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Exhibit 2.1
AMENDED AND RESTATED PURCHASE AND SALE AGREEMENT
BETWEEN
PRIME HOSPITALITY CORP.,
as Seller,
and
AMERICAN GENERAL HOSPITALITY OPERATING PARTNERSHIP, L.P.
as Purchaser
January 7, 1998
Meriden, Connecticut
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TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS....................................................1
1.1. "Acquisition Costs" ................................................1
1.2. "Adjustments" ......................................................2
1.3. "Affiliate" ........................................................2
1.4. "Agreement" ........................................................2
1.5. "Business Day" .....................................................2
1.6. "Change in Control" ................................................2
1.7. "Closing" ..........................................................2
1.8. "Closing Date" .....................................................2
1.9. "Code" .............................................................3
1.10. "Construction Costs" ...............................................3
1.11. "Contracts" ........................................................3
1.12. "Cut-Off Time" .....................................................3
1.13. "Defective Property" ...............................................3
1.14. "Deposit" ..........................................................4
1.15. "Diligence Notice" .................................................4
1.16. "Documents" ........................................................4
1.17. "Due Diligence Material" ...........................................4
1.18. "Environmental Laws" ...............................................4
1.19. "Environmental Report" .............................................4
1.20. "Escrow Agent" .....................................................4
1.21. "Escrow Agreement" .................................................4
1.22. "Estoppel Certificate" .............................................4
1.23. "Exchange Act" .....................................................5
1.24. "Excluded Intellectual Property" ...................................5
1.25. "FF&E" .............................................................5
1.26. "FF&E Leases" ......................................................5
1.27. "Financial Statements" .............................................5
1.28. "Franchise Agreement" ..............................................5
1.29. "Franchisor Comfort Letters" .......................................5
1.30. "Full Service Hotels" ..............................................6
1.31. "Group Two Sale Agreement" .........................................6
1.32. "Hazardous Substance" ..............................................6
1.33. "Hotel" ............................................................6
1.34. "Improvements" .....................................................6
1.35. "Intangible Property" ..............................................6
1.36."Leased FF&E" .......................................................7
1.37. "Letter of Credit...................................................7
1.38. "Liquidated Damages" ...............................................7
1.39. "Liquor License" ...................................................7
1.40. "Mortgagee" ........................................................7
1.41. "Offer" ............................................................7
1.42. "Operating Leases" .................................................7
1.43. "Operating Lessee" .................................................7
1.44. "Original Agreement" ...............................................7
1.45. "Other Agreements" .................................................7
1.46. "Other Revenues" ...................................................7
(i)
3
1.47. "Permitted Encumbrances" ...........................................7
1.48. "Person" .......................................................... 8
1.49. "Project Plan" .................................................... 8
1.50. "Property" ........................................................ 8
1.51. "Proposed AmeriSuites Hotel" ...................................... 8
1.52. "Prorations Settlement" ........................................... 8
1.53. "Purchase Price" .................................................. 8
1.54. "Purchaser" ....................................................... 8
1.55. "Real Property" ................................................... 8
1.56. "REIT" ............................................................ 8
1.57. "Restricted Period" ............................................... 8
1.58. "Room Revenues" ................................................... 8
1.59. "SEC Documents" ................................................... 8
1.60. "Seller" .......................................................... 9
1.61. "Seller's knowledge" .............................................. 9
1.62. "Seller Subsidiary" ............................................... 9
1.63. "Space Leases" .................................................... 9
1.64. "Subordination, Nondisturbance and Attornment Agreement" .......... 9
1.65. "Survey" .......................................................... 9
1.66. "Survival Period" ................................................. 9
1.67. "Title Commitment" ................................................ 9
1.68. "Title Company" ................................................... 9
1.69. "WARN Act" ........................................................ 9
SECTION 2. PURCHASE AND SALE............................................10
2.1. Purchase and Sale..................................................10
2.2. Deposit............................................................10
2.3. Closing............................................................10
2.4. Purchase Price.....................................................10
2.5. Tax Free Exchange..................................................11
SECTION 3. DILIGENCE; CASUALTY AND CONDEMNATION..........................11
3.1. Diligence Inspections..............................................11
3.2. Defective Property.................................................14
3.3. Title Matters......................................................15
3.4. Survey.............................................................16
3.5. Additional Termination Option......................................16
3.6. Adjournment of Closing.............................................17
SECTION 4. CONDITIONS TO PURCHASER'S OBLIGATION TO CLOSE.................17
4.1. Closing Documents..................................................17
4.2. Condition of the Property..........................................19
4.3. Title Policies.....................................................20
4.4. Opinions of Counsel................................................20
4.5. Other Approvals....................................................20
4.6. Representations....................................................20
4.7. Default Under Group Two Sale Agreement.............................20
4.8. Default under Other Agreements.....................................20
(ii)
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SECTION 5. CONDITIONS TO SELLER'S OBLIGATION TO CLOSE....................21
5.1. Purchase Price.....................................................21
5.2. Closing Documents..................................................21
5.3. Opinion of Counsel.................................................21
5.4. Other Approvals....................................................22
5.5. Representations....................................................22
5.6. Default Under Group Two Sale Agreement.............................22
5.7. Default under Other Agreements.....................................22
SECTION 6. REPRESENTATIONS OF SELLER.....................................22
6.1. Status and Authority of Seller.....................................22
6.2. Action of Seller...................................................23
6.3. No Violations of Agreements........................................23
6.4. Litigation.........................................................23
6.5. Existing Leases, Agreements, Etc...................................23
6.6. Franchise Agreement................................................24
6.7. Contracts..........................................................24
6.8. Taxes..............................................................24
6.9. Not a Foreign Person...............................................24
6.10. Hazardous Substances...............................................24
6.11. Insurance..........................................................24
6.12. FF&E...............................................................25
6.13. Employment and Union Contracts.....................................25
6.14. Adjacent Land Leases...............................................25
6.15. Trademarks.........................................................25
6.16. Compliance with Laws...............................................25
6.17. Inventory..........................................................25
6.18. Holder of Liquor License...........................................25
SECTION 7. REPRESENTATIONS OF PURCHASER..................................26
7.1. Status and Authority of Purchaser..................................27
7.2. Action of Purchaser................................................27
7.3. No Violations of Agreements........................................27
7.4. Litigation.........................................................27
7.5. No Conflicts.......................................................27
SECTION 8. COVENANTS OF SELLER AND PURCHASER.............................28
8.1. Covenants of Seller................................................28
SECTION 9. CLOSING COSTS.................................................31
9.1. Closing Costs......................................................31
SECTION 10. DEFAULT......................................................32
10.1. Default by Seller..................................................32
10.2. Default by Purchaser...............................................32
SECTION 11. LIQUOR LICENSE; FRANCHISE AGREEMENT...........................33
11.1. Liquor License.....................................................33
11.2. Franchise Agreement................................................33
11.3. License for Excluded Intellectual Property.........................34
(iii)
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SECTION 12. ADJUSTMENTS, PRORATIONS AND DEPOSITS.........................35
12.1. Matters to be Adjusted or Prorated................................35
12.2. Certiorari Proceeding.............................................37
SECTION 13. RIGHT OF FIRST REFUSAL; RADIUS RESTRICTION; AMERISUITES HOTEL
PURCHASE OPTION...........................................37
13.1. Right of First Refusal on Full Service Hotels.....................37
13.2. Radius Restriction................................................39
13.3. AmeriSuites Hotels................................................39
13.4. Multi-Property Exception..........................................43
13.5. Survival and Damages..............................................43
13.6. General Provisions................................................43
SECTION 14. MISCELLANEOUS................................................45
14.1. Agreement to Indemnify............................................45
14.2. Brokerage Commissions.............................................46
14.3. Publicity.........................................................46
14.4. Confidentiality...................................................47
14.5. Notices...........................................................47
14.6. Waivers, Etc......................................................49
14.7. Assignment; Successors and Assigns................................49
14.8. Severability......................................................50
14.9. Counterparts, Etc.................................................50
14.10. Governing Law.....................................................50
14.11. Performance on Business Days......................................51
14.12. Attorneys' Fees...................................................51
14.13. Section and Other Headings........................................51
14.14. Financing and Priority of Operating Leases........................51
14.15. Group Two Purchase and Sale Agreement.............................51
14.16. Exceptions to Liquidated Damages..................................51
EXHIBITS
Exhibit B Legal Description of the Premises
Exhibit D Franchise Agreement
Exhibit E-1 Form of Franchisor Comfort Letter in favor of Purchaser
Exhibit E-2 Form of Franchisor Comfort Letter in favor of Mortgagee
Exhibit H Form of Operating Lease
Exhibit I List of Personal Property and Equipment Subject to UCC
Financing Statements
Exhibit K List of Space Leases and Security Deposits
Exhibit L Form of Subordination, Non-Disturbance and Attornment
Agreement
Exhibit O Form of Representation Letter in favor of Accountants
Exhibit R Form of Bill of Sale and Assignment Agreement
(iv)
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Exhibit S Form of Assignment and Assumption of Space Leases
Exhibit T List of Leased FF&E
Exhibit U List of Employment Agreements and Union Contracts
Exhibit V Exclusions to Representations Regarding Compliance with
Applicable Laws
Exhibit W Form of Assignment and Assumption of Contracts
Exhibit X Environmental Report
(v)
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AMENDED AND RESTATED PURCHASE AND SALE AGREEMENT
THIS AMENDED AND RESTATED PURCHASE AND SALE AGREEMENT is made as of the
7th day of January, 1998, between PRIME HOSPITALITY CORP., a Delaware
corporation ("Seller"), as seller, and AMERICAN GENERAL HOSPITALITY OPERATING
PARTNERSHIP, L.P. ("Purchaser"), as purchaser.
W I T N E S S T H:
WHEREAS, Seller and Purchaser entered into that certain Purchase and
Sale Agreement dated as of November 20, 1997, as amended by Amendment to
Purchase and Sale Agreement dated January __, 1998 (the "Original Agreement"),
for the sale of certain properties, including the Property (as defined below);
and
WHEREAS, Seller and Purchaser desire to amend and restate the
Original Agreement in the form of eight separate contracts, one contract for
each of the Properties (as defined in the Original Agreement) (such contracts
other than this Agreement being referred to herein as the "Other Agreements");
and
WHEREAS, this Agreement shall constitute one of such eight separate
contracts which shall amend and restate the Original Agreement; and
WHEREAS, Seller is willing to sell Seller's interest in the Property
to Purchaser, 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, with respect to the Property, all of the provisions of the Original
Agreement are superseded, amended and restated in their entirety 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:
1.1. "Acquisition Costs" shall mean all costs and expenses incurred
by Seller in connection with the proposed acquisition of a Proposed AmeriSuites
Hotel, including without limitation, the purchase price under any contract of
sale for the same, any architect, engineer, attorney, accountant and other
professional fees, any due diligence expenses incurred in assessing the Proposed
AmeriSuites Hotel, title and survey costs,
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transfer taxes and pre-opening expenses of the hotel, including without
limitation, costs incurred in the reflagging of the hotel, promotional and
advertising expenses, administrative expenses, employee hiring and training
expenses, the cost of supplies, equipment and furniture purchased for the hotel,
governmental, utility or other deposits required for operation of the hotel and
similar costs.
1.2. "Adjustments" shall have the meaning given such term in Section
12.1.
1.3. "Affiliate" shall mean, with respect to any entity, any entity
that , directly or indirectly, controls or is controlled by or is under common
control with such entity. For the purposes of this definition, "control"
(including the correlative meanings of the terms "controlled by" and "under
common control with"), as used with respect to any entity, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such entity, through the ownership
of voting securities, partnership interests or other equity interests.
1.4. "Agreement" shall mean this Amended and Restated Purchase and
Sale Agreement, together with Exhibits A through X attached hereto, as it and
they may be amended from time to time as herein provided.
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. "Change in Control" shall mean (a) any merger or consolidation
of Seller with or into any Person or any sale, transfer or other conveyance,
whether direct or indirect, of all or substantially all of the beneficial
ownership of Seller, in one transaction or a series of related transactions, if,
immediately after giving effect to such transaction any Person is or becomes,
directly or indirectly, the beneficial owner of more than fifty percent (50%) of
the shares of the total voting power of Seller; or (y) any Person obtains the
power to direct or cause the direction of the management policies of Seller,
whether through voting securities or by contract or otherwise.
1.7. "Closing" shall have the meaning given such term in Section
2.3.
1.8. "Closing Date" shall have the meaning given such term in
Section 2.3.
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1.9. "Code" shall mean the Internal Revenue Code of 1986, as
amended, and the treasury regulations promulgated thereunder.
1.10. "Construction Costs" shall mean all hard and soft costs
incurred by Seller or the Seller Subsidiary, as appropriate, in connection with
the acquisition of the site and construction and related improvements for a
Proposed AmeriSuites Hotel, including without limitation (a) the cost of funds
used for such construction, whether provided by a third party lender or by
Seller (the interest on such funds being calculated in the latter event at a
rate equal to the prime rate reported in the Money Rates column or comparable
section of The Wall Street Journal (or if The Wall Street Journal is no longer
published, a different publication designated by Seller) as the rate then in
effect for corporate loans at large U.S. money center commercial banks, plus
three percent (3%) compounded monthly), (b) attorney, accountant, engineer,
architect, contractor and other professional fees; (c) any due diligence
expenses incurred in assessing a site for the Proposed AmeriSuites Hotel; (d)
title and survey costs; (e) transfer taxes; and (f) pre-opening expenses of the
hotel, including without limitation, promotional and advertising expenses,
administrative expenses, employee hiring and training expenses, the cost of
supplies, equipment and furniture ordered or purchased for the hotel,
governmental, utility or other deposits required for operation of the hotel and
similar costs.
1.11. "Contracts" shall mean, all hotel licensing agreements and
other service contracts (including without limitation the Franchise Agreement
and the Liquor License), 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 the Property, to the
extent Seller's interest therein is assignable or transferable.
1.12. "Cut-Off Time" shall mean 12:01 a.m. on the Closing Date of
this Agreement.
1.13. "Defective Property" shall mean the Property if and when such
Property (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 the Property
into substantially the same condition as existing prior to such damage.
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1.14. "Deposit" shall have the meaning given such term in Section
2.2.
1.15. "Diligence Notice" shall mean that certain letter, dated
November 26, 1997, from Purchaser to Seller, delivered pursuant to Sections 3.3
and/or 3.4 of the Original Agreement.
1.16. "Documents" shall mean, with respect to any Property, all
books, records and files relating to the leasing, maintenance, management or
operation of the Property.
1.17. "Due Diligence Material" shall have the meaning set forth in
Section 14.4.
1.18. "Environmental Laws" shall mean the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U. S. C. ss. 9601, et
seq., the Resource Conservation and Recovery Act, 42 U. S. C. ss. 6901, et seq.,
the Clean Air Act, 42 U.S.C. ss. 7401, et seq., the Clean Water Act, 33 U.S.C.
ss. 1251, et seq., the Toxic Substances Control Act, 15 U.S.C. ss. 2601, et
seq., and the Occupational Safety and Health Act, 29 U.S.C. ss. 651, et seq., as
any of the preceding have been amended prior to the date hereof, and any other
federal, state, or local law, ordinance, regulation, rule, order, decision or
permit relating to the protection of the environment or of human health from
environmental effects of Hazardous Substances and which are applicable to the
Hotel.
1.19. "Environmental Report" shall have the meaning given such term
in Section 6.10.
1.20. "Escrow Agent" shall mean Chicago Title Insurance Company.
1.21. "Escrow Agreement" shall mean that certain Escrow Deposit
Agreement dated as of even date herewith among Purchaser, Seller and Escrow
Agent.
1.22. "Estoppel Certificate" shall mean a statement made by the
franchisor under the Franchise Agreement in favor of Purchaser and/or any
Mortgagee certifying to such matters as Purchaser and/or its Mortgagee may
reasonably request, including, without limitation, the following: that an
attached copy of the Franchise Agreement is a true, correct and complete copy of
such Franchise Agreement which has not been modified except as identified; that
Seller is not in monetary or other default under the Franchise Agreement and
that no event has occurred which with the giving of notice or the passage of
time or both will become a default under the Franchise Agreement; and to any
other matters
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which franchisor is required to certify pursuant to the terms of the Franchise
Agreement; in a form reasonably acceptable to said franchisor; provided,
however, that if the Franchise Agreement (i) does not require and the estoppel
certificate is delivered without the inclusion of a statement that no event has
occurred which with the giving of notice or the passage of time or both will
become a default, or (ii) refers to any non-monetary, immaterial defaults under
the Franchise Agreement on an estoppel certificate, then in either case the
estoppel certificate shall be deemed satisfactory to fulfill Seller's
obligations under Section 4.1(h), provided Seller shall indemnify and hold
harmless Purchaser against any loss, cost, damage, claim or liability occasioned
by such immaterial default.
1.23. "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
1.24. "Excluded Intellectual Property" shall mean all trademarks,
trade names, copyrights, patents or technical processes owned or used, in whole
or in part, by Seller at the Property and also used in connection with any other
property owned, leased or managed by Seller (and shall not include such items
which are used with respect to Seller itself or Seller's Affiliates).
1.25. "FF&E" shall mean, all supplies, appliances, machinery,
devices, fixtures, appurtenances, equipment, furniture, furnishings and articles
of tangible personal property of every kind and nature whatsoever located in or
at, or used exclusively in connection with the ownership, operation or
maintenance of the Property, excluding however (a) the Leased FF&E and (b) any
such items which are owned by tenants, subtenants, concessionaires or licenses
under the Space Leases, guests, invitees, employees, agents or independent
contractors.
1.26. "FF&E Leases" shall mean the leases for all of the Leased
FF&E.
1.27. "Financial Statements" shall have the meaning given such term
in Section 3.1(b).
1.28. "Franchise Agreement" shall mean the hotel licensing agreement
applicable to the Hotel which is listed on Exhibit D, pursuant to which the
Hotel is operated under the flag identified on Exhibit D.
1.29. "Franchisor Comfort Letters" shall mean letters from the
franchisor under the Franchise Agreement in favor of the Purchaser (or such
designee of Purchaser as may take
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title to the Property, provided Purchaser advises Seller of such designee at
least thirty (30) days prior to Closing) and any Mortgagee, substantially in the
forms attached as Exhibits E-1 and E-2 or in such other form as the franchisor,
Purchaser or Purchaser's designee or Mortgagee, as applicable, shall agree,
provided that such other form substantially covers the matters set forth in said
Exhibits E-1 and E-2.
1.30. "Full Service Hotels" shall mean hotels with a restaurant and
meeting facilities and may have some or all of the following: conference
facilities, banquet space, lounge areas, gift shops, recreational facilities
(including swimming pool), and guest services (including room service, valet
service and laundry).
1.31. "Group Two Sale Agreement" shall have the meaning given that
term in Section 14.15.
1.32. "Hazardous Substance" shall mean any substance defined as a
"hazardous waste," "hazardous substance," "toxic substance," "hazardous
material," pollutant, contaminant or any word of similar import under any
Environmental Laws, including, without limitation, oil, petroleum, or any
petroleum-derived substance or waste, asbestos or asbestos-containing materials,
PCBs, explosives, radioactive materials, dioxin, or urea formaldehyde
insulation.
1.33. "Hotel" shall mean the hotel located at the Property.
1.34. "Improvements" shall mean all buildings, fixtures, walls,
fences, landscaping and other structures and improvements situated on, affixed
or appurtenant to the Real Property.
1.35. "Intangible Property" shall mean all transferable or
assignable permits, certificates of occupancy, operating permits, sign permits,
development rights and approvals, certificates, licenses, warranties and
guarantees, telephone exchange numbers identified with the Property held by
Seller and all other transferable intangible property, miscellaneous rights,
benefits and privileges of any kind or character with respect to the Property
held by Seller, including without limitation all trademarks, trade names,
copyrights, patents or technical processes, owned and used by Seller which
pertain solely to the Property and expressly excluding the Excluded Intellectual
Property and all trademarks, trade names, copyrights, patents or technical
processes used with respect to Seller itself or Seller's Affiliates, and
expressly excluding the Contracts.
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1.36. "Leased FF&E" shall have the meaning given such term in
Section 6.12.
1.37. "Letter of Credit" shall have the meaning given such term in
Section 2.2.
1.38. "Liquidated Damages" shall have the meaning given such term in
Section 10.1.
1.39. "Liquor License" shall mean a license to provide alcoholic
beverages at the Hotel issued by the state in which the Hotel is located or
other applicable governmental authority.
1.40. "Mortgagee" shall mean any and all lenders who provides
financing to Purchaser in connection with the Property.
1.41. "Offer" shall have the meaning given such term in Section 13.
1.42. "Operating Lease" shall mean the lease to be entered into
between Purchaser or its designee, as landlord, and Operating Lessee, as tenant,
on the Closing Date with respect to the Property, substantially in the form of
Exhibit H.
1.43. "Operating Lessee" shall mean a wholly-owned subsidiary of
Seller as tenant, of an Operating Lease(s); which is a single-purpose entity
with the sole purpose of leasing, managing, maintaining, operating and
performing other related functions for the Hotel.
1.44. "Original Agreement" shall have the meaning given such term in
the recitals to this Agreement.
1.45. "Other Agreements" shall have the meaning given such term in
the recitals to this Agreement.
1.46. "Other Revenues" shall have the meaning given such term in
Section 12.1.
1.47. "Permitted Encumbrances" shall mean (a) liens for taxes,
assessments and governmental charges with respect to the Property not yet due
and payable or due and payable but not yet delinquent or as to which adequate
reserves are provided therefor; (b) the Space Leases; (c) applicable zoning
regulations and ordinances provided the same do not prohibit or impair in any
material respect use of the Property as a hotel as currently operated and
constructed; (d) UCC Financing Statements securing the purchase price of FF&E
under the FF&E Leases identified on Exhibit I; provided, however, that such
liens shall be confined
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to the asset in question and the aggregate principal amount of indebtedness
secured by such liens shall not exceed the cost of acquisition or construction
of the property subject thereto; (e) such other nonmonetary encumbrances with
respect to the Property which are not objected to by Purchaser in accordance
with Section 3; and (f) such exceptions or matters, as the case may be,
otherwise accepted by Purchaser pursuant to Section 3.
1.48. "Person" shall mean any individual, corporation, general and
limited partnership, limited liability company, stock company or association,
joint venture, association, company, trust, bank, trust company, land trust,
business trust or other legal entity.
1.49. "Project Plan" shall have the meaning given such term in
Section 13.3.
1.50. "Property" shall mean all of the Seller's interest in the Real
Property, and in the FF&E, the Documents, the Improvements and the Intangible
Property related to the Real Property.
1.51. "Proposed AmeriSuites Hotel" shall have the meaning given such
term in Section 13.3.
1.52. "Prorations Settlement" shall have the meaning given such term
in Section 12.1.
1.53. "Purchase Price" shall have the meaning given such term in
Section 2.4.
