respect to the Land and the Hotel. In the event that the Title Commitment sets forth exceptions (the "Unpermitted Exceptions") other than the Permitted Exceptions, Buyer shall notify Seller in writing of the Unpermitted Exceptions within ten (10) days after Buyer's receipt of the Title Commitment. Seller shall have until the Closing Date to either remove the Unpermitted Exceptions or arrange for the issuance by the Escrow Agent of an endorsement to the owner's policy to be issued to Buyer at the Closing insuring Buyer against any loss or damage Buyer might incur as a result of the existence of any Unpermitted Exception which Seller cannot otherwise cause to be removed prior to the Closing Date. If any Unpermitted Exception over which such an endorsement has not been so issued remains unremoved as of the Closing Date, Buyer may terminate this Agreement and this Agreement shall become null and void, without further liability of either party to the other, except as otherwise expressly set forth herein. In the event that Buyer does not notify Seller in writing of any Unpermitted Exceptions within ten (10) days after Buyer's receipt of the Title Commitment, then Buyer shall be deemed to have waived any right it otherwise would have had to object to any Unpermitted Exceptions, and shall accept title to the Property at the Closing subject to such Unpermitted Exceptions. 2 At the time and place of the Closing, upon payment in full of the Purchase Price and satisfaction of all of Buyer's obligations under this Agreement, Seller shall: (a) Convey and deliver title to the Land and the Hotel by special warranty deed with the deed restrictions set forth in Exhibit C in recordable form and subject to the Permitted Exceptions. (b) Assign and deliver to Buyer all of Seller's interest in the Reservation Deposits, the Tangible Personal Property (to the extent assignable), the Licenses and Permits and the Guest and Customer Lists by a Bill of Sale, provided Buyer agrees that, from and after the Closing Date, it will assume all of the obligations of Seller thereunder. (c) Assign and deliver to Buyer all of Seller's interest in the Service Contracts (to the extent assignable), by an Assignment and Assumption Agreement, whereby Buyer assumes the obligations thereof from and after the Closing Date. Seller shall be responsible for all obligations owing prior to Closing. Seller, as of the Closing Date, shall terminate the existing management contract for the Property. (d) Deliver to Buyer, if available, copies of the Licenses and Permits and the Service Contracts. (e) Assign and deliver to Buyer all of Seller's interest in any other Leases affecting the Property (to the extent assignable), by an Assignment and Assumption of Leases, whereby Buyer assumes the obligations thereof from and after the Closing Date. (f) Deliver to Buyer an affidavit originally executed by Seller to the effect that Seller is not a foreign person for purposes of 26 U.S.C. 1445 (b) (2). (g) Terminate the employment of all of its employees at the Property. Upon completion of the Due Diligence Period (as hereinafter defined), Seller will provide notice to all of its employees of the impending sale. Seller shall provide the employees an opportunity to submit applications for employment with Buyer, and Buyer may discuss employment opportunities with the employees, provided that a representative of Seller is present during all communications with employees of Seller. (h) Deliver to Buyer possession of the Property. The documents described in this Section 3 are hereinafter collectively referred to as the "Seller's Closing Documents." 4. Documents and Deliveries at Closing by Buyer. At the time and place of Closing, Buyer shall execute and deliver to: (a) Seller: (i) all such documents as may be necessary to effect an assumption by Buyer, and the consent of all relevant third parties thereto, if applicable, from and after the Closing Date, of all obligations of Seller under the Service Contracts, the Licenses and Permits and the Leases, all obligations with respect to the Reservation Deposits, and all other obligations or liabilities of Seller or the Property to be assumed by Buyer 3 pursuant to the terms of this Agreement from and after the Closing Date, and (ii) a certified copy of a resolution of the controlling body of Buyer (in the event that Buyer is not an individual) authorizing Buyer to consummate the subject transaction upon the terms and conditions herein contained; (b) Documentation in form and content satisfactory to Seller establishing that effective as of the Closing Date, Seller, together with any guarantor of Seller's obligations, shall be released by the holder of the first mortgage on the Property from all obligations under the note, mortgage and other documentation associated with the loan secured by the first mortgage on the Property; (c) AmeriHost Franchise Systems, Inc. ("AFSI"), or to Seller as AFSI's franchise document repository, all such documents as may be necessary to (i) effect a release of Seller and AHI by AFSI from any and all further liabilities and obligations under any franchise agreement between Seller and AFSI with respect to the Property and any guarantee thereof, and (ii) induce AFSI to enter into a franchise agreement granting to Buyer an exclusive license to operate the Property as an AmeriHost Inn(R) hotel within a specified territory, the form of which documents shall be agreed upon by AFSI and Buyer prior to the expiration of the Due Diligence Period, including, without limitation, payment to AFSI of a non-refundable application fee of One Thousand and No/100 Dollars ($1,000.00), an initial franchise fee of One Thousand and No/100 Dollars ($1,000.00), and issuance of a certificate of insurance meeting AFSI coverage requirements. In the event AFSI and Buyer cannot agree upon the form of the documents during the Due Diligence Period, Buyer at its sole discretion and upon written notice to Seller on or before expiration of the Due Diligence Period, may terminate this Agreement, whereupon the Escrow Agent shall return the Deposit and all interest earned thereon, but not the Non-refundable Deposit, to Buyer, and this Agreement shall become null and void, without further liability of either party to the other, except as otherwise expressly set forth herein. If Buyer fails to notify Seller of its termination of this Agreement as set forth above, then Buyer shall be deemed to have waived its right of termination under this paragraph, whereupon the full amount of the Deposit shall be released to Seller upon Escrow Agent's receipt of unilateral written notice by Seller; (d) An indemnification agreement by Buyer and Michael P. Holtz in the form attached as Exhibit D, whereby they agree to indemnify and hold harmless AHI from certain losses they may incur with AFSI in the event the Property ceases to be operated under the AFSI system during the seven (7) year period following the Closing Date; and (e) A participation agreement in the form attached hereto as Exhibit E. The documents described in this Section 4 are hereinafter collectively referred to as the "Buyer's Closing Documents." The Seller's Closing Documents and the Buyer's Closing Documents are sometimes referred to herein, collectively, as the "Closing Documents." 5. Closing Expenses. Seller shall be responsible for Seller's and up to $5,000 of Buyer's attorneys' fees (and to the extent less than $5000, Seller shall apply such difference of any of the Mississippi Buyer's attorneys fees not being paid by the Mississippi Seller), the deed 4 recording fees and the full cost of any basic owner's title insurance policy, excluding extended coverage and endorsements. Buyer shall be responsible for any survey expenses, any costs and expenses attendant to the investigation into any environmental conditions on or about the Property, the full cost of any lender's title insurance policy, any costs for extended coverage and/or endorsements to the owner's title insurance policy, and all costs, fees, taxes and other charges associated with any financing obtained by Buyer to finance the acquisition of, or improvements to, the Property. All real estate transfer taxes (i.e., the State and local recording taxes, including the State and County transfer taxes and the revenue stamps) shall be paid by the party designated in the transfer tax statue or ordinance, and if not so designated then by Buyer. Escrow fees and document preparation fees or any title insurance company fees for the use of the title company's offices for the Closing shall be borne equally by the parties. Except as provided elsewhere in this Agreement, all other costs in connection with the Closing shall be paid by the party incurring such cost. 6. Conditions to Obligations of Buyer. The obligations of Buyer to perform Buyer's obligations under this Agreement are, and shall be subject to, the satisfaction of each of the following conditions at or prior to the Closing: (a) Seller shall have executed, acknowledged (where applicable) and delivered the Seller's Closing Documents to be executed and delivered by Seller, and Seller shall have delivered to Buyer all of the agreements, documents and other items required under this Agreement. (b) All of the representations and warranties of Seller contained in this Agreement shall have been true and correct in all material respects when made, and shall be true and correct in all material respects on the Closing Date. (c) Seller shall have performed, observed and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed, observed and complied with on its part prior to or as of the Closing. 