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EXHIBIT 2.1
AMENDED AND RESTATED PURCHASE AND SALE AGREEMENT
BETWEEN
PRIME HOSPITALITY CORP.,
as Seller,
and
EQUITY INNS PARTNERSHIP, L.P.,
as Purchaser
December 2, 1997
1. Flagstaff, AZ
2. Cincinnati, OH/
Forest Park
3. Jacksonville,
FL
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TABLE OF CONTENTS
Page
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SECTION 1. DEFINITIONS....................................................... 1
1.2. Agreement............................................................ 2
1.3. Allocable Purchase Price............................................. 2
1.4. Assets .............................................................. 2
1.5. Business Day......................................................... 2
1.6. Closing ............................................................. 2
1.7. Closing Date......................................................... 2
1.8. Code ................................................................ 2
1.9. Contracts............................................................ 2
1.10. Counter-Offer....................................................... 3
1.11. Defective Property.................................................. 3
1.12. Deposit............................................................. 3
1.13. Diligence Notice Letter............................................. 3
1.14. Documents........................................................... 3
1.15. Encumbrance......................................................... 3
1.16. Escrow Agent........................................................ 3
1.17. Escrow Agreement.................................................... 3
1.18. FF&E ............................................................... 3
1.19. First Offer Hotels.................................................. 3
1.20. First Offer Response Period......................................... 3
1.21. Hotel .............................................................. 4
1.22. Improvements........................................................ 4
1.23. Intangible Property................................................. 4
1.24. Inventory........................................................... 4
1.25. Lease .............................................................. 4
1.26. LP Agreement........................................................ 4
1.27. Option Hotels....................................................... 4
1.28. Option Response Period.............................................. 5
1.29. Notice of Sale...................................................... 5
1.30. Offer Period........................................................ 5
1.31. Option Period....................................................... 5
1.32. Permitted Encumbrances.............................................. 5
1.33. Properties.......................................................... 5
1.34. Purchase Price...................................................... 5
1.35. Purchaser........................................................... 5
1.36. Real Property....................................................... 5
1.37. REIT ............................................................... 5
1.38. Review Period....................................................... 6
1.39. Seller ............................................................. 6
(i)
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1.40. Seller Group........................................................ 6
1.41. Seller's knowledge.................................................. 6
1.42. Surveys............................................................. 6
1.43. Tenant ............................................................. 6
1.44. Title Commitments................................................... 6
1.45. Title Company....................................................... 6
SECTION 2. PURCHASE AND SALE; DILIGENCE...................................... 6
2.1. Purchase and Sale.................................................... 6
2.2. Deposit ............................................................. 6
2.3. Due Diligence........................................................ 7
2.4. Casualty; Condemnation............................................... 7
2.5. Title Matters........................................................ 8
2.6. Survey Matters...................................................... 9
SECTION 3. CLOSING; PURCHASE PRICE........................................... 9
3.1. Closing 8
3.2. Purchase Price....................................................... 9
SECTION 4. CONDITIONS TO PURCHASER'S OBLIGATION TO CLOSE..................... 9
4.1. Closing Documents.................................................... 10
4.2. Condition of Properties.............................................. 12
4.3. Title Policies....................................................... 12
4.4. Opinions of Counsel.................................................. 12
4.5. No PIP Requirement at Closing........................................ 12
4.6. Representations...................................................... 12
SECTION 5. CONDITIONS TO SELLER'S OBLIGATION TO CLOSE........................ 12
5.1. Purchase Price....................................................... 13
5.2. Closing Documents.................................................... 13
5.3. Opinion of Counsel................................................... 13
5.4. Representations...................................................... 13
5.5. Amendment to LP Agreement............................................ 13
SECTION 6. REPRESENTATIONS AND WARRANTIES OF SELLER.......................... 13
6.1. Status and Authority of Seller....................................... 13
6.2. Action of Seller..................................................... 14
6.3. No Violations of Agreements.......................................... 14
6.4. Litigation........................................................... 14
6.5. Existing Leases, Agreements, Etc..................................... 14
6.6. Utilities, Etc....................................................... 15
(ii)
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6.7. Compliance With Law.................................................. 15
6.8. Taxes 15
6.9. Not A Foreign Person................................................. 15
6.10. Hazardous Substances................................................ 16
6.11. Insurance........................................................... 16
6.12. Ownership........................................................... 16
SECTION 7. REPRESENTATIONS AND WARRANTIES OF PURCHASER....................... 17
7.1. Status and Authority of Purchaser.................................... 17
7.2. Action of Purchaser.................................................. 18
7.3. No Violations of Agreements.......................................... 18
7.4. Litigation........................................................... 18
7.5. No Conflicts......................................................... 18
7.6. REIT Status, Organization............................................ 18
7.7. REIT Filings......................................................... 19
SECTION 8. COVENANTS OF SELLER AND PURCHASER................................. 19
8.1. Covenants of Seller.................................................. 19
8.2. Covenants of Purchaser............................................... 20
SECTION 9. CLOSING COSTS..................................................... 20
9.1. Closing Costs........................................................ 20
SECTION 10. DEFAULT. ........................................................ 20
10.1. Default by Seller................................................... 20
10.2. Default by Purchaser................................................ 21
SECTION 11. RIGHT OF FIRST OFFER; COMMITMENT TO SELL......................... 21
11.1. Right of First Offer................................................ 21
11.2. Commitment to Sell.................................................. 24
11.3. General Provisions.................................................. 25
SECTION 12. MISCELLANEOUS.................................................... 27
12.1. Agreement to Indemnify.............................................. 27
12.2. Brokerage Commissions............................................... 28
12.3. Publicity........................................................... 28
12.4. Notices............................................................. 29
12.5. Waivers, Etc........................................................ 30
12.6. Assignment; Successors and Assigns.................................. 31
12.7. Severability........................................................ 31
12.8. Counterparts, Etc................................................... 32
(iii)
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12.9. Governing Law....................................................... 32
12.10. Performance on Business Days....................................... 32
12.11. Attorneys' Fees.................................................... 33
12.12. Section and Other Headings......................................... 33
12.13. No Oral Modifications.............................................. 33
12.14. Incorporation by Reference......................................... 33
Exhibit A - The Properties
Exhibits B-1-3 - Legal Descriptions
Exhibit C - Form of Lease
Exhibit D - Exceptions to Seller Representations
and Warranties
Exhibit E - Schedule of Agreements
(iv)
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AMENDED AND RESTATED PURCHASE AND SALE AGREEMENT
THIS AMENDED AND RESTATED PURCHASE AND SALE AGREEMENT is made as of the
2nd day of December, 1997, between PRIME HOSPITALITY CORP., a Delaware
corporation ("Seller"), as seller, and Equity Inns Partnership, L.P., a
Tennessee limited partnership ("Purchaser"), as purchaser.
WITNESSETH:
WHEREAS, Seller and Purchaser entered into that certain Purchase and Sale
Agreement (the "Original Agreement"), dated as of September 22, 1997, as amended
by that certain Amendment to Purchase and Sale Agreement (the "First
Amendment"), dated as of November 6, 1997, Second Amendment to Purchase and Sale
Agreement (the "Second Amendment"), dated as of November 10, 1997 and Third
Amendment to Purchase and Sale Agreement (the "Third Amendment"), dated as of
November 19, 1997 (the Original Agreement, as amended by the First Amendment,
the Second Amendment and the Third Amendment, shall hereinafter be referred to
as the "Prior Agreement"), with respect to certain properties more particularly
described therein; and
WHEREAS, Seller and Purchaser desire to amend and restate the Prior
Agreement to exclude certain of the properties which were included therein and
to make certain other modifications more particularly set forth herein; and
WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to
purchase from Seller, the Properties, subject to and upon the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the mutual receipt and legal
sufficiency of which are hereby acknowledged, Seller and Purchaser hereby agree
that all of the provisions of the Prior Agreement are superseded, amended and
restated to read as follows:
SECTION 1. DEFINITIONS.
Capitalized terms used in this Agreement shall have the meanings set forth
below or in the Section of this Agreement referred to below:
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1.1. Affiliate: The term "Affiliate" of an entity shall mean (a) an entity
that, directly or indirectly, controls or is controlled by or is under common
control with such entity, (b) any other entity that owns, beneficially, directly
or indirectly, more than fifty percent (50%) of the outstanding capital stock,
shares or equity interests of such entity, or (c) any officer, director,
employee, partner or trustee of such entity or any person or entity controlling,
controlled by or under common control with such entity (excluding trustees and
entities serving in similar capacities who are not otherwise an Affiliate of
such entities).