1.54. "Purchaser" shall have the meaning given such term in the
preamble to this Agreement.
1.55. "Real Property" shall mean the real property described on
Exhibit B, together with all easements, rights of way, privileges, licenses and
appurtenances which Seller may now own with respect thereto.
1.56. "REIT" shall mean American General Hospitality Corporation.
1.57. "Restricted Period" shall have the meaning given such term in
Section 13.
1.58. "Room Revenues" shall have the meaning given such term in
Section 12.1.
1.59. "SEC Documents" shall mean all reports, schedules, forms,
statements and other documents filed by the
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REIT with the SEC pursuant to the Securities Act and the reporting requirements
of Section 13 of the Exchange Act.
1.60. "Seller" shall have the meaning given such term in the
preamble to this Agreement
1.61. "Seller's knowledge" shall mean the actual knowledge, after
review of the Seller's records with respect to the matter at issue, of (a) John
M. Elwood, Executive Vice President and Chief Financial Officer, (b) David
Simon, President and Chief Executive Officer, (c) Richard Szymanski, Vice
President and Corporate Controller, (d) Joseph Bernadino, Senior Vice President,
Secretary and Corporate Counsel, (e) Linda Rials, Regional Vice President, (f)
Steve Kronick, Regional Vice President, (g) Peter Marino, Regional Vice
President and (e) the present general manager of the Property. The individuals
identified in this Section 1.61 are the individuals in the Seller who are most
likely to have information concerning matters to which Seller is making a
representation or warranty in this Agreement.
1.62. "Seller Subsidiary" shall have the meaning set forth in
Section 13.1.
1.63. "Space Leases" shall mean, collectively, all of the leases,
together with any amendments or modifications thereto, for the lease of space
within the Property with Seller as lessor which are identified on Exhibit K.
1.64. "Subordination, Nondisturbance and Attornment Agreement" shall
mean if Mortgagee desires a lien superior in priority to the Operating Lease, an
agreement substantially in the form attached hereto as Exhibit L.
1.65. "Survey" shall have the meaning given such term in Section
3.4.
1.66. "Survival Period" shall have the meaning given such term in
Section 6.
1.67. "Title Commitment" shall have the meaning given such term in
Section 3.3.
1.68. "Title Company" shall mean, collectively, Chicago Title
Insurance Company and Commonwealth Land Title Insurance Company, each as a 50%
co-insurers, or such other title insurance company or companies as shall have
been reasonably approved by Purchaser and Seller.
1.69. "WARN Act" shall have the meaning given such term in Section
8.1(e).
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SECTION 2. PURCHASE AND SALE.
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 Property for the Purchase Price, subject to and in accordance with
the terms and conditions of this Agreement.
2.2. Deposit. Purchaser has deposited with the Escrow Agent the sum
of Five Hundred Thirteen Thousand Seven Hundred Fifty Dollars ($513,750)
(together with all interest accrued thereon, if any, the "Deposit") in the form
of an unconditional, irrevocable letter of credit issued by Bank One, Texas,
N.A. (the "Letter of Credit"). The Letter of Credit shall be in the amount of
Seven Million Five Hundred Thousand Dollars ($7,500,000), which amount shall
represent the Deposit as well as the deposits required pursuant to the Other
Agreements. The Deposit (and the Letter of Credit) shall be held pursuant to,
and disbursed according to, the terms of the Escrow Agreement. Notwithstanding
anything to the contrary contained in this Agreement, until the Deposit is
disbursed in accordance with the Escrow Agreement, this Agreement shall not
terminate and shall remain in full force and effect to the extent necessary for
such purpose.
2.3. Closing. The purchase and sale of the Property shall be
consummated at a closing (the "Closing") to be held at the offices of Willkie
Farr & Gallagher, One Citicorp Center, 153 East 53rd Street, New York, New York
or at such other location as Seller and Purchaser may agree, at 10:00 a.m. local
time, on January 9, 1998 or such earlier date as Seller and Purchaser may agree
upon (the "Closing Date"); provided, however, that Seller shall have the right,
by written notice to Purchaser, to adjourn the Closing Date for up to ninety
(90) days as set forth in Section 3 or to satisfy its obligations with respect
to that Property under Section 4, unless such obligations shall have been waived
by Purchaser and provided that such adjournment with respect to the Property
shall not adjourn the Closing Date with respect to any of the other properties
to be conveyed under the Other Agreements.
2.4. Purchase Price.
(a) At the Closing, Purchaser shall pay to Seller for the Property a
purchase price (the "Purchase Price") in the amount of Nine Million Four Hundred
Eighty-Five Thousand Dollars ($9,485,000), allocated Eight Million Four Hundred
Ninety Thousand Dollars ($8,490,000) to the Real Property and Improvements and
Nine Hundred Ninety-Five Thousand Dollars
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($995,000) to the personal property including, without limitation, the FF&E and
the Intangible Property.
(b) The Purchase Price (plus or minus adjustments and prorations set
forth in Section 12 hereof) shall be payable by wire transfer of immediately
available federal funds on the Closing Date to an account to be designated by
Seller prior to the Closing.
2.5. Tax Free Exchange.
(a) Purchaser shall use commercially reasonable efforts to cooperate
with Seller (which cooperation shall be at Seller's expense) in structuring one
or more Section 1031 exchanges, if so desired by Seller, provided that such
structuring shall not materially adversely affect Purchaser's rights hereunder.
(b) Purchaser shall not be required to incur any additional
liability by reason of the provisions of this Section 2.5 and Seller hereby
indemnifies Purchaser from and against any and all cost, expense, loss,
liability or damage resulting from its cooperation under this Section 2.5.
(c) Purchaser and its agents and attorneys do not guarantee any
specific tax treatment by reason of this Section 2.5.
(d) Any reasonable costs and expenses incurred by purchaser in
connection with Purchaser complying with the terms of this Section 2.5 shall be
paid by Seller.
SECTION 3. DILIGENCE; CASUALTY AND CONDEMNATION.
3.1. Diligence Inspections.
(a) Purchaser and Purchaser's authorized representatives and
employees shall have the right, at Purchaser's sole cost, risk and expense, from
time to time to enter upon and pass through the Hotel during normal business
hours and upon reasonable notice to Seller to examine and inspect all of the
then-existing books, records, surveys, plans, specifications, permits,
certificates of occupancy and other files that are relevant to the management,
ownership, operation, use, occupancy, construction and leasing of the Hotel, as
are in Seller's possession and control, and have not been otherwise provided to
Purchaser pursuant to this Agreement. Purchaser agrees and acknowledges that it
has investigated and/or received
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the opportunity to investigate the Property to its satisfaction and that it is
not relying on any materials, statements, representations or warranties of any
kind, other than as specifically set forth in this Agreement, in purchasing the
Property. To the extent that, in connection with such investigation, Purchaser,
its agents, representatives or contractors, has damaged or disturbed or does
damage or disturb 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 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 Purchaser has received pursuant to this Agreement.
Purchaser shall indemnify, defend and hold harmless Seller from and against any
and all cost, expense, liability, 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 3.1(a) shall
survive the termination of this Agreement and the Closing.
(b) Seller has delivered to Purchaser true, correct and complete
copies (or where specifically indicated original counterparts) of the following,
together with all amendments, modifications, renewals or extensions thereof:
(i) All warranties, guaranties, indemnities and claims for the
benefit of Seller relating to the Hotel or any part thereof which are still in
effect;
(ii) Financial statements prepared in accordance with
generally accepted accounting principals, balance sheets, income statements,
general ledgers and budgets for the Hotel, for the current year to date and each
of the three (3) years prior to the year of this Agreement (the "Financial
Statements"), including the itemization of annual insurance premiums for each
such year for fire, extended coverage, workers' compensation, vandalism and
malicious mischief, general liability, business interruption, rents and other
forms of insurance shown thereon; expenses incurred for water, electricity,
natural gas, sewer and other utility charges; total rents and revenues collected
from tenants and from hotel guests and other patrons of the Hotel; management
fees; maintenance, repairs and other expenses relating to the management and
operation of the Hotel; occupancy statistics for the Hotel for the current year
to date and the prior three (3) calendar years; and all capital expenditures
made
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during the aforementioned periods. To the extent that the Financial Statements
provided by Seller for the current year do not include any period up to and
including the Closing Date, Seller shall, within 25 days after the Closing Date,
provide Purchaser with monthly unaudited Financial Statements applicable to such
period inclusive of the Closing Date;
(iii) All of the most recent real estate and personal property
tax statements with respect to the Hotel and, to the extent in Seller's
possession or control or readily available without expense, notices of appraised
value for the Real Property and Improvements;
(iv) To the extent in Seller's possession or control or
readily obtainable without expense, all engineering and architectural plans,
drawings and specifications relating to the Hotel, as well as copies of any
environmental reports, boundary surveys, engineering reports and subsurface
studies affecting the Hotel. If the Hotel is purchased by Purchaser, all such
documents and information shall thereupon be and become the property of
Purchaser without payment of any additional consideration therefor; provided,
however, in the event that the Closing does not actually occur, Purchaser shall
return such information to Seller;
(v) All Contracts;
(vi) All Space Leases and all agreements for real estate
commissions, brokerage fees, finder's fees or other compensation payable by
Seller in connection therewith which would be binding on Purchaser after
Closing;
(vii) All notices received from governmental authorities in
connection with the Hotel;
(viii) A list of all current Hotel employees and their
salaries or wages and all employment benefits accompanied by copies of their
employment agreements and/or union contracts, if any;
(ix) All FF&E Leases;
(x) The Franchise Agreement and a current deficiency report
and the two most recent inspection reports of the franchiser of the Hotel,
together with any product improvement plan requirements previously submitted to
Seller by such franchiser or to which Seller has agreed;
(xi) A schedule of any litigation, arbitration or
administrative proceedings pending or threatened with respect to any Hotel;
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(xii) Any leases of adjacent land or facilities used in
connection with the operation of the Hotel; and
(xiii) Seller's 1997 capital and operating budgets and all
materials relating to its marketing program.
At such time prior to Closing as Seller has knowledge (as defined in this
Agreement) of any material inaccuracy, misstatement or omission in any of the
information furnished to Purchaser pursuant to this Section 3.1(b), Seller shall
notify Purchaser in writing of the same and shall supply Purchaser with updated
information or schedules, as required. Upon notification to Purchaser, any
representations and warranties of Seller in this Agreement related to such
information shall be deemed modified to incorporate such information. If any of
Seller's representations or warranties is modified such that any representation
or warranty is materially and adversely different than that made upon execution
of this Agreement, then Purchaser may terminate this Agreement by notice given
to Seller within ten (10) Business Days after Seller has provided such
information.
Purchaser's representatives shall have access to all financial and other
information relating to the Hotel, to the extent in Seller's possession and
control (and without requiring Seller to expend funds except a diminimus
amount), sufficient to enable the REIT to prepare audited financial statements
in conformity with Regulation S-X of the U.S. Securities and Exchange Commission
and to enable the REIT to satisfy its reporting obligations under the Exchange
Act or to prepare a registration statement, report or disclosure statement for
filing with the SEC on behalf of the REIT and/or its Affiliates. Prior to
completion of the audit of the Property currently being performed by Coopers &
Lybrand, L.L.P., Seller shall provide to Purchaser's representatives a signed
representation letter substantially in the form attached hereto as Exhibit O for
the Property.
3.2. Defective Property.
(a) If, prior to the Closing, (i) the Property suffers a casualty or
condemnation which causes the Property to become a Defective Property, (ii) the
Property is not, prior to the Closing, restored to a condition substantially the
same as the condition thereof immediately prior to such casualty or
condemnation, and (iii) Purchaser provides written notice of same to Seller no
later than the Closing Date, time being of the essence, then subject to
paragraph (b) of this Section 3.2 and the remainder of this Section 3, Purchaser
may elect at its
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option to terminate this Agreement. Promptly upon learning of the same, Seller
covenants and agrees to provide Purchaser with prompt written notice of any
casualty or condemnation affecting the Property.
(b) If Purchaser timely gives notice to Seller of any Defective
Property, and Purchaser and Seller shall, acting reasonably and in good faith,
be unable or unwilling to agree (x) that Seller shall, at its sole cost, attempt
to remedy the applicable defect prior to the Closing (in which event Seller
shall have the right to adjourn the Closing Date pursuant to the provisions of
Section 3.7 for up to ninety (90) days for such purpose), (y) that Purchaser
shall, notwithstanding such defect, acquire the Defective Property subject to a
reduction in the Purchase Price, as reasonably determined by Seller and
Purchaser, sufficient to compensate Purchaser for such defect, or (z) on the
substitution of another property owned by Seller for such Defective Property,
this Agreement shall, at Purchaser's option, terminate.
3.3. Title Matters. Purchaser has received from the Title Company a
preliminary title commitment for a fee policy having an effective date after the
date of the Original Agreement, for an ALTA (or such other form reasonably
approved by Purchaser) owner's policy of title insurance with respect to the
Property, together with complete and legible copies of all instruments and
documents referred to as exceptions to title (collectively, the "Title
Commitment"). Except as set forth in the Diligence Notice, Purchaser
acknowledges that it does not have any other objections to title exceptions
shown on the Title Commitment. Seller acknowledges and agrees that Seller shall
attempt to remedy the objections set forth in the Diligence Notice with respect
to the Property. Seller shall have the right to adjourn the Closing Date
pursuant to Section 3.6 for up to ninety (90) days for such purpose. If Seller
shall be unable to remove any such title defects to which Purchaser has objected
in accordance with this Section 3.3, Purchaser may elect (i) to terminate this
Agreement, and this Agreement shall be of no further force and effect, except as
otherwise expressly provided herein, or (ii) to consummate the transactions
contemplated hereby, notwithstanding such title defect, without any abatement or
reduction in the Purchase Price on account thereof. Purchaser shall make any
such election by written notice to Seller given on or prior to the earlier of
the Closing Date or the fifth Business Day after Seller's notice of its
inability to cure such defect, and time shall be of the essence with respect to
the giving of such notices by Purchaser. Failure of Purchaser to give such
notice shall be deemed an election by Purchaser to proceed in accordance with
clause (ii) above, and such exception shall be a Permitted Encumbrance.
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Notwithstanding the foregoing, Seller shall be obligated to take any
and all actions necessary to remove as a title exception (and shall not have the
aforesaid option to not cure) any mortgages, deeds of trust, judgments and other
liens of a monetary nature, as well as any liens or encumbrances created,
permitted or suffered by Seller from and after the date of the Diligence Notice.
3.4. Survey. Purchaser has received a survey with respect to the
Real Property (the "Survey") by a licensed surveyor in the jurisdiction in which
the Property is located, which (i) contains an accurate legal description of the
Property, (ii) shows the location, dimension and description (including
applicable recording information) of all utilities, easements, encroachments and
other physical matters affecting the Property, the number of striped parking
spaces located thereon and all applicable building set-back lines, (iii) states
whether the 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 in the Diligence
Notice, Purchaser acknowledges and agrees that it does not have any other
objections to any matter shown on the Survey. Seller acknowledges and agrees
that Seller shall attempt to remedy the objections set forth in the Diligence
Notice with respect to the Survey. Seller shall have the right to adjourn the
Closing Date for up to ninety (90) days pursuant to Section 3.6 for such
purpose. If Seller shall be unable to remove any such survey defect to which
Purchaser has objected, Purchaser may elect (i) to terminate this Agreement and
this Agreement shall terminate and be of no further force or effect except as
otherwise expressly provided herein, or (ii) to consummate the transactions
contemplated hereby, notwithstanding such defect, without any abatement or
reduction in the Purchase Price on account thereof. Purchaser shall make any
such election by written notice to Seller given on or prior to the earlier of
the Closing Date or fifth Business Day after Seller's notice of its inability to
cure such defect and time shall be of the essence with respect to the giving of
such notice by Purchaser. Failure of Purchaser to give such notice shall be
deemed an election by Purchaser to proceed in accordance with clause (ii) above
and such matter shall be a Permitted Encumbrance.
3.5. Additional Termination Option. If Purchaser shall elect,
pursuant to any provision of this Agreement or the Other Agreements to terminate
any three or more of the Other Agreements and/or this Agreement, then, together
with such notice of termination with respect to this Agreement or an Other
Agreement which taken by itself or together with any prior notices of
termination would result in three or more such terminations, Purchaser may, in
such notice, or Seller may,
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within 10 Business Days of receipt of such notice of termination by written
notice to Purchaser, terminate this Agreement and simultaneously terminate the
Other Agreements and the Group Two Sale Agreement, in which event the Deposit
shall be returned to Purchaser and the parties to this Agreement shall have no
further obligations under this Agreement, the Other Agreements and the Group Two
Sale Agreement except as expressly provided in this Agreement, the Other
Agreements or the Group Two Sale Agreement. Notwithstanding the foregoing, if
any provision in any Other Agreement expressly provides that a termination
thereof shall not be considered for purposes of determining whether three such
terminations have occurred, such provision of the Other Agreement shall be
controlling.
3.6. Adjournment of Closing.
(a) At the request of either Purchaser or Seller, the Closing shall
be adjourned for up to ninety (90) days until all objections with respect to the
Property set forth in the Diligence Notice have been cured or remedied.
(b) At Closing, if Seller is unable to deliver any Estoppel
Certificates (as required by Section 4.1(h)), Franchisor Comfort Letters (as
required by Section 4.1(j) or any necessary consents and approvals (as required
by Section 4.5)), then unless such requirement is waived by Purchaser in its
sole and absolute discretion, Seller shall have the right to adjourn the Closing
for up to ninety (90) days. If at Closing Seller is unable to deliver any
required Estoppel Certificates, Franchisor Comfort Letters or any necessary
consents and approvals for three or more Properties under any of the Other
Agreements and/or this Agreement, then unless the parties shall otherwise
mutually agree (or unless such requirement is waived by Purchaser in its sole
and absolute discretion), the Closing shall be adjourned with respect to the
Property and all of the other Properties to be conveyed under the Other
Agreements until such Estoppel Certificates, Franchisor Comfort Letters or
consents are obtained provided such adjournment shall not be longer than ninety
(90) days.
SECTION 4. CONDITIONS TO PURCHASER'S OBLIGATION TO CLOSE.
The obligation of Purchaser to acquire the Property on the Closing Date shall be
subject to the satisfaction of the following conditions precedent on and as of
the Closing Date, any or all of which may be waived by Purchaser in its sole and
absolute discretion:
4.1. Closing Documents. Seller shall have delivered to Purchaser:
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(a) A good and sufficient special warranty deed in form as shall be
customary in the jurisdiction in which the Property is located, in proper
statutory form for recording, duly executed and acknowledged by Seller,
conveying fee simple title to the Property, free from all liens and encumbrances
other than the Permitted Encumbrances;
(b) A bill of sale and assignment agreement, substantially in the
form attached hereto as Exhibit R, 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 Documents and the Intangible Property with respect to the Property;
(c) An assignment and assumption agreement, substantially in the
form attached hereto as Exhibit S, duly executed and acknowledged by Seller,
with respect to all of Seller's right, title and interest in, to and under the
Space Leases with respect to the Property;
(d) Duly executed transfer tax forms, as required by applicable law;
(e) To the extent the same are in Seller's possession, fully
executed copies of all Contracts pertaining to the Property;
(f) A duly executed original counterpart of the Operating Lease for
the Hotel and all other documents and sums required to be delivered by Seller
pursuant thereto (including without limitation any Subordination, Nondisturbance
and Attornment Agreement, if any, between Seller, as tenant, and any Mortgagee);
(g) If necessary, an assignment and assumption agreement,
substantially in the form attached hereto as Exhibit W, duly executed and
acknowledged by Seller and Operating Lessee, with respect to all of Seller's
right, title and interest in, to and under the Contracts;
(h) Duly executed Estoppel Certificates from the franchisor under
the Franchise Agreement; provided that any such Estoppel Certificate shall be
provided to Purchaser prior to Closing promptly following receipt by Seller of
the same;
(i) Certificates of title for any motor vehicles constituting a
portion of the FF&E;
(j) Franchisor Comfort Letters;
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(k) Subject to the provisions of Section 11.1, copies of the Liquor
License for the Hotel;
(l) All original Documents, to the extent in Seller's possession and
control, including without limitation all keys, access cards and access
combinations for the Hotel;
(m) Certified copies of all charter documents, applicable corporate
resolutions and certificates of incumbency with respect to Seller;
(n) 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
(o) Such other conveyance documents, certificates, deeds,
affidavits, and other instruments as Purchaser or the Title Company may
reasonably require to omit standard exceptions to title and to effectuate the
transactions contemplated hereunder, including without limitation GAP
undertakings, or as customarily given by sellers in connection with real or
personal property with respect to the state in which the Property is located.
4.2. Condition of the Property.
(a) The Property shall, except as otherwise provided in Section 3.2,
be in substantially the same physical condition (including without limitation,
with respect to the environmental condition of the Property) as on the date of
this Agreement, 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 Property
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 Property
which would render the Property a Defective Property; and
(d) All material licenses, permits and other authorizations
necessary for the current use, occupancy and operation of the Property shall be
in full force and effect in all material respects, including without limitation
the Liquor License and Franchise Agreement.
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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 a title
insurance policy to Purchaser, subject only to the Permitted Encumbrances, in
accordance with Section 3.3.
4.4. Opinions of Counsel. Purchaser shall have received a written
opinion from counsel to Seller regarding the organization and authority of
Seller, the due execution and delivery of this Agreement and the Operating
Lease, having the customary and reasonable assumptions and qualifications, and
such other matters with respect to the transactions contemplated by this
Agreement or the Operating Lease as the Purchaser may reasonably require. Seller
and Purchaser shall agree upon local counsel for the jurisdiction in which the
Property is located to provide an appropriate jurisdiction-specific opinion, the
cost of which local counsel will be shared equally by Seller and Purchaser. An
opinion from in-house counsel to Seller shall satisfy this Section 4.4 with
respect to all matters which customarily do not require a local counsel opinion.
4.5. Other Approvals. Seller shall have obtained and delivered to
Purchaser, in form and substance reasonably satisfactory to Seller and
Purchaser, (a) all required governmental approvals and waivers as may be
necessary or appropriate to consummate the transactions contemplated by this
Agreement; (b) the consent of the franchisor, if required; (c) the consent of
the ground lessor under that certain Lease dated June 29, 1973 (as amended, the
"Armonk Lease") for premises located in Armonk, New York to the transactions
contemplated by the Group Two Sale Agreement; and (d) a modification of such
Armonk Lease to extend the initial term thereof such that at the closing of such
property there shall be at least thirty (30) years of the initial term
remaining.
4.6. Representations. All representations and warranties made herein
by Seller shall be true and correct in all material respects.
4.7. Default Under Group Two Sale Agreement. Seller shall not be in
default, or have committed an act or failed to perform an act which, with the
giving of notice, the passage of time or both, will become a default under, the
Group Two Sale Agreement.