7. Conditions to Obligations of Seller. The obligations of Seller to perform Seller's obligations under this Agreement are, and shall be subject to, the satisfaction of each of the following conditions at or prior to the Closing: (a) Buyer shall have executed, acknowledged (where applicable) and delivered the Buyer's Closing Documents to be executed and delivered by Buyer, and Buyer shall have delivered to Seller all of the agreements, documents and other items required under this Agreement. All Leases and Service Contracts affecting the Property will be assumed by Buyer from and after the Closing Date. In particular, with respect to: (i) AFSI franchise documents, Buyer shall have executed and delivered all required franchise documents to AFSI, or to Seller as AFSI's franchise document repository, one week prior to the Closing Date (except for a copy of the deed which shall be provided to AFSI immediately after the Closing) and AFSI shall have countersigned said documents so that effective on the Closing Date, Buyer shall become a franchisee of AFSI with respect to the Property; and (ii) the first mortgage loan on the Property, Buyer shall either have obtained new financing sufficient to pay off the loan in full or a duly executed 5 release in form and substance satisfactory to Seller releasing Seller and AHI, as guarantor of said loan, from all liability under said loan. (b) All of the representations and warranties of Buyer contained in this Agreement shall have been true and correct in all material respects when made, and shall be true and correct in all material respects on the Closing Date. (c) Buyer shall have performed, observed and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed, observed and complied with on its part prior to or as of the Closing. (d) Seller shall have been released from any and all further liabilities and obligations under and any franchise agreement between Seller and AFSI with respect to the Property, including, without limitation, any termination fee(s) required to be paid in connection with such release. (e) The simultaneous closing of the sale of the Mississippi Hotel from the Mississippi Seller to the Mississippi Buyer. (f) The appraised value of the Property and the Mississippi Hotel collectively, pursuant to an appraisal to be conducted by Cushman & Wakefield after the date of this Agreement but prior to the Closing Date, shall not exceed the purchase price of the Property and the Mississippi Property, collectively. 8. Casualty to Property. Seller shall maintain comprehensive insurance coverage of the Property until the Closing. Promptly after the occurrence of any fire or other casualty affecting the Property or any portion thereof occurring between the Effective Date and the Closing Date (a "Casualty"), Seller shall give Buyer written notice thereof (a "Casualty Notice"), which Casualty Notice shall state the type, location and amount of damage to the Property. If, prior to the Closing, such a Casualty shall occur and the cost to complete repairs of such Casualty shall equal $500,000 or more, then, in any such event, either party, at its sole option, may terminate this Agreement by written notice to the other (a "Casualty Termination Notice"), within ten (10) days after Buyer has received the Casualty Notice; provided, however, that if the Closing is scheduled for a date which is less than ten (10) days after Buyer's receipt of the Casualty Notice the Closing shall be adjourned until ten (10) days after Buyer's receipt of the Casualty Notice; and provided, further, however, that Seller shall have the sole option to terminate this Agreement, if the insurance proceeds payable to Seller on account of such Casualty would exceed the Purchase Price, in which event the Deposit and all interest earned thereon and the Non-refundable Deposit shall be returned to Buyer, this Agreement shall become null and void without further liability of either party to the other, except as otherwise expressly set forth herein (other than the obligation of Buyer to keep confidential all documents and other materials furnished to Buyer pursuant to the transaction contemplated by this Agreement). If neither Buyer nor Seller elect to terminate this Agreement, then the Closing shall take place as provided herein, without credit to the Purchase Price. 9. Condemnation. In the event of any taking of all or any part of the Property by eminent domain proceedings, or the commencement of any such proceedings from the Effective 6 Date to the Closing Date, Seller promptly shall give Buyer written notice of such proceeding stating the amount, type and location of such taking or proposed taking and Buyer shall proceed as follows: (a) Should all of the Property, or a portion of the Property which materially interferes with the present use thereof, be condemned, Buyer shall be permitted to terminate this Agreement by written notice to that effect to Seller on or before the date fixed for the Closing, and the Deposit and all interest earned thereon and the Non-refundable Deposit shall be returned to Buyer. Thereafter, this Agreement shall become null and void without further liability of either party to the other, except as otherwise expressly set forth herein (other than the obligation of Buyer to keep confidential all documents and other materials furnished to Buyer pursuant to the transaction contemplated by this Agreement). (b) If only a portion of the Property is condemned, which would not materially interfere with the present use thereof, Buyer will be liable and obligated to take title to the remaining portion of the Property at the Purchase Price, in which event Seller shall assign to Buyer all of Seller's right, title and interest in and to any award resulting from such condemnation. 10. Closing. Settlement of this transaction shall be held no later than February 17, 2003, at a location to be mutually agreed upon by Seller and Buyer, time being of the essence thereof; provided however, Buyer agrees to use its best efforts to consummate the Closing no later than December 31, 2002 and shall permit Seller and its representatives to contact Buyer's financing sources and to participate in conversations with them and Buyer for purposes of verifying that Buyer is using Buyer's best efforts in this regard. The settlement of this transaction and the date of such settlement are referred to herein, respectively, as the "Closing" and the "Closing Date." Seller and Buyer may mutually agree upon an earlier date for settlement of this transaction or fix another place for settlement of this transaction. Notwithstanding anything to the contrary contained in this Agreement, the Closing of this Agreement is contingent upon the simultaneous closing of the sale of the Mississippi Hotel from the Mississippi Seller to the Mississippi Buyer. 11. Apportionments and Additional Payments. The following apportionments and payments are to be made as of the Closing Date: (a) All taxes attributable to the Property, including, but not limited to, real estate taxes and personal property taxes, if any, shall be apportioned on the basis of the tax year (or other period for which assessed) whether due or payable. If the current year taxes are not available as of the Closing Date, the amounts from the last-issued tax bill shall be used. All tax refunds from prior years shall remain the property of Seller. If a refund is received for a period after the Closing, Buyer shall be entitled to the same, after deduction of any expenses incurred by Seller in order to obtain such refund. If a refund is received for a period prior to Closing, Seller shall be entitled to the same, after deduction of any expenses incurred by Buyer in order to obtain such refund. The parties agree to cooperate fully to assist each other in providing such information in their possession or control as may be necessary to assist in obtaining any such refunds. In no event shall 7 Seller pay or be apportioned real estate taxes and personal property taxes attributable to the Property for any period after the Closing Date. (b) All assessments attributable to the Property, including, but not limited to, sewer rents, water charges, and all other municipal charges, if any, which have become a lien upon the Land or the Hotel, whether or not recorded at the Effective Date of this Agreement, shall be apportioned for the year in which the Closing occurs. In no event shall Seller pay or be apportioned assessments attributable to the Property for any period after the Closing Date. (c) All income of any type arising from the Hotel and the Service Contracts, including, but not limited to, commissions shall be apportioned (except with respect to room rentals for the night preceding the Closing Date, which is covered by Section 11(f) below and vending machine monies, which is covered by Section 11(j) below). (d) Charges for the consumption of electricity, fuel oil on the Property, steam, gas, telephone services and other utility services, if any, shall be apportioned, unless final readings therefor can be established as of the Closing Date. Further, payments under the Service Contracts, the Leases and any other executory contracts assigned to Buyer will be apportioned. (e) At the Closing and, in addition to the Purchase Price, Buyer shall pay to Seller, in cash or by cashier's or certified check, or by Federal funds wire transfer a sum equivalent to all monies in house banks, petty cash and cash registers, which monies shall be counted jointly by representatives of Seller and Buyer. Seller shall notify accounts receivable of change of ownership and any address change of account processing. (f) The final night's room revenue (revenue from rooms occupied on the evening preceding the Closing Date), including any sales tax (the "Guest Ledger"), will be retained by Seller. (g) The fees for Licenses and Permits assigned hereby shall be apportioned. (h) Refundable deposits made by Seller under the Leases or other agreements transferred to Buyer hereunder shall be added to the cash portion of the Purchase Price, and Buyer shall thereupon acquire all of Seller's rights and obligations, if any, in and to such deposits. (i) All prepaid rents, room rental deposits, and all other deposits for advance reservations, banquets or future services shall be paid over to Buyer. Seller agrees to provide to Buyer at the Closing a then current list of all advance reservations, banquets or services for the period after the Closing Date (and to update said list thereafter). Seller agrees that any pricing for advanced reservations must be in accordance with past practices. Buyer agrees to provide rooms and services for persons and organizations who or which made advance reservations, and Buyer agrees to indemnify and hold harmless Seller against any claim brought against Seller as a result of Buyer's failure to honor any such reservations. 