1.2. "Agreement" shall mean this Purchase and Sale Agreement, together
with Exhibits A through E attached hereto, as it and they may be amended from
time to time as herein provided.
1.3. "Allocable Purchase Price" shall mean, with respect to any of the
Properties, the applicable amount set forth on Exhibit A hereto.
1.4. "Assets" shall mean, with respect to any Hotel, collectively, all of
the Real Property, the FF&E, the Contracts, the Documents, the Improvements and
the Intangible Property owned by Seller in connection with or relating to such
Hotel.
1.5. "Business Day" shall mean any day other than a Saturday, Sunday or
any other day on which banking institutions in the State of New York are
authorized by law or executive action to close.
1.6. "Closing" shall have the meaning given such term in Section 3.1.
1.7. "Closing Date" shall have the meaning given such term in Section 3.1.
1.8. "Code" shall mean the Internal Revenue Code of 1986, as amended, and
the treasury regulations promulgated thereunder.
1.9. "Contracts" shall mean, with respect to any Property, all service
contracts, equipment leases, booking agreements and other arrangements or
agreements to which Seller is a party affecting the ownership, repair,
maintenance, management, leasing or operation of such Property, to the extent
Seller's interest therein is assignable or transferable.
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1.10. "Counter-Offer" shall have the meaning given such term in Section
11.1.
1.11. "Defective Property" shall mean any Property which (i) has been
condemned in whole or in part, or (ii) by reason of damage by fire, vandalism,
acts of God or other casualty or cause, has suffered damage such that
expenditures equal to or greater than $500,000 (as such cost is determined by an
architect or engineer selected by Seller and reasonably satisfactory to
Purchaser) shall be required in order to restore such Property into
substantially the same condition as existing prior to such damage.
1.12. "Deposit" shall have the meaning given such term in Section 2.2.
1.13. "Diligence Notice Letter" shall mean that certain letter, dated
November 6, 1997, from Purchaser to Seller, delivered pursuant to Sections 2.5
and 2.6 of the Original Agreement.
1.14. "Documents" shall mean, with respect to any Property, all books,
records and files relating to the leasing, maintenance, management or operation
of such Property.
1.15. "Encumbrance" shall have the meaning given such term in Section
11.3.
1.16. "Escrow Agent" shall mean the Title Company.
1.17. "Escrow Agreement" shall mean that certain Escrow Agreement, dated
as of September 22, 1997, among Purchaser, Seller and Escrow Agent.
1.18. "FF&E " shall mean, with respect to any Property, all appliances,
machinery, devices, fixtures, appurtenances, equipment, furniture, furnishings
and articles of tangible personal property of every kind and nature whatsoever
owned by Seller and located in or at, or used exclusively in connection with the
ownership, operation or maintenance of such Property.
1.19. "First Offer Hotels" shall have the meaning given such term in
Section 11.1.
1.20. "First Offer Response Period" shall have the meaning given such term
in Section 11.1.
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1.21. "Hotel" shall mean each hotel located at the properties identified
on Exhibit A, the legal descriptions of which are set forth on Exhibits B-1
through B-3.
1.22. "Improvements" shall mean, with respect to any Property, all
buildings, fixtures, walls, fences, landscaping and other structures and
improvements situated on, affixed or appurtenant to the Real Property with
respect to such Property.
1.23. "Intangible Property" shall mean, with respect to any Property, all
transferable or assignable permits, certificates of occupancy, operating
permits, sign permits, development rights and approvals, certificates, licenses,
warranties and guarantees, the Contracts, telephone exchange numbers identified
with such Property held by Seller and all other transferable intangible
property, miscellaneous rights, benefits and privileges of any kind or character
with respect to such Property held by Seller, except (a) to the extent held by
or transferred to the Tenant under the Lease and (b) for all trademarks, trade
names, copyrights, patents or technical processes, including, without
limitation, any "AmeriSuites" brand name, logos and designs, owned or used by
Seller with respect to such Property.
1.24. "Inventory " shall mean all inventory located at the Hotels,
including, without limitation, all mattresses, pillows, bed linens, towels,
powder goods, soaps, cleaning supplies and such other supplies, together with
any food inventory such as cereal, breakfast rolls, coffee, which shall be more
particularly described in the schedule of Inventory approved by Purchaser and
delivered at Closing by Seller, and which shall be at a minimum in amounts
sufficient to comply with the requirements of the applicable franchise
agreement.
1.25. "Lease" shall mean, collectively, all of the leases to be entered
into between Purchaser, as landlord, and the Tenant, as tenant, with respect to
each of the Properties, each substantially in the form attached hereto as
Exhibit C.
1.26. "LP Agreement" shall mean that certain Third Amended and Restated
Agreement of Limited Partnership of Equity Inns Partnership, L.P., dated as of
June 25, 1997.
1.27. "Option Hotels" shall have the meaning given such term in Section
11.2.
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1.28. "Option Response Period" shall have the meaning given such term in
Section 11.2.
1.29. "Notice of Sale" shall have the meaning given such term in Section
11.2.
1.30. "Offer Period" shall have the meaning given such term in Section
11.1.
1.31. "Option Period" shall have the meaning given such term in Section
11.3.
1.32. "Permitted Encumbrances" shall mean, with respect to any Property,
(a) liens for taxes, assessments and governmental charges with respect to such
Property not yet due and payable or due and payable but not yet delinquent or as
to which adequate reserves are provided therefor; (b) applicable zoning
regulations and ordinances provided the same do not prohibit or impair in any
material respect the use of such Property as a hotel as currently operated and
constructed; (c) such other nonmonetary encumbrances as do not, in Purchaser's
reasonable opinion, impair marketability and do not materially interfere with
the use of such Property as a functioning hotel as currently operated and
constructed; (d) such other nonmonetary encumbrances with respect to such
Property which shall not have been objected to by Purchaser pursuant to the
Diligence Notice Letter; and (e) such exceptions or matters, as the case may be,
otherwise accepted by Purchaser.
1.33. "Properties" shall mean all of the Assets relating to the properties
identified on Exhibit A, the legal descriptions of which are set forth in
Exhibits B-1 through B-3.
1.34. "Purchase Price" shall have the meaning given such term in Section
3.2.
1.35. "Purchaser" shall have the meaning given such term in the preamble
to this Agreement.
1.36. "Real Property" shall mean the real property described in the
applicable Exhibit B-1 through B-3, together with all easements, rights of way,
privileges, licenses and appurtenances which Seller may now own with respect
thereto.
1.37. "REIT" shall mean Equity Inns, Inc.
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1.38. "Review Period" shall mean the period which commenced on the date of
the Prior Agreement and expired on November 10, 1997.
1.39. "Seller" shall have the meaning given such term in the preamble to
this Agreement.
1.40. "Seller Group shall mean Seller and any Affiliate of Seller that is
a parent or direct or indirect wholly-owned subsidiary of Seller.
1.41. "Seller's knowledge" shall mean the actual knowledge of Joseph
Bernadino, John M. Elwood, David Simon and Richard Szymanski.
1.42. "Surveys" shall have the meaning given such term in Section 2.5.
1.43. "Tenant" shall mean Caldwell Holding Corp., a Delaware corporation,
a wholly-owned subsidiary of Seller.
1.44. "Title Commitments" shall have the meaning given such term in
Section 2.5.
1.45. "Title Company" shall mean Chicago Title Insurance Company or such
other title insurance company or companies as shall have been reasonably
approved by Purchaser and Seller.
SECTION 2. PURCHASE AND SALE; DILIGENCE.
2.1. Purchase and Sale. In consideration of the mutual covenants herein
contained, Purchaser hereby agrees to purchase from Seller, and Seller hereby
agrees to sell to Purchaser, all of Seller's right, title and interest in and to
the Properties for the Purchase Price, subject to and in accordance with the
terms and conditions of this Agreement.
2.2. Deposit. Purchaser has deposited the sum of $1,308,750 (the
"Deposit") with the Escrow Agent. The Deposit shall be held in an
interest-bearing account pursuant to the terms of the Escrow Agreement. If this
Agreement shall terminate with respect to all of the Properties pursuant to
Section 10.1, the Deposit, together with all interest accrued thereon, shall be
returned to Purchaser. If this Agreement shall terminate pursuant to Section
10.2, the Deposit, together with all interest accrued thereon, shall be paid to
Seller. If the Closing shall
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occur, the Deposit shall be credited toward the Purchase Price, pursuant to
Section 3.2, and the interest earned on the Deposit shall be paid to Purchaser.