4.8. Default under Other Agreements. Seller shall not be in default,
or have committed an act or failed to perform an act which, with the giving of
notice, the passage of time or both, will become a default under, any of the
Other Agreements.
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In the event any condition to Purchaser's obligation to close set
forth in this Section 4 is not satisfied with respect to the Property by the
Closing Date (as adjourned, if applicable), Purchaser shall not be obligated to
close and, at Purchaser's option, this Agreement shall terminate; provided,
however, such failure of a condition shall not be a default under this
Agreement.
SECTION 5. CONDITIONS TO SELLER'S OBLIGATION TO CLOSE.
The obligation of Seller to convey the Property on the Closing Date to Purchaser
is subject to the satisfaction of the following conditions precedent on and as
of the Closing Date, any or all of which may be waived by Seller in its sole and
absolute discretion:
5.1. Purchase Price. Purchaser shall deliver to Seller the Purchase
Price, pursuant to Section 2.4.
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
(c) Such other conveyance documents, certificates, deeds, affidavits
and other instruments as Seller or the Title Company may reasonably require to
effectuate the transactions contemplated hereunder.
5.3. Opinion of Counsel. Seller shall have received a written
opinion from counsel to Purchaser regarding the organization and authority of
Purchaser, the due execution and delivery of this Agreement and the Operating
Lease, having the customary and reasonable assumptions and qualifications, and
such other matters with respect to the transactions contemplated by this
Agreement or the Operating Lease as Seller may reasonably require. As set forth
in Section 4.3, Seller and Purchaser shall agree upon local counsel for the
jurisdiction in which the Property is located to provide an appropriate
jurisdiction-specific opinion, the cost of which local counsel will be shared
equally by Seller and Purchaser. An opinion from in-house counsel to Purchaser
shall satisfy this Section 5.3 with respect to all matters which customarily do
not require a local counsel opinion.
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5.4. Other Approvals. Seller and Purchaser shall have received, in
form and substance reasonably satisfactory to Seller and Purchaser, (a) all
required governmental approvals and waivers as may be necessary or appropriate
to consummate the transactions contemplated by this Agreement, other than as
expressly set forth in Section 11.1; (b) all consents of franchisors, if
required; (c) the consent of the ground lessor under the Armonk Lease to the
transactions contemplated by the Group Two Sale Agreement; and (d) a
modification of such Armonk Lease to extend the initial term thereof such that
at the closing of such property there shall be at least thirty (30) years of the
initial term remaining.
5.5. Representations. All representations and warranties made herein
by Purchaser shall be true and correct in all material respects.
5.6. Default Under Group Two Sale Agreement. Purchaser shall not be
in default, or have committed an act or failed to perform an act which, with the
giving of notice, the passage of time or both, will become a default under, the
Group Two Sale Agreement.
5.7. Default under Other Agreements. Purchaser shall not be in
default, or have committed an act or failed to perform an act which, with the
giving of notice, the passage of time or both, will become a default under, any
of the Other Agreements.
In the event any condition to Seller's obligation to close set forth
in this Section 5 is not satisfied, Seller shall not be obligated to close and,
at Seller's option, this Agreement shall terminate, and except with respect to
the failure of the conditions set forth in Section 5.1, Section 5.6 and Section
5.7 (which shall be a default under this Agreement), such failure of a condition
shall not be a default under this Agreement.
SECTION 6. REPRESENTATIONS OF SELLER.
To induce Purchaser to enter into this Agreement, Seller represents 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 to transact business in each jurisdiction in
which the nature of the business conducted by it requires such qualification,
except
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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 on or prior
to the Closing Date, such document shall constitute the valid and binding
obligation and agreement of Seller, as the case may be, enforceable against
Seller 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 or the Operating Lease by Seller, 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 the
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 is
bound.
6.4. Litigation. Seller has not 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 Operating 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 Property, (c)
will result in or subject the Property to a material liability, or (d) involves
condemnation or eminent domain proceedings against any part of the Property.
6.5. Existing Leases, Agreements, Etc. Other than any agreements
provided to Purchaser not later than December 15, 1997, there are no other
material agreements for the use or occupancy of the Property which will be
binding on Purchaser subsequent to the Closing Date, which Purchaser cannot
terminate. The list of Space Leases attached hereto as Exhibit K is a current,
complete and accurate listing of all leases affecting the Property as of the
date hereof. The copies of the Space Leases provided or made available to
Purchaser not later than December 15, 1997 are full and complete copies of said
Space Leases and, to Seller's knowledge, are valid, in full force and effect and
no party has breached any material condition or provision thereof. No tenant
under any Lease has prepaid rent or additional rent or any other items under the
Space Leases for
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more than one (1) month in advance and there are no security deposits held by
Seller under any of the Space Leases other than as set forth on Exhibit K.
6.6. Franchise Agreement. The Franchise Agreement listed on Exhibit
D is the sole franchise agreement affecting the Property as of the date hereof.
The copy of the Franchise Agreement provided or made available to Purchaser not
later than December 1, 1997 is a true and complete copy of said Franchise
Agreement and, to Seller's knowledge, is valid, in full force and effect and no
party has breached any material condition or provision thereof.
6.7. Contracts. The copies of the Contracts provided or made
available to Purchaser not later than December 1, 1997 are true and complete
copies of said Contracts and, to Seller's knowledge, are valid, in full force
and effect and no party has breached any material condition or provision
thereof.
6.8. Taxes. To Seller's knowledge, other than the amounts disclosed
by tax bills, no taxes or special assessments of any kind (special, bond or
otherwise) are or have been levied with respect to the Property, 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.
6.10. Hazardous Substances. To the best of Sellers' knowledge, and
except for the conditions specifically described in the environmental report
listed on Exhibit X (the "Environmental Report"), (i) no Hazardous Substances
are located on or have been released or disposed of in, on, under or from the
Hotel so as to impose liability or require remediation under any Environmental
Laws and (ii) no liability under or violation of any Environmental Laws or
condition that could give rise to such liability or violation exists with
respect to the Hotel, including without limitation liabilities relating to
offsite disposal of waste in connection with the Hotel. To the best of Seller's
knowledge, there are no pending or threatened claims by any person arising out
of any alleged violation of Environmental Laws or any release or threatened
release of Hazardous Substances arising out of the ownership or operation of the
Hotel.
6.11. Insurance. Seller has not received any written notice from any
insurance carrier of defects or inadequacies in the Property which, if
uncorrected, would result in a termination of insurance coverage or a material
increase in the premiums charged therefor.
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6.12. FF&E. All FF&E is owned by Seller (other than such items
listed on Exhibit T (the "Leased FF&E") and any such items which are owned by
tenants, subtenants, concessionaires or licensees under the Space Leases,
guests, invitees, employees, agents or independent contractors).
6.13. Employment and Union Contracts. Exhibit U to this Agreement is
a true and complete list of all employment agreements and union contracts or
other labor agreements with respect to the Property.
6.14. Adjacent Land Leases. Seller does not lease any land or
facilities adjacent to the Property.
6.15. Trademarks. Seller has received no written notice that the use
of any trademark or tradename is in violation of any trademark or tradename
owned by any other person or entity.
6.16. Compliance with Laws. To Seller's knowledge, the Property is
in compliance with all laws of governmental authorities which are applicable to
the Property or the use or operation of the Property, except as set forth on
Exhibit V.
6.17. Inventory. At Closing, the Property shall contain sufficient
supplies and personalty to operate the Property in a manner consistent with the
operation of the Property immediately prior to the Closing by Seller.
6.18. Holder of Liquor License. The holder of the Liquor License for
the Property is Prime Hospitality Corp., a Delaware corporation.
The representations 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; provided, however, that, Seller shall have the right, from
time to time prior to the Closing Date, to modify the representations as
necessary to conform to factual changes by notice to Purchaser. If a Seller
representation or warranty thereby is modified to an extent that the
representation or warranty is materially and adversely different than that made
upon execution of this Agreement, then Purchaser may terminate this Agreement,
provided notice of such termination is given to Seller within ten (10) Business
Days after Seller has provided notice of the modification.
The representations made in Section 6.1 and Section 6.2 shall survive the
Closing indefinitely. The representations made in Section 6.3 through and
including Section 6.18 shall survive Closing for a period of one (1) year (the
"Survival Period") and,
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upon termination of the Survival Period, shall terminate absolutely will full
and final discharge of liability except to the extent that Purchaser shall have
given to Seller written notice of a breach thereof within the Survival Period
(but in any event promptly after learning of such breach) specifying in
sufficient detail the facts constituting such alleged breach and the loss then
reasonably ascertainable as a consequence thereof, and an opportunity to cure
such breach within a reasonable period of time after Purchaser having learned of
such breach. Notwithstanding any provision to the contrary set forth in this
Agreement, Purchaser shall have no claim against Seller and Seller shall have no
liability to Purchaser, in the event of a breach of any of Seller's
representations and warranties and statements in this Agreement in a respect
which is not material and which does not result in any loss or damage to
Purchaser.
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 Property or
matters affecting the Property, whether made by Seller, on Seller's behalf or
otherwise, including, without limitation, the physical condition of the
Property, title to or the boundaries of the Real 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 Property or the
market and physical environments in which they are located. Purchaser
acknowledges (i) that Purchaser has made and is relying upon its own
investigation or that of third parties with respect to the physical,
environmental, economic and legal condition of the 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. 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 Property in its "as is" condition on the Closing
Date.
SECTION 7. REPRESENTATIONS OF PURCHASER.
To induce Seller to enter into this Agreement, Purchaser represents to Seller as
follows:
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7.1. Status and Authority of Purchaser. Purchaser is a limited
partnership duly organized, validly existing and in trust good standing under
the laws of the State of Delaware 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
trust or unincorporated business association in each jurisdiction in which the
nature of the business conducted by it requires such qualification.
7.2. Action of Purchaser. Purchaser has taken all necessary action
to authorize the execution, delivery and performance of its obligations under
this Agreement and the Operating 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 or the Operating Lease by Purchaser, nor
compliance with the terms and provisions hereof or of the Operating Lease, 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. Purchaser has not received any written notice of,
and, to Purchaser's knowledge, no action or proceeding is pending or threatened
and no investigation looking toward such an action or proceeding has begun which
questions the validity of this Agreement or the Operating Lease or any action
taken or to be taken pursuant hereto or pursuant to the Operating Lease.
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 limited partnership agreement, as the case may be, of the
Purchaser; any indenture, mortgage, deed of trust, loan agreement, note, lease
or other agreement or instrument to which Purchaser is a party or to which it,
any of its properties
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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 Purchaser.
The representations 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; provided, however, that, Purchaser shall
have the right, from time to time prior to the Closing Date, to modify the
representations as necessary to conform to factual changes by notice to Seller.
If a Purchaser representation or warranty thereby is modified to an extent that
the representation or warranty is materially and adversely different than that
made upon execution of this Agreement, then Seller may terminate this Agreement,
provided notice of such termination is given to Purchaser within ten (10)
Business Days after Seller has provided notice of the modification.
The representations made in Section 7.1 and Section 7.2 shall
survive the Closing indefinitely. The representations made in Section 7.3
through and including Section 7.5 shall survive Closing for the Survival Period
and, upon termination of the Survival Period, shall terminate absolutely will
full and final discharge of liability except to the extent that Seller shall
have given to Purchaser written notice of a breach thereof within the Survival
Period (but in any event promptly after learning of such breach) specifying in
sufficient detail the facts constituting such alleged breach and the loss then
reasonably ascertainable as a consequence thereof, and an opportunity to cure
such breach within a reasonable period of time after Seller having learned of
such breach. Notwithstanding any provision to the contrary set forth in this
Agreement, Seller shall have no claim against Purchaser and Purchaser shall have
no liability to Seller, in the event of a breach of any of Purchaser's
representations and warranties and statements in this Agreement in a respect
which is not material and which does not result in any loss or damage to Seller.
SECTION 8. COVENANTS OF SELLER AND PURCHASER.
8.1. Covenants of Seller. Seller hereby covenants with Purchaser,
which covenants shall be performed at Seller's sole cost and expense unless
otherwise set forth in this Agreement, that commencing upon the date of the
Original Agreement and continuing until the Closing Date (or as otherwise set
forth below):
(a) Upon learning of any material change in any condition of the
Property 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,
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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 the Property, under
the Franchise Agreement in a good and businesslike fashion consistent with its
past practices (which Seller believes to be in compliance with the Franchise
Agreement) and to cause the Property 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 Property 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. Without limiting the foregoing, Seller shall provide to Purchaser a
copy of each monthly profit and loss statement for the Property;
(d) Seller shall not, without the Purchaser's written consent, enter
into any modifications, renewals or extensions of any of the Space Leases or the
Franchise Agreement, other than those modifications, renewals or extensions
required by the terms of the applicable document, or enter into any other
leases, agreements, mortgages or other loan documents or other commitments
relating to the Property or the operation of the Hotel other than in the normal
course of business and which are by their terms terminable without penalty upon
not more than thirty (30) days notice;
(e) From and after the Closing Date, to employ substantially all of
the present employees of the Hotel, in at least the number and positions as are
required in order to avoid triggering any notification requirements under the
Worker Adjustment Retraining and Notification Act ("WARN Act"), without limiting
Seller's ability to discharge any or all of such employees thereafter (provided,
however, that no such discharge will trigger a WARN Act notification or
otherwise impose any obligations on Seller). Any employees of Seller working at
the Hotel as of the Closing Date shall remain the employees of Seller after the
Closing Date. Seller hereby agrees to indemnify and hold harmless Purchaser from
and against any and all liability, cost, damages and expenses arising from or
relating to the failure of Seller to comply with this Section 8.1(e). The
provisions of this Section 8.1(e) shall survive the Closing;
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(f) To operate, manage, and maintain the Hotel consistent with
Seller's prior practice and as a reasonable and prudent operator of like-kind
hotels in the same competitive market would operate, manage, and maintain the
Hotel, including, without limitation, (i) using reasonable efforts to keep
available the services of its present employees at the Improvements and to
preserve its relations with guests, suppliers and other parties doing business
with Seller with respect to the Hotel, (ii) accepting booking contracts for the
use of the Hotel facilities on terms not less favorable than the terms typically
arranged by Seller as of the date of this Agreement and in accordance with
Seller's prior practice, (iii) maintaining the current level of advertising and
other promotional activities for Hotel facilities, (iv) maintaining its books of
accounts and records in the usual, regular and ordinary manner, in accordance
with generally accepted accounting principles applied on a basis consistent with
the basis used in keeping its books in prior years; (v) continuing to operate
the Property under the Liquor License and Franchise Agreement in a fashion
consistent with its past practice (which Seller believes to be in compliance
with such Liquor License and Franchise Agreement); (vi) maintaining supplies and
personalty consistent with the prior operations of Seller; (vii) expending such
amounts for advertising and promotions as are scheduled to be expended prior to
Closing pursuant to Seller's 1997 operating budget for the Hotel; and (viii)
expending such amounts for capital improvements as are scheduled to be expended
prior to Closing pursuant to Seller's 1997 capital budget for the Hotel,
provided that if any such scheduled capital improvement is not completed prior
to Closing, Seller shall complete such improvements at its sole cost and expense
in a manner consistent with Seller's past operation of the Hotel and this
subparagraph (viii) shall survive Closing;
(g) To keep and maintain the Hotel in a state of repair and
condition consistent with the requirements of clause (f) above;
(h) To keep, observe, and perform all its obligations in all
material respects under the Space Leases, the Franchise Agreement, the Liquor
License and the Contracts for the Hotel, and all other applicable contractual
arrangements relating to the Hotel consistent with Seller's past practice;
(i) To not enter into any new agreements of the nature of Contracts
or Space Leases or any amendments, modifications, renewals or extensions of any
existing Contracts or Space Leases, without Purchaser's prior written consent,
except that the Seller shall not be required to obtain Purchaser's consent to
any new agreement or any renewal or extension of existing agreements which may
be terminated on not more than thirty (30) days prior notice without cost or
expense. Any such new agreement or
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renewal or extension of existing agreements to which Purchaser's consent was not
obtained, whether or not such consent is required under this Section 8.1(i)
shall subject the applicable agreement to Purchaser's review under Section 3;
(j) To not cause or permit the removal of FF&E from the Hotel except
for the purpose of discarding and replacing, where needed or appropriate, worn
items, and timely make all repairs, maintenance, and replacements to keep the
Hotel and all FF&E in good operating condition;
(k) To comply with all federal, state, and municipal laws,
ordinances, regulations, and orders relating to the Hotel;
(l) To not sell or assign or enter into any agreement to sell or
assign, or to create or permit to exist any lien or encumbrance (other than a
Permitted Exception) on, the Hotel or any portion thereof;
(m) To not cancel any existing booking contracts for the use of
Hotel facilities or new booking contracts obtained by Seller after the date of
this Agreement except as may be consistent with Seller's past practices and the
practices of a reasonable and prudent operator of a like-kind hotels in the same
competitive market, and to continue to book contracts and reservations
consistent with prior practices;
(n) To pay or cause to be paid all taxes, assessments and other
impositions levied or assessed on the Hotel or any part thereof on or before the
date on which the payment thereof is due;
(o) To use reasonable, good faith efforts to obtain the Estoppel
Certificates, the Franchisor Comfort Letters, and any consents and approvals
necessary for the transaction contemplated by this Agreement at least one week
prior to the Closing; to continue to use reasonable, good faith efforts to
obtain such items thereafter; to promptly inform Purchaser of any issues or
problems which Seller foresees in obtaining any such items; and to deliver each
such item to Purchaser promptly after receipt thereof; and
(p) To keep the existing insurance coverage for the Hotel in full
force and effect.
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, inspection
fees, and
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the costs and expenses of preparing engineering and environment reports, market
studies and appraisals, whether or not the transactions contemplated hereby are
consummated. The cost of the Survey, Title Commitment (and the policies and
endorsements issued pursuant thereto), all state and local sales, transfer,
excise, value-added or other similar taxes, all recording and filing fees that
may be imposed by reason of the sale, transfer, assignment and delivery of the
Property shall be shared equally by Seller and Purchaser. As between Purchaser
and Seller, the cost of seeking consents including, without limitation, any
transfer or assumption fees incurred in connection therewith, Franchisor Comfort
Letters and Estoppel Certificates shall be borne solely by Seller.
SECTION 10. DEFAULT.
10.1. Default by Seller. If Seller shall have made any
representation herein which shall be untrue or misleading in any material
respect (subject to the right to cure in Section 6), or if 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, as its sole and exclusive
remedy, may terminate this Agreement, in which event the Deposit shall be
returned to Purchaser and Seller shall be obligated to pay Purchaser Five
Hundred Thirteen Thousand Seven Hundred Fifty Dollars ($513,750) as liquidated
damages and not as a penalty (the "Liquidated Damages"). Purchaser and Seller
acknowledge that the damages which may be incurred by Purchaser in the event of
Seller's default are difficult to quantify as of the date of this Agreement; the
Liquidated Damages represent the parties reasonable estimate of Purchaser's
probable future damages in the event of Seller's default and the Liquidated
Damages represent fair and reasonable compensation to Purchaser in the event of
Seller's default. Except with respect to the Liquidated Damages, Purchaser
hereby waives any and all rights it may have to sue Seller for money damages in
connection with this Agreement.
10.2. Default by Purchaser. If Purchaser shall have made any
representation herein which shall be untrue or misleading in any material
respect (subject to the right to cure in Section 7), or if 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, whereupon Purchaser shall be obligated to pay
Seller an amount equal to the Liquidated Damages, as liquidated damages and not
as a penalty. The Deposit shall be retained by Seller and offset against the
Liquidated Damages. Purchaser and Seller acknowledge that the damages which may
be incurred by Seller in the event of
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Purchaser's default are difficult to quantify as of the date of this Agreement;
the Liquidated Damages represent the parties reasonable estimate of Seller's
probable future damages in the event of Purchaser's default and the Liquidated
Damages represent fair and reasonable compensation to Seller in the event of
Purchaser's default.
SECTION 11. LIQUOR LICENSE; FRANCHISE AGREEMENT
11.1. Liquor License. Seller currently holds the Liquor License for
the Hotel and if, in compliance with all applicable laws, statutes, rules,
regulations and ordinances, Seller may continue to hold such Liquor License
following the Closing, Seller shall maintain the Liquor License and Purchaser
shall not interfere with the maintenance of the Liquor License. If Seller may
not continue to hold a Liquor License for the Property following the Closing or
if the existing Liquor License needs to be revised to reflect the Purchaser as
owner of the Property, then Seller shall apply for a new or modified Liquor
License or, if advised by local counsel to be required under local laws,
regulations or orders, Purchaser or its designee shall apply for a liquor
license for the Hotel, at Seller's sole cost and expense, promptly after
Closing. Seller and Purchaser shall cooperate to obtain a liquor license for the
Hotel or modifications to the existing Liquor License or to maintain the
existing Liquor License in effect. Until such time as such new or modified
liquor license is obtained, Seller shall take all steps reasonably necessary to
enable the current Liquor License to be used by the Hotel and to permit the
uninterrupted sale and service of alcoholic beverages at the Hotel. The
provisions of this Section 11.1 shall survive the Closing.
11.2. Franchise Agreement.
(a) Purchaser may instruct Seller to terminate the Franchise
Agreement with such termination to be effective as of the Closing Date, in
Purchaser's sole discretion, provided that in such event Purchaser shall be
solely responsible for the payment of liquidated damages, termination fees,
costs or other liabilities arising from or related to the termination of such
Franchise Agreement and shall indemnify and hold harmless Seller therefrom. The
preceding provisions of this Section 11.2 shall survive the Closing or earlier
termination of this Agreement.
(b) As between Seller and Purchaser, Seller shall be solely
responsible for obtaining, at its sole cost and expense, the Franchisor Comfort
Letters and the consent of the franchisor, if required pursuant to the Franchise
Agreement, to the transactions described in this Agreement; provided that the
failure of Seller to obtain such Franchisor Comfort Letters or consents of
franchisors, after using commercially reasonable,
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good faith efforts to do so in accordance with Section 8.1(o), shall not be a
default under this Agreement; provided further that Seller's obligation and
liability to pay administrative fees imposed by the franchisor for such
Franchisor Comfort Letters, such consents or otherwise in connection with the
transaction contemplated by this Purchase Agreement shall be limited to the
first One Hundred Thousand Dollars ($100,000) of the collective administrative
fees required by the franchisor and by any franchisor in connection with the
transactions contemplated by the Other Agreements and one-half of all amounts in
excess thereof, and Purchaser hereby covenants and agrees to pay the other
one-half of such administrative fees in excess of One Hundred Thousand Dollars
($100,000). In no event shall the requirement of payment of administrative fees
constitute a reason for Purchaser to fail to close on the Property.