8 (j) All vending machine monies received from the first opening of and collection from such machines subsequent to Closing shall be paid to Seller without apportionment. Except as herein otherwise provided, all apportionments provided for in this agreement shall be made as of 12:01 a.m. CT on the Closing Date and based upon the actual number of days in the period covered by the sum being apportioned. Closing adjustments and apportionments made pursuant to the foregoing provisions shall be determined jointly by representatives of Buyer and Seller tentatively at the Closing (or as otherwise set forth herein). 12. Inspection of Property. From the Effective Date of this Agreement and continuing thereafter for a period of fifteen (15) days (the "Due Diligence Period"), Seller shall permit and, to the extent reasonably required by Buyer (but at no cost or expenses to Seller), assist Buyer in the making of (a) a complete physical inspection of the Property, and (b) investigations of all financial data, records, insurance policies, utility bills, tax bills, Leases, contracts, Service Contracts and all documents or papers (including copies of recorded plats of the Property and copies of building plans for the improvements thereon) in the possession of Seller, its agents or other parties pertaining to the ownership, condition and operation of the Property. The costs and expenses of Buyer's review shall be borne solely by Buyer. If, at any time prior to the expiration of the Due Diligence Period, Buyer, in its sole and absolute discretion, determines that it is unwilling to proceed with this transaction for any reason whatsoever, then Buyer, at its sole discretion and upon written notice to Seller on or before the expiration of the Due Diligence Period, may terminate this Agreement, whereupon the Escrow Agent shall return the Deposit and all interest earned thereon, but not the Non-refundable Deposit, to Buyer, and this Agreement shall become null and void, without further liability of either party to the other, except as otherwise expressly set forth herein. Seller shall retain the Non-refundable Deposit. If Buyer fails to notify Seller of its termination of this Agreement as set forth above, then Buyer shall be deemed to have waived its right of termination under this paragraph, in which event Buyer shall accept title to the Property in its then "as-is" and "where-is" condition, subject to the representations and warranties of Seller expressly set forth herein. All information furnished by Seller to Buyer in accordance with this Agreement or obtained by Buyer in the course of its review or Closing preparation shall be treated as confidential information by Buyer and shall be returned to Seller. In addition, until the Closing has been consummated, Buyer will not, without Seller's written consent, disclose or discuss with any employee of Seller, or any other member of the staff of the Hotel, any of the following: (i) this Agreement or any of the terms hereof, (ii) the transaction contemplated by this Agreement, or (iii) any aspect of the Hotel's operations or finances. Furthermore, copies of all reports, engineering studies, analyses and other documents and information resulting from investigations under this paragraph by Buyer, or any of its employees, agents or representatives, also shall be treated as confidential information by Buyer (although Buyer need not deliver copies of the same to Seller). Buyer shall maintain a policy of comprehensive general liability insurance in order to insure against any damage, claim, loss or injury which Buyer, or any of its employees, agents or representatives, may cause in conducting such studies, analyses or investigations, which policy 9 shall name Seller as an additional insured thereunder. Buyer shall defend, indemnify and hold Seller harmless from and against any liabilities, claims, demands or actions incident to, resulting from, or in any way arising out of, such test, inspection or entry by or on behalf of Buyer onto the Property. The foregoing indemnity shall survive the Closing and not be merged therein. Buyer's feasibility study shall include all steps necessary to determine whether substances regarded as hazardous by any applicable law, solid wastes, or other substances known or suspected to pose a threat to health or the environment (collectively, "Hazardous Substances") have been disposed of or otherwise released on or to the Property or exist on or within any portion of the Property. Buyer's failure to indicate disapproval based on such feasibility study shall relieve Seller of any liability to Buyer as a result of any environmental hazard on or to the Property subsequently discovered. 13. Covenants of Seller. Seller hereby agrees that during the period between the Effective Date and the Closing Date that: (a) Seller will (i) manage the Property or cause the Property to be managed in accordance with past practices and shall continue to offer services and amenities, including the pricing of such services and amenities in accordance with such past practices, and (ii) continue past normal practice with respect to reasonable maintenance and repairs of the Property and the Property will be at least in the same condition on the Closing Date as on the Effective Date, except for normal wear and tear and damage by any Casualty; provided, however, that nothing herein shall obligate Seller to undertake any major repairs or major renovations or make capital improvements to the Property, except for that required to operate the Property in the course of its day to day business. (b) Seller shall allow Buyer or Buyer's representatives access to the Property, and to any books, records for the Hotel and other documents required to be delivered under this Agreement, upon reasonable prior notice at reasonable times. Buyer shall hold in strict confidence all matters pertaining to the Property. (c) Seller will operate the business in the ordinary course and will not significantly change rates and salaries without Buyer's approval. 14. Buyer's Representations and Warranties. Buyer represents and warrants to Seller as follows, which representations and warranties shall be true and correct in all material respects as of the Effective Date and as of the Closing Date, and which shall survive the Closing for a period of seven (7) years thereafter: (a) In the event that Buyer is not an individual, Buyer is duly organized, validly existing and in good standing under the laws of the State in which it has been formed. (b) Buyer has full power and authority to enter into this Agreement and to perform its obligations hereunder. (c) The person executing this Agreement on behalf of Buyer has been duly authorized to do so and, when so executed, this Agreement shall constitute a valid 10 obligation of Buyer, binding upon and enforceable against Buyer in accordance with its terms. Buyer will indemnify and hold harmless Seller, its successors and assigns, from and against any and all loss, liability, damage, cost or expense, including, without limitation, reasonable attorneys' fees, suffered or incurred by Seller due to a breach of any of the foregoing representations and warranties. No claim for a breach of any representation or warranty of Buyer shall be actionable after Closing if the breach in question was actually known to Seller prior to Closing. 15. Seller's Representations and Warranties. Seller represents and warrants to Buyer as follows, which representations and warranties shall be true and correct in all material respects as of the Effective Date and as of the Closing Date, and which shall survive the Closing for a period of seven (7) years thereafter that except as set forth on Exhibit F as attached hereto and as may be amended from time to time by Seller through the Closing Date: (a) To Seller's knowledge, no notice of any material violation of any zoning, building or other law, ordinance, regulation, requirement or directive of any type against the Property or any portion thereof has been received by Seller from a governmental body. (b) To Seller's knowledge, no notice of a pending condemnation, expropriation, eminent domain or similar proceeding affecting all or any portion of the Property has been received by Seller. (c) Seller will not enter into any employment contracts or deferred compensation agreements with employees of Seller, if any, at the Property, which will be binding upon Buyer after the Closing, without the prior consent of Buyer. (d) All of the Property to be transferred on the Closing Date shall be in the same condition as on the Effective Date of this Agreement, except for reasonable wear and tear. (e) Seller is a limited liability company duly constituted, validly existing, and in good standing under the laws of the State of Illinois. (f) To Seller's knowledge, Seller's income tax returns have not been audited by the Internal Revenue Service or the State of Illinois. (g) As of the Closing Date, Seller will hold good and marketable title to all of the Property, subject to no mortgage, pledge, lien, encumbrance, security interest or charge, that will not be discharged prior to Closing, other than the Permitted Exceptions. (h) The Property is and will be adequately insured against fire and casualty to the Closing Date, and valid policies therefor are and will be outstanding and duly enforced, and the premiums to become due thereon to the Closing Date will be paid when due by Seller. Seller has not received any notice of any cancellation of policies pertaining to the foregoing. 11 Seller will indemnify and hold harmless Buyer, its successors and assigns, from and against any and all loss, liability, damage, cost or expense, including, without limitation, reasonable attorneys' fees, suffered or incurred by Buyer due to a breach of any of the foregoing representations and warranties. No claim for a breach of any representation or warranty of Seller shall be actionable after Closing if the breach in question was actually known to Buyer prior to Closing. 