2.3. Due Diligence. Any forms of franchise guidelines and franchise
agreements for "AmeriSuites" which Seller shall have provided to Purchaser in
connection with Purchaser's due diligence shall be substantially similar to (i)
the form which Tenant shall enter into in connection with the Closing and (ii)
(subject to any changes made by franchisor to such form on a non-discriminatory
basis) the form to be employed with respect to any First Offer Hotels and Option
Hotels. To the extent that, in connection with its due diligence investigation,
Purchaser, its agents, representatives or contractors, shall have damaged or
disturbed any of the Real Property or the Improvements located thereon,
Purchaser shall return the same to substantially the same condition which
existed immediately prior to such damage or disturbance. In the event that the
transactions contemplated by this Agreement are not closed and consummated for
any reason, Purchaser shall, on request by Seller, deliver to Seller all tests,
reports and inspections of the Property made and conducted by Purchaser or for
its benefit or any other documents or information (including title commitments,
UCC financing statement search reports, title documents, surveys, zoning
reports, environmental audits, structural engineering reports, appraisals and
the like), which Purchaser has received pursuant to this Agreement; provided,
however, that Seller shall reimburse Purchaser's out-of-pocket expenses for any
of the foregoing materials (other than materials delivered by Seller or its
agents or representatives to Purchaser) which it requests that Purchaser so
deliver. Purchaser shall indemnify, defend and hold harmless Seller from and
against any and all expense, loss or damage which Seller may incur as a result
of any act or omission of Purchaser or its representatives, agents or
contractors in connection with such examinations and inspections, other than to
the extent that any expense, loss or damage arises from any gross negligence or
willful misconduct of Seller. The provisions of this Section 2.3 shall survive
the termination of this Agreement and the Closing.
2.4. Casualty; Condemnation.(a) If, prior to the Closing, (i) any Property
suffers a casualty or partial condemnation which would cause such Property to
become a Defective Property and (ii) such Property is not, prior to the Closing,
restored to a condition substantially the same as the condition thereof
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immediately prior to such casualty or condemnation, either Purchaser or Seller
may, on notice to the other given prior to the Closing Date, terminate this
Agreement with respect to such Defective Property, in which event Purchaser
shall acquire all of the Properties other than such Defective Property, and the
Purchase Price shall be reduced by the Allocable Purchase Price of such
Defective Property. Promptly upon learning of the same, Seller covenants and
agrees to provide Purchaser with prompt written notice of any casualty or
condemnation affecting any Property.
(b) If, prior to the Closing, any Property shall be condemned in its
entirety, this Agreement shall automatically terminate with respect to such
Defective Property, in which event Purchaser shall acquire all of the Properties
other than such Defective Property, and the Purchase Price shall be reduced by
the Allocable Purchase Price of such Defective Property.
(c) If neither Purchaser nor Seller shall elect to terminate this
Agreement with respect to a Defective Property pursuant to Paragraph (a) of this
Section 2.4, Seller agrees (i) in the case of a casualty loss, to assign to
Purchaser at Closing its rights to any insurance proceeds with respect to such
loss, pay over to Purchaser any such proceeds already received and give
Purchaser a credit against the Purchase Price in the amount of any deductible or
uninsured loss, or (ii) in the case of a condemnation, to assign to Purchaser at
Closing its rights to any compensation in connection with such condemnation and
pay over to Purchaser any such compensation already received, and, in either
such event, Purchaser shall acquire such Defective Property as provided herein.
(d) If any Property shall suffer a casualty loss which shall not render
the Property a Defective Property, Seller shall assign to Purchaser at Closing
its rights to any insurance proceeds with respect to such loss, pay over to
Purchaser any such proceeds already received and give Purchaser a credit against
the Purchase Price in the amount of any deductible or uninsured loss, and
Purchaser shall acquire such Property as provided herein.
2.5. Title Matters. Purchaser has received from the Title Company a
preliminary title commitment, having an effective date after the date of this
Agreement, for an ALTA (or such other form reasonably approved by Purchaser)
owner's policy of title
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insurance with respect to each of the Properties, together with complete and
legible copies of all instruments and documents referred to as exceptions to
title (collectively, the "Title Commitments"). Except as set forth on the
Diligence Notice Letter, Purchaser acknowledges and agrees that it does not have
any objection to any title exceptions which affect the Properties.
2.6. Survey Matters. Purchaser has received a survey with respect to each
of the Properties (the "Surveys") by a licensed surveyor in the jurisdiction in
which each such Property is located, which (i) contains an accurate legal
description of the applicable Property, (ii) shows the location, dimension and
description (including applicable recording information) of all utilities,
easements, encroachments and other physical matters affecting such Property, the
number of striped parking spaces located thereon and all applicable building
set-back lines, (iii) states whether the applicable Property is located within a
100-year flood plain and (iv) is certified to Purchaser and the Title Company
and such other persons as shall have been requested by Purchaser or Seller.
Except as set forth on the Diligence Notice Letter, Purchaser acknowledges and
agrees that it does not have any objection to any matter shown on the Surveys.
SECTION 3. CLOSING; PURCHASE PRICE.
3.1. Closing. The purchase and sale of the Properties shall be consummated
at a closing (the "Closing") to be held at the offices of Hunton & Williams, 200
Park Avenue, 43rd Floor, New York, New York 10166-0136, or at such other
location as Seller and Purchaser may agree, at 10:00 a.m. local time, on or
about December 10, 1997 (the "Closing Date").
3.2. Purchase Price. (a) At the Closing, Purchaser shall pay to Seller for
the Properties a purchase price (the "Purchase Price") in the amount of
$18,430,139 (subject to customary prorations and adjustments), except that
Purchaser shall receive a credit against the Purchase Price in the amount of the
Deposit.
(b) The Purchase Price shall be payable by wire transfer of immediately
available funds on the Closing Date to an account or accounts to be designated
by Seller prior to the Closing.
(c) Notwithstanding anything to the contrary contained in Section 2.3
hereof or this Section 3.2, if either Seller or
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Purchaser shall not be ready to close with respect to one or more Hotels by the
Closing Date, the Closing shall occur as to such Hotels as to which the parties
shall agree, and the parties shall agree as to one or more additional closings
of groups of one or more Hotels until settlement has occurred as to all of the
Hotels, provided that settlement shall have occured as to all of the Hotels no
later than December 22, 1997. In the event of more than one Closing, this
Agreement shall be deemed a separate agreement as to each Hotel and, except as
otherwise agreed to between Seller and Purchaser, (a) the Purchase Price for
each individual Hotel shall be the applicable Allocable Purchase Price, and (b)
the Deposit for each individual Hotel shall equal the amount set forth on
Exhibit A. In the event of multiple Closings, the place and manner of Closing
shall be as reasonably agreed between Seller and Purchaser.
(d) The provisions of Sections 3.2(c) and (e) shall survive the Closing.
SECTION 4. CONDITIONS TO PURCHASER'S OBLIGATION TO CLOSE.
The obligation of Purchaser to acquire the Properties on the Closing Date
shall be subject to the satisfaction of the following conditions precedent on
and as of the Closing Date, which Seller covenants to use commercially
reasonable efforts to fulfill:
4.1. Closing Documents. Seller shall have delivered to Purchaser:
(a) Good and sufficient special warranty deeds, with legal descriptions
based on the deeds by which Seller received title to the Properties, and
quitclaim deeds with legal descriptions based on the Surveys, if the Surveys
indicate any differing legal descriptions, all in forms as shall be customary in
the various jurisdictions in which the Properties are located, with respect to
all of the Properties, in proper statutory form for recording, duly executed and
acknowledged by Seller, conveying fee simple title to the applicable Properties,
free from all liens and encumbrances other than the Permitted Encumbrances;
(b) A bill of sale and assignment agreement, in form and substance
reasonably satisfactory to Seller and Purchaser, duly executed and acknowledged
by Seller, with respect to all of Seller's right, title and interest in, to and
under the FF&E, the
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Documents and the Intangible Property with respect to the Properties;
(c) A bill of sale and assignment agreement, in form and substance
reasonably satisfactory to Seller, Purchaser and Tenant, duly executed and
acknowledged by Seller, to Tenant, with respect to all of Seller's right, title
and interest in, to and under the Inventory and the Contracts, with respect to
the Properties;
(d) Duly executed and acknowledged memoranda of lease, setting forth the
material terms of each Lease, in form and substance reasonably satisfactory to
Seller and Purchaser;
(e) Duly executed transfer tax forms, as required by applicable law;
(f) Duly executed environmental disclosure forms, as and to the extent
required by applicable law;
(g) To the extent the same are in Seller's possession, original, fully
executed copies of all Contracts pertaining to the Properties;
(h) A duly executed copy of the Lease and all other documents and sums
required to be delivered by Seller and/or the Tenant pursuant thereto;
(i) A duly executed copy of the franchise agreement between the Tenant and
the franchisor with respect to each of the Properties;
(j) Certified copies of all charter documents, applicable corporate
resolutions and certificates of incumbency with respect to Seller and the
Tenant;
(k) an affidavit of Seller in accordance with Section 1445 of the Code and
such documentation as shall be required to comply with the reporting
requirements of Section 1099-S of the Code; and
(l) Such other conveyance documents, certificates, deeds, and other
instruments as may be required by this Agreement or as Purchaser or the Title
Company may reasonably require to effectuate the transactions contemplated
hereunder.