(c) In the event Purchaser directs Seller to terminate the Franchise
Agreement pursuant to this Section 11.2 and intends to cause Operating Lessee,
as lessee, to enter into a new franchise agreement at the Closing and has a
binding commitment from the new franchisor for the same (subject to reasonable
conditions), Seller and Purchaser hereby agree to negotiate in good faith to an
adjustment of the rent payable pursuant to the Operating Lease, based on the
terms and conditions of the new franchise agreement and its anticipated effect
on Gross Revenues (as defined in the Operating Lease).
(d) Notwithstanding anything to the contrary contained herein
(including without limitation subparagraph (b) above), if in connection with the
transaction contemplated by this Agreement or the obtaining of the Franchisor
Comfort Letters or franchisor consents, the franchisor requires any capital
improvement to be made at the Property (hereinafter, a "PIP"), Purchaser shall
be solely responsible for the cost and expense of the same. In no event shall
the requirement of a PIP constitute a reason for Purchaser to fail to close on
the Property. In lieu of agreeing to any PIP requirement, Purchaser may direct
Seller to terminate the Franchise Agreement as provided in Section 11.2(a). If
any such PIP requirement is imposed solely as a result of Purchaser's request
for a Franchisor Comfort Letter, Purchaser may waive the delivery of such
Franchisor Comfort Letter as a condition to Closing.
11.3. License for Excluded Intellectual Property. At the Closing, as
part of the bill of sale and assignment agreement, Seller shall grant to
Purchaser a nonexclusive license to use the Excluded Intellectual Property
pursuant to the following terms and conditions:
(a) the license shall be effective from the Closing Date until the
earlier of (i) the tenth anniversary of the
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Closing Date; or (ii) a termination pursuant to the provisions of Section
11.3(d) below;
(b) upon the expiration of the license pursuant to clause (i) of
subparagraph (a) above, the license shall automatically terminate, without the
need of notice from Seller, and Purchaser shall have no further right to use the
Excluded Intellectual Property in connection with the Property;
(c) Purchaser covenants that it shall not and shall not permit the
license for the Excluded Intellectual Property to be used in any manner which
could impair the value of the Excluded Intellectual Property or the reputation
of Seller or Seller's Affiliates or of any of the properties owned by Seller
sharing the Excluded Intellectual Property with the Property; Purchaser shall
indemnify and hold harmless Seller from and against any losses, costs or damages
incurred by Seller as a result of Purchaser's failure to perform the covenant
set forth in this subparagraph (c); and
(d) in the event Purchaser fails to perform the covenant set forth
in subparagraph (c) above, Seller shall have the right to terminate the license
upon written notice to Purchaser, and Purchaser shall have no further right to
use the Excluded Intellectual Property.
The provisions of this Section 11.3 shall survive the Closing.
SECTION 12. ADJUSTMENTS, PRORATIONS AND DEPOSITS.
12.1. Matters to be Adjusted or Prorated. To the extent then capable
of being calculated or estimated, on the Closing Date (the "Prorations
Settlement"), and otherwise within 30 days after the Closing Date, the following
items shall be apportioned as of the Cut-Off Time with respect to the Property
and appropriate payments made as described in this Agreement in respect thereof
(collectively, the "Adjustments"):
(a) Real estate and ad valorem taxes and assessments based on the
rates and assessed valuation applicable in the current fiscal tax year, or if
not established for such year, the latest fiscal year for which assessed. (In
the latter case, an appropriate correction in the adjustment shall be made
within one year after the Closing Date when the current year's assessments are
established.)
(b) All rates, rents, charges, and payments for sewer, water, gas,
electricity, telephone and other utility services for which final bills have not
been rendered as of the Closing Date. Seller shall exercise reasonable efforts
to cause meters to be read as of the Closing Date.
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(c) Compensation for all employees, including all accrued wages,
fringe benefits, including pension and similar benefits, vacation and sick pay,
unemployment compensation, social security and other payroll taxes, and
disability and workers' compensation insurance.
(d) Any taxes accrued and/or payable to the various local
governments by any business entity operating the Hotel and its related
businesses, including business and occupation taxes, retail sales taxes, gross
receipts taxes, and other special lodging or hotel taxes, but excluding income
taxes and franchise taxes of Seller.
(e) Rents collected under the Space Leases, including percentage
rents (if any) based on the results from the most recently completed period (and
adjusting payments shall be made as soon as reasonably practical after the
Closing Date when final results are reported).
(f) All revenues from the rental of Hotel rooms (exclusive of Other
Revenues) ("Room Revenues") for the night that includes 12:01 a.m. on the
Closing Date, which shall be divided equally between Purchaser and Seller.
(g) All revenues earned from operation of the Hotel other than Room
Revenues, including without limitation, revenues from the sale of food,
beverages, rental of meeting and banquet rooms, telephone sales, vending
machines, valet and parking services, revenues from any "mini-bars" located in
the Hotel rooms and all other revenues (the "Other Revenues"), provided that
Other Revenues arising from the sale of food and beverages in restaurants and
bars which do not remain open the entire Cut-Off Night shall be apportioned as
of the last hour at which the applicable restaurant or bar is open.
(h) All sales, excise, hotel occupancy or other similar taxes
(excluding in any event income, franchise and real property taxes) collected
with respect to the Room Revenues and Other Revenues.
(i) All costs and expenses of operating the Hotel, including without
limitation, amounts paid or payable under the Contracts, Franchise Agreement,
and FF&E Leases which are reasonably capable of such proration.
(j) Seller's active guest ledger, cash drawers and house account,
which shall be purchased at par.
Seller shall pay all accounts payable at the Hotel relating to services or
goods provided prior to Closing.
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With respect to subparagraph (b) through (j), it is the intent of Seller
and Purchaser that all income and expenses relating to the Property shall be
prorated as provided in this Section 12 such that Seller shall have the benefit
of all income and be responsible for all expenses and liabilities incurred in
connection with the Property fairly allocable to the period prior to the Closing
Date and that Operating Lessee under the Operating Lease at the Property shall
have the benefit of all income and be responsible for all expenses and
liabilities of the Property relating to the period from and after the Closing
Date. With respect to the prorations and Adjustments set forth in subparagraph
(a) of this Section 12.1, the Purchase Price shall be adjusted based on the
prorations between Seller and Purchaser with respect to such subparagraph.
12.2. Certiorari Proceeding. Any refunds with respect to certiorari
proceedings for tax years prior to and including the current tax year shall
belong to Seller and Seller may continue with and control such proceedings,
provided that if any portion of a refund is received by Seller which relates to
any period after the Closing, such portion shall be delivered to Purchaser.
After the Review Period, Seller shall keep Purchaser advised of the status of
any certiori proceedings which relate to the current tax year or could affect
the taxes due for a subsequent tax year and Purchaser shall have the right to
participate in and approve tax settlements of such certiori proceedings which
relate to the current tax year, which settlements shall not be effective without
Purchaser's prior written approval.
SECTION 13. RIGHT OF FIRST REFUSAL; RADIUS RESTRICTION; AMERISUITES HOTEL
PURCHASE OPTION.
13.1. Right of First Refusal on Full Service Hotels.
(a) Seller hereby grants to Purchaser a right of first refusal for a
period commencing on the Closing Date and terminating on the earlier of (i) the
fifth anniversary of the Closing Date and (ii) the date upon which Article XXXVI
of the Operating Lease for the Property is effected such that Seller no longer
manages the Property (the "Restricted Period") on any and all Full Service
Hotels owned as of the date of this Agreement or acquired or constructed during
the Restricted Period by (A) Seller or (B) any of Seller's wholly-owned
subsidiaries or any other Person for which Seller may direct the sale of such
Person's assets, whether through voting securities or by contract or otherwise
(a "Seller Subsidiary"), on the terms and conditions set forth in this Section
13.1. If during the Restricted Period, Seller or a Seller Subsidiary shall
receive a bona fide offer (the "Offer") from an unaffiliated third party to
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purchase one or more of its Full Service Hotels and such Offer contains a price
and terms acceptable to Seller or the Seller Subsidiary, as applicable, then
Seller (x) shall notify Purchaser in writing promptly after the receipt of the
Offer, such notice to be accompanied by a copy of the Offer, and (y) as promptly
as possible, shall provide copies of, or reasonable access to, due diligence
materials in Seller's possession, custody or control relating to the such Full
Service Hotels (including historical occupancy and Rev PAR information, title
policies, title commitments and copies of documents referenced therein, surveys,
environmental audits, zoning reports, engineering reports, appraisals, budgets
and other similar materials, all to the extent in Seller's possession or
control). By its delivery of such due diligence materials, Seller shall not be
warranting or guaranteeing the accuracy of such information (though Seller shall
not deliver any information which it knows to be untrue or misleading), it being
agreed that Purchaser shall be responsible for making an independent
investigation and determination with respect to such information. Within ten
(10) Business Days after the receipt of Seller's notice and the documents
referred to in clause (y) of this Section 13.1, Purchaser shall notify Seller
and the Seller Subsidiary in writing whether Purchaser desires to purchase the
applicable Full Service Hotel at the price and on the terms set forth in the
Offer.
(b) If Purchaser shall fail to respond within the ten (10) Business
Day period referenced in subparagraph (a) above, Purchaser shall be deemed
conclusively to have elected not to purchase the Full Service Hotel. In such
event or if Purchaser elects not to purchase the Full Service Hotel, Seller or
the Seller Subsidiary shall have the right to transfer the Full Service Hotel
covered by the Offer to the party making the Offer, substantially in accordance
with the terms of the Offer and without material modifications beneficial to
said third party purchaser, without any further notice to Purchaser. If,
however, Seller or the Seller Subsidiary and such third party purchaser
thereafter agree to terms for such purchase which are materially different from
those provided in the Offer and beneficial to the third party purchaser, then
Purchaser's right of first refusal under this Section 13.1 shall be renewed with
respect to such Full Service Hotel, on the terms of the Offer as so modified. If
the sale of a Full Service Hotel is consummated with a third party, provided
that Seller shall have complied with the requirements of this Section 13.1, this
Section 13.1 shall no longer be applicable with respect to such Full Service
Hotel simultaneously with the sale. The exercise or non-exercise by Purchaser of
the right to purchase a Full Service Hotel does not affect Purchaser's
continuing right of first refusal with respect to any other Full Service Hotels.
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(c) If Purchaser elects to purchase the Full Service Hotel pursuant
to the Offer, then within ten (10) Business Days after Seller's receipt of
Purchaser's election to purchase, Seller or a Seller Subsidiary, as applicable,
and Purchaser shall execute and deliver a contract of sale relating to such Full
Service Hotel, containing the terms and conditions set forth in the Offer.
Within three (3) Business Days after execution of such contract of sale,
Purchaser shall pay the "Deposit" amount required thereunder to be held in
escrow pursuant to the terms of the contract of sale. Purchaser agrees that the
deposit required by any contract of sale to which Purchaser is a party for a
Full Service Hotel shall be five percent (5%) of the purchase price for the Full
Service Hotel.
(d) Notwithstanding anything to the contrary contained in this
Agreement, the provisions of this Section 13.1 shall not apply to the Property
or to any other properties for which Purchaser has terminated this Agreement or
any of the Other Agreements, as applicable, or which has been eliminated from
the Group Two Sale Agreement (unless the problem which Purchaser identified in
the applicable notice of termination has been remedied in full), and Seller may
sell such Properties without regard to this Section 13.1.
(e) Purchaser's rights under this Section 13.1 shall not apply to
any Full Service Hotel which is subject to any foreclosure sale, or deed-in-lieu
thereof and upon the completion of any such foreclosure sale or deed-in-lieu
thereof, this Section 13.1 shall no longer be applicable with respect to such
Full Service Hotel, unless the purchaser at such foreclosure sale is the Seller
or a Seller Subsidiary. No further instrument or confirmation shall be required
with respect to such termination.
(f) Notwithstanding anything to the contrary contained in this
Agreement, this Section 13.1 shall not apply to the Full Service Hotel located
in St. Thomas and known as "Frenchman's Reef" and Purchaser may sell that
property without regard to this Section 13.1.
13.2. Radius Restriction. Subject to the provisions of Section 13.4
below, during the Restricted Period, neither Seller nor any Seller Subsidiary
shall own, lease, acquire, construct or manage any Full Service Hotel located
within a three (3) mile radius of the Hotel.
13.3. AmeriSuites Hotels.
(a) In the event that Seller or any Seller Subsidiary shall seek to
acquire and/or construct a new "AmeriSuites" brand hotel within a radius of
three (3) miles of the Property (each a "Proposed AmeriSuites Hotel") at any
time during the Restricted
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Period, Purchaser or any of its Affiliates shall have the right and option to
purchase said Proposed AmeriSuites Hotel (or Seller's interest therein) pursuant
to the terms and conditions set forth below.
(b) With respect to each Proposed AmeriSuites Hotel, to the extent
in Seller's possession and control and (to the extent applicable to the Proposed
AmeriSuites Hotel) Seller shall submit in writing to Purchaser (or shall provide
Purchaser with notice of and reasonable access to) the items set forth in
clauses (i) through (ix) below (collectively, a "Project Plan") as soon as such
information is readily available and, with respect to any Proposed AmeriSuites
Hotel which Seller seeks to construct, no later than 210 days prior to the
anticipated completion date for construction set forth in the Project Plan. The
Project Plan shall be comprised of the following:
(i) to the extent then available or completed, detailed plans
and specifications for the construction of the Proposed AmeriSuites Hotel;
(ii) a schedule for the estimated costs of construction
prepared jointly by the contractor engaged to perform the work and Seller; a
construction schedule setting forth the target commencement date, substantial
completion date and final completion date for the construction of the Projected
AmeriSuites Hotel and the dates for completion of the various phases of
construction, if applicable;
(iii) estimated operating expenses and cash flow, occupancy
projections and Rev PAR information for the first twelve months after opening
and for periods thereafter, to the extent then developed;
(iv) historical occupancy and Rev Par information for the
preceding three years;
(v) estimated costs for reflagging the Proposed AmeriSuites
Hotel;
(vi) a title insurance commitment issued in Seller's name
relating to the site of the Proposed AmeriSuites Hotel, together with copies of
all documents referenced therein;
(vii) a survey of the site for the Proposed AmeriSuites Hotel;
(viii) any environmental or engineering reports prepared in
connection with the Proposed AmeriSuites Hotel; and
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(ix) such other information (including without limitation
market information) with respect to a Proposed AmeriSuites Hotel as may be
reasonably necessary to permit a purchaser to adequately evaluate the same,
provided such information has been developed and is in the possession of Seller
or may be obtained at a nominal cost.
By its delivery of the Project Plan as provided in this Section 13.3(b), Seller
shall not be warranting or guaranteeing the accuracy of such information (though
Seller shall not deliver any information which it knows to be untrue or
misleading), it being agreed that Purchaser shall be responsible for making an
independent investigation and determination with respect to such information.
(c) No later than the date which is 30 days after Seller has
provided the Project Plan to Purchaser, Purchaser shall notify Seller whether it
will acquire the Proposed AmeriSuites Hotel on the following terms and
conditions:
(i) The purchase price for the Proposed AmeriSuites Hotel
shall be either (X) one hundred five percent (105%) of Construction Costs, if
Seller constructs the Proposed AmeriSuites Hotel or (Y) 105% of Acquisition
Costs, if Seller acquires an existing Proposed AmeriSuites Hotel; provided,
however, that if Seller is able to assign to Purchaser any contract of sale
between Seller and an owner of a Proposed AmeriSuites Hotel, without penalty,
consent or a requirement of Seller's continuing liability thereafter, then
Purchaser, in its sole discretion, may accept such assignment and pay to Seller
in lieu of the purchase price described in this subparagraph (i), an amount
equal to the sum of (A) any deposits made by Seller under the contract of sale,
(B) any reasonable costs or expenses incurred by Seller as of the date of the
assignment and (c) an amount equal to that which, absent the assignment to
Purchaser, would have been five percent (5%) of Acquisition Costs or
Construction Costs, as appropriate;
(ii) Within three (3) Business Days after providing its notice
of intent to purchase the Proposed AmeriSuites Hotel, Purchaser shall provide to
an escrow agent reasonably acceptable to Seller and Purchaser a deposit toward
the purchase price in an amount equal to five percent (5%) of the purchase
price, which deposit, at Purchaser's election, may be in the form of a letter of
credit issued by a bank or other lending institution reasonably approved by
Seller;
(iii) Any hotel which Purchaser or its Affiliates acquires
pursuant to this Section 13.3 shall be operated as an AmeriSuites brand hotel
pursuant to a franchise agreement entered into by Purchaser or its Affiliate, as
franchisee, and Seller, as
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franchisor, which franchise agreement shall have a minimum term of ten (10)
years and be in Seller's then-standard form of franchise agreement at such time;
(iv) At the Closing, in the event Purchaser or its Affiliate
simultaneously enters into an operating lease with an Affiliate of Purchaser for
the operation of the Proposed AmeriSuites Hotel and directs that the such entity
be the franchisee, Seller, as franchisor, shall provide a "comfort letter" in
favor of Purchaser substantially in the form of Exhibit E-1; and
(v) If Seller constructs the Proposed AmeriSuites Hotel, the
obligation of Purchaser to close on the acquisition thereof shall be conditioned
on receipt of a temporary certificate of occupancy for the Proposed AmeriSuites
Hotel.
(d) If Purchaser elects to acquire the Proposed AmeriSuites Hotel,
then within ten (10) Business Days after Seller's receipt of Purchaser's
election to purchase, Seller or a Seller Subsidiary, as applicable, and
Purchaser shall execute and deliver a contract of sale relating to such Proposed
AmeriSuites Hotel, containing (among other terms) the terms and conditions set
forth in this Section 13.3.
(e) If Purchaser fails to exercise its option to purchase by
providing written notice to Seller within the time period set forth in
subparagraph (c), Purchaser shall be deemed conclusively to have rejected its
option to purchase the Proposed AmeriSuites Hotel. In such event or if Purchaser
rejects its option to purchase a Proposed AmeriSuites Hotel, this Agreement
immediately shall terminate and be of no further force and effect with respect
to such Proposed AmeriSuites Hotel. Notwithstanding the foregoing, Seller shall
be obligated to re-offer such Proposed AmeriSuites Hotel to Purchaser in
accordance with this Section 13.3 if the size of the Proposed AmeriSuites Hotel
is changed substantially or any projection of total costs and expenses for such
Proposed AmeriSuites Hotel shows total costs and expenses which are
substantially less than those contained in the Project Plan. The exercise or
non-exercise by Purchaser of the right to purchase a particular Proposed
AmeriSuites Hotel does not affect Purchaser's continuing rights under this
Section 13.3 with respect to any other Proposed AmeriSuites Hotels.
(f) Except as provided by subsection (g) below, the obligations of
Seller under this Section 13.3 shall apply to any "AmeriSuites" hotels which
Seller or any Seller Subsidiary owns or which Seller or any Seller Subsidiary
has the right to sell, and Seller shall cause such Seller Subsidiaries desiring
to sell any "AmeriSuites" or similar hotel to comply with this Section 13.3 on
the same terms as Seller. Reference to "sell" in this
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Section 13.3 shall refer to sale of fee simple title, ground lease, joint
venture or similar arrangements.
(g) The provisions of this Section 13.3 shall not apply to any
AmeriSuites hotels which are owned, operated or under construction by Seller or
a Seller Subsidiary as of the date of this Agreement, including without
limitation those certain AmeriSuites hotels located at (i) Shelton, CT, (ii)
Secaucus, NJ, (iii) Princeton, NJ and (iv) Las Vegas, NV, and Seller may own,
operate and/or construct such AmeriSuites hotels without regard to this
Agreement.
13.4. Multi-Properties Exception. Notwithstanding anything to the
contrary contained herein, if Seller at any time (including during the
Restricted Period), (i) has the opportunity to own, lease, acquire, construct or
manage five (5) or more Full Service Hotels (other than the Hotel and the hotels
subject to the Other Agreements or the Group Two Sale Agreement) as a result of
a single transaction and (ii) twenty-five percent (25%) or less of such Full
Service Hotels would violate the restrictions set forth in Section 13.2 above,
then Seller, in its sole discretion, may own, lease, acquire, construct or
manage such Full Service Hotels, which Full Service Hotels shall not be subject
to the provisions of Section 13.2 and there shall be no default of this
Agreement by reason of Seller owning, leasing, acquiring, developing or managing
such Full Service Hotels.
13.5. Survival and Damages. Notwithstanding any contrary limitations
contained elsewhere in this Agreement, the provisions of this Section 13 shall
survive the Closing for the duration of the Restricted Period. In the event that
Seller or a Seller Subsidiary shall breach any of the covenants and provisions
contained in this Section 13, Purchaser shall be entitled to enforce the terms
of this section by specific performance or seek damages in a court of law and
the provisions of Section 10 shall not apply.
13.6. General Provisions.
(a) The provisions of this Section 13 shall be binding solely on
Seller and Seller Subsidiaries and not on other of Seller's Affiliates or their
respective directors, officers, shareholders or employees. Furthermore, the
provisions of this Section 13 shall not apply to transfers by operation of law,
deed or otherwise to a Person in the event of a Change in Control of Seller, and
immediately after such a Change in Control, the provisions of this Section 13
shall be deemed null, void and of no further force and effect.
(b) When applicable pursuant to Section 13.1 or Section 13.3, Seller
or a Seller Subsidiary, as applicable, and
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Purchaser or its Affiliate, as applicable, shall use reasonable, good faith
efforts to agree upon the terms of the contract of sale which shall incorporate
the terms of this Agreement to the extent consistent with the Offer or the
provisions of Section 13.3, as applicable, provided that the provisions in this
Section 13 shall not be included in such a contract of sale. If Seller or a
Seller Subsidiary and Purchaser or its Affiliate shall be unable to agree on the
terms thereof within ten (10) Business Days after Seller's receipt of
Purchaser's election to purchase, 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.
(c) Time shall be of the essence as to all periods set forth in this
Section 13.
(d) If Purchaser shall at any time materially breach its agreement
to purchase any Full Service Hotel or any Proposed AmeriSuites Hotel or
materially default under any contract of sale entered into with respect thereto
(subject to any applicable notice and cure periods), Purchaser thereafter shall
have no further rights to purchase hotel properties pursuant to Section 13.1
and/or Section 13.3 and Seller shall have no further obligations under said
Sections. This provision shall be in addition to any and all other remedies,
including liquidated damages provisions, which Seller may have under said
contracts of sale.
(e) As a condition to receiving the due diligence materials and
Project Plans contemplated in Section 13.1 and Section 13.3, Purchaser shall
sign a confidentiality agreement in form reasonably acceptable to Seller, which
confidentiality agreement shall contain substantially the same provisions as
Section 14.4.
(f) None of the rights created or granted pursuant to this Section
13 shall constitute a lien on any property.
(g) Neither party hereto shall record this Agreement or any
memorandum thereof without the written consent of the other party.
(h) The provisions of this Section 13 shall be personal to Purchaser
and its Affiliates. In no event shall Purchaser assign, transfer or otherwise
convey its rights under this Section 13 to any Person other than an Affiliate of
Purchaser without Seller's prior written consent, which consent may be withheld
in Seller's sole discretion; any transfer in violation of this Section 13.6(h)
shall be void and of no force or effect.