16. Indemnity and Survival. Seller agrees to and does hereby indemnify, defend, exonerate and save Buyer harmless of and from any and all liability, loss, damage, claim and expense incurred or suffered by Buyer arising out of or incidental to the operation of the Property by Seller prior to the conveyance of the Property to Buyer and for liability incurred by it relating to Hazardous Substances during the time it owned the Property prior to the Closing, except for any liability attributable to actions or omissions by Buyer, or any of its employees, agents or representatives, in connection with the studies, analyses or investigations to be conducted by or at the direction of Buyer in accordance with the provisions of Section 12 hereof. Buyer agrees to and does hereby indemnify, defend exonerate and save Seller harmless of and from any and all liability, loss, damage, claims and expense incurred or suffered by Seller arising out of or incidental to the operation of the Property by Buyer after the conveyance of the Property to Buyer, including liability for Hazardous Substances, from and after the Closing, except for any liability attributable to actions or omissions by Seller before the Closing. All obligations of the parties called for herein shall survive the Closing of Buyer's purchase of the Property. 17. AS IS, WHERE IS. THE PROPERTY IS BEING SOLD "AS IS, WHERE IS" AND, EXCEPT AS SPECIFIED ANYWHERE IN THIS AGREEMENT, SELLER MAKES NO REPRESENTATION OR WARRANTY OF ANY KIND AS TO THE CONDITION THEREOF, AND BUYER ACKNOWLEDGES THAT BUYER IS RELYING ON ITS DUE DILIGENCE REVIEW IN PURCHASING THE PROPERTY. IT IS UNDERSTOOD AND AGREED THAT BUYER ASSUMES FULL AND COMPLETE RESPONSIBILITY FOR COMPLIANCE WITH ALL TITLES OF THE FEDERAL AMERICANS WITH DISABILITIES ACT ("ADA") AND THE REGULATIONS PROMULGATED PURSUANT THERETO, AS WELL AS ANY AND ALL STATE OR LOCAL ACCESSIBILITY STANDARDS. 18. Deposit. [INTENTIONALLY DELETED] 19. Broker. Seller and Buyer each represent and warrant to the other that it has not utilized the services of any real estate broker, salesperson or finder in connection with this Agreement or the purchase and sale of the Property contemplated hereby. Seller and Buyer each agree to indemnify, defend and hold harmless the other and their respective successors and assigns from and against all claims for brokerage commissions and finder's fees arising from or attributable to the acts or omissions of the indemnifying party or any person or entity purportedly acting on behalf of the indemnifying party. The foregoing indemnifications shall survive the Closing for a period of two (2) years thereafter. 12 20. Termination, Default and Remedies. (a) Default by Seller. If Seller shall be in default hereunder, Buyer's sole remedy shall be to terminate this Agreement by written notice delivered to Seller at or prior to the Closing whereupon this Agreement shall become null and void, without further liability of either party to the other. (b) Default by Buyer. In the event of a default by Buyer hereunder, Seller's sole remedy shall be to terminate this Agreement by notice to Buyer, whereupon this Agreement shall become null and void, without further liability of either party to the other. 21. Special Conditions. [INTENTIONALLY DELETED] 22. Supplemental Documents. The parties agree to execute all documents which may reasonably be required to effectuate the terms and provisions of this Agreement. 23. Notices. Any notices given or required to be given hereunder shall be by hand delivery, by overnight courier or by telecopy confirmed by answerback received. Notices shall be deemed given on the date sent for hand delivery and telecopy, and the day after the date sent for overnight courier. All notices shall be sent to the following addresses, or such other addresses as the party may direct by written notice: IF TO SELLER: WITH A COPY TO: Arlington Hospitality, Inc. Shefsky & Froelich Ltd. 2355 South Arlington Heights Road--Suite 400 444 North Michigan Avenue--Suite 2500 Arlington Heights, IL 60005 Chicago, IL 60611 Attention: James Dale, Chief Financial Officer Attention: Mitchell D. Goldsmith, Esq. Telephone: 847-228-5400 Telephone: 312-836-4006 Facsimile: 847-228-5409 Facsimile: 312-527-3194 IF TO BUYER: WITH A COPY TO: Michael P. Holtz Piper Rudnick 490 East Route 22 203 North LaSalle Street--Suite 1800 North Barrington, IL 60010 Chicago, IL 60601 Telephone: 847-277-0068 Attention: David Glickstein, Esq. E-Mail: mpholtz@aol.com Telephone: 312-368-4000 Facsimile: 312-236-7516 IF TO ESCROW AGENT: First American Title Insurance Company 30 N. LaSalle Street Chicago, Illinois 60602 Attention: Greg Chaparro, Esq.
13 24. Section Headings. The section headings used herein are inserted solely for the convenience of reference and shall not affect the construction or interpretation of this Agreement. 25. Entire Contract. This Agreement constitutes the entire sale and purchase contract between the parties hereto and there are no other understandings, oral or written, relating to the subject matter hereof. This Agreement may not be changed, modified or amended, in whole or in part, except in writing, signed by all parties. 26. Invalid Provisions. If any one or more the provisions of this Agreement, or the applicability or any such provision to a specific situation, shall be held invalid or unenforceable, such provision shall be modified to the minimum extent necessary to make it or its application valid and enforceable, and the validity and enforceability of all other provisions of this Agreement and all other applications of any such provision shall not be affected thereby. 27. Construction. The words "include" or "including" shall be construed as incorporating, also "but not limited to" or "without limitation." The word "day" means a calendar day, unless otherwise specified. The words "herein," "hereof," "hereunder" and other similar compounds of the words "here" when used in this Agreement shall refer to the entire Agreement and not to any particular provision or section. If the last day of any time period stated herein shall fall on a Saturday, Sunday or legal holiday, then the duration of such time period shall be extended so that it shall end on the next succeeding day which is not a Saturday, Sunday or legal holiday. Whenever used in this Agreement, the singular shall include the plural, the plural the singular, and the use of any gender shall be applicable to all genders. Marginal notes are inserted for convenience only and shall not form part of the text of this Agreement. No inference in favor or against either party shall be drawn based upon which party or which party's counsel served as principal draftsman of this Agreement. 28. Covenant Not to Record. Buyer will not record this Agreement. Any attempted recording of this Agreement by Buyer shall constitute a default hereunder on the part of Buyer and shall cause forfeiture by Buyer of the Deposit and all interest thereon and the Non-refundable Deposit. 29. Binding Effect. This Agreement and the terms and conditions hereof shall extend to and be binding upon the parties hereto and their successors and assigns; provided, that Buyer only may assign this Agreement (with written notice to Seller) to an entity controlled by Buyer, and in such event, Buyer shall remain liable hereunder. 30. Counterparts and Copies. This Agreement may be executed in several counterparts, all of which, when taken together, shall be deemed to be one original. Each fully executed copy also shall be deemed to be an original. 31. Governing Law. This Agreement shall be governed by and construed in accordance with substantive laws of the State of Illinois. 32. Notice to Third Parties. Buyer and Seller jointly shall inform all contractors, suppliers, and required others (all as mutually agreed to by Buyer and Seller) of the sale of the Property to Buyer. The form and substance and timing of such notice and the persons to whom 14 such notices are to be sent are to be mutually agreed upon by Buyer and Seller, but in no event shall such notice be sent prior to expiration of the Due Diligence Period, or sooner than seven (7) days prior to the Closing. 33. Like Kind Exchange. Notwithstanding anything contained herein to the contrary, in the event that Seller desires to complete the sale of the Property contemplated hereby as part of a "like-kind exchange" in accordance with Internal Revenue Code Section 1031, Buyer agrees to execute and deliver any and all documents and instruments reasonably required in order to accomplish the foregoing. 34. Gift Certificates. Buyer must honor whirlpool gift certificates ("Certificates") for a period of one (1) year after the Closing Date. Seller shall reimburse Buyer $25.00 for each Certificate if redeemed when the Hotel was not sold-out and $50.00 for each Certificate if redeemed when the Hotel was sold-out. This provision shall survive the Closing. 35. Effective Date. The date of formation of this Agreement shall for all purposes be the date of the last party to execute this Agreement between Buyer and Seller (the "Effective Date"). If not effective by ten (10) days following the date of counterpart execution of this Agreement by Seller, this Agreement shall be null and void. [SIGNATURE PAGE IMMEDIATELY FOLLOWS] 15 IN WITNESS WHEREOF, the parties have executed this Agreement as of the later of the dates written below. BUYER: SELLER: MPH INVESTMENTS OF ILLINOIS, INC., FREEPORT, IL 899 L.L.C. By: /s/ Michael P. Holtz By: ARLINGTON INNS OF AMERICA, INC., ---------------------------------- Michael P. Holtz, President its Manager By: /s/ James B. Dale ---------------------------- James B. Dale, Secretary Dated: November 7, 2002 Dated: November 7, 2002 ------------------------------- ------------------------- 16 EX-99.5 7 c72894exv99w5.txt INDEMNIFICATION AGREEMENT REDACTED INDEMNIFICATION AGREEMENT Indemnification Agreement dated this ____ day of ________, 200_, by and among Michael P. Holtz ("MPH"), MPH Investments of Mississippi, Inc. ("MPH-Mississippi"), MPH Investments of Illinois, Inc. ("MPH-Illinois" -- together with MPH-Mississippi and MPH, collectively, the "Indemnitors" and individually, an "Indemnitor"), AP Properties of Mississippi, Inc. ("APM"), Freeport, IL 899, L.L.C. ("899") and Arlington Hospitality, Inc. ("AHI" -- together with APM and 899, collectively, the "AHI Group"). RECITALS: A. APM has contracted to sell the 89-room AmeriHost Inn located in Vicksburg, Mississippi (the "Vicksburg Property") to MPH-Mississippi. 