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4.2. Condition of Properties. (a) All of the Properties and all
Improvements located thereon shall, except as otherwise provided in Section 2.3,
be in substantially the same physical condition as on September 22, 1997,
ordinary wear and tear excepted;
(b) No material default or event which with the giving of notice and/or
lapse of time could constitute a material default shall have occurred and be
continuing under any material agreement benefiting or affecting the Properties
in any material respect;
(c) No action shall be pending or threatened for the condemnation or
taking by power of eminent domain of all or any material portion of the
Properties which would render any Property a Defective Property; and
(d) All material licenses, permits and other authorizations necessary for
the current use, occupancy and operation of the Properties shall be in full
force and effect in all material respects.
4.3. Title Policies. The Title Company shall be prepared, subject only to
payment of the applicable premium, endorsement and related fees and delivery of
all conveyance documents in recordable form, to issue title insurance policies
to Purchaser, in accordance with Section 2.5, together with such affirmative
coverages as Purchaser may reasonably require and shall have been determined by
the Title Company as available prior to the date hereof.
4.4. Opinions of Counsel. Purchaser shall have received a written opinion
from counsel to Seller, in form and substance reasonably satisfactory to
Purchaser and Seller's counsel, regarding the organization and authority of
Seller and Tenant.
4.5. No PIP Requirement at Closing. There shall be no PIP requirement
imposed by the franchisor in connection with the Closing.
4.6. Representations. All representations and warranties made herein by
Seller shall be true and correct in all material respects.
SECTION 5. CONDITIONS TO SELLER'S OBLIGATION TO CLOSE.
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The obligation of Seller to convey the Properties on the Closing Date to
Purchaser is subject to the satisfaction of the following conditions precedent
on and as of the Closing Date, which Purchaser covenants to use commercially
reasonable efforts to fulfill:
5.1. Purchase Price. Purchaser shall deliver to Seller the Purchase Price,
pursuant to Section 3.1.
5.2. Closing Documents. Purchaser shall have delivered to Seller:
(a) Duly executed and acknowledged counterparts of the documents described
in Section 4.1, where applicable;
(b) Certified copies of all charter documents, partnership agreements,
applicable resolutions and certificates of incumbency with respect to Purchaser
and its general partner; and
5.3. Opinion of Counsel. Seller shall have received a written opinion from
counsel to Purchaser, in form and substance reasonably satisfactory to Seller
and Purchaser's counsel, regarding the organization and authority of Purchaser
and the REIT.
5.4. Representations. All representations and warranties made herein by
Purchaser shall be true and correct in all material respects.
5.5. Amendment to LP Agreement. Purchaser shall have caused Exhibit A of
the LP Agreement to be amended so as to add Seller as a limited partner listed
thereon.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF SELLER.
To induce Purchaser to enter into this Agreement, Seller represents and
warrants to Purchaser as follows:
6.1. Status and Authority of Seller. Seller is a corporation duly
organized, validly existing and in corporate good standing under the laws of its
state of incorporation, and has all requisite power and authority under the laws
of such state and its respective charter documents to enter into and perform its
obligations under this Agreement and to consummate the transactions contemplated
hereby. Seller has duly qualified
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to transact business in each jurisdiction in which the nature of the business
conducted by it requires such qualification, except where failure to do so could
not reasonably be expected to have a material adverse effect.
6.2. Action of Seller . Seller has taken all necessary action to authorize
the execution, delivery and performance of this Agreement, and upon the
execution and delivery of any document to be delivered by Seller or Tenant on or
prior to the Closing Date, such document shall constitute the valid and binding
obligation and agreement of Seller or Tenant, as the case may be, enforceable
against Seller or Tenant in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws of general application affecting the rights and remedies of creditors.
6.3. No Violations of Agreements. Neither the execution, delivery or
performance of this Agreement by Seller or of the Lease by Tenant, nor
compliance with the terms and provisions hereof or thereof, will result in any
breach of the terms, conditions or provisions of, or conflict with or constitute
a default under, or result in the creation of any lien, charge or encumbrance
upon any Property pursuant to the terms of any indenture, mortgage, deed of
trust, note, evidence of indebtedness or any other agreement or instrument by
which Seller or Tenant is bound, except pursuant to the Lease or this Agreement.
6.4. Litigation. Neither Seller nor Tenant has received any written notice
of and, to Seller's knowledge, no action or proceeding is pending or threatened
and no investigation looking toward such an action or proceeding has begun,
which (a) questions the validity of this Agreement or the Lease or any action
taken or to be taken pursuant hereto, (b) will result in any material adverse
change in the business, operation, affairs or condition of the Properties, taken
as a whole, (c) will result in or subject the Properties to a material
liability, or (d) involves condemnation or eminent domain proceedings against
any part of the Properties, which would render such Property a Defective
Property.
6.5. Existing Leases, Agreements, Etc. Other than any agreements provided
to Purchaser prior to the execution of this Agreement and listed on the schedule
attached hereto as Exhibit E, there are no other material agreements affecting
the
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Properties which will be binding on Purchaser subsequent to the Closing Date,
which Purchaser cannot terminate.
6.6. Utilities, Etc. To Seller's knowledge, all utilities and services
necessary for the use and operation of the Properties (including, without
limitation, road access, gas, water, electricity and telephone) are available
thereto, are of sufficient capacity to meet adequately all needs and
requirements necessary for the current use and operation of the Properties and
for their respective intended purposes. To Seller's knowledge, no fact,
condition or proceeding exists which would result in the termination or material
impairment of the furnishing of such utilities to the Properties.
6.7. Compliance with Law. To Seller's knowledge, except as set forth on
Exhibit D attached hereto, (i) the Properties and the current use and operation
thereof do not violate any material federal, state, municipal and other
governmental statutes, ordinances, by-laws, rules, regulations or any other
legal requirements, including, without limitation, those relating to
construction, occupancy, zoning, subdivision, land use, adequacy of parking,
environmental protection, occupational health and safety and fire safety
applicable thereto; and (ii) there are presently in effect all material
licenses, permits and other authorizations necessary for the current use,
occupancy and operation thereof (including liquor license, if required). Except
as disclosed to Purchaser, Seller has not received written notice of any
threatened request, application, proceeding, plan, study or effort which would
materially adversely affect the current use or zoning of any of the Properties
or which would materially adversely modify or realign any adjacent street or
highway.
6.8. Taxes. To Seller's knowledge, other than the amounts disclosed by tax
bills (copies of which have been delivered by Seller to Purchaser prior to the
execution of this Agreement), no taxes or special assessments of any kind
(special, bond or otherwise) are or have been levied with respect to any of the
Properties, or any portion thereof, which are outstanding or unpaid, other than
amounts not yet due and payable or, if due and payable, not yet delinquent.
6.9. Not A Foreign Person. Seller is not a "foreign person" within the
meaning of Section 1445 of the Code.