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(i) Notwithstanding anything to the contrary contained in this
Agreement, Seller retains the unrestricted right to continue to grant franchise
agreements for "AmeriSuites" hotels to unaffiliated third-parties. So long as
such franchisees are not Seller Affiliates, the provisions of this Section 13
shall be inapplicable with respect thereto.
(j) The provisions of this Section 13 shall survive the Closing.
SECTION 14. MISCELLANEOUS.
14.1. Agreement to Indemnify.
(a) Subject to any express provisions of this Agreement to the
contrary, (i) Seller shall indemnify and hold harmless Purchaser and its
permitted (under this Agreement) successors and assigns 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) Space Leases or the Contracts and relating to
periods prior to the Closing or (y) any damage to property of others or injury
to or death of any person or any claims for any debts or obligations occurring
on or about or in connection with the Property or any portion thereof at any
time or times prior to the Closing or (z) all accounts payable and sales taxes
due for or on account of the period prior to Closing, and (ii) Purchaser shall
indemnify and hold harmless Seller 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) the Contracts or the Space Leases relating to periods on or
after the Closing, or (y) any damage to property of others or injury to or death
of any person or any claims for any debts or obligations occurring on or about
the Property or any portion thereof at any time or times on or after the Closing
or (z) sales taxes due for or on account of the period from and after the
Closing.
(b) Whenever it is provided in this Agreement that an obligation of
Seller will be assumed by Purchaser on or after the Closing, Purchaser shall be
deemed to have also agreed to indemnify and hold harmless Seller and its
respective successors and assigns from and against all claims, losses, damages,
liabilities, costs, and expenses (including, without limitation, reasonable
attorneys' and accountants' fees and expenses) arising from any failure of
Purchaser to perform the obligation so assumed on or after the Closing.
(c) Whenever either party shall learn through the filing of a claim
or the commencement of a proceeding or
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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.
(d) At the request of either party, the provisions of this Section
14.1 shall be included in any or all of the Closing documents contemplated by
this Agreement. The provisions of this Section 14.1 shall survive the Closing
and the termination of this Agreement.
14.2. 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 NationsBanc Montgomery Securities, Inc.. 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 NationsBanc Montgomery
Securities, Inc. or any other broker, finder or like agent claiming by or
through Seller. Purchaser shall be solely responsible for and shall indemnify
and hold harmless Seller 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 any broker, finder or like agent claiming
by or through Purchaser. The provisions of this Section 14.2 shall survive the
Closing and any termination of this Agreement.
14.3. Publicity. The parties agree that no party shall contact or
conduct negotiations with public officials, make any public pronouncements,
issue press releases or otherwise furnish information regarding this Agreement,
the transactions contemplated by this Agreement or any materials provided or
prepared in accordance with this Agreement (including without limitation, all
due diligence materials, whether prepared by Seller or Purchaser) to any third
party without the consent of the other parties, which consent shall not be
unreasonably withheld, delayed or conditioned, except as required by law or
contractual obligations of such parties to third parties or as advised by
reputable counsel to be in accordance with law or such
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contractual obligation. 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. The provisions of this Section 14.3
shall survive the Closing or earlier termination of this Agreement.
14.4. Confidentiality. Except to the extent otherwise provided
herein, required by law or advised by counsel to be in accordance with law or as
contemplated by Section 14.3, until the consummation of the transactions
contemplated by this Agreement, Seller and Purchaser shall hold and shall cause
the Seller Subsidiaries and the Purchaser's Affiliates, respectively, to hold
all information and documents obtained in connection with the transactions
contemplated by this Agreement confidential, including without limitation any
oral and written information concerning the Seller and the Hotel (collectively,
the "Due Diligence Material"), provided that the parties to this Agreement may
disclose such information and documents to their respective legal counsel,
accountants, employees (to the extent an employee's services are requested in
connection with this Agreement), lenders and their counsel, brokers, boards of
directors, any hotel franchisors, any marketing company employed to do
feasibility studies or any investment banking, environmental or engineering
consultants retained in connection with the proposed transaction, subject to
this confidentiality provision. If the purchase and sale contemplated by this
Agreement is not consummated for any reason whatever, each party to this
Agreement shall as soon as reasonably practicable, return all such information
and documents (and any copies thereof in such parties' possession) to the other
party. Purchaser and Seller each hereby agree to indemnify and hold harmless the
other from and against any and all claims, demands, suits, causes of action,
judgments, damages, losses, fines, penalties, costs and expenses, including
without limitation reasonable attorneys' fees and disbursements relating to the
a breach by such indemnifying party (or its directors, officers, shareholders,
partners, members, agents, employees or any independent contractors retained by
it) of any of the covenants to be performed by such party contained in this
Section 14.4. Notwithstanding anything to the contrary contained in this
Agreement, the provisions of this Section 14.4 shall survive the Closing for a
period of two (2) years. With respect to the indemnity obligations or any breach
of this Section 14.4, the provisions of Section 10 shall not apply and the
indemnified party may seek damages in a court of law or exercise any other
remedies available at law or equity.
14.5. Notices. (a) Any and all notices, demands, consents,
approvals, offers, elections and other communications required or permitted
under this Agreement shall be deemed
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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]
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:
American General Hospitality
Operating Partnership, L.P.
5605 MacArthur Blvd., Suite 1200
Irving, Texas 75038
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Attn: Steven D. Jorns and/or Bruce G. Wiles
[Telecopier No. (972) 550-6895]
with a copy to:
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Attn: Douglas A. Raelson, Esq.
[Telecopier No. (212) 856-7806]
(a) 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.
14.6. 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, 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.
14.7. Assignment; Successors and Assigns. Except as otherwise
expressly set forth in this Agreement, this Agreement and all rights and
obligations hereunder shall not be assignable by any party without the written
consent of the other parties; provided, however, that (a) Purchaser shall have
the right to designate an Affiliate(s) of Purchaser to receive record title to
the Property, (b) Seller shall have the right to designate an Affiliate of
Seller to be the Operating Lessee under the Operating Lease. 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.
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56
14.8. 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 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.
14.9. 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.
14.10. 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
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57
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.
14.11. 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 payment or performance shall automatically be
extended to the first Business Day following such date.
14.12. 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.
14.13. 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.
14.14. Financing and Priority of Operating Lease. If Purchaser, in
connection with the Closing or thereafter during the term of the Operating
Lease, desires to obtain financing from a Mortgagee secured by a lien on the
Property, Purchaser shall cause the Mortgagee to provide Operating Lessee, as
lessee, with a Subordination, Nondisturbance and Attornment Agreement. If
Purchaser shall fail to provide such Subordination, Nondisturbance and
Attornment Agreement, the Operating Lease shall be superior to the lien of said
financing. The provisions of this Section 14.14 shall survive Closing or
termination of this Agreement.
14.15. Group Two Purchase and Sale Agreement. Contemporaneously with
entering into the Original Agreement, Purchaser and Seller entered into that
certain Purchase and Sale Agreement for the sale of an additional eleven
properties (or leasehold interests therein) (the "Group Two Sale Agreement"),
the closing of which sale is not contemplated to occur prior to September 30,
1998. The parties agree that any default or termination of this Agreement
automatically shall be a default or termination, as applicable, of the Group Two
Sale Agreement.
14.16. Exceptions to Liquidated Damages. Notwithstanding anything to
the contrary contained in this Agreement, the provisions of Section 10 shall not
apply to any rights or obligations of Seller or Purchaser which survive the
Closing and in connection with such matters which survive the
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Closing, a party may seek damages in a court of law or exercise any other
remedies available at law or equity.
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59
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:
-------------------------
Richard Szymanski
Vice President
PURCHASER:
AMERICAN GENERAL HOSPITALITY OPERATING
PARTNERSHIP, L.P., a Delaware limited
partnership
By: AGH GP, Inc., its sole general partner
By:
--------------------------
Bruce G. Wiles
Executive Vice President
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EXHIBIT B
LEGAL DESCRIPTION
(CROSSROADS)
MAHWAH, NEW JERSEY
- --------------------------------------------------------------------------------
ALL THAT CERTAIN TRACT, PARCEL AND LOT OF LAND LYING AND BEING SITUATE IN THE
TOWNSHIP OF MAHWAH, COUNTY OF BERGEN, STATE OF NEW JERSEY, BEING MORE
PARTICULARLY DESCRIBED AS FOLLOWS:
KNOWN AND DESIGNATED AS THE HOTEL UNIT SITUATE IN "CROSSROADS CONDOMINIUM",
TOGETHER WITH AN UNDIVIDED $50. 00 PERCENTAGE INTEREST IN THE COMMON ELEMENTS
APPURTENANT THERETO (AND IN THE LIMITED COMMON ELEMENTS APPURTENANT THERETO, AS
FOLLOWS, IF ANY) AND A 50.00 PERCENTAGE INTEREST IN THE TOWER SITE COMMON
ELEMENTS OF SAID CONDOMINIUM APPURTENANT THERETO, AS THE SAME IS SET FORTH IN
THE MASTER DEED FOR "CROSSROADS CONDOMINIUM" WHICH SAID MASTER DEED IS DATED
DECEMBER 28, 1994 AND DULY RECORDED IN THE OFFICE OF THE CLERK/REGISTER OF
BERGEN COUNTY ON JANUARY 23, 1995 IN DEED BOOK 7763, PAGE 1 AS THE SAME MAY BE
NOW OR HEREAFTER LAWFULLY AMENDED.
SAID PREMISE BEING ALSO DESCRIBED AS FOLLOWS:
KNOWN AND DESIGNATED AS THE HOTEL UNIT SITUATE IN "CROSSROADS CONDOMINIUM",
TOGETHER WITH AN UNDIVIDED $50. 00 PERCENTAGE INTEREST IN THE COMMON ELEMENTS
APPURTENANT THERETO (AND IN THE LIMITED COMMON ELEMENTS APPURTENANT THERETO, AND
A 50.00 PERCENTAGE INTEREST IN THE TOWER SITE COMMON ELEMENTS OF SAID
CONDOMINIUM APPURTENANT THERETO AS THE SAME IS SET FORTH IN THE MASTER DEED FOR
"CROSSROADS CONDOMINIUM" WHICH SAID MASTER DEED IS DATED DECEMBER 28, 1994 AND
DULY RECORDED IN THE OFFICE OF THE CLERK/REGISTER OF BERGEN COUNTY ON JANUARY
23, 1995 IN DEED BOOK 7763, PAGE 1 AS THE SAME MAY BE NOW OR HEREAFTER LAWFULLY
AMENDED.
THE FOREGOING DESCRIPTION BEING IN ACCORDANCE WITH A SURVEY PREPARED BY YURASEK
CONSULTANTS, DATED NOVEMBER 15, 1994, REVISED TO DECEMBER 11, 1997.
TOGETHER WITH 100 FOOT WIDE EASEMENT FOR ACCESS AND UTILITIES AND EASEMENT(S)
AND ROAD IMPROVEMENT AGREEMENT SET FORTH IN DEED BOOK 6880 PAGE 16, FIRST
AMENDMENT IN DEED BOOK 7148 PAGE 52, SECOND AMENDMENT IN DEED BOOK 7343 PAGE 1,
THIRD AMENDMENT IN DEED BOOK 7533 PAGE 817.
TOGETHER WITH ROAD EASEMENT(S) SET FORTH IN DEED BOOK 7309 PAGE 638.
SAID CONDOMINIUM UNIT BEING LOCATED WITHIN THE CONFINES OF THE FOLLOWING
DESCRIBED PREMISES:
BEGINNING AT A POINT ON THE EASTERLY LINE OF NEW JERSEY ROUTE 287, SAID POINT
BEING IN THE DIVISION LINE OF LANDS NOW OR FORMERLY OF INTERNATIONAL CROSSROADS
HOLDING CORPORATION AND LANDS NOW OR FORMERLY OF SHARP ELECTRONICS; SAID POINT
OF BEGINNING BEING DISTANT 92 FEET ON A COURSE OF SOUTH 69 DEGREES 42 MINUTES 10
SECONDS EAST FROM A POINT ON THE FORMER EASTERLY SIDELINE OF NEW JERSEY STATE
HIGHWAY ROUTE 17 DISTANT 1916.52 FEET SOUTHERLY, AS MEASURED ALONG THE FORMER
EASTERLY LINE OF NEW JERSEY STATE HIGHWAY ROUTE 17 FROM THE DIVISION LINE OF THE
STATE OF NEW JERSEY AND THE STATE OF NEW YORK, AND RUNNING THENCE;
(Continued on Next Page)
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61
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1. ALONG THE DIVISION LINE OF LANDS NOW OR FORMERLY OF INTERNATIONAL CROSSROADS
HOLDING CORPORATION AND LANDS NOW OR FORMERLY 0F SHARP ELECTRONICS, SOUTH 69
DEGREES 42 MINUTES 10 SECONDS EAST, A DISTANCE OF 1,937.10 FEET TO A POINT;
THENCE
2. SOUTH 03 DEGREES 17 MINUTES 56 SECONDS EAST, A MEASURED DISTANCE OF 285.42
FEET (DEED REFERENCE: 294.16 FEET) TO AN ANGLE POINT; THENCE
3. SOUTH 05 DEGREES 43 MINUTES 46 SECONDS WEST, A DISTANCE OF 309.86 FEET TO AN
ANGLE POINT; THENCE
4. SOUTH 12 DEGREES 56 MINUTES 45 SECONDS WEST, A DISTANCE OF 293.49 FEET TO AN
ANGLE POINT; THENCE
5. SOUTH 19 DEGREES 36 MINUTES 00 SECONDS WEST, A DISTANCE OF 506.39 FEET TO AN
ANGLE POINT; THENCE
6. SOUTH 33 DEGREES 37 MINUTES 03 SECONDS WEST, AND PART OF THE DISTANCE
CROSSING THE RAMAPO RIVER, A DISTANCE OF 1,210.20 FEET TO A POINT; THENCE
7. LEAVING THE RAMAPO RIVER, SOUTH 47 DEGREES 36 MINUTES 43 SECONDS EAST, A
DISTANCE OF 82.45 FEET TO A POINT; THENCE
8. SOUTH 32 DEGREES 03 MINUTES 07 SECONDS WEST, A DISTANCE OF 85.22 FEET TO A
POINT IN THE NORTHEASTERLY SIDELINE OF NEW JERSEY STATE HIGHWAY ROUTE NO. 17;
THENCE
9. ALONG NEW JERSEY STATE HIGHWAY ROUTE NO. 17, NORTH 55 DEGREES 11 MINUTES 07
SECONDS WEST, AND PART OF THE DISTANCE CROSSING THE RAMAPO RIVER, A DISTANCE OF
243.89 FEET TO A POINT IN THE DIVISION LINE BETWEEN LANDS NOW OR FORMERLY OF
INTERNATIONAL CROSSROADS HOLDING CORPORATION AND LANDS NOW OR FORMERLY OF
ELTING, VICTOR, AND INGANAMORT; THENCE
10. ALONG THE LAST MENTIONED DIVISION LINE, NORTH 28 DEGREES 53 MINUTES 07
SECONDS EAST, A DISTANCE OF 119.26 FEET TO A POINT IN THE DIVISION LINE BETWEEN
LANDS NOW OR FORMERLY OF INTERNATIONAL CROSSROADS HOLDING CORPORATION, LANDS NOW
OR FORMERLY OF ELTING, VICTOR AND INGANAMORT AND LANDS NOW FORMERLY OF SUBURBAN
PROPANE GAS CO.; THENCE
11. ALONG THE LAST MENTIONED DIVISION LINE, NORTH 47 DEGREES 36 MINUTES 43
SECONDS WEST, A DISTANCE OF 528.84 FEET TO AN ANGLE POINT IN THE DIVISION LINE
BETWEEN LANDS NOW OR FORMERLY OF INTERNATIONAL CROSSROADS HOLDING CORPORATION
AND LANDS NOW FOR FORMERLY OF SUBURBAN PROPANE GAS CO.; THENCE
12. ALONG THE LAST MENTIONED DIVISION LINE, NORTH 42 DEGREES 17 MINUTES 45
SECONDS EAST, A MEASURED DISTANCE OF 124.37 FEET (DEED REFERENCE: NORTH 42
DEGREES 23 MINUTES 17 SECONDS EAST 125.00 FEET) TO A CONCRETE MONUMENT AND
CORNER BEING A POINT IN THE DIVISION LINE BETWEEN LANDS NOW OR FORMERLY OF
INTERNATIONAL CROSSROADS HOLDING CORPORATION, LANDS NOW OR FORMERLY OF SUBURBAN
PROPANE GAS CO. AND LANDS NOW
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62
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OR FORMERLY OF LEISURE TIME TOURS; THENCE
13. ALONG THE LAST MENTIONED DIVISION LINE, NORTH 47 DEGREES 31 MINUTES 05
SECONDS WEST, A MEASURED DISTANCE OF 326.34 FEET (DEED REFERENCE: NORTH 47
DEGREES 36 MINUTES 43 SECONDS WEST 326.10 FEET) TO A CONCRETE MONUMENT AND
CORNER BEING A POINT IN THE DIVISION LINE BETWEEN LANDS NOW OR FORMERLY OF
INTERNATIONAL CROSSROADS HOLDING CORPORATION AND LANDS NOW OR FORMERLY OF
LEISURE TIME TOURS; THENCE
14. ALONG THE LAST MENTIONED DIVISION LINE, NORTH 35 DEGREES 54 MINUTES 52
SECONDS EAST, A MEASURED DISTANCE OF 75.01 FEET (DEED REFERENCE: NORTH 35
DEGREES 36 MINUTES 17 SECONDS EAST 75.00 FEET) TO A CONCRETE MONUMENT AND
CORNER; THENCE
15. CONTINUING ALONG THE LAST MENTIONED DIVISION LINE, NORTH 47 DEGREES 36
MINUTES 43 SECONDS WEST, A DISTANCE OF 251.91 FEET TO A POINT IN THE CENTERLINE
OF LEISURE LANE (FORMERLY HOUVENKOFF ROAD); THENCE
16. NORTH 35 DEGREES 14 MINUTES 51 SECONDS EAST, ALONG THE CENTERLINE OF LEISURE
LAND (FORMERLY HOUVENKOFF ROAD) A DISTANCE OF 100.24 FEET TO A POINT IN THE
CENTERLINE OF PARK LANE; THENCE
17. NORTH 47 DEGREES 19 MINUTES 53 SECONDS WEST, ALONG THE CENTERLINE OF PARK
LANE, A DISTANCE OF 393.00 FEET TO THE NORTHWESTERLY LINE OF PARK LANE AND THE
POINT IN THE DIVISION LINE BETWEN LANDS NOW OR FORMERLY OF INTERNATIONAL
CROSSROADS HOLDING CORPORATION, PARK LANE AND LANDS NOW OR FORMERLY OF LEISURE
TIME TOURS; THENCE
18. ALONG THE LAST MENTIONED DIVISION LINE, SOUTH 42 DEGREES 40 MINUTES 07
SECONDS WEST, A DISTANCE OF 303.90 FEET TO A POINT IN THE NORTHEASTERLY SIDELINE
OF NEW JERSEY STATE HIGHWAY ROUTE NO. 17; THENCE
19. ALONG SAME NORTH 43 DEGREES 23 MINUTES 24 SECONDS WEST, A DISTANCE OF 146.62
FEET A POINT; THENCE
20. CONTINUING ALONG THE SAME SOUTH 63 DEGREES 08 MINUTES 11 SECONDS WEST, A
DISTANCE OF 157.00 FEET TO A POINT; THENCE
21. CONTINUING ALONG THE SAME IN A NORTHWESTERLY DIRECTION, ON A CURVE TO THE
RIGHT HAVING A RADIUS OF 1,307.69 FEET AND A CENTRAL ANGLE OF 15 DEGREES 26
MINUTES 04 SECONDS, AN ARC DISTANCE OF 352.27 FEET TO AN ANGLE POINT; THENCE
22. CONTINUING ALONG SAME NORTH 01 DEGREES 17 MINUTES 57 SECONDS WEST, A
DISTANCE OF 18.81 FEET TO THE INTERSECTION OF THE EASTERLY LINE OF NEW JERSEY
STATE HIGHWAY ROUTE 17 WITH THE SOUTHEASTERLY LINE OF NEW JERSEY ROUTE NO. 287;
THENCE
23. ALONG THE SOUTHEASTERLY LINE OF NEW JERSEY ROUTE NO. 287, NORTH 82 DEGREES
24 MINUTES 59 SECONDS EAST, A DISTANCE OF 82.20 FEET TO AN ANGLE POINT IN SAME;
THENCE
24. CONTINUING ALONG THE SOUTHEASTERLY LINE OF NEW JERSEY ROUTE NO. 287, NORTH
32 DEGREES 27 MINUTES 40 SECONDS EAST, A DISTANCE OF 155.63 FEET TO AN ANGLE
POINT IN
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63
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SAME; THENCE
25. CONTINUING ALONG THE SOUTHEASTERLY LINE OF NEW JERSEY ROUTE NO. 287, NORTH
24 DEGREES 41 MINUTES 23 SECONDS EAST, A DISTANCE OF 268.49 FEET TO AN ANGLE
POINT IN SAME; THENCE
26. CONTINUING ALONG THE SOUTHEASTERLY LINE OF NEW JERSEY ROUTE NO. 287, NORTH
16 DEGREES 10 MINUTES 52 SECONDS EAST, A DISTANCE OF 461.38 FEET TO AN ANGLE
POINT IN SAME; THENCE
27. CONTINUING ALONG THE SOUTHEASTERLY LINE OF NEW JERSEY ROUTE NO. 287, NORTH
22 DEGREES 40 MINUTES 18 SECONDS EAST, A DISTANCE OF 728.80 FEET TO THE POINT
AND PLACE OF BEGINNING.
BEING ALSO KNOWN AS (REPORTED FOR INFORMATIONAL PURPOSES ONLY):
P/O LOT 2, BLOCK 26, ON THE OFFICIAL TAX MAP OF THE TOWNSHIP OF MAHWAH.
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Exhibit C
Exchange Rights Agreement
THIS EXCHANGE RIGHTS AGREEMENT (this "Agreement"), dated as of
_________, 1997, is entered into by and among American General Hospitality
Corporation, a Maryland corporation (the "Company" ), American General
Hospitality Operating Partnership, L.P., a Delaware limited partnership (the
"Operating Partnership"), and the Persons whose names are set forth on Exhibit A
attached hereto.
R E C I T A L S:
A. The Company, through AGH GP, Inc., a Nevada corporation ("AGH
GP") and AGH LP, Inc., a Nevada corporation ("AGH LP"), each a wholly-owned
subsidiary of the Company, have formed the Operating Partnership pursuant to the
Amended and Restated Agreement of Limited Partnership of the Operating
Partnership dated July 31, 1996, as subsequently amended (the "Partnership
Agreement").