899 has contracted to sell the 64-room AmeriHost Inn located in Freeport, Illinois (the "Freeport Property") to MPH-Illinois. MPH is the controlling shareholder of each of MPH-Mississippi and MPH-Illinois. B. Effective as of September 30, 2000, AHI (formerly known as AmeriHost Properties, Inc.), together with its affiliates AmeriHost Management, Inc., AmeriHost Development, Inc. and AmeriHost Inn Franchising, Inc. (collectively, the "AmeriHost Parties") entered into a Development Agreement with Cendant Corporation ("Cendant") and AmeriHost Franchise Systems, Inc. (the "Franchisor"). Section 4.3(a)(ii) of the Development Agreement provides in part that upon transfer of an "API Facility" to an "Unaffiliated Third Party" which has been operational for at least eighteen (18) months prior to transfer and is approved by the Franchisor, then either Cendant or the Franchisor will pay to the operator of the facility an "Incremental Fee" in cash equal to the product of [REDACTED] of the facility for the twelve (12) full months preceding the "Closing Date." C. Section 4.3(d) of the Development Agreement provides that at the option of Franchisor, if the "Franchise Agreement" for a particular "Transferred Facility" terminates for any reason prior to the seventy-six (76) month anniversary, it has the right either: (i) to set-off against amounts due AHI or its affiliates under the Development Agreement or a separate "Royalty Sharing Agreement" (as defined in the Development Agreement") an amount equal to the unamortized portion of the Incremental Fee; or (ii) to receive all "Royalty" and "System Assessment Fees" on a mutually agreeable "API Facility" or "Additional API Facility" then owned by AHI, which is comparable to the "Transferred Facility" in question for the remainder of the seventy-six (76) month period following such termination (the fee stream to Franchisor per this subparagraph (ii) being the "Franchisor Substitute Stream"). The Repayment Amount is to be reduced by fifty percent (50%) of the liquidated damages actually received by the Franchisor from and on behalf of the transferee, net of costs of collection - -- such net sum being the "Net Repayment Amount." The amount, if any, that Franchisor is entitled to from AHI or its affiliates pursuant to Section 4.3(d) of the Development Agreement (either per offset of the Net Repayment Amount or comprising the Franchisor Substitute Stream) is hereinafter referred to as the "Offset Amount." D. The sale of the properties owned by 899 to MPH-Illinois and by APM to MPH-Mississippi will qualify the respective owners to Incremental Fees of approximately [REDACTED] and [REDACTED], respectively, which will be subject to potential Offset Amount reductions. The actual amount of Offset Amount to which Franchisor is entitled from AHI or its affiliates with respect to the Vicksburg Property or Freeport Property are hereinafter referred to as the "Vicksburg Offset Amount" and the "Freeport Offset Amount," respectively. E. The parties, as a condition to the closing of the sale of the Vicksburg Property to MPH-Mississippi and of the Freeport Property to MPH-Illinois is the undertakings of the Indemnitors hereunder. NOW THEREFORE, in consideration of the premises and covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows: 1. Recitals. The recitals set forth above are incorporated by reference herein and made a part hereof, as if fully rewritten. Capitalized terms used herein and not otherwise defined shall have the same meaning as set forth in the Development Agreement. 2. Indemnification. MPH-Mississippi and MPH jointly and severally indemnify and hold each of the AHI Group Members and their affiliates (collectively, the "Indemnitees") harmless from and against any and all cost, loss and liabilities they may incur with respect to the operation of Section 4.3 of the Development Agreement regarding the Vicksburg Property, including but not limited to any Offset Amount to which Franchisor is entitled or which it has taken with respect to the Vicksburg Property or APM. MPH-Illinois and MPH jointly and severally indemnify and hold the Indemnitees harmless from and against any and all cost, loss and liabilities they may incur with respect to the operation of Section 4.3 of the Development Agreement regarding the Freeport Property, including but not limited to any Offset Amount to which Franchisor is entitled or which it has taken with respect to the Freeport Property or 899. The indemnification obligation shall be paid by the Indemnitors in question within five (5) days following delivery of written notice from one of the AHI Group Members to the applicable Indemnitors detailing the amount of which indemnification is sought (the "Indemnification Amount"). Should an Indemnitor fail to make payment on a timely basis of the Indemnification Amount, then the Indemnitees shall be entitled to payment of: (a) interest computed at the lesser of the maximum legal rate or twelve percent (12%) per annum, with respect to the unpaid Indemnification Amount outstanding from time to time; plus (b) all costs and expenses incurred by the Indemnitee with respect to collecting the Indemnification Amount, including but not limited to reimbursement of all applicable legal fees, paralegal fees, costs and expenses. 3. Miscellaneous. (a) Survival. All representations, warranties and covenants of the parties contained in this Agreement or made pursuant hereto, shall survive the date of execution 2 of this Agreement and remain in full force and effect, and shall survive the termination or expiration of this Agreement. (b) Counsel. All parties hereto have been represented by counsel, and no inference shall be drawn in favor of or against any party by virtue of the fact that such party's counsel was or was not the principal draftsman of this Agreement. (c) Notices. All notices or other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given if delivered personally or sent by registered or certified mail, postage prepaid or via national courier, addressed to the party entitled to notice at the address set forth below, or such other address as is subsequently provided by written notice from such party to the other parties: IF TO THE AHI GROUP: WITH A COPY TO: Arlington Hospitality, Inc. Shefsky & Froelich Ltd. 2355 South Arlington Heights Road--Suite 400 444 North Michigan Avenue--Suite 2500 Arlington Heights, IL 60005 Chicago, IL 60611 Attention: James Dale, Chief Financial Officer Attention: Mitchell D. Goldsmith, Esq. Telephone: 847-228-5400 Telephone: 312-836-4006 Facsimile: 847-228-5409 Facsimile: 312-527-3194 IF TO INDEMNITORS: WITH A COPY TO: Michael P. Holtz Piper Rudnick 490 East Route 22 203 North LaSalle Street--Suite 1800 North Barrington, IL 60010 Chicago, IL 60601 Telephone: 847-277-0068 Attention: David Glickstein, Esq. E-Mail: mpholtz@aol.com Telephone: 312-368-4000 Facsimile: 312-236-7516
(d) No Assignment. Except as expressly noted below, this Agreement and the rights of the parties under this Agreement may not be sold, assigned or otherwise transferred without the prior written consent of the other party. (e) Entire Agreement. This Agreement, and the documents appended hereto, sets forth the entire agreement and understanding of the parties hereto in respect of the subject matter contemplated hereby, and supersedes all prior agreements, arrangements and understandings relating to the subject matter hereof. (f) Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois. Should any dispute arise under this Agreement, it shall be litigated in the state or federal courts situated in Cook County, Illinois, to which jurisdiction and venue all parties consent. (g) Counterparts. This Agreement may be executed in two or more counterparts, each of which, whether photocopy, facsimile or ink, shall be deemed an original, but all of which together shall constitute one instrument. 3 (h) Approval. This Agreement shall be binding upon the parties, their respective heirs, successors and assigns, and each entity party represents and warrants that this Agreement has been duly approved by proper corporate action. (i) Remedies. No party hereunder shall be entitled to consequential damages as a result of the breach by any other party of its obligations hereunder. Each party's damages shall be limited to actual damages as a result of the breach of any obligation hereunder. IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first set forth above. INDEMNITORS: AHI GROUP: AP PROPERTIES OF MISSISSIPPI, INC. - ------------------------------------- MICHAEL P. HOLTZ By: ------------------------------ James B. Dale, Secretary MPH INVESTMENTS OF MISSISSIPPI, INC. FREEPORT, IL 899 L.L.C. By: -------------------------------- Michael P. Holtz, President By: ARLINGTON INNS OF AMERICA, INC., its Manager MPH INVESTMENTS OF ILLINOIS, INC. By: --------------------------- James B. Dale, Secretary By: -------------------------------- Michael P. Holtz, President ARLINGTON HOSPITALITY, INC. By: ------------------------------ James B. Dale, Secretary 4 EX-99.6 8 c72894exv99w6.txt CONTINGENT PURCHASE PRICE PARTICIPATION AGREEMENT CONTINGENT PURCHASE PRICE PARTICIPATION AGREEMENT Agreement as of the ____ day of ________, 200_ by and among MPH Investments of Mississippi, Inc., a Mississippi corporation ("Vicksburg Buyer"), AP Properties of Mississippi, Inc., a Mississippi corporation ("Vicksburg Seller"), MPH Investments of Illinois, Inc. ("Freeport Buyer") and Freeport IL 899, L.L.C. ("Freeport Seller"). RECITALS A. Vicksburg Seller is a wholly-owned subsidiary of Arlington Hospitality, Inc. ("AHI") and the owner of a leasehold estate and the improvements thereon comprising the AmeriHost Inn - Vicksburg, Mississippi, an 89 room hotel (the "Vicksburg Hotel"), which, together with all tangible and intangible property related thereto, and all improvements and betterments hereafter made to the Vicksburg Hotel through the earlier to occur of (i) the fifth anniversary of the date of this Agreement (the "Outside Date") and (ii) the date of sale (the "Vicksburg Sale Date") of all or substantially all of the foregoing by Vicksburg Buyer to an unaffiliated third party ("New Vicksburg Buyer"), is hereinafter collectively referred to as the "Vicksburg Property." B. Freeport Seller is a wholly-owned subsidiary of AHI and the owner of a 64 room AmeriHost Inn hotel and all underlying land in Freeport, Illinois (the "Freeport Hotel"), which, together with all tangible and intangible property related thereto, and all improvements and betterments hereafter made to the Freeport Hotel through the earlier to occur of (i) the Outside Date and (ii) the date of sale ("Freeport Sale Date") of all or substantially all of the foregoing by Freeport Buyer to an unaffiliated third party ("New Freeport Buyer"), is hereinafter collectively referred to as the "Freeport