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6.10. Hazardous Substances. Except as set forth on Exhibit D attached
hereto or as described in any environmental report delivered to Purchaser
(including, without limitation, the environmental site assessments set forth on
Exhibit D), to Seller's knowledge, Seller has not stored or disposed of (or
engaged in the business of storing or disposing of) or has released or caused
the release of any hazardous waste, contaminants, oil, radioactive or other
material on any of the Properties, or any portion thereof, the removal of which
is required or the maintenance of which is prohibited or penalized by any
applicable Federal, state or local statutes, laws, ordinances, rules or
regulations, and, to Seller's knowledge, except as set forth on Exhibit D
attached hereto or as described in any environmental report delivered to
Purchaser (including, without limitation, the environmental site assessments set
forth on Exhibit D), the Properties are free from any such hazardous waste,
contaminants, oil, radioactive and other materials, except any such materials
maintained in the ordinary course of a hotel business in accordance with
applicable law.
6.11. Insurance. Seller has not received any written notice from any
insurance carrier of defects or inadequacies in the Properties which, if
uncorrected, would result in a termination of insurance coverage or a material
increase in the premiums charged therefor.
6.12. Ownership. All Assets, Contracts, FF&E, Intangible Property and Real
Property are owned by Seller and are assignable and transferable without the
consent of any third party (or, if any such consent is required, such consent
shall be obtained no later than the Closing), and there are no capital leases,
except as set forth on Exhibit E.
The representations and warranties made in this Agreement by Seller shall
be deemed remade by Seller as of the Closing Date with the same force and effect
as if made on, and as of, such date.
Except as otherwise expressly provided in this Agreement or any documents
to be delivered to Purchaser at the Closing, Seller disclaims the making of any
representations or warranties, express or implied, regarding the Properties or
matters affecting the Properties, whether made by Seller, on Seller's behalf or
otherwise, including, without limitation, the physical condition of the
Properties, title to or the boundaries of the Real
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Property, pest control matters, soil conditions, the presence, existence or
absence of hazardous wastes, toxic substances or other environmental matters,
compliance with building, health, safety, land use and zoning laws, regulations
and orders, structural and other engineering characteristics, traffic patterns,
market data, economic conditions or projections, and any other information
pertaining to the Properties or the market and physical environments in which
they are located. Without negating the covenants, representations and warranties
of Seller under this Agreement, Purchaser acknowledges (i) that Purchaser has
entered into this Agreement with the intention of making and relying upon its
own investigation or that of third parties with respect to the physical,
environmental, economic and legal condition of each Property and (ii) that
Purchaser is not relying upon any statements, representations or warranties of
any kind, other than those specifically set forth in this Agreement or in any
document to be delivered to Purchaser at the Closing made by Seller. Without
negating the covenants, representations and warranties of Seller under this
Agreement, Purchaser further acknowledges that it has not received from or on
behalf of Seller any accounting, tax, legal, architectural, engineering,
property management or other advice with respect to this transaction and is
relying solely upon the advice of third party accounting, tax, legal,
architectural, engineering, property management and other advisors. Subject to
the provisions of this Agreement, Purchaser shall purchase the Properties in
their "as is" condition on the Closing Date.
SECTION 7. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
To induce Seller to enter into this Agreement, Purchaser represents and
warrants to Seller as follows:
7.1. Status and Authority of Purchaser. Purchaser is a Tennessee limited
partnership duly organized, validly existing and in trust good standing under
the laws of the State of Tennessee and has all requisite power and authority
under the laws of such state and under its charter documents to enter into and
perform its obligations under this Agreement and to consummate the transactions
contemplated hereby. Purchaser has duly qualified and is in good standing as a
foreign limited partnership in each jurisdiction in which the nature of the
business conducted by it requires such qualification.
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7.2. Action of Purchaser. Purchaser has taken all necessary action to
authorize the execution, delivery and performance of this Agreement and the
Lease, and upon the execution and delivery of any document to be delivered by
Purchaser on or prior to the Closing Date such document shall constitute the
valid and binding obligation and agreement of Purchaser, enforceable against
Purchaser in accordance with its terms, except as enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws of general
application affecting the rights and remedies of creditors.
7.3. No Violations of Agreements. Neither the execution, delivery or
performance of this Agreement nor the Lease by Purchaser, nor compliance with
the terms and provisions hereof, will result in any breach of the terms,
conditions or provisions of, or conflict with or constitute a default under, or
result in the creation of any lien, charge or encumbrance upon any property or
assets of Purchaser pursuant to the terms of any indenture, mortgage, deed of
trust, note, evidence of indebtedness or any other agreement or instrument by
which Purchaser is bound.
7.4. Litigation. No investigation, action or proceeding is pending and, to
Purchaser's knowledge, no action or proceeding is threatened and no
investigation looking toward such an action or proceeding has begun, which
questions the validity of this Agreement or any action taken or to be taken
pursuant hereto.
7.5. No Conflicts. Neither the execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated hereby by
Purchaser, will conflict with or result in a material breach or violation of, or
constitute a default under the charter, bylaws, certificate of limited
partnership or LP Agreement, as the case may be, of the REIT or Purchaser; any
indenture, mortgage, deed of trust, loan agreement, note, lease or other
agreement or instrument to which the REIT or Purchaser is a party or to which
they, either of them, any of their respective properties or other assets is
subject; or any applicable material statute, judgment, decree, order, rule or
regulation of any court or governmental agency or body applicable to the REIT or
Purchaser.
7.6. REIT Status . The REIT is a "qualified real estate investment trust"
as defined in Section 856 of the Code.
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7.7. REIT Filings. The private placement memorandum delivered by Purchaser
to Seller on September 18, 1997 with respect to the REIT does not include, as of
such date, any untrue statement of a material fact or omit to state any material
fact required to be stated or necessary to make the statements made, in light of
the circumstances under which they were made, not misleading.
The representations and warranties made in this Agreement by Purchaser
shall be deemed remade by Purchaser as of the Closing Date with the same force
and effect as if made on, and as of, such date.
SECTION 8. COVENANTS OF SELLER AND PURCHASER.
8.1. Covenants of Seller. Seller hereby covenants with Purchaser between
the date of this Agreement and the Closing Date as follows:
(a) Upon learning of any material change in any condition with
respect to any of the Properties or of any event or circumstance which makes any
representation or warranty of Seller to Purchaser under this Agreement untrue or
misleading in any material respect, promptly to notify Purchaser thereof
(Purchaser agreeing, on learning of any such fact or condition, promptly to
notify Seller thereof).
(b) To continue or cause to continue to operate each of the
Properties as an "AmeriSuites" hotel, in a good and businesslike fashion
consistent with its past practices and to cause each of the Properties to be
maintained in good working order and condition in a manner consistent with its
past practice.
(c) To provide to Purchaser, promptly upon reasonable request, such
unaudited financial and other information and certifications of Seller with
respect to the Properties as Purchaser may from time to time reasonably request
in order to comply with any applicable securities laws and/or any rules,
regulations or requirements of the Securities and Exchange Commission and, if
required or requested, to permit Purchaser to incorporate by reference any
information included in filings made by Seller with the Securities and Exchange
Commission.
(d) To deliver to Purchaser the items set forth in Section 4.1 and
Section 4.4.
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8.2. Covenants of Purchaser. Purchaser hereby covenants with Seller on and
as of the Closing Date as follows:
(a) To deliver to Seller the items set forth in Section 5.2.
SECTION 9. CLOSING COSTS.
9.1. Closing Costs. Each of the parties hereto shall pay its own expenses
in connection with this Agreement and the transactions contemplated hereby,
including, without limitation, any legal and accounting fees, the costs and
expenses of preparing engineering and environment reports, market studies and
appraisals, the cost of the Surveys, Title Commitments, zoning reports, UCC
financing statement search reports, environmental audits, zoning reports,
structural engineering reports, appraisals and the like, whether or not the
transactions contemplated hereby are consummated (but subject, however, to the
provisions of Section 2.3, with respect to items which Purchaser delivers to
Seller at Seller's request). Seller and Purchaser shall each pay 50% of all
state and local sales, transfer, excise, value-added or other similar taxes, and
all recording and filing fees that may be imposed by reason of the sale,
transfer, assignment, delivery and leasing (other than any tax imposed in
connection with the recording of a memorandum of lease, which amounts shall be
paid pursuant to the terms of the applicable Lease) of the Properties.
SECTION 10. DEFAULT.
10.1. Default by Seller. If (a) Seller shall have made any representation
or warranty herein which shall be untrue or misleading in any material respect,
or (b) Seller shall fail to perform any of the material covenants and agreements
contained herein to be performed by Seller and such failure continues for a
period of ten (10) days after notice thereof from Purchaser, Purchaser may, (i)
sue for specific performance and damages, (ii) sue for damages without specific
performance (with or without terminating this Agreement and receiving a refund
of the Deposit, and all interest thereon) or (iii) exercise any other right or
remedy at law or in equity; provided, however, that Purchaser shall in no event
be entitled to monetary damages in excess of the amount of the Deposit.