B. Pursuant to the Partnership Agreement, the Limited Partners (as
defined below) hold units of limited partnership interest ("OP Units") in the
Operating Partnership.
C. The Operating Partnership has agreed to provide the Limited
Partners with certain rights to exchange their OP Units for cash or, at the
election of the Company, for shares of the Company's common stock, $0.01 par
value per share (the "REIT Stock").
Accordingly, the parties hereto do hereby agree as follows:
ARTICLE 1
DEFINED TERMS
The following definitions shall be for all purposes, unless
otherwise clearly indicated to the contrary, applied to the terms used in this
Agreement.
"Assignee" means a Person to whom one or more OP Units have been
transferred in a manner permitted under the Partnership Agreement, but who has
not become a substituted Limited Partner in accordance therewith.
"Business Day" means any day except a Saturday, Sunday or other day
on which commercial banks in New York, New York are authorized or required by
law to close.
65
"Cash Amount" means an amount of cash per OP Unit equal to the Value
on the Valuation Date of the REIT Stock Amount.
"Exchange Factor" means 1.0, provided, that in the event that the
Company (i) declares or pays a dividend on its outstanding REIT Stock in REIT
Stock or makes a distribution to all holders of its outstanding REIT Stock in
REIT Stock; (ii) subdivides its outstanding REIT Stock; or (iii) combines its
outstanding REIT Stock into a smaller number of shares of REIT Stock, the
Exchange Factor shall be adjusted by multiplying the Exchange Factor by a
fraction, the numerator of which shall be the number of shares of REIT Stock
issued and outstanding on the record date for such dividend, contribution,
subdivision or combination assuming for such purpose that such dividend,
distribution, subdivision or combination has occurred as of such time, and the
denominator of which shall be the actual number of shares of REIT Stock
(determined without the above assumption) issued and outstanding on the record
date for such dividend, distribution, subdivision or combination. Any adjustment
to the Exchange Factor shall become effective immediately after the effective
date of such event retroactive to the record date, if any, for such event.
"Exchanging Partner" has the meaning set forth in Section 2.1
hereof.
"Exchange Right" has the meaning set forth in Section 2.1 hereof.
"Lien" means any lien, security interest, mortgage, deed of trust,
charge, claim, encumbrance, pledge, option, right of first offer or first
refusal and any other right or interest of others of any kind or nature, actual
or contingent, or other similar encumbrance of any nature whatsoever.
"Limited Partner" means any Person, other than AGH LP, named as a
Limited Partner on Exhibit A or has become a Limited Partner in accordance with
the Partnership Agreement.
"Lock-up Agreement" means the Lock-up Agreement among the Company
and the Limited Farmers, dated the date hereof.
"Notice of Exchange" means the Notice of Exchange substantially in
the form of Exhibit B to this Agreement.
"REIT Stock Amount" means that number of shares of REIT Stock equal
to the product of the number of OP Units offered for exchange by an Exchanging
Partner, multiplied by the Exchange Factor as of the Valuation Date, provided,
that in the event the Company or the Operating Partnership issues to all holders
of REIT Stock rights, options, warrants or convertible or exchangeable
securities entitling the stockholders to subscribe for or purchase REIT Stock,
or any other securities or property (collectively, the "rights"), then the REIT
Stock Amount shall also include such rights that a holder of that number of
shares of REIT Stock would be entitled to receive.
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66
"SEC" means the Securities and Exchange Commission.
"Specified Exchange Date" means the tenth (10th) Business Day after
receipt by the Operating Partnership and the Company of a Notice of Exchange;
provided, however, that if the Operating Partnership has more than 99 partners,
as determined in accordance with the provisions of Treasury Regulation Section
1.7704-1(h), then the Specified Exchange Date shall mean the thirty-first (31st)
calendar day after receipt by the Operating Partnership and the Company of a
Notice of Exchange.
"Valuation Date" means the date of receipt by the Operating
Partnership and the Company of a Notice of Exchange or, if such date is not a
Business Day, the first Business Day thereafter.
"Value" means, with respect to shares of REIT Stock, the average of
the daily market price for the five (5) consecutive trading days immediately
preceding the Valuation Date. The market price for each such trading day shall
be: (i) if the REIT Stock is listed or admitted to trading on the New York Stock
Exchange (the "NYSE"), any national securities exchange or the Nasdaq Stock
Market ("Nasdaq"), the closing price on such day, or if no such sale takes place
on such day, the average of the closing bid and asked prices on such day; (ii)
if the REIT Stock is not listed or admitted to trading on the NYSE, any national
securities exchange or the Nasdaq, the last reported sale price on such day or,
if no sale takes place on such day, the average of the closing bid and asked
prices on such day, as reported by a reliable quotation source designated by the
Company; or (iii) if the REIT Stock is not listed or admitted to trading on the
NYSE, any national securities exchange or the Nasdaq and no such last reported
sale price or closing bid and asked prices are available, the average of the
reported high bid and low asked prices on such day, as reported by a reliable
quotation source designated by the Company, or if there shall be no bid and
asked prices on such day, the average of the high bid and low asked prices, as
so reported, on the most recent day (not more than five (5) days prior to the
date in question) for which prices have been so reported; provided, that if
there are no bid and asked prices reported during the five (5) days prior to the
date in question, the Value of the REIT Stock shall be determined by the
independent directors of the Company acting in good faith on the basis of such
quotations and other information as they consider, in their reasonable judgment,
appropriate. In the event the REIT Stock Amount includes rights that a holder of
REIT Stock would be entitled to receive, then the Value of such rights shall be
determined by the independent directors of the Company acting in good faith on
the basis of such quotations and other information as they consider, in their
reasonable judgment, appropriate.
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ARTICLE 2
EXCHANGE RIGHT
Section 2.1. Exchange Right.
A. Subject to Sections 2.1.B, 2.1.C, 2.1.D and 2.1.E hereof, and
subject to any limitations under applicable law, the Operating Partnership
hereby grants to each Limited Partner and each Limited Partner hereby accepts
the right (the "Exchange Right"), exercisable on or after the date that is six
(6) months after the date of this Agreement to exchange on a Specified Exchange
Date all or a portion of the OP Units held by such Limited Partner at an
exchange price equal to the Cash Amount. The Exchange Right shall be exercised
pursuant to a Notice of Exchange delivered to the Operating Partnership, with a
copy delivered to the Company, by the Limited Partner who is exercising the
Exchange Right (the "Exchanging Partner"); provided, however, that the Company,
on behalf of the Operating Partnership, may elect, after a Notice of Exchange is
delivered, to satisfy the Exchange Right which is the subject of such notice in
accordance with Section 2.1.B. A Limited Partner may not exercise the Exchange
Right for less than one thousand (1,000) OP Units or, if such Limited Partner
holds less than one thousand (1,000) OP Units, all of the OP Units held by such
Limited Partner. Any Assignee of a Limited Partner may exercise the rights of
such Limited Partner pursuant to this Section 2.1, and such Limited Partner
shall be deemed to have assigned such rights to such Assignee and shall be bound
by the exercise of such rights by such Assignee. In connection with any exercise
of such rights by an Assignee on behalf of a Limited Partner, the Cash Amount or
the REIT Stock Amount, as the case may be, shall be satisfied by the Operating
Partnership or the Company, as the case may be, directly to such Assignee and
not to such Limited Partner.
B. Notwithstanding the provisions of Section 2.1.A, the Company may,
on behalf of the Operating Partnership, in its sole and absolute discretion,
elect to satisfy an Exchanging Partner's Exchange Right by exchanging REIT Stock
and rights equal to the REIT Stock Amount on the Specified Exchange Date for the
OP Units offered for exchange by the Exchanging Partner. In the event the
Company shall elect to satisfy, on behalf of the Operating Partnership, an
Exchanging Partner's Exchange Right by exchanging REIT Stock for the OP Units
offered for exchange, (i) the Company hereby agrees to notify the Exchanging
Partner within five (5) Business Days after the receipt by the Company of such
Notice of Exchange, (ii) each Exchanging Partner hereby agrees to execute such
documents and instruments as the Company may reasonably require in connection
with the issuance of REIT Stock upon exercise of the Exchange Right and (iii)
the Company hereby agrees to deliver stock certificates representing fully paid
and nonassessable shares of REIT Stock.
C. Notwithstanding anything herein to the contrary, the Company
shall not be entitled to satisfy an Exchanging Partner's Exchange Right pursuant
to Section 2.1.B if the delivery of REIT Stock to such Limited Partner by the
Company pursuant to Section 2.1.B (regardless of the Operating Partnership's
obligations to the Limited Partner under Section 2.l.A) (i) would be prohibited
under the Articles of Incorporation of the Company, (ii) would otherwise
jeopardize the REIT status of the Company, or (iii) would cause the acquisition
of the REIT Stock by the Limited
-4-
68
Partner to be "integrated" with any other distribution of REIT Stock by the
Company for purposes of complying with the registration provisions of the
Securities Act of 1933, as amended.
D. Any Cash Amount to be paid to an Exchanging Partner shall be paid
on the Specified Exchange Date; provided, however, that the Operating
Partnership may elect to cause the Specified Exchange Date to be delayed for up
to an additional 60 days to the extent required for the Company to cause
additional REIT Shares to be issued to provide financing to be used to make such
payment of the Cash Amount by the Operating Partnership.
E. Notwithstanding the provisions of Section 2.1., any person to
whom OP Units have been pledged, in compliance with the terms of the Lock-up
Agreement, may exercise its Exchange Right prior to the date that is six (6)
months after the date of this Agreement, provided however, such OP Units shall
only be exchangeable for the Cash Amount.
F. The Exchange Right shall expire with respect to any OP Units for
which an Exchange Notice has not been delivered to the Operating Partnership and
the Company on or before December 31, 2046.
G. Any exchange of OP Units pursuant to this Article 2 shall be
deemed to have occurred as of the Specified Exchange Pate for all purposes,
including without limitation the payment of distributions or dividends in
respect of OP Units or REIT Stock, as applicable. Any OP Units acquired by the
Company pursuant to an exercise by any Limited Partner of an Exchange Right
shall be deemed to be acquired by and reallocated or reissued to the Company.
AGH GP, as general partner of the Operating Partnership, shall amend the
Partnership Agreement to reflect each such exchange and reallocation or
reissuance of OP Units and each corresponding recalculation of the OP Units of
the Limited Partners. The number of OP Units to be reallocated or reissued to
the Company shall equal the number of shares of REIT Stock issued to a Limited
Partner upon exercise of an Exchange Right in accordance with the terms of this
Agreement.
ARTICLE 3
OTHER PROVISIONS
Section 3.1. Covenants of the Company.
A. At all times during the pendency of the Exchange Right, the
Company shall reserve for issuance such number of shares of REIT Stock as may be
necessary to enable the Company to issue such shares in full payment of the REIT
Stock Amount in regard to all OP Units held by Limited Partners which are from
time to time outstanding.
B. During the pendency of the Exchange Right, the Company shall
deliver to Limited Partners in a timely manner all reports filed by the Company
with the SEC to the extent the Company also transmits such reports to its
stockholders and all other communications transmitted from time to time by the
Company to its stockholders generally.
-5-
69
C. The Company shall notify each Limited Partner, upon request, of
the then current Exchange Factor and such notice will include a reasonable
explanation of the Exchange Factor calculation to be applied at such time.
Section 3.2. Fractional Shares.
No fractional shares of REIT Stock shall be issued upon exchange of
OP Units. The number of full shares of REIT Stock which shall be issuable upon
exchange of OP Units (or the cash equivalent amount thereof if the Cash Amount
is paid) shall be computed on the basis of the aggregate amount of OP Units so
surrendered. Instead of any fractional shares of REIT Stock which would
otherwise be issuable upon exchange of any OP Units, the Operating Partnership
shall pay a cash adjustment in respect of such fraction in an amount equal to
the Cash Amount of an OP Unit multiplied by such fraction.
ARTICLE 4
GENERAL PROVISIONS
Section 4.1. Addresses and Notice.
All notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, registered first-class
mail, telex, telecopier, or any courier guaranteeing overnight delivery, (i) at
the address listed on the records of the Operating Partnership, with respect to
a Limited partner or Assignee, and (ii) at 5605 MacArthur Boulevard, Suite 1200,
Irving, Texas 75038, Attn: President, with respect to the Operating Partnership
or the Company.
All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; three (3)
business days after being deposited in the mail, postage prepaid, if mail; when
answered back, if telexed; when receipt is acknowledged, if telecopies; or at
the time delivered, if delivered by an air courier guaranteeing overnight
delivery.
Section 4.2. Titles and Captions.
All article or section titles or captions in this Agreement are for
convenience only. They shall not be deemed part of this Agreement and in no way
define, limit, extend or describe the scope or intent of any provisions hereof.
Except as specifically provided otherwise, references to "Articles" and
"Sections" are to Articles and Sections of this Agreement.
Section 4.3. Pronouns and Plurals.
Whenever the context may require, any pronoun used in this Agreement
shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns, pronouns and verbs shall include the plural and vice
versa.
-6-
70
Section 4.4. Further Action and Additional Restrictions.
The parties shall execute and deliver all documents, provide all
information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.
Section 4.5. Binding Effect.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns including subsequent Limited Partners or
Assignees.
Section 4.6. Waiver.
No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of any
such breach or any other covenant, duty, agreement or condition.
Section 4.7. Counterparts.
This Agreement may be executed in counterparts, all of which
together shall constitute one agreement binding on all of the parties hereto,
notwithstanding that all such parties are not signatories to the original or the
same counterpart. Each party shall become bound by this Agreement immediately
upon affixing its signature hereto.
Section 4.8. Applicable Law.
This Agreement shall be construed and enforced in accordance with
and governed by the laws of the State of Maryland, without regard to the
principles of conflicts of law thereof.
Section 4.9. Invalidity of Provisions.
If any provision of this Agreement is or becomes invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby.
Section 4.10. Entire Agreement.
This Agreement contains the entire understanding and agreement among
the Limited Partners, the Operating Partnership and the Company with respect to
the subject matter hereof and supersedes any other prior written or oral
understandings or agreements among them with respect thereto.
-7-
71
Section 4.11. Amendment.
This Agreement may be amended from time to time in the same manner
as the Partnership Agreement (in accordance with Section 14.1A thereof) may be
amended as provided therein but excluding the interests of AGH LP.
-8-
72
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first written above.
THE COMPANY:
AMERICAN GENERAL HOSPITALITY CORPORATION
By:
---------------------------
Name:
Title:
AMERICAN GENERAL HOSPITALITY OPERATING
PARTNERSHIP, L.P.
BY: AGH GP, INC., its general partner
By:
-----------------------
Name:
Title:
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73
Signature page to the Exchange Rights Agreement entered into by and among
American General Hospitality Corporation, American General Hospitality Operating
Partnership, L.P. the undersigned and the other parties thereto.
HOLDER(S):
Address:
700 Route 46 East PRIME HOSPITALITY CORP.
Fairfield, NJ 07007-2700
By:
---------------------------------
Name:
Title:
-10-
74
Exhibit A
Limited Partners and Their Addresses
HOLDER(S):
Address:
700 Route 46 East PRIME HOSPITALITY CORP.
Fairfield, NJ 07007-2700
By:
---------------------------------
Name:
Title:
-11-
75
Exhibit B
Notice of Exchange
The undersigned Limited Partner hereby irrevocably (i) exchanges
____________ OP Units in American General Hospitality Operating Partnership,
L.P., in accordance with the terms of the Exchange Rights Agreement, dated as of
___________, 1997, and the Exchange Right referred to therein; (ii) surrenders
such OP Units and all right, title and interest therein; and (iii) directs that
the Cash Amount or REIT Stock Amount (as determined by the Company) deliverable
upon exercise of the Exchange Right be delivered to the address specified below,
and if REIT Stock is to be delivered, such REIT Stock will be registered or
placed in the name(s) and at the address(es) specified below. The undersigned
hereby represents, warrants, and certifies that the undersigned (a) has
marketable and unencumbered title to such OP Units, free and clear, other than
any encumbrance arising pursuant to the Partnership Agreement, of the rights or
interests of any other person or entity; (b) has the full right, power, and
authority to exchange and surrender such OP Units as provided herein; and (c)
has obtained the consent or approval of all persons or entities, if any, (other
than consent or approval that may be required of the Company or the Operating
Partnership) having the right to consent or approve such exchange and surrender
on the part of the undersigned.
Dated:_________________________
Name of Limited Partner:
-------------------------------
Please Print
-------------------------------
(Signature of Limited Partner)
-------------------------------
(Street Address)
-------------------------------
(City) (State) (Zip Code)
Signature Guaranteed by:
-------------------------------
If REIT Stock is to be issued, issue to:
Name:_________________________________________
Please insert social security or identifying number:__________
-12-
76
EXHIBIT D
LIST OF FRANCHISE EXHIBITS
Mahwah Sheraton Crossroads Hotel
License Agreement, dated 12/28/94 between Sheraton Franchise Corporation and
Mahwah Holding Corp.
77
Exhibit E-1
Form of Franchisor
Comfort Letter in
favor of Purchaser
Form of Owner Comfort Letter
[Letterhead of Holiday Inns Franchising, Inc.]
_________________, 1998
American General Hospitality Corporation
5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
Re: Holiday Inns Conversion License Agreement between _____________., a
____________ ("Lessee") and Holiday Inns Franchising, Inc.
("Franchiser/Licensor") dated _____, 19__ (the "Agreement"),
granting to Lessee the right to operate a Holiday Inn hotel,
including the use of the name(s) Holiday Inn and other related
intellectual property rights (collectively, the "Trademarks") in
connection with the hotel property located at ______________,
____________(the "Hotel")
Ladies and Gentlemen:
The Franchiser/Licensor understands the following:
A. American General Hospitality Operating Partnership, L.P., a
Delaware limited partnership (the "Operating Partnership") is
an affiliate of American General Hospitality Corporation, a
Maryland corporation (the "Company"). The Operating
Partnership, either directly or through an affiliate, has
acquired or will acquire one hundred percent (100%) of the
ownership interests the Hotel (the "Owner");
B. The Hotel will be leased to ________, a ________ ("Lessee");
C. The Hotel will be managed by ___________,a _________
("Manager"); and
D. The Company's initial public offering and a secondary offering
of stock in the Company were made pursuant to registration
statements on
78
Form S-11. The Company may sell shares to the general public
and, in connection therewith, the Company has the absolute and
unbridled right to market such securities and prepare and file
all necessary or reasonably required registration statements
(each a "Registration Statement") and other papers, documents
and instruments necessary or reasonably required in the
Company's judgment, and that of its attorneys and
underwriters, to file a Registration Statement with respect to
its shares with the U.S. Securities and Exchange Commission
and/or similar state authorities and to cause same to become
effective and to disclose therein and thus to its
underwriters, to the U.S. Securities and Exchange Commission
and/or to similar state authorities and to the public all of
the terms, conditions and provisions of the Agreement and any
agreement with respect to a new franchise/license, as well as
various documents delivered to the Company and/or the
Operating Partnership pursuant to the Agreement and any
agreement with respect to a new franchise/license.
With the knowledge and understanding that the beneficiaries of this
letter will rely upon the consents, agreements and certifications contained
herein, the Franchiser/Licensor hereby consents, agrees and certifies as
follows:
1. Franchiser/Licensor consents to the use of the Trademarks and the
discussion of the terms of the Agreement in any Registration Statement and any
related preliminary or final prospectus; provided, however, that the Company
include the following statement in the Registration Statement and any related
preliminary or final prospectus:
HOLIDAY INN(R) AND CROWNE PLAZA(R) ARE REGISTERED TRADEMARKS OF, AND
HOLIDAY INN SELECT(SM) IS A REGISTERED SERVICE MARK OF, HOLIDAY INNS
FRANCHISING, INC. ("HOLIDAY INNS"): HOLIDAY INNS HAS NOT ENDORSED OR
APPROVED THE OFFERING OR ANY OF THE FINANCIAL RESULTS OF THE HOTELS
SET FORTH IN THIS PROSPECTUS NOR DOES HOLIDAY INNS HAVE ANY INTEREST
IN THE COMPANY, THE LESSEE, OR THE COMMON STOCK OFFERED HEREBY,
EXCEPT AS A FRANCHISER. A GRANT OF A HOLIDAY INN, HOLIDAY INN
SELECT, OR CROWNE PLAZA FRANCHISE LICENSE FOR CERTAIN OF THE HOTELS
IS NOT INTENDED AS, AND SHOULD NOT BE INTERPRETED AS, AN EXPRESS OR
IMPLIED APPROVAL OR ENDORSEMENT BY HOLIDAY INNS (OR ANY OF ITS
AFFILIATES, SUBSIDIARIES, OR DIVISIONS) OF THE COMPANY, THE
OPERATING PARTNERSHIP, THE LESSEE, OR THE COMMON STOCK OFFERED
HEREBY.
[TO BE MODIFIED FOR [ILLEGIBLE]]
79
2. Franchiser/Licensor agrees that the information attached as
Exhibit A hereto concerning Franchiser/Licensor to be included in the
Registration Statement is true and correct in all material respects.
3. From and after the date hereof, Franchiser/Licensor agrees that
it shall send a copy of any notice or statement of a breach or default under the
Agreement or any notices or statement of any intention to cancel or terminate
the Agreement by certified mail, return receipt requested, to the Company at the
address shown above at the same time such notice or statement is sent to Lessee.
The Company shall have the option, within a reasonable time, but not less than
ninety (90) days following receipt by the Company of such notice to cure any
such act, omission, breach, or default of Lessee. Any default which is not, by
its nature, reasonably susceptible of being cured by the Company shall be deemed
cured by the taking of possession of the Hotel by the Company's designee.
Franchiser/Licensor agrees that, upon the termination of Lessee's leasehold
interest in the Hotel or in the event of a default by Lessee under the
Agreement, and the curing of such default by the Company, Franchiser/Licensor
will permit the Hotel to be operated pursuant to the Agreement by a designee of
the Company for a period of up to twelve months in order to allow such designee
of the Company to apply for a new franchise/license.
4. Franchiser/Licensor acknowledges that Lessee will lease the Hotel
and certain other hotels, and agrees that such leasing of other hotels will not
constitute a breach of the Agreement.
5. Franchiser/Licensor acknowledges that Manager will manage and
operate the Hotel and certain other hotels, and agrees that such management and
operation of other hotels will not constitute a breach of the Agreement.
6. The Franchiser/Licensor certifies, as of the date hereof, as
follows:
(a) Attached as Exhibit B is a true, correct and complete copy of
the Agreement and all amendments, supplements and
modifications thereof;
(b) Lessee is the sole franchisee/licensee pursuant to the
Agreement, with all rights and duties as franchisee/licensee
pursuant to the Agreement, and is a franchisee/licensee in
good standing under the terms of this Agreement;
(c) There is presently no default, and, to the best of
Franchiser/Licensor's knowledge, there is no event or state of
facts that with the more passage of time or the notice of
default or both would constitute a default, under the
Agreement (including, without limitation, the provisions of
the Franchiser/Licensor's standards manual or the requirements
of any property improvement plan); and
80
(d) There are no agreements or understandings, oral or otherwise,
between Franchiser/Licensor and Lessee with regard to the
Agreement, except as set forth in the Agreement.