Property." The Vicksburg Property and Freeport Property are hereinafter sometimes collectively referred to as the "Properties" and individually referred to as a "Property." C. Vicksburg Buyer and Vicksburg Seller will be closing upon a certain purchase agreement for the sale of the Vicksburg Hotel (the "Vicksburg Purchase Contract") for a purchase price of the first mortgage debt secured by the Vicksburg Hotel on the closing date plus $468,850 (the "Vicksburg Buyer's Purchase Price") and the parties are desirous of providing for the Vicksburg Seller's contingent right to participate in some of the future appreciation of the Vicksburg Hotel as hereinafter provided. D. Freeport Buyer and Freeport Seller will be closing upon a certain purchase contract for the sale of the Freeport Hotel for a purchase price equal to the first mortgage debt secured by the Freeport Hotel plus $132,237 ("Freeport Purchase Contract") and the parties are desirous of providing for the Freeport Seller's contingent right to participate in value of the Freeport Hotel above $1,300,000, as hereinafter provided. The participation proceeds payable to the Vicksburg Seller and the Freeport Seller per this Agreement are sometimes hereinafter referred to as "Participation Proceeds." E. AHI has entered into an Omnibus Agreement with Michael P. Holtz, the controlling shareholder of each of the Vicksburg Buyer and the Freeport Buyer, which contemplates the transactions set forth in these Recitals, as well as the termination and settlement of his employment relationship with AHI effective as of closing of the property purchases. NOW THEREFORE, in consideration of the premises and covenants contained herein, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: 1. Recitals; Effective Date. The recitals set forth above are incorporated by reference herein and made a part hereof as if fully rewritten. This Agreement shall be effective on the date of closings of the Vicksburg Property Contract and Freeport Purchase Contract, and shall survive the closings of said contracts. 2. Vicksburg Property. In the event of a sale of the Vicksburg Property to a New Vicksburg Buyer on or before the Outside Date, Vicksburg Buyer agrees to pay to Vicksburg Seller on the date of the closing of the sale of the Vicksburg Property to the New Vicksburg Buyer, as additional purchase price for the sale of the Vicksburg Hotel under the Vicksburg Purchase Contract, the amount, if any, equal to the sum of: (i) fourteen percent (14%) of the Net Proceeds from the sale of the Vicksburg Property in excess of $3,500,000, capped in all events at $140,000 (i.e., fourteen percent (14%) of the first $1,000,000 in Net Proceeds in excess of $3,500,000); plus (ii) twenty percent (20%) of all Net Proceeds from the sale of the Vicksburg Property in excess of $4,630,729. In the event that the Vicksburg Property has not been sold by the Outside Date, then the Vicksburg Buyer and Vicksburg Seller shall endeavor to mutually agree upon the value the Vicksburg Property as of the Outside Date, or failing to mutually agree, they shall have the Vicksburg Property appraised as of the Outside Date pursuant to the appraisal process set forth in Section 4(b) below (the agreed on or appraised value as adjusted for capital improvements to the subject Property as noted below being the "Vicksburg Outside Date Value"). No later than forty-five (45) days following the date of determination of the Vicksburg Outside Date Value, the Vicksburg Buyer shall pay to the Vicksburg Seller the amount, if any, equal to the sum of: (i) fourteen percent (14%) of the Vicksburg Outside Date Value in excess of $3,500,000, capped in all events at $140,000; plus (ii) twenty percent (20%) of the Vicksburg Outside Date Value in excess of $4,630,729. The terms of this Section 2 shall be superseded by the terms of Section 5 if applicable. 3. Freeport Hotel. In the event of a sale of the Freeport Property to a New Freeport Buyer on or before the Outside Date, Freeport Buyer agrees to pay to Freeport Seller on the date of the closing of the sale of the Freeport Property to the New Freeport Buyer, as additional purchase price for the sale of the Freeport Hotel under the Freeport Purchase Contract the amount, if any, equal to twenty percent (20%) of all Net Proceeds from the sale of the Freeport Property in excess of $1,300,000. In the event that the Freeport Property has not been sold by the Outside Date, then the Freeport Buyer and Freeport Seller shall endeavor to mutually agree upon the value the Freeport Property as of the Outside Date, or failing to mutually agree, they shall have the Freeport Property appraised as of the Outside Date pursuant to the appraisal process set forth in Section 4(b) below (the agreed on or appraised value as adjusted for capital improvements to the subject 2 Property as noted below being the "Freeport Outside Date Value"). No later than ten (10) days following the date of determination of the Freeport Outside Date Value, the Freeport Buyer shall pay to the Freeport Seller the amount, if any, equal to twenty percent (20%) of the Vicksburg Outside Date Value in excess of $1,300,000. Notwithstanding anything to the contrary contained herein, to the extent that the Freeport Property is sold prior to the Vicksburg Property and the Freeport Net Proceeds of sale of the Freeport Property to the Freeport Buyer from the New Freeport Buyer, after satisfaction of all mortgage debt secured by the Property are insufficient to pay the contingent purchase price payments called for in this Section 3 in full, then the deficiency if any shall accrue without interest and be payable by the Vicksburg Buyer upon the earlier of the sale of the Vicksburg Property or the Outside Date, in addition to the other monies, if any, otherwise owing from the Vicksburg Buyer to the Vicksburg Seller per Section 2 hereof. The terms of this Section 3 shall be superseded by the terms of Section 5 below, if applicable. 4. Computation Guidelines. (a) Net Proceeds. For purposes of computing "Net Proceeds" from the sale of a Property, there shall be: (i) added to the sales price the amount of direct or indirect compensation or fees paid or payable to the seller of the Property and/or any affiliate or designee of such seller, including but not limited to consulting fees, asset management fees, commissions, non competition covenant fees, etc. (collectively, "Affiliate Fees"); provided however, to the extent an Affiliate Fee is already included as a portion of the sales price of the Property (e.g., if three percent (3%) commission is payable by the seller of the Property to an affiliate of the Seller), then such Affiliate Fee shall not be added to the sales price of the Property for purposes of this Section 4(a)(i); and (ii) subtracted from the sales price the sum of the following: (A) all actual third party closing costs paid by the seller in connection with the sale of the Property; plus (B) all third party commissions paid in connection with the sale of the Property; plus (C) all capital expenditures incurred by the seller of the Property following the date of this Agreement through the date of sale (but in no event later than the fifth anniversary of the date hereof), as reduced to the extent of accumulated depreciation for those capital expenditures made over two years prior to the date of sale, all as computed in accordance with GAAP. (b) Appraised Value. In order to determine the fair market value of a Property as of the Outside Date, the Property in question shall be appraised as of the Outside Date by an appraiser mutually agreeable to the parties, or should they fail to agree upon an appraiser within ninety (90) days following the Outside Date, then by an appraiser selected by Cushman & Wakefield, Inc. (which may be Cushman & Wakefield, Inc.) For purposes of the contingent purchase price payments called for above, the appraised value shall be reduced as to each Property by the amount of the sum of: (i) capital expenditures made by the relevant owner during the two years preceding the Outside Date; plus (ii) the amount of capital expenditures made by the relevant owner during the first 3 years following the date hereof, as reduced by the accumulated depreciation with respect to 3 such expenditures from the date placed in service through the Outside Date, as computed in accordance with GAAP. 5. Early Payment. Notwithstanding anything to the contrary contained herein, Vicksburg Buyer and Freeport Buyer shall have the right to prepay in their entirety all contingent purchase price amounts that would otherwise be due and owing with respect to the Properties per Section 2 and Section 3 above by tender of the cumulative sum of $340,000 (subject to dollar-for-dollar credit to the extent of prior payments pursuant to Section 6) to the Vicksburg Seller and to the Freeport Seller or their assigns, to be allocated among them as they deem proper (the "Early Contingent Sum Payment") at any time prior to the Vicksburg Sale Date (the date of such payment being the "Early Payment Date"); provided that such Early Contingent Sum Payment is made prior to the Outside Date in one lump sum (subject to the right to credit for Participation Proceeds payments previously paid per the operation of Section 6 below), and provided further; if a Property is under contract for sale on or before ninety (90) days following the Early Payment Date and is sold pursuant to such contract or an extension or modification thereof or a new contract with the buyer named therein or its affiliates entered into within ninety (90) days following termination of the old contract, then a new computation shall be made to determine: (i) the amount of Participation Proceeds that would have been paid with respect to such Property had the sale occurred on the Early Payment Date, plus (ii) the amount of Participation Proceeds that would have been paid with respect to the other Property based on the adjusted appraised value as of the Early Payment Date (as computed in accordance with Section 4(b) above, except in lieu of using the Outside Date, the Property will be valued as of the Early Payment Date, and the reduction for capital expenditures shall be for the sum of all capital expenditures made by the relevant owner during the two (2) years preceding the Early Payment Date, plus the amount of the relevant owner's capital expenditures as reduced by accumulated depreciation for the Property preceding the two (2) year period), provided that if such other Property is also sold pursuant to a contract of sale entered into on or before ninety (90) days following the Early Payment Date, then the Net Proceeds from such sale (as adjusted per Section 4(a) above) shall be used in lieu of appraised value; to the extent that the sum of the amounts computed per subparagraphs (i) and (ii) immediately above exceed $340,000 (such amount being the "Excess") then no later than the date of the computation of said sum, the Freeport Buyer and Vicksburg Buyer jointly and severally agree to pay the Excess as among the Vicksburg Seller and Freeport Seller or their assigns) as they or their designee shall designate, or barring any designation, the Excess shall be split equally among them. 6. Refinancing. In the event that prior to the Outside Date a Property owner refinances one of the Properties, then the net proceeds from such refinancing (the "Refinancing Net Proceeds") shall be applied toward an initial payment against the Participation Proceeds called for in Section 2 and Section 3 hereof as if they had constituted Net Proceeds from sale of the Property. Upon a subsequent refinancing of the Property prior to the Outside Date or upon a sale of the Property or valuation of the Property effective as of the Outside Date, any payments made to the Vicksburg Seller or Freeport Seller or their assigns per operation of the immediately preceding sentence shall be credited against the Participation Proceeds otherwise payable hereunder; however, in no event shall the Vicksburg Buyer or Freeport Buyer be entitled to a return of any such Refinancing Net Proceeds previously made. For purposes hereof, the term Refinancing Net Proceeds shall mean the proceeds available to a Property owner upon refinancing of its Property, after payment of the following: (i) payoff of debt secured by the 4 Property in question; and (ii) payment of all nonaffiliated third-party costs and expenses incurred in connection with effecting the refinancing, including but not limited to appraisal fees, mortgage recording costs and legal fees. 7. Notices. Any notices given or required to be given hereunder shall be by hand delivery, by overnight courier or by telecopy confirmed by answerback received. Notices shall be deemed given on the date sent for hand delivery and telecopy, and the day after the date sent for overnight courier. All notices shall be sent to the following addresses, or such other addresses as the party may direct by written notice: IF TO SELLER: WITH A COPY TO: Arlington Hospitality, Inc. Shefsky & Froelich Ltd. 2355 South Arlington Heights Road--Suite 400 444 North Michigan Avenue--Suite 2500 Arlington Heights, IL 60005 Chicago, IL 60611 Attention: James Dale, Chief Financial Officer Attention: Mitchell D. Goldsmith, Esq. Telephone: 847-228-5400 Telephone: 312-836-4006 Facsimile: 847-228-5409 Facsimile: 312-527-3194 IF TO BUYER: WITH A COPY TO: Michael P. Holtz Piper Rudnick 490 East Route 22 203 North LaSalle Street--Suite 1800 North Barrington, IL 60010 Chicago, IL 60601 Telephone: 847-277-0068 Attention: David Glickstein, Esq. E-Mail: mpholtz@aol.com Telephone: 312-368-4000 Facsimile: 312-236-7516 IF TO ESCROW AGENT: First American Title Insurance Company 30 N. LaSalle Street Chicago, Illinois 60602 Attention: Greg Chaparro, Esq.
Freeport Buyer agrees to notify AHI and Freeport Seller, and Vicksburg Buyer agrees to notify AHI and Vicksburg Seller as soon as the applicable Property owner begins the sales or refinancing process for its Property and further agrees to keep them notified periodically of its progress and the terms and conditions of such efforts from time to time. 8. Section Headings. The section headings used herein are inserted solely for the convenience of reference and shall not affect the construction or interpretation of this Agreement. 9. Entire Contract; Survival. This Agreement constitutes the entire sale and purchase contract between the parties hereto and there are no other understandings, oral or written, relating to the subject matter hereof. This Agreement may not be changed, modified or amended, in whole or in part, except in writing, signed by all parties. The obligations of the parties hereunder shall survive any sale of the Freeport Property by the Freeport Buyer and any 5 sale of the Vicksburg Property by the Vicksburg Buyer or any subsequent sales of such Properties. 10. Invalid Provisions. If any one or more the provisions of this Agreement, or the applicability or any such provision to a specific situation, shall be held invalid or unenforceable, such provision shall be modified to the minimum extent necessary to make it or its application valid and enforceable, and the validity and enforceability of all other provisions of this Agreement and all other applications of any such provision shall not be affected thereby. 11. Construction. The words "include" or "including" shall be construed as incorporating, also "but not limited to" or "without limitation." The word "day" means a calendar day, unless otherwise specified. The words "herein," "hereof," "hereunder" and other similar compounds of the words "here" when used in this Agreement shall refer to the entire Agreement and not to any particular provision or section. If the last day of any time period stated herein shall fall on a Saturday, Sunday or legal holiday, then the duration of such time period shall be extended so that it shall end on the next succeeding day which is not a Saturday, Sunday or legal holiday. Whenever used in this Agreement, the singular shall include the plural, the plural the singular, and the use of any gender shall be applicable to all genders. Marginal notes are inserted for convenience only and shall not form part of the text of this Agreement. No inference in favor or against either party shall be drawn based upon which party or which party's counsel served as principal draftsman of this Agreement. 12. Enforcement. Should a party breach any of its obligations under this Agreement, then any of the non-breaching parties may bring an action to compel performance and/or payment of the breached obligation, and the prevailing party in such action shall be entitled to reimbursement of all costs, expenses and legal fees incurred in connection with such action. Any contingent purchase price payments called for hereunder and not paid when due shall bear interest at the lesser of the maximum legally permitted rate or twelve percent (12%) per annum, compounded semi annually. 13. Binding Effect. This Agreement and the terms and conditions hereof shall extend to and be binding upon the parties hereto and their successors and assigns; provided, that each of Freeport Seller and Vicksburg Seller may assign their rights and obligations under this Agreement (with written notice to Vicksburg Buyer and Freeport Buyer) to Arlington Hospitality, Inc. or such other entity as either of them designates pursuant to an assignment and assumption agreement executed by the assignor and assignee. 14. Counterparts and Copies. This Agreement may be executed in several counterparts, all of which, when taken together, shall be deemed to be one original. Each fully executed copy also shall be deemed to be an original. 15. Governing Law. This Agreement shall be governed by and construed in accordance with substantive laws of the State of Illinois. Any dispute with respect to the subject matter hereof shall be litigated in Cook County, Illinois, to which jurisdiction and venue all parties consent. All parties hereto waive their right to trial by jury with respect to any dispute among them regarding this Agreement or the subject matter hereof. 6 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. BUYERS: SELLERS: MPH INVESTMENTS OF MISSISSIPPI, INC. AP PROPERTIES OF MISSISSIPPI, INC. By: By: --------------------------------- --------------------------------- Michael P. Holtz, President James B. Dale, Secretary MPH INVESTMENTS OF ILLINOIS, INC. FREEPORT ILLINOIS 899, L.L.C. By: ARLINGTON INNS OF AMERICA, INC., By: its Manager --------------------------------- Michael P. Holtz, President By: ---------------------------- James B. Dale, Secretary 7 EX-99.7 9 c72894exv99w7.txt MUTUAL RELEASE MUTUAL RELEASE Release Agreement dated this ____ day of ________, 200_, by and between Michael P. Holtz ("MPH") and Arlington Hospitality, Inc. ("AHI"). RECITALS WHEREAS, the parties have entered into an Omnibus Agreement of even date herewith ("Omnibus Agreement") which, among other things, formalizes the termination of the employment agreement dated April 7, 1995, as amended by four amendments, between the parties hereto ("Employment Agreement"); and WHEREAS, pursuant to the Omnibus Agreement, MPH has caused the formation of: (i) MPH Investments of Illinois, Inc. ("MPH-Illinois"), which has contracted to purchase the Freeport-AmeriHost Inn from Freeport IL 899, L.L.C. ("899") under the "Freeport Purchase Agreement"; and (ii) MPH Investments of Mississippi, Inc. ("MPH-Mississippi"), which has contracted to purchase the AmeriHost Inn & Suites Rainbow Hotel Casino-Vicksburg, Mississippi from AP Properties of Mississippi, Inc. ("APM"), under the "Vicksburg Purchase Agreement; and WHEREAS, APM, 899, MPH-Illinois and MPH-Mississippi have also entered into a Contingent Purchase Price Participation Agreement ("Participation Agreement") whereby the purchasers of the referenced properties have agreed to pay certain contingent purchase price amounts to the designated Sellers; and WHEREAS, the parties are desirous of entering into the release set forth herein simultaneous with and as a condition to the closing of the Omnibus Agreement, Participation Agreement, Freeport Purchase Agreement and Vicksburg Purchase Agreement. NOW THEREFORE, in consideration of the premises and covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: 1. Release by MPH. MPH, on behalf of himself, his heirs, successors and assigns and on behalf of each of the Holtz Family Trust, MPH-Illinois and MPH-Mississippi (collectively, the "MPH Releasors"), jointly and severally, for and in consideration of the undertakings in the following Section 2 and other valuable consideration in hand paid, the receipt and sufficiency of which is hereby acknowledged, do hereby and by these presents, for anyone claiming by or through or under any MPH Releasor, fully remise, release, acquit and forever discharge each of the AHI Releasors (as defined in Section 2 hereinafter) and each of the AHI Releasors' respective agents, attorneys-in-fact, heirs, estates, successors, assigns, members, trustees, employees, directors, officers and personal representatives, as well as any predecessor, successor, subsidiary or affiliated corporation or other entity, jointly and severally (individually and collectively, the "AHI Releasees") from and against (except as expressly noted in Section 3 below), any and all liability, claims, costs and damages of any manner or nature whatsoever from the beginning of time to the date hereof, including but not limited to any obligation under the Employment Agreement, which is hereby deemed terminated in all respects with no further obligations or liabilities thereunder from any of the AHI Releasees to any of the MPH Releasors. 2. Release by AHI. AHI on behalf of itself, its agents, subsidiaries, estates, executors, assigns, directors and officers (collectively, the "AHI Releasors") jointly and severally, for and in consideration of the undertakings of Section 1 and other valuable consideration in hand paid, the receipt and sufficiency of which are hereby acknowledged, do hereby and by these presents, for anyone claiming by or through or under any AHI Releasor, fully remise, release and forever discharge each of the MPH Releasors and each of the MPH Releasors' respective agents, attorneys-in-fact, heirs, estates, successors, assigns, members, trustees, employees, directors, officers and personal representatives, as well as any predecessor, successor, subsidiary or affiliated corporation or other entity, jointly and severally (individually and collectively, the "MPH Releasees") from and against any and all liabilities, claims, costs and damages of any manner or nature whatsoever from the beginning of time to the date hereof (except as expressly noted in Section 3 below), including but not limited to any obligations under the Employment Agreement. 3. Ongoing Obligations. Notwithstanding anything to the contrary contained in this Release: (a) the obligations of the respective parties with respect to each of the Omnibus Agreement, Participation Agreement, Freeport Purchase Agreement and Vicksburg Purchase Agreement shall remaining in full force and effect and nothing contained herein shall be deemed to reduce, diminish or release any of the obligations contained in said agreements; and (b) no release is being provided by the AHI Releasors to any of the MPH Releasees for any claim any of the AHI Releasors may have with respect to any action or inaction taken by MPH during the course of his employment by AHI, to the extent he would not be entitled to indemnification for such action or inaction by the applicable AHI Releasor under Delaware law. IN WITNESS WHEREOF, the undersigned have executed this Release effective as of the date first set forth above. MPH: AHI: ARLINGTON HOSPITALITY, INC. - ---------------------------------- MICHAEL P. HOLTZ By: --------------------------------- James Dale, Secretary 2 EX-99.8 10 c72894exv99w8.txt ASSIGNMENT AND ASSUMPTION OF GROUND LEASE ASSIGNMENT AND ASSUMPTION OF GROUND LEASE THIS ASSIGNMENT AND ASSUMPTION OF GROUND LEASE (this "Assignment") is made as of __________, 200_ ("Effective Date"), by and between AP Properties of Mississippi, Inc., a Mississippi corporation ("Assignor") and MPH Investments of Mississippi, Inc., a Mississippi corporation ("Assignee"). RECITALS: WHEREAS, AP Hotels of Mississippi, Inc., predecessor in interest to Assignor, as tenant, and Rainbow Casino-Vicksburg Partnership, L.P., as landlord ("Landlord"), entered into that certain Ground Lease dated June 21, 1994, as amended by that certain First Amendment to Ground Lease dated February 18, 2002 (as so amended, the "Ground Lease"), demising certain premises located at 1350 Warrington Road, in the City of Vicksburg, Warren County, State of Mississippi, commonly known as the AmeriHost Inn & Suites Rainbow Hotel Casino - Vicksburg, Mississippi (the "Premises"); and WHEREAS, Assignor desires to assign to Assignee all of Assignor's right, title and interest in, to and under the Ground Lease and Assignee desires to accept such assignment and assume all obligations of Assignor under said Ground Lease arising or accruing on and after the Effective Date. NOW, THEREFORE, for and in consideration of the foregoing and other valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Assignor hereby assigns, transfers and sets over unto Assignee as of the Effective Date, all right, title and interest of Assignor in, to and under the Ground Lease, including Assignor's right, title and interest in and to the "Improvements" as set forth in Section 1.1 of the Ground Lease. Assignor hereby agrees to indemnify, defend and hold Assignee harmless from and against any and all cost, expense (including, without limitation, reasonable attorneys' fees and court costs), liability, damage and claim that may arise out of obligations of Assignor, as tenant under the Ground Lease, occurring prior to the Effective Date. 2. Assignee hereby accepts such assignment and hereby assumes and agrees to perform all obligations of Assignor arising or accruing on or after the Effective Date under the Ground Lease, and shall make all payments and keep and perform all conditions and covenants of the Ground Lease in the same manner as if Assignee were the original tenant thereunder. Assignee accepts possession of the Premises in their condition on the Effective Date. Assignee hereby agrees to indemnify, defend and hold Assignor harmless from and against any and all cost, expense (including, without limitation, reasonable attorney's fees and court costs), liability, damage and claim that may arise out of obligations of Assignee, as tenant under the Ground Lease, occurring on and after the Effective Date. 3. Assignor hereby represents to Assignee that Assignor is the absolute owner of the leasehold estate under the Ground Lease, free and clear of any mortgages, liens, encumbrances or adverse interests of third parties, and the Premises have not been sublet in whole or in part. 4. This Assignment shall be binding upon, and shall inure to the benefit of the parties hereto, and their respective successors and assigns. 5. This Assignment may be executed in one or more counterparts, each of which shall constitute an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment as of the date first above written. ASSIGNEE: ASSIGNOR: MPH INVESTMENTS OF MISSISSIPPI, INC. AP PROPERTIES OF MISSISSIPPI, INC. By: By: --------------------------------- --------------------------------- Its: Its: -------------------------------- -------------------------------- Title: Title: ------------------------------ ------------------------------ 2 STATE OF ) ----------------- ) SS: COUNTY OF ) ------------- ) I, ____________________, a Notary Public in and for the County and State aforesaid, do hereby certify that _________________, the ________________ of MPH Investments of Mississippi, Inc., a Mississippi corporation, a _______________, personally known to me to be the same person whose name is subscribed to the foregoing instrument as such officer, appeared before me this day in person and acknowledged that he signed and delivered said instrument as his own free and voluntary act and as the free and voluntary act of said corporation for the uses and purposes therein set forth. GIVEN under my hand and notarial seal this ______ day of __________, 2002. -------------------------------- Notary Public My Commission Expires: ---------- STATE OF ) ----------------- ) SS: COUNTY OF ) ------------- ) I, ____________________, a Notary Public in and for the County and State aforesaid, do hereby certify that _______________________, the ___________ of AP Properties of Mississippi, Inc., a Mississippi corporation, personally known to me to be the same person whose name is subscribed to the foregoing instrument as such officer of such corporation, appeared before me this day in person and acknowledged that he signed and delivered said instrument as his own free and voluntary act and as the free and voluntary act of said corporation for the uses and purposes therein set forth. GIVEN under my hand and notarial seal this ______ day of __________, 2002. -------------------------------- Notary Public My Commission Expires: ---------- 3 CONSENT TO ASSIGNMENT The undersigned, Rainbow Casino-Vicksburg Partnership, L.P., being the current landlord ("Landlord") under that certain Ground Lease dated June 21, 1994 (as amended, the "Ground Lease") as more particularly referenced in that certain Assignment and Assumption of Ground Lease dated ________, 2002 between AP Properties of Mississippi, Inc. ("Assignor") and MPH Investments of Mississippi, Inc. ("Assignee") to which this consent is attached, hereby consents to the foregoing Assignment and Assumption of Ground Lease. Landlord represents that, to its actual knowledge, neither Landlord nor Assignor are in default of their obligations under the Ground Lease as of the date hereof. Landlord hereby releases and discharges each AP Properties of Mississippi, Inc., as tenant, and Arlington Hospitality, Inc., f/k/a AmeriHost Properties, Inc., as guarantor of the tenant's obligations under the Ground Lease, from any and all liability under such Ground Lease and guaranty thereof. Assignee shall become liable and responsible for the full performance and observance of all the provisions, covenants and conditions set forth in the Ground Lease on the part of the tenant to be performed and observed thereunder as if Assignee were the original tenant thereunder. This Consent to Assignment shall be deemed limited solely to the assignment of the tenant's leasehold estate from AP Properties of Mississippi, Inc. to MPH Investments of Mississippi, Inc. and Landlord reserves the right to consent to any further or additional assignments hereafter. Dated this _____ day of ___________, 2002. Rainbow Casino-Vicksburg Partnership, L.P., a Mississippi limited partnership By: United Gaming Rainbow Its: General Partner By: ---------------------------------------- Its: --------------------------------------- Title: ------------------------------------- -----END PRIVACY-ENHANCED MESSAGE-----