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10.2. Default by Purchaser. If (a) Purchaser shall have made any
representation or warranty herein which shall be untrue or misleading in any
material respect, or (b) Purchaser shall fail to perform any of the covenants
and agreements contained herein to be performed by it and such failure shall
continue for a period of ten (10) days after notice thereof from Seller, Seller
may, as its sole and exclusive remedy at law and in equity, terminate this
Agreement. In the event that Seller shall so terminate this Agreement, the
Deposit, together with all interest accrued thereon, shall be retained by
Seller, as liquidated damages and not as a penalty, whereupon Purchaser shall,
except as expressly provided herein, have no further monetary or nonmonetary
obligations hereunder, other than with respect to obligations which expressly
survive the termination hereof (which obligations shall not include the
obligation to purchase the Properties hereunder).
SECTION 11. RIGHT OF FIRST OFFER; COMMITMENT TO SELL.
11.1. Right of First Offer.
(a) If, during the Option Period, any member of the Seller Group desires
to sell any five (5) or more "AmeriSuites" hotels as a group (such group of
hotels being hereinafter collectively referred to as the "First Offer Hotels"),
then before offering the First Offer Hotels for sale to third parties, Seller
shall (i) deliver to Purchaser a notice (an "Offer") setting forth the price and
all material terms and conditions upon which Seller would be willing to sell the
First Offer Hotels, and (ii) shall provide copies of, or reasonable access to,
all due diligence materials with respect to the First Offer Hotels in Seller's
possession or control (including occupancy, ADR and Rev PAR information,
financial statements, title policies, title documents, surveys, environmental
audits, zoning reports, income and expense statements, appraisals, operating
agreements, engineering reports, PIPs, Star reports, budgets, litigation reports
and similar materials). Within 30 days following receipt of the Offer (such
30-day period, the "First Offer Response Period"), Purchaser shall by notice to
Seller either (i) accept the Offer, (ii) deliver to Seller a counter-offer (a
"Counter-Offer") setting forth a price and all of the material terms and
conditions upon which Purchaser would be willing to purchase the First Offer
Hotels, or (iii) elect not to accept the Offer or deliver a Counter-Offer. If
Purchaser shall fail to deliver
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notice of its election pursuant to the foregoing sentence during the First Offer
Response Period, Purchaser shall be deemed conclusively to have elected not to
accept the Offer or deliver a Counter-Offer.
(b) In the event that Purchaser delivers a Counter-Offer, within 10 days
thereafter Seller may elect to accept the Counter-Offer by delivering notice to
Purchaser of such election.
(c) In the event that Purchaser does not elect to accept Seller's Offer or
deliver a Counter-Offer, Seller shall be free to offer to sell the First Offer
Hotels during the Offer Period to any and all third parties upon substantially
the same terms and conditions as set forth in the Offer, but at a price not less
than an amount equal to 95% of the purchase price set forth in the Offer. In the
event that Purchaser delivers a Counter-Offer and Seller does not accept such
Counter-Offer, Seller shall be free to offer to sell the First Offer Hotels
during the Offer Period to any and all third parties upon substantially the same
terms and conditions as set forth in the Offer, but at a price not less than an
amount equal to 100% of the purchase price set forth in the Offer. The "Offer
Period" shall mean the period of six months following the earlier of the date of
delivery to Seller of a Counter-Offer or, if none shall be delivered, the
expiration of the First Offer Response Period.
(d) In the event that Purchaser accepts the Offer within the First Offer
Response Period, or in the event that Seller accepts Purchaser's Counter-Offer
within the 10-day period referred to in paragraph (a) of this Section 11.1, then
Purchaser and Seller shall, within 10 days of Purchaser's acceptance of the
Offer or Seller's acceptance of the Counter-Offer, as the case may be, execute
and deliver to each other a contract of sale relating to the First Offer Hotels,
which contract of sale shall, to the extent consistent with the terms and
conditions as set forth in the Offer or the Counter-Offer, as the case may be,
incorporate the terms of the Original Agreement, but which shall be modified as
necessary to reflect the price and such terms and conditions set forth in the
Offer or the Counter-Offer. Upon execution of a contract of sale pursuant to the
immediately foregoing sentence, Purchaser shall, simultaneously therewith, pay
the "Deposit" amount required thereunder, which amount shall be held in escrow
pursuant to the terms thereof. Seller shall sell and Purchaser shall purchase
(and, where applicable,
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Purchaser shall lease to Seller) the First Offer Hotels in accordance with said
contract of sale.
(e) If Purchaser and Seller shall be unable to agree on the terms of a
contract of sale pursuant to, and within the time periods set forth in,
paragraph (d) of this Section 11.1, the parties shall submit such issue to
binding arbitration in accordance with the Commercial Arbitration Rules of the
American Arbitration Association or any successor organization thereto.
(f) In the event that a sale of First Offer Hotels is consummated with a
third party, provided that Seller shall have complied with the requirements
hereof, then this Agreement automatically shall terminate and be of no further
force or effect simultaneously therewith with respect to such First Offer
Hotels.
(g) Purchaser's rights hereunder shall not apply to any foreclosure sale
of any First Offer Hotels, and upon the completion of any such foreclosure sale,
this Agreement automatically shall terminate and be of no further force or
effect simultaneously therewith with respect to such First Offer Hotels, unless
the purchaser at such foreclosure sale is an Affiliate of Seller. No further
instrument or confirmation shall be required with respect to such termination.
(h) Purchaser's rights hereunder shall not apply (i) to any transfer of
Seller's hotel properties, by operation of law, deed or otherwise, to any
parent, affiliate or wholly-owned subsidiary of Seller or to any entity which is
a successor to Seller by way of merger, consolidation or corporate
reorganization or by the purchase of substantially all of the assets,
partnership interests or shares of stock of Seller, but the obligations of this
Section 11 shall apply to any successor and Seller shall cause such successor to
assume such obligations.
(i) Seller shall be obligated to offer no more than twenty (20) First
Offer Hotels to Purchaser during each year of the Option Period; provided,
however, that any First Offer Hotels with respect to which Seller shall have
failed to enter into a sales contract (with a Person (as defined in the Lease)
other than Purchaser) during each such year shall not count toward the
aforementioned twenty-hotel minimum.
(j) Seller agrees that it shall not deliberately and in bad faith
structure sales so as to avoid the requirements of this
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Section 11.1 by selling five or more hotels to the same purchaser in any
one-year period in quantities of fewer than five hotels per transaction.
11.2. Commitment to Sell.
(a) During each successive 12-month period during the Option Period,
Seller shall offer to sell to Purchaser not fewer than five (5) "AmeriSuites"
hotels, or such lesser number of "AmeriSuites" hotels as shall then be owned by
Seller (any such hotel or hotels being hereinafter collectively referred to as
the "Option Hotels"), by issuance of a notice of sale to Purchaser (the "Notice
of Sale"), pursuant to the terms of this Section 11.2. In connection with the
issuance of a Notice of Sale, Seller shall provide copies of, or reasonable
access to, all due diligence materials with respect to the First Offer Hotels in
Seller's possession or control (including occupancy, ADR and Rev PAR
information, financial statements, title policies, title documents, surveys,
environmental audits, zoning reports, income and expense statements, appraisals,
operating agreements, engineering reports, PIPs, Star reports, budgets,
litigation reports and similar materials).
(b) The Notice of Sale shall set forth the proposed purchase price and
such other reasonable material terms and conditions upon which Seller would be
willing to sell the Option Hotels. Within 30 days following receipt of the
Notice of Sale (such 30-day period, the "Option Response Period"), Purchaser
shall by notice to Seller either (i) agree to purchase the Option Hotels
pursuant to the terms set forth in the Notice of Sale, or (ii) elect not to
purchase the Option Hotels. If Purchaser shall fail to deliver notice of its
election pursuant to the foregoing sentence during the Option Response Period,
Purchaser shall be deemed conclusively to have elected not to purchase the
Option Hotels.
(c) In the event that Purchaser elects to purchase the Option Hotels
pursuant to the foregoing paragraph (b) of this Section 11.2, then Purchaser and
Seller shall, within 10 days of Purchaser's election, execute and deliver to
each other a contract of sale relating to the Option Hotels, which contract of
sale shall, to the extent consistent with the terms and conditions as set forth
in the Notice of Sale, incorporate the terms of the Original Agreement, but
which shall be modified as necessary to reflect the price and such terms and
conditions set
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forth in the Notice of Sale. Upon execution of a contract of sale pursuant to
the immediately foregoing sentence, Purchaser shall, simultaneously therewith,
pay the "Deposit" amount required thereunder, which amount shall be held in
escrow pursuant to the terms thereof. Seller shall sell and Purchaser shall
purchase (and, where applicable, Purchaser shall lease to Seller) the Option
Hotels in accordance with said contract of sale.
(d) Seller and Purchaser shall use reasonable, good faith efforts to agree
upon the terms of the contract of sale pursuant to the foregoing paragraph (c)
of this Section 11.2. If Seller and Purchaser shall be unable to agree on the
terms thereof within 10 days after Purchaser's election to purchase, Seller's
offer and Purchaser's acceptance shall be deemed revoked and terminated, and
Seller shall be deemed to have satisfied its obligations hereunder with respect
to such Option Hotels.
11.3. General Provisions.
(a) Time shall be of the essence as to all periods set forth in this
Section 11.
(b) Any First Offer Hotels offered pursuant to the provisions of Section
11.1 shall also be deemed Option Hotels for the purpose of satisfying Seller's
obligation to offer hotel properties to Purchaser pursuant to Section 11.2.
(c) Notwithstanding anything to the contrary contained herein, Purchaser's
right of first offer and Seller's commitment to sell, as set forth in Section
11.1(a) and 11.1(b) hereof, shall only apply during the period commencing on the
Closing Date and terminating on the date immediately preceding the third
anniversary thereof (the "Option Period"), and Seller shall have no obligation
to deliver Purchaser an Offer with respect to any hotels other than during such
Option Period, unless Seller has failed to offer Purchaser an aggregate of 15
Option Hotels, in which event such period shall be extended until Seller
fulfills such requirement (which extension shall not negate any other rights and
remedies which Purchaser may have).
(d) None of the rights created or granted pursuant to this Section 11
shall constitute a lien on any property, and all such rights are, and will at
all times be, subject and subordinate to the lien of all mortgages and other
financing arrangements, except where a member of the Seller Group is the
lender/creditor
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(including, without limitation, any deed to secure debt, deed of trust,
collateral assignment, or other similar instrument creating a lien or other
encumbrance as security (an "Encumbrance")) which may now or hereafter encumber
or affect Seller's interest in any hotels which it now or hereafter owns, or any
portion thereof, and to all advances, increases, renewals, modifications,
consolidations, extensions, participations and replacements thereof,
irrespective of the time of recording or the priority of the lien of such
mortgage or other Encumbrance, all without the necessity of any further
instrument of subordination.
(e) If Purchaser shall at any time breach its agreement to purchase any
First Offer Hotel or Option Hotel or materially default under any contract of
sale entered into with respect thereto (subject to any applicable notice and
cure period), Purchaser shall thenceforward have no further rights to purchase
hotel properties pursuant to Sections 11.1 or 11.2, and Seller shall have no
further obligations under said Sections. The foregoing provision shall be in
addition to any and all other remedies, including liquidated damages provisions,
that Seller may have under said contracts of sale; provided, however, that
Seller shall have no further remedies, other than as set forth in this Paragraph
(e), with respect to such breach or default.
(f) Where any offer to sell First Offer Hotels pursuant to Section 11.1 or
Option Hotels pursuant to Section 11.2 includes, as a term thereof, the right of
Seller to lease back the applicable hotel property from Purchaser, references to
the sale thereof in this Section 11 shall be deemed also to include such an
agreement to lease. Unless expressly required in the applicable Offer or Notice
of Sale, Purchaser shall not be obligated to lease back any First Offer Hotel or
Option Hotel purchased by Purchaser to Seller, Tenant or any other member of the
Seller Group. Where a First Offer Hotel or Option Hotel purchased by Purchaser
is not leased back to Seller or such leaseback or a Lease expires or is
terminated, then, so long as Purchaser, an Affiliate of Purchaser or their
purchaser is the owner of such hotel, Seller shall not unreasonably withhold,
delay or condition the issuance of an "AmeriSuites" franchise agreement from
Purchaser, Purchaser's tenant or other operator upon such franchise terms
granted Tenant with respect to the Hotels.
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(g) Neither party hereto shall record this Agreement or any memorandum
thereof without the written consent of the other party.
(h) The obligations of Seller under this Section 11 shall apply to any
"AmeriSuites" hotels which any member of the Seller Group owns or which any
member has the right to sell, and Seller shall cause such members of the Seller
Group desiring to sell any "AmeriSuites" or similar hotel to comply with this
Section 11 on the same terms as Seller. Reference to "sell" in this Section 11
shall refer to sale of fee simple title, ground lease, joint venture or similar
arrangements.
(i) Use of the form of the Original Agreement in preparing any agreement
of purchase and sale for a First Offer Hotel or Option Hotel shall include,
without limitation, the terms regarding (i) the Review Period, (ii) a two-tiered
Deposit in the maximum amount of 4.7% of the purchase price as liquidated
damages and (iii) (if applicable) the same form of Lease (excluding economic and
other material terms contained in the applicable Offer or Notice of Sale);
provided, however, that use of the form of the Original Agreement shall not
include (x) the provisions of Section 3.2 thereof with respect to the payment of
a portion of the purchase price with LP Units (as defined therein) (unless
expressly agreed by the parties thereto) or (y) the provisions of Section 11
hereof.
(j) Notwithstanding anything to the contrary contained herein, Seller
shall in no event have any obligation to purchase additional "AmeriSuites"
hotels in order to comply with the requirements to offer hotels to Purchaser
pursuant to the provisions of this Section 11.
(k) The provisions of this Section 11 shall survive the Closing.
SECTION 12. MISCELLANEOUS.
12.1. Agreement to Indemnify. (a) Subject to any express provisions of
this Agreement to the contrary, Seller shall indemnify and hold harmless
Purchaser from and against any and all obligations, claims, losses, damages,
liabilities, and expenses (including, without limitation, reasonable attorneys'
and accountants' fees and disbursements) arising out of (x) any damage to
property of others or injury to or death of any person
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or any claims for any debts or obligations occurring on or about or in
connection with any Property or any portion thereof at any time or times prior
to the Closing, (y) any liabilities for taxes due from Seller which shall have
accrued prior to the Closing in connection with any Property and (z) any failure
by Seller to comply with applicable "bulk sale" laws.
(b) Whenever either party shall learn through the filing of a claim or the
commencement of a proceeding or otherwise of the existence of any liability for
which the other party is or may be responsible under this Agreement, the party
learning of such liability shall notify the other party promptly and furnish
such copies of documents (and make originals thereof available) and such other
information as such party may have that may be used or useful in the defense of
such claims and shall afford said other party full opportunity to defend the
same in the name of such party and shall generally cooperate with said other
party in the defense of any such claim.
(c) The provisions of this Section 12.1 shall survive the Closing and the
termination of this Agreement.
12.2. Brokerage Commissions. Each of the parties hereto represents to the
other parties that it dealt with no broker, finder or like agent in connection
with this Agreement or the transactions contemplated hereby, other than Merrill
Lynch & Co. Seller shall be solely responsible for and shall indemnify and hold
harmless Purchaser and its respective legal representatives, heirs, successors
and assigns from and against any loss, liability or expense, including,
reasonable attorneys' fees, arising out of any claim or claims for commissions
or other compensation for bringing about this Agreement or the transactions
contemplated hereby made by Merrill Lynch & Co. or any other broker, finder or
like agent other than such loss, liability or expense resulting from Purchaser's
breach of its representations made in this Section 12.2. The provisions of this
Section 12.2 shall survive the Closing and any termination of this Agreement.
12.3. Publicity. The parties agree that no party shall, with respect to
this Agreement and the transactions contemplated hereby, contact or conduct
negotiations with public officials, make any public pronouncements, issue press
releases or otherwise furnish information regarding this Agreement or the
transactions contemplated to any third party without the consent of the other
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parties, which consent shall not be unreasonably withheld, delayed or
conditioned, except to consultants, advisors, investors, lenders, underwriters
and other parties reasonably necessary to consummate the transactions required
hereby and as required by law or contractual obligations of such parties to
third parties. No party, or its employees shall trade in the securities of any
parent or affiliate of Seller or of Purchaser until a public announcement of the
transactions contemplated by this Agreement has been made. No party shall record
this Agreement or any notice thereof.
12.4. Notices. (a) Any and all notices, demands, consents, approvals,
offers, elections and other communications required or permitted under this
Agreement shall be deemed adequately given if in writing and the same shall be
delivered either in hand, by telecopier with written acknowledgment of receipt,
or by mail or Federal Express or similar expedited commercial carrier, addressed
to the recipient of the notice, postpaid and registered or certified with return
receipt requested (if by mail), or with all freight charges prepaid (if by
Federal Express or similar carrier).
(b) All notices required or permitted to be sent hereunder shall be
deemed to have been given for all purposes of this Agreement upon the date of
acknowledged receipt, in the case of a notice by telecopier, and, in all other
cases, upon the date of receipt or refusal, except that whenever under this
Agreement a notice is either received on a day which is not a Business Day or is
required to be delivered on or before a specific day which is not a Business
Day, the day of receipt or required delivery shall automatically be extended to
the next Business Day.
(c) All such notices shall be addressed,
if to Seller to:
Prime Hospitality Corp.
700 Route 46 East
Fairfield, New Jersey 07707-2700
Attn: Mr. David Simon
[Telecopier No. (201) 882-8577]
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and
Prime Hospitality Corp.
700 Route 46 East
Fairfield, New Jersey 07707-2700
Attn: General Counsel
[Telecopier No. (201) 882-8577]
with a copy to:
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022-4677
Attn: Eugene A. Pinover, Esq.
[Telecopier No. (212) 821-8111]
if to Purchaser, to:
Equity Inns Partnership, L.P.
4735 Spottswood, Suite 102
Memphis, Tennessee 38117
Attn: Mr. Phillip H. McNeill, Sr.
[Telecopier No. (901) 761-1485]
with a copy to:
Hunton & Williams
1751 Pinnacle Drive, Suite 1700
McLean, VA 22102
Attn: Gerald R. Best, Esq.
[Telecopier No. (703) 714-7410]
(d) By notice given as herein provided, the parties hereto and their
respective successors and assigns shall have the right from time to time and at
any time during the term of this Agreement to change their respective addresses
effective upon receipt by the other parties of such notice and each shall have
the right to specify as its address any other address within the United States
of America.
12.5. Waivers, Etc. Any waiver of any term or condition of this Agreement,
or of the breach of any covenant, representation or warranty contained herein,
in any one instance,
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shall not operate as or be deemed to be or construed as a further or continuing
waiver of any other breach of such term, condition, covenant, representation or
warranty or any other term, condition, covenant, representation or warranty, nor
shall any failure at any time or times to enforce or require performance of any
provision hereof operate as a waiver of or affect in any manner such party's
right at a later time to enforce or require performance of such provision or any
other provision hereof. This Agreement may not be amended, nor shall any waiver,
change, modification, consent or discharge be effected, except by an instrument
in writing executed by or on behalf of the party against whom enforcement of any
amendment, waiver, change, modification, consent or discharge is sought.
12.6. Assignment; Successors and Assigns. This Agreement and all rights
and obligations hereunder shall not be assignable by any party without the
written consent of the other parties, except that, after the Closing, (i) Seller
may assign its surviving rights, if any, under this Agreement to Tenant or an
Affiliate of Seller, and (ii) Purchaser may assign its right to purchase a First
Offer Hotel or an Option Hotel to one or more Affiliates of Purchaser, and
Purchaser may assign its rights and obligations hereunder to an Affiliate of
Purchaser, provided that Purchaser remain liable for its obligations hereunder.
The provisions of this Agreement shall not merge with delivery of the deeds and
shall survive Closing. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective legal representatives,
successors and permitted assigns. This Agreement is not intended and shall not
be construed to create any rights in or to be enforceable in any part by any
other persons.
12.7. Severability. If any provision of this Agreement shall be held or
deemed to be, or shall in fact be, invalid, inoperative or unenforceable as
applied to any particular case in any jurisdiction or jurisdictions, or in all
jurisdictions or in all cases, because of the conflict of any provision with any
constitution or statute or rule of public policy or for any other reason, such
circumstance shall not have the effect of rendering the provision or provisions
in question invalid, inoperative or unenforceable in any other jurisdiction or
in any other case or circumstance or of rendering any other provision or
provisions herein contained invalid, inoperative or unenforceable to the extent
that such other provisions are not themselves actually in conflict with such
constitution, statute or rule of public
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policy, but this Agreement shall be reformed and construed in any such
jurisdiction or case as if such invalid, inoperative or unenforceable provision
had never been contained herein and such provision reformed so that it would be
valid, operative and enforceable to the maximum extent permitted in such
jurisdiction or in such case.
12.8. Counterparts, Etc. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement
constitutes the entire agreement of the parties hereto with respect to the
subject matter hereof and shall supersede and take the place of any other
instruments purporting to be an agreement of the parties hereto relating to the
subject matter hereof.
12.9. Governing Law. This Agreement shall be interpreted, construed,
applied and enforced in accordance with the laws of the State of New York
applicable to contracts between residents of the State of New York which are to
be performed entirely within the State of New York, regardless of (i) where this
Agreement is executed or delivered; or (ii) where any payment or other
performance required by this Agreement is made or required to be made; or (iii)
where any breach of any provision of this Agreement occurs, or any cause of
action otherwise accrues; or (iv) where any action or other proceeding is
instituted or pending; or (v) the nationality, citizenship, domicile, principal
place of business, or jurisdiction of organization or domestication of any
party; or (vi) whether the laws of the forum jurisdiction otherwise would apply
the laws of a jurisdiction other than the State of New York; or (vii) any
combination of the foregoing.
To the maximum extent permitted by applicable law, any action to enforce,
arising out of, or relating in any way to, any of the provisions of this
Agreement may be brought and prosecuted in such court or courts located in the
State of New York as is provided by law; and the parties consent to the
jurisdiction of said court or courts located in the State of New York and to
service of process by registered mail, return receipt requested, or by any other
manner provided by law.
12.10. Performance on Business Days. In the event the date on which
performance or payment of any obligation of a party required hereunder is other
than a Business Day, the time for
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payment or performance shall automatically be extended to the first Business Day
following such date.
12.11. Attorneys' Fees. If any lawsuit or arbitration or other legal
proceeding arises in connection with the interpretation or enforcement of this
Agreement, the prevailing party therein shall be entitled to receive from the
other party the prevailing party's costs and expenses, including reasonable
attorneys' fees incurred in connection therewith, in preparation therefor and on
appeal therefrom, which amounts shall be included in any judgment therein.
12.12. Section and Other Headings. The headings contained in this
Agreement are for reference purposes only and shall not in any way affect the
meaning or interpretation of this Agreement.
12.13. No Oral Modifications. This Agreement may not be amended, nor shall
any waiver, change, modification, consent or discharge be effected, except by an
instrument in writing executed by or on behalf of the party against whom
enforcement of any amendment, waiver, change, modification, consent or discharge
is sought.
12.14. Incorporation by Reference. All of the provisions applicable to the
Properties set forth in Paragraph 7 of the First Amendment and Paragraph 2 of
the Second Amendment are hereby incorporated by reference as if fully set forth
herein and are ratified and confirmed by Seller and Purchaser.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as a sealed instrument as of the date first above written.
SELLER:
PRIME HOSPITALITY CORP.
By:
----------------------------------------
Its:
-----------------------------------
PURCHASER:
EQUITY INNS PARTNERSHIP, L.P.
By: Equity Inns Trust,
its general partner
By:
-----------------------------------
Its:
------------------------------
40
Exhibit A
The Properties
Location Allocable Radius Restriction Deposit Allocation
- -------- --------- ------------------ ------------------
Purchase Price
--------------
1. Flagstaff, AZ $ 5,169,458 10 miles $436,250
2. Cincinnati, OH/ $ 6,985,218 8 miles--Restricted $436,250
Forest Park radius does not
include the Cincinnati
Riverfront sub market
3. Jacksonville, $ 6,275,463 6 miles-- Restricted $436,250
FL radius does not
include the Deerwood
office and Downtown
sub markets
41
Exhibit B-1 through B-3
Legal Descriptions of Properties
42
Exhibit C
Form of Lease
43
Exhibit D
Exceptions to Seller Representations and Warranties
44
Exhibit E
Schedule of Agreements