7. Notwithstanding anything to the contrary set forth herein, the
Franchiser/Licensor acknowledges that the beneficial holder of the Agreement is
the Operating Partnership.
8. The provisions of this letter shall inure to the benefit of the
Company, the Operating Partnership and other affiliates of the Company, Lessee
and Manager, Owner and shall be binding upon Franchiser/Licensor, its successors
and assigns.
HOLIDAY INNS FRANCHISING, INC.
By:
--------------------------------
Name:
Title:
Date:____________, 19__
81
EXHIBIT A
82
EXHIBIT B
83
Exhibit E-2
Form of Franchisor Comfort Letter in favor of Mortgagee
A form reasonably acceptable to Mortgagee and the franchisor.
84
EXHIBIT G
Form of Lock-Up Letter
__________, 1997
American General Hospitality Corporation
American General Hospitality
Operating Partnership, L.P.
5605 MacArthur Boulevard
Suite 1200
Irving, Texas 75038
Ladies and Gentlemen:
Reference is made to that certain Purchase and Sale Agreement, dated
as of ___________, 1997, as amended (the "Agreement") between Prime Hospitality
Corp., a Delaware corporation, and American General Hospitality Operating
Partnership, L.P., a Delaware limited partnership ("Operating Partnership"),
pursuant to which the undersigned will receive interests in the Operating
Partnership.
In order to induce the Operating Partnership to consummate the
transactions contemplated by the Agreement, the undersigned, intending to be
legally bound, hereby agrees that, without the prior written consent of American
General Hospitality Corporation (the "Company"), for a six month period
commencing on the date hereof (the "Lock-up Period" ), the undersigned will not,
directly or indirectly, offer to sell, sell, grant any option for the sale of,
or otherwise dispose of or transfer, any units of limited partnership interest
("OP Units") in the Operating Partnership received pursuant to the Agreement or
any shares of common stock of the Company, $0.01 par value per share (the
"Stock"), issuable upon exchange of the OP Units in accordance with the Exchange
Rights Agreement (the "Exchange Agreement") dated the date hereof among the
undersigned, the Operating Partnership and the Company or pursuant to the
Amended and Restated Agreement of Limited Partnership of the Operating
Partnership.
The undersigned acknowledges that any sale or transfer of any OP
Units or Stock in violation of this letter will be null and void. The
undersigned acknowledges that it is impossible to measure the damages that will
accrue to the Operating Partnership or the Company by reason of a failure of the
undersigned to comply with the provisions of this letter. Therefore, if the
Company and/or the Operating Partnership shall institute any action or
85
proceeding to enforce the provisions hereof, the undersigned agrees that the
Company and/or the Operating Partnership shall be entitled to injunctive relief,
and the undersigned waives, and shall not allege, any claim or defense to such
action or proceeding, including, without limitation, any claim or defense that
the undersigned has an adequate remedy at law.
IN WITNESS WHEREOF, the undersigned has executed this Lock-Up
Agreement as of the date first written above.
PRIME HOSPITALITY CORP.
By:
------------------------------
Name:
Title:
86
EXHIBIT H
FORM OF OPERATING LEASE
LEASE AGREEMENT
DATED AS OF ________ __, 1998
BETWEEN
-----------------
AS LESSOR
AND
-----------------
AS LESSEE
[Name and location of Hotel]
87
TABLE OF CONTENTS
SECTION PAGE
- ------- ----
ARTICLE I
1.1 Leased Property .............................................. 1
1.2 Term ......................................................... 2
1.3 [Intentionally Omitted.] ..................................... 2
ARTICLE II ............................................................... 2
Definitions ....................................................... 2
ARTICLE III
3.1 Rent ........................................................ 16
3.2 Confirmation of Participating Rent .......................... 21
3.3 Additional Charges .......................................... 23
3.4 No Set Off .................................................. 23
3.5 Annual Budget ............................................... 23
3.6 Books and Records ........................................... 26
3.7 [Intentionally omitted.] .................................... 26
3.8 Hotel Operations ............................................ 26
3.9 Allocation of Revenues ...................................... 27
3.10 Performance Standard ........................................ 27
ARTICLE IV ............................................................... 28
4.1 Payment of Impositions ...................................... 28
4.2 Notice and Accrual of Impositions ........................... 30
4.3 Adjustment of Impositions ................................... 31
4.4 Utility Charges ............................................. 31
4.5 Franchise Fees .............................................. 31
4.6 Ground Rent ................................................. 31
ARTICLE V ................................................................ 31
5.1 No Termination, Abatement, etc .............................. 31
ARTICLE VI ............................................................... 32
6.1 Ownership of the Leased Property ............................ 32
6.2 Lessee's Personal Property .................................. 32
ARTICLE VII .............................................................. 33
7.1 Condition of the Leased Property ............................ 33
7.2 Use of the Leased Property .................................. 34
7.3 Lessor to Grant Easements, etc. ............................. 35
ARTICLE VIII ............................................................. 35
8.1 Compliance with Legal and Insurance Requirements,
etc ....................................................... 35
8.2 Legal Requirements Covenants ................................ 36
8.3 Environmental Covenants ..................................... 37
ARTICLE IX ............................................................... 39
88
PAGE
9.1 Maintenance and Repair ..................................... 39
ARTICLE X ................................................................ 41
10.1 Alterations ................................................ 41
10.2 Salvage .................................................... 42
10.3 Lessor Alterations ......................................... 42
ARTICLE XI ............................................................... 42
Liens ............................................................. 42
ARTICLE XII .............................................................. 43
Permitted Contests ................................................ 43
ARTICLE XIII ............................................................. 44
13.1 General Insurance Requirements ............................. 44
13.2 Replacement Cost ........................................... 47
13.3 [Intentionally omitted] .................................... 47
13.4 Waiver of Subrogation ...................................... 47
13.5 Form Satisfactory, etc. .................................... 47
13.6 Increase in Limits ......................................... 47
13.7 Blanket Policy ............................................. 48
13.8 Separate Insurance ......................................... 48
13.9 Reports on Insurance Claims ................................ 48
ARTICLE XIV .............................................................. 49
14.1 Insurance Proceeds ......................................... 49
14.2 Reconstruction in the Event of Damage or Destruction
Covered by Insurance ...................................... 49
14.3 Reconstruction in the Event of Damage or Destruction
Not Covered by Insurance .................................. 50
14.4 Lessee's Property and Business Interruption
Insurance ................................................. 50
14.5 Abatement of Rent .......................................... 50
14.6 Damage Near End of Term .................................... 50
ARTICLE XV ............................................................... 51
15.1 Definitions ................................................ 51
15.2 Parties' Rights and Obligations ............................ 51
15.3 Total Taking ............................................... 51
15.4 Allocation of Award . . .................................... 51
15.5 Partial Taking ............................................. 52
15.6 Temporary Taking ........................................... 52
ARTICLE XVI .............................................................. 53
16.1 Events of Default .......................................... 53
16.2 Remedies ................................................... 55
16.3 [Intentionally omitted.] ................................... 57
16.4 Waiver ..................................................... 57
16.5 Application of Funds ....................................... 57
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89
PAGE
ARTICLE XVII ............................................................. 57
Lessor's Right to Cure Lessee's Default ........................... 57
ARTICLE XVIII ............................................................ 58
18.1 Personal Property Limitation ............................... 58
18.2 Sublease Rent Limitation ................................... 58
18.3 Sublease Lessee Limitation ................................. 59
18.4 Lessee Ownership Limitation ................................ 59
18.5 Lessee Net Worth ........................................... 59
18.6 No Other Business .......................................... 60
ARTICLE XIX .............................................................. 60
Holding Over ...................................................... 60
ARTICLE XX ............................................................... 61
Indemnification ................................................... 61
ARTICLE XXI .............................................................. 62
21.1 Subletting and Assignment .................................. 62
21.2 Attornment ................................................. 63
ARTICLE XXII ............................................................. 63
Officer's Certificates; Financial Statements; Lessor's
Estoppel Certificates and Covenants ........................ 63
ARTICLE XXIII ............................................................ 66
Lessor's Right to Inspect ......................................... 66
ARTICLE XXIV ............................................................. 66
No Waiver ......................................................... 66
ARTICLE XXV .............................................................. 67
Remedies Cumulative ............................................... 67
ARTICLE XXVI ............................................................. 67
Acceptance of Surrender ........................................... 67
ARTICLE XXVII ............................................................ 67
No Merger of Title ................................................ 67
ARTICLE XXVIII ........................................................... 67
28.1 Conveyance by Lessor ....................................... 67
28.2 Other Interests ............................................ 68
ARTICLE XXIX ............................................................. 70
Quiet Enjoyment ................................................... 70
ARTICLE XXX .............................................................. 70
Notices ........................................................... 70
-iii-
90
PAGE
ARTICLE XXXI ............................................................. 71
Appraisers ........................................................ 71
ARTICLE XXXII ............................................................ 72
Security - Assignment of Agreements ............................... 72
ARTICLE XXXIII ........................................................... 73
33.1 Miscellaneous ............................................... 73
33.2 Transition Procedures ....................................... 73
33.3 Standard of Discretion ...................................... 75
33.4 Action for Damages .......................................... 75
33.5 Limitation on Liability .................................... 75
33.6 *** [FOR CROSSROADS, MAHWAH, NEW JERSEY ONLY Condominium
Association Voting Rights .................................. 75
ARTICLE XXXIV ............................................................ 75
Memorandum of Lease ............................................... 75
ARTICLE XXXV ............................................................. 76
[Intentionally omitted.] .......................................... 76
ARTICLE XXXVI ............................................................ 76
36.1 Option to Terminate Lease - Appointment of Manager ......... 76
ARTICLE XXXVII ........................................................... 79
37.1 Compliance with Franchise Agreement ........................ 79
37.2 Compliance with Management Agreement. ...................... 80
ARTICLE XXXVIII .......................................................... 80
Capital Expenditures .............................................. 80
ARTICLE XXXIX ............................................................ 82
39.1 Lessor's Default ........................................... 82
39.2 Limitation of Lessor's Liability ........................... 83
ARTICLE XL - ARBITRATION ................................................. 83
40.1 Arbitration ................................................ 83
40.2 Alternative Arbitration .................................... 83
40.3 Arbitration Procedures ..................................... 84
Exhibit A: Other Properties
Exhibit B: Land
Exhibit C: Base Rent; Calculation of Participating Rent and Portion of Rent
Attributable to Franchise
Exhibit D: Description of Capital Improvements in Accordance with GAAP
-iv-
91
LEASE AGREEMENT
THIS LEASE AGREEMENT (hereinafter called "Lease"), made as of the
_____ day of January, 1998, by and between ***[AMERICAN GENERAL HOSPITALITY
OPERATING PARTNERSHIP, L.P., a Delaware limited partnership]*** (hereinafter
called "Lessor"), and ______________________, a Delaware corporation hereinafter
called "Lessee"), provides as follows:
W I T N E S S E T H:
Lessor owns the Leased Property. Contemporaneously herewith Lessor
and/or Affiliates of Lessor are acquiring (directly or indirectly) from Lessee
and/or Affiliates of Lessee, certain Other Properties, and Lessor and such
Affiliates are entering into the Other Leases with Lessee and/or Affiliates of
Lessee.
In furtherance of such series of transactions, Lessor and Lessee
wish to enter into this Lease.
NOW, THEREFORE, Lessor, in consideration of the payment of rent by
Lessee to Lessor, the covenants and agreements to be performed by Lessee, and
upon the terms and conditions hereinafter stated, does hereby rent and lease
unto Lessee, and Lessee does hereby rent and lease from Lessor, the Leased
Property.
ARTICLE I
1.1 Leased Property. The leased property (the "Leased Property") is
comprised of Lessor's interest in the following:
(a) the land described in Exhibit "B" attached hereto and by
reference incorporated herein (the "Land");
(b) all buildings, structures and other improvements of every kind
including, but not limited to, alleyways and connecting tunnels, sidewalks,
utility pipes, conduits and lines (on-site and off-site), parking areas and
roadways appurtenant to such buildings and structures presently situated upon
the Land (collectively, the "Leased Improvements");
(c) all easements, rights and appurtenances relating to the Land and
Leased Improvements;
(d) all appliances, equipment, machinery, devices, fixtures, and
other items of property required for or incidental to the use of the Leased
Improvements as a hotel, including all components thereof, now and hereafter
permanently affixed to or incorporated into the Leased Improvements, including,
without
92
limitation, all furnaces, boilers, heaters, electrical equipment, heating,
plumbing, lighting, ventilating, refrigerating, incineration, air and water
pollution control, waste disposal, air-cooling and air-conditioning systems and
apparatus, sprinkler systems and fire and theft protection equipment, all of
which to the greatest extent permitted by law are hereby deemed by the parties
hereto to constitute real estate, together with all replacements, modifications,
alterations and additions thereto (collectively, the "Fixtures");
(e) all furniture and furnishings and all other items of personal
property (excluding Inventory and Lessee's Personal Property) located on, and
used in connection with, the operation of the Leased Improvements as a hotel,
together with all replacements, modifications, alterations and additions
thereto;
(f) all existing leases of the Leased Property (including any
security deposits or collateral held by Lessor pursuant thereto); and
(g) the rights of Lessor in the Franchise Agreement with respect to
the Facility.
THE LEASED PROPERTY IS DEMISED IN ITS PRESENT CONDITION WITHOUT REPRESENTATION
OR WARRANTY (EXPRESSED OR IMPLIED) BY LESSOR AND SUBJECT TO THE RIGHTS OF
PARTIES IN POSSESSION, AND TO THE EXISTING STATE OF TITLE INCLUDING ALL
COVENANTS, CONDITIONS, RESTRICTIONS, EASEMENTS AND OTHER MATTERS OF RECORD
INCLUDING ALL APPLICABLE LEGAL REQUIREMENTS AND MATTERS WHICH WOULD BE DISCLOSED
BY AN INSPECTION OF THE LEASED PROPERTY OR BY AN ACCURATE SURVEY THEREOF.
1.2 Term. The term of the Lease (the "Term") shall commence on the
date hereof (the "Commencement Date") and shall end on the tenth (10th)
anniversary of the last day of the month prior to the month in which the
Commencement Date occurs, unless sooner terminated in accordance with the
provisions hereof.
1.3 [Intentionally Omitted.]
ARTICLE II
Definitions: For all purposes of this Lease, except as otherwise
expressly provided or unless the context otherwise requires, (a) the terms
defined in this Article have the meanings assigned to them in this Article and
include the plural as well as the singular, (b) all accounting terms not
otherwise defined herein have the meanings assigned to them in accordance with
GAAP, (c) all references in this Lease to designated "Articles," "Sections" and
other subdivisions are to the designated Articles,
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Sections and other subdivisions of this Lease and (d) the words "herein,"
"hereof" and "hereunder" and other words of similar import refer to this Lease
as a whole and not to any particular Article, Section or other subdivision.
Additional Charges: As defined in Section 3.3.
Affiliate: As used in this Lease the term "Affiliate" of a Person
shall mean any Person that, directly or indirectly, controls or is controlled by
or is under common control with such Person. For the purposes of this
definition, "control" (including the correlative meanings of the terms
"controlled by" and "under common control with"), as used with respect to any
person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such person,
through the ownership of voting securities, partnership interests or other
equity interests, by contract or otherwise.
Annual Budget: As used in this Lease, the term "Annual Budget" shall
mean the Operating Budget and a Capital Budget prepared by Lessee and approved
by Lessor in accordance with Section 3.5.
Award: As defined in Section 15.1(c).
Base Rate: The prime rate (or base rate) reported in the Money Rates
column or comparable section of The Wall Street Journal as the rate then in
effect for corporate loans at large U.S. money center commercial banks, whether
or not such rate has actually been charged by any such bank. If no such rate is
reported in The Wall Street Journal or if such rate is discontinued, then Base
Rate shall mean such other successor or comparable rate as Lessor may reasonably
designate.
Base Rent: As defined in Section 3.1(a).
Beverage Sales: Shall mean gross revenues from (i) the sale of wine,
beer, liquor or other alcoholic beverages, whether sold in a bar or lounge,
delivered to or available in a guest room, sold at meetings or banquets or at
any other location at the Leased Property and (ii) non-alcoholic beverages sold
in a bar or lounge. Such revenue shall include sales by Lessee and its permitted
subtenants, licensees and concessionaires, but as to subleases, licenses or
similar arrangements for alcoholic beverage sales which are entered into by
Lessor or any prior owner of the Leased Property with parties who are not
Affiliates of Lessee and which were existing as of the date of this Lease, such
revenue shall only include rents received under such existing subleases,
licenses or similar arrangements. Such revenue shall be determined in a manner
consistent with the Uniform System and shall not include the following:
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(a) Any gratuity or service charge added to a customer's bill or
statement in lieu of a gratuity which is paid directly to an employee to the
extent actually paid to employees;
(b) Credits, rebates or refunds; and
(c) Sales taxes or taxes of any other kind imposed on the sale of
alcoholic or other beverages.
Business Day: Each Monday, Tuesday, Wednesday, Thursday and Friday
that is not a day on which national banks in New York City or in the
municipality wherein the Leased Property is located are closed.
Capital Budget: As defined in Section 3.5.
Capital Expenditures: Amounts advanced to pay the costs of Capital
Improvements pursuant to an approved Capital Budget.
Capital Expenditures Reserve: As defined in Article XXXVIII.
Capital Impositions: Taxes, assessments or similar charges imposed
upon or levied against the Leased Property for the costs of public improvements,
including, without limitation, roads, sidewalks, public lighting fixtures,
utility lines, storm sewers, drainage facilities, and similar improvements.
Capital Improvements: Improvements to the Leased Property and
replacement or refurbishing of Fixtures and of Furniture and Equipment that
constitute portions of the Leased Property in connection with its Primary
Intended Use, all as designated as capital improvements by and determined in
accordance with GAAP, and as more fully described on Exhibit D attached.
CERCLA: The Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.
Change in Operations: As defined in Section 3.8.
COBRA: The Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended.
Code: The Internal Revenue Code of 1986, as amended.
Commencement Date: As defined in Section 1.2.
Company: American General Hospitality Corporation.
Condemnation, Condemnor: As defined in Section 15.1.
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Consolidated Financials: For any fiscal year or other accounting
period for Lessee and its consolidated Subsidiaries, statements of operations,
partners' capital and cash flow (or, in the case of a corporation, statements of
operations, retained earnings and cash flow) for such period and for the period
from the beginning of the respective fiscal year to the end of such period and
the related balance sheet as at the end of such period, together with the notes
to any such yearly statement, all in such detail as may be required by the SEC
with respect to filings made by the Company or Lessor, and setting forth in
comparative form the corresponding figures for the corresponding period in the
preceding fiscal year, and prepared in accordance with GAAP and such statements
shall, at Lessor's sole cost and expense, be audited annually (and quarterly if
required by the SEC) by Coopers & Lybrand LLP or another so-called "Big Six"
firm of independent certified public accountants designated by Lessor.
Consolidated Financials shall be prepared on the basis of a December 31 fiscal
year of Lessee.
Consumer Price Index: The "Consumer Price Index" published by the
Bureau of Labor Statistics of the United States Department of Labor, U.S. City
Average, All Items for Urban Wage Earners and Clerical Workers (1982-1984 =
100).
Date of Taking: As defined in Section 15.1(b).
Emergency Expenditures: Expenditures required to take necessary or
appropriate actions to respond to Emergency Situations.
Emergency Situations: Fire, any other casualty, or any other events,
circumstances or conditions which threaten the safety or physical well-being of
the Facility's guests or employees or which involve the risk of material
property damage or material loss to the Facility.
Environmental Authority: Any department, agency or other body or
component of any Government that exercises any form of jurisdiction or authority
under any Environmental Law.
Environmental Authorization: Any license, permit, order, approval,
consent, notice, registration, filing or other form of permission or
authorization required under any Environmental Law.
Environmental Laws: All applicable federal, state, local and foreign
laws and regulations relating to pollution of the environment (including without
limitation, ambient air, surface water, ground water, land surface or subsurface
strata), including without limitation laws and regulations relating to
emissions, discharges, Releases or threatened Releases of Hazardous Materials or
otherwise relating to the manufacture,
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processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials. Environmental Laws include but are not limited
to CERCLA, FIFRA, RCRA, SARA and TSCA.
Environmental Liabilities: Any and all actual or potential
obligations to pay the amount of any judgment or settlement, the cost of
complying with any settlement, judgment or order for injunctive or other
equitable relief, the cost of compliance or corrective action in response to any
notice, demand or request from an Environmental Authority, the amount of any
civil penalty or criminal fine, and any court costs and reasonable amounts for
attorney's fees, fees for witnesses and experts, and costs of investigation and
preparation for defense of any claim or any Proceeding, regardless of whether
such Proceeding is threatened, pending or completed, that may be or have been
asserted against or imposed upon Lessor, Lessee, any Predecessor, the Leased
Property or any property used therein and arising out of:
(a) Failure to comply at any time with all Environmental Laws
applicable to the Leased Property;
(b) Presence of any Hazardous Materials on, in, under, at or in any
way affecting the Leased Property, except to the extent used in the ordinary
course of business at the Leased Property;
(c) A Release or threatened Release of any Hazardous Materials on,
in, at, under or in any way affecting the Leased Property;
(d) Identification of Lessee, Lessor or any Predecessor as a
potentially responsible party under CERCLA or under any other Environmental Law;
(e) Presence at any time of any above-ground and/or underground
storage tanks, as defined in RCRA or in any applicable Environmental Law on,
in, at or under the Leased Property or any adjacent site or facility; or
(f) Any and all claims for injury or damage to persons or property
arising out of exposure to Hazardous Materials originating or located at the
Leased Property, or resulting from operation thereof including, without
limitation, claims resulting from such Hazardous Materials migrating to an
adjoining property.
Event of Default: As defined in Section 16.1.
Facility: The hotel and/or other facility offering lodging and other
services or amenities being operated or
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proposed to be operated on the Leased Property.
Fair Market Value: The fair market value of the Leased Property (or
any portion thereof) means an amount equal to the price that a willing buyer not
compelled to buy would pay a willing seller not compelled to sell for such
Leased Property, (a) assuming the same is unencumbered by this Lease, (b)
determined in accordance with the appraisal procedures set forth in Article XXXI
or in such other manner as shall be mutually acceptable to Lessor and Lessee,
(c) assuming that such seller must pay customary closing costs and title
premiums, and (d) taking into account the positive or negative effect on the
value of the Leased Property attributable to the interest rate, amortization
schedule, maturity date, prepayment penalty and other terms and conditions of
any encumbrance that is assumed by the transferee or subject to which the Leased
Property is transferred. In addition, in determining the Fair Market Value with
respect to damaged or destroyed Leased Property such value shall be determined
as if such Leased Property had not been so damaged or destroyed.
FIFRA: The Federal Insecticide, Fungicide, and Rodenticide Act, as
amended.
Fixtures: As defined in Section 1.1.
Food Sales: Shall mean (i) gross revenues from the sale of food and
non-alcoholic beverages that are sold or delivered on or off the Facility by
Lessee, its permitted subtenants, licensees or concessionaires, whether for cash
or for credit, including in respect of guest rooms, banquet rooms, meeting rooms
and other similar rooms, and (ii) gross revenue from the rental of banquet,
meeting and other similar rooms. Such revenue shall include sales by Lessee and
its permitted subtenants, licensees and concessionaires, but as to subleases,
licenses or similar arrangements for food and non-alcoholic beverage sales which
were entered into by Lessor or any prior owner of the Leased Property with
parties who are not Affiliates of Lessee and which are existing as of the date
of this Lease, such revenue shall only include rents received under such
existing subleases, licenses or similar arrangements. Such revenue shall be
determined in a manner consistent with the Uniform System and shall not include
the following:
(a) Vending machine sales;
(b) Any gratuities or service charges added to a customer's bill or
statement in lieu of a gratuity which is paid directly to an employee to the
extent actually paid to employees;
(c) Non-alcoholic beverages sold from a bar or lounge;
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(d) Credits, rebates or refunds;
(e) Sales taxes or taxes of any other kind imposed on the sale of
food or non-alcoholic beverages; and
(f) Amounts representing the value or cost of food or non-alcoholic
beverages furnished on a complimentary basis to on-site employees of the Hotel.
Franchise Agreement: Any hotel franchise agreement or license
agreement obtained by Lessor under which the Facility is operated.
Furniture and Equipment: For purposes of this Lease, the terms
"furniture and equipment" shall mean collectively all furniture, furnishings,
wall coverings, fixtures and hotel equipment and systems located at, or used in
connection with, the Facility, together with all replacements therefor and
additions thereto, including, without limitation, (i) all equipment and systems
required for the operation of kitchens, bars and restaurants, if any, laundry
and dry cleaning facilities, (ii) office equipment, (iii) dining room wagons,
materials handling equipment, cleaning and engineering equipment, (iv) telephone
and computerized accounting systems, and (v) vehicles.
GAAP: Generally accepted accounting principles as are at the time
applicable and otherwise consistently applied.
General Partner: AGH GP, Inc., the general partner of Lessor.
***[Revise if Lessor is a special purpose entity.]***
Government: The United States of America, any state, district or
territory thereof, any foreign nation, any state, district, department,
territory or other political division thereof, or any political subdivision of
any of the foregoing.
Gross Revenues: All revenues, receipts, and income of any kind
derived directly or indirectly by Lessee from or in connection with the Facility
(including rentals or other payments from tenants, lessees, licensees or
concessionaires but not including their gross receipts) whether on a cash basis
or credit, paid or collected, determined in accordance with GAAP and the Uniform
System, including, but not limited to, Room Revenues, Food Sales, Beverage Sales
and Other Income, excluding, however: (i) funds furnished by Lessor, (ii)
federal, state and municipal excise, sales, occupancy and use taxes collected
directly from patrons and guests or as a part of the sales price of any goods,
services or displays, such as gross receipts, admissions, cabaret or similar or
equivalent taxes and paid over to federal, state or municipal governments, (iii)
gratuities actually paid to employees, (iv) proceeds of insurance and
condemnation, (v)
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proceeds from sales other than sales in the ordinary course of business (vi) all
loan proceeds from financing or refinancings of the Facility or interests
therein or components thereof, (vii) judgments and awards, except any portion
thereof arising from normal business operations of the hotel, (viii) such other
items as are excluded from the definitions of Food Sales, Beverage Sales and
Room Revenues, (ix) Real Estate Tax refunds pertaining to the Leased Premises,
and (x) items constituting "allowances" under the Uniform System.
Hazardous Materials: All chemicals, pollutants, contaminants, wastes
and toxic substances, including without limitation:
(a) Solid or hazardous waste, as defined in RCRA or in any
Environmental Law;
(b) Hazardous substances, as defined in CERCLA or in any
Environmental Law;
(c) Toxic substances, as defined in TSCA or in any Environmental
Law;
(d) Insecticides, fungicides, or rodenticides, as defined in FIFRA
or in any Environmental Law;
(e) Gasoline or any other petroleum product or byproduct,
polychlorinated biphenols, asbestos and urea formaldehyde;
(f) Asbestos or asbestos containing materials;
(g) Urea formaldehyde foam insulation; and
(h) Radon gas.
Holder: Any holder of a Mortgage, any purchaser of the Leased
Property or any portion thereof at a foreclosure sale or any sale in lieu
thereof, or any designee of any of the foregoing.
Impositions: Collectively, all taxes (including, without limitation,
all ad valorem, sales and use, occupancy, single business, gross receipts,
transaction privilege, rent or similar taxes as the same relate to or are
imposed upon Lessee or Lessor or Lessee's business conducted upon the Leased
Property) assessments (including, without limitation, all assessments for public
improvements or benefit, whether or not commenced or completed prior to the date
hereof and whether or not to be completed within the Term), water, sewer or
other rents and charges, excises, tax inspection, authorization and similar fees
and all other governmental charges, in each case whether general
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or special, ordinary or extraordinary, or foreseen or unforeseen, of every
character in respect of the Leased Property or the business conducted thereon by
Lessee (including all interest and penalties thereon caused by any failure in
payment by Lessee), which at any time during or with respect to the Term hereof
may be assessed or imposed on or with respect to or be a lien upon (a) Lessor's
interest in the Leased Property, (b) the Leased Property, or any part thereof or
any rent therefrom or any estate, right, title or interest therein, or (c) any
occupancy, operation, use or possession of, or sales from, or activity conducted
on or in connection with the Leased Property by Lessee, or the leasing or use of
the Leased Property or any part thereof by Lessee. Nothing contained in this
definition of Impositions shall be construed to require Lessee to pay (1) any
tax based on net income (whether denominated as a franchise or capital stock or
other tax) imposed on Lessor or any other person, or (2) any net revenue tax of
Lessor or any other person, or (3) any tax imposed with respect to the sale,
exchange or other disposition by Lessor of any Leased Property or the proceeds
thereof, or (4) any single business, gross receipts (other than a tax on any
rent received by Lessor from Lessee), transaction, privilege or similar taxes
as the same relate to or are imposed upon Lessor except to the extent that any
tax, assessment, tax levy or charge that Lessee is obligated to pay pursuant to
the first sentence of this definition and that is in effect at any time during
the Term hereof is totally or partially repealed, and a tax, assessment, tax
levy or charge set forth in clause (1) or (2) is levied, assessed or imposed
expressly in lieu thereof.
Indemnified Party: Either of a Lessee Indemnified Party or a Lessor
Indemnified Party.
Indemnifying Party: Any party obligated to indemnify an Indemnified
Party pursuant to any provision of this Lease.
Insurance Requirements: All terms of any insurance policy required
by this Lease and all requirements of the issuer of any such policy.
Inventory: All "Inventories of Merchandise" and "Inventories of
Supplies" as defined in the Uniform System, including, but not limited to,
linens, china, silver, glassware and other non-depreciable personal property,
and any property of the type described in Section 1221(1) of the Code.
Land: As defined in Article I.
Lease: This Lease.
Lease Year: Any 12-month period from January 1 to December 31 during
the Term, or any shorter period at the beginning or the end of the Term.
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Leased Improvements; Leased Property: Each as defined in Article I.
Legal Requirements: All federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions affecting either the Leased Property or the maintenance,
construction, use, operation or alteration thereof (whether by Lessee or
otherwise), whether or not hereafter enacted and in force, including (a) all
laws, rules or regulations pertaining to the environment, occupational health
and safety and public health, safety or welfare, and (b) any laws, rules or
regulations that may (1) require repairs, modifications or alterations in or to
the Leased Property or (2) in any way adversely affect the use and enjoyment
thereof, and (c) all permits, licenses and authorizations necessary or
appropriate to operate the Leased Property for its Primary Intended Use,
including, but not limited to, any licenses required for the sale and service of
alcoholic beverages, and (d) all covenants, agreements, restrictions and
encumbrances contained in any instruments, either of record or known to Lessee
(other than encumbrances hereafter created by Lessor without the consent of
Lessee), at any time in force affecting the Leased Property.
Lessee: The Lessee designated on this Lease and its respective
permitted successors and assigns.
Lessee Indemnified Party: Lessee, any Affiliate of Lessee, any other
Person against whom any claim for indemnification may be asserted hereunder as a
result of a direct or indirect ownership interest in Lessee, the officers,
directors, stockholders, members, partners, employees, agents and
representatives of Lessee and any corporate stockholder, agent or representative
of Lessee, and the respective heirs, personal representatives, successors and
assigns of any such officer, director, stockholder, members, partners, employee,
agent or representative.
Lessee's Personal Property: As defined in Section 6.2.
Lessor: The Lessor designated on this Lease and its respective
successors and assigns.
Lessor Indemnified Party: Lessor, any Affiliate of Lessor, including
the Company and the General Partner, any other Person against whom any claim for
indemnification may be asserted hereunder as a result of a direct or indirect
ownership interest in Lessor, the officers, directors, stockholders, partners,
members, employees, agents and representatives of any of the foregoing Persons
and of any stockholder, partner, member, agent, or representative of any of the
foregoing Persons, and the respective heirs, personal representatives,
successors and
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assigns of any such officers, directors, partners, stockholders, members,
employees, agents or representatives.
Lessor's Audit: An audit by Lessor's independent certified public
accountants of the operation of the Leased Property during any Lease Year, which
audit shall be at Lessor's sole cost and expense and may, at Lessor's election,
be either a complete audit of the Leased Property's operations or an audit of
Room Revenues, Food Sales, Beverage Sales and Other Income realized from the
operation of the Leased Property during such Lease Year.
*** [FOR CROWNE PLAZA LAS VEGAS PROPERTY ONLY: Management Agreement: That
certain Hotel Management Agreement between Lessee and Prime Hospitality Corp.
dated the date hereof relating to the management of the Leased Property, a copy
of which has been delivered to Lessor. NOTE: Management Agreement for 10 year
term to be non-assignable, to provide for automatic termination upon termination
of Lease and any managment fee payable thereunder to be subordinate to the
Lease] ***.
Manager: Prime Hospitality Corp., a Delaware corporation.
Mortgage: As defined in Section 28.2.
Net Worth: The excess of total assets over total liabilities, total
assets and total liabilities each to be determined in accordance with GAAP,
excluding, however, from the determination of total assets: (a) goodwill,
organizational expenses, research and development expenses, trademarks, trade
names, copyrights, patents, patent applications, and other similar intangibles;
(b) all deferred charges that are not required to be capitalized in accordance
with GAAP or unamortized debt discounts and expenses; (c) treasury stock; (d)
securities which are not readily marketable; (e) any write-up in the book value
of any asset resulting from a revaluation thereof; (f) this Lease and the Other
Leases; and (g) any items not included in clauses (a) through (f) above that are
treated as intangibles in conformity with GAAP. All marketable securities will
be valued at their current market value.
New Management Agreement: Any hotel management agreement entered
into between Lessee and AGHI (as defined in Section 36.1 hereof) or any
experienced hotel management company, which is not an Affiliate of Lessee,
pursuant to the terms of Article XXXVI hereof on terms satisfactory to Lessor,
Lessee and AGHI or such third party management company, as the case may be.
No Sale Period: A period of three (3) years from the date hereof.
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Notice: A notice given pursuant to Article XXX.
Officer's Certificate: A certificate of Lessee reasonably acceptable
to Lessor, signed by the chief financial officer or another officer duly
authorized so to sign by Lessee or a general partner of Lessee, or any other
person whose power and authority to act has been authorized by delegation in
writing by any such officer.
Operating Budget: As defined in Section 3.5.
Other Income: All revenues, receipts, and income of any kind derived
directly or indirectly from or in connection with the Facility and included in
Gross Revenues other than Room Revenues, Food Sales or Beverage Sales.
Overdue Rate: On any date, a rate equal to the Base Rate plus 5% per
annum, but in no event greater than the maximum nonusurious rate then permitted
under applicable law.
Other Leases: The leases of the Other Properties between Lessor
and/or its Affiliates and Lessee and/or its Affiliates.
Other Properties: The properties described on Exhibit "A" attached
hereto.
Payment Date: Any due date for the payment of any installment of
Rent.
Participating Rent: As defined in Sections 3.1(b), 3.1(c) and
3.1(d).
Person: The term "Person" means and includes individuals,
corporations, general and limited partnerships, limited liability companies,
stock companies or associations, joint ventures, associations, companies,
trusts, banks, trust companies, land trusts, business trusts, or other legal
entities and governments and agencies and political subdivisions thereof.
Personal Property Taxes: All personal property taxes imposed on the
furniture, furnishings or other items of personal property located on, and used
in connection with, the operation of the Leased Improvements as a hotel (other
than Inventory and other personal property owned by the Lessee), together with
all replacements, modifications, alterations and additions thereto.
Predecessor: Any Person whose liabilities arising under any
Environmental Law have or may have been retained or assumed by Lessor or Lessee
pursuant to the provisions of this Lease.
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Primary Intended Use: As defined in Section 7.2(b).
Proceeding: Any judicial action, suit or proceeding (whether civil
or criminal), any administrative proceeding (whether formal or informal) any
investigation by a governmental authority or entity (including a grand jury),
and any arbitration, mediation or other non-judicial process for dispute
resolution.
RCRA: The Resource Conservation and Recovery Act, as amended.
Real Estate Taxes: All real estate taxes, including general and
special assessments, if any, which are imposed upon the Land and any
improvements thereon.
Release: A "Release" as defined in CERCLA or in any Environmental
Law, unless such Release has been properly authorized and permitted in writing
by all applicable Environmental Authorities or is allowed by such Environmental
Law without authorizations or permits.
Rent: Collectively, the Base Rent, Participating Rent, and
Additional Charges.
RevPAR Decline: A decline of the RevPAR Yield Index of the Facility
below 90.
RevPAR Yield Index: The percentage amount obtained by dividing the
RevPAR of the Leased Property by the RevPAR of the Leased Property's
Competitive Set, with the terms "RevPAR" and "Competitive Set" having the
meanings ascribed to them in Smith Travel Research Reports ("STR Reports"),
calculated in accordance with the STR Reports which contains a full calendar
year calculation thereof for the Leased Property (or if STR Reports are no
longer published or do not contain sufficient information to make such
calculation, the RevPAR Yield Index shall instead be calculated using the
methodology presently used by STR Reports from information contained in any
other publication reasonably selected by Lessor and recognized by the hotel
industry as being an authoritative source of such information or, if no such
publication exists, from an analysis conducted at the joint expense of Lessor
and Lessee by a nationally recognized accounting firm with a hospitality
division chosen by Lessor and Lessee).
Room Revenues: Gross revenue from the rental of guest rooms, whether
to individuals, groups or transients, at the Facility, determined in a manner
consistent with the Uniform System and excluding the following:
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(a) The amount of all credits, rebates or refunds to customers,
guests or patrons;
(b) All sales taxes or any other taxes imposed on the rental of such
guest rooms; and
(c) Any fees collected for amenities including, but not limited to,
telephone, laundry, movies or concessions.
SARA: The Superfund Amendments and Reauthorization Act of 1986, as
amended.
SEC: The U.S. Securities and Exchange Commission or any successor
agency.
State The State or Commonwealth of the United States in which the
Leased Property is located.
Subsidiaries: Corporations or other entities in which Lessee or
Lessor, as applicable, owns, directly or indirectly, more than 50% of the voting
rights or control, as applicable (individually, a "Subsidiary").
Taking: A permanent or temporary taking or voluntary conveyance
during the Term hereof of all or part of the Leased Property, or any interest
therein or right accruing thereto or use thereof, as the result of, or in
settlement of, any Condemnation or other eminent domain proceeding affecting the
Leased Property.
Tax Law Change: A change in the Code (including, without limitation,
a change in the Treasury regulations promulgated thereunder) or in the judicial
or administrative interpretations of the Code, which in Lessor's determination
will permit Lessor or an Affiliate thereof to operate the Facility as a hotel
without adversely affecting the Company's qualification for taxation as a real
estate investment trust under the applicable provisions of the Code.
Term: As defined in Section 1.2.
TSCA: The Toxic Substances Control Act, as amended.
Unavoidable Delay: Delay due to strikes, lock-outs, labor unrest,
inability to procure materials, power failure, acts of God, governmental
restrictions, enemy action, civil commotion, fire, unavoidable casualty,
condemnation or other similar causes beyond the reasonable control of the party
responsible for performing an obligation hereunder, provided that lack of funds
shall not be deemed a cause beyond the reasonable control of either party hereto
unless such lack of funds is caused by the
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breach of the other party's obligation to perform any obligations of such other
party under this Lease.
Unavoidable Occurrence: The occurrence of strikes, lock-outs, labor
unrest, inability to procure materials, power failure, acts of God, governmental
restrictions, enemy action, civil commotion, fire, unavoidable casualty,
condemnation or other similar causes beyond the reasonable control of Lessee,
provided that any such occurrence is an extraordinary (as opposed to a routine
or cyclical) material event that was not reasonably foreseeable when the then
applicable Annual Budget was prepared.
Uneconomic for its Primary Intended Use: A state or condition of the
Facility such that in the reasonable, good faith judgment of Lessor the Facility
cannot be operated on a commercially practicable basis for its Primary Intended
Use, such that Lessor intends to, and shall, complete the cessation of
operations from the Leased Facility.
Uniform System: Shall mean the Uniform System of Accounts for Hotels
(8th Revised Edition, 1986) as published by the Hotel Association of New York
City, Inc., as same may hereafter be revised, and as the same has been
interpreted and applied by Coopers & Lybrand LLP in connection with the audit of
the Leased Property prepared for the Company in connection with its initial
public offering.
Unsuitable for its Primary Intended Use: A state or condition of the
Facility such that in the reasonable, good faith judgment of Lessor the Facility
cannot function as an integrated hotel facility consistent with standards
applicable to a well maintained and operated hotel comparable in quality and
function to that of the Facility prior to the damage or loss.
WARN: Work Adjustment and Retraining Notification Act, as amended.
ARTICLE III
3.1 Rent. Lessee will pay to Lessor by wire transfer of immediately
available funds or such other transfer as Lessor may require, to the account of
Lessor or to the account of such other Person, as Lessor from time to time may
designate in a Notice, without set-off or deduction at any time, all Base Rent,
Participating Rent and Additional Charges, during the Term, as follows:
(a) Base Rent: The fixed annual sum set forth on Exhibit C (subject
to adjustment and increase as set forth in this Subparagraph (a) and in
Subparagraph (d) hereof, the "Base Rent"), payable in advance in consecutive
monthly installments,
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the first of which shall be payable on the Commencement Date and continuing
thereafter each subsequent calendar month of the Term, each such monthly payment
to be paid on the first day of each such calendar month of the Term; provided,
however, that (i) Base Rent shall be prorated as to any partial Lease Year, (ii)
the first and last monthly payments of Base Rent shall be prorated as to any
partial month, and (iii) payments of Base Rent shall be subject to abatement
where and only where and to the extent expressly provided in this Lease. The
Base Rent payable for each month shall equal the annual sum set forth on Exhibit
C multiplied by a fraction having as its numerator the Budgeted Receipts for
such month and having as its denominator the aggregate Budgeted Receipts for the
current Lease Year. If the term of this Lease commences or ends other than on
the first or last day of a month, the Base Rent due for such month shall equal
the monthly Base Rent (computed as provided in the preceding sentence)
multiplied by a fraction having as its numerator the number of days in said
partial month and having as its denominator the number of days in the entire
month. "Budgeted Receipts" shall mean the Gross Revenues projected in the
Operating Budget for such Lease Year (or portion thereof).
(b) Participating Rent: For each calendar month during the Term,
Lessee shall pay percentage rent ("Participating Rent") in arrears in an amount
calculated by the following formula (the "Revenues Computation"):
For any month, Participating Rent shall equal:
The amount equal to the Monthly Revenue Computation (defined
below)
less
an amount equal to the Base Rent paid for the Lease Year to
date
less
an amount equal to the Participating Rent paid for the Lease
Year to date.
The Participating Rent due for each calendar month during the Term shall be paid
on or before the twenty-first (21st) day of the succeeding month. In no event
shall Participating Rent be less than zero.
For purposes of defining the Monthly Revenues Computation:
(i) "Cumulative Monthly Portion" shall mean a fraction having
as its numerator the aggregate Budgeted Receipts (as defined in Section 3.1(a))
for the calendar months in a Lease Year which have elapsed including the month
for which the calculation is being made and having as its denominator the
aggregate Budgeted Receipts for the Lease Year. The Cumulative Monthly Portion
for the December 31 Participating Rent payment
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(due January 21 of the next Lease Year) will be 100%, assuming that the Lease
Year in question is a full Lease Year. If the term of this Lease commences or
ends on other than the first or last day of a month, then when calculating the
Cumulative Monthly Portion beginning or ending during such calendar month, the
Cumulative Monthly Portion for such partial calendar month shall be the product
of (i) a fraction having as its numerator the Budgeted Receipts for said month
and having as its denominator the Budgeted Receipts for the entire calendar
year, multiplied by (ii) another fraction having as its numerator the actual
Gross Revenues received during said partial month and having as its denominator
the actual Gross Revenues received during the entire month.(1)
(ii) "First Tier Room Revenue Percentage," "Second Tier Room
Revenue Percentage," "Third Tier Room Revenue Percentage," "First Tier Food
Sales Percentage," "Second Tier Food Sales Percentage," and "Other Income
Percentage" shall mean the percentages corresponding to each of such terms as
set forth on Exhibit C.
(iii) "Annual Room Revenues First Break Point" and "Annual
Room Revenues Second Break Point" shall mean the amount of annual Room Revenues
corresponding to each of such terms as set forth on Exhibit C.
(iv) "Annual Food Sales Break Point" shall mean the amount of
annual Food Sales and Beverage Sales corresponding to such term as set forth on
Exhibit C.
The Monthly Revenues Computation shall be the amount obtained by
adding, for the applicable Lease Year, (i) an amount equal to the First Tier
Room Revenue Percentage of all year to date Room Revenues up to (but not
exceeding) the Cumulative Monthly Portion of the Annual Room Revenues First
Break Point, (ii) an amount equal to the Second Tier Room Revenue Percentage of
all year to date Room Revenues in excess of the Cumulative Monthly Portion of
the Annual Room Revenues First Break Point up to (but not exceeding) the
Cumulative Monthly Portion of the Annual Room Revenues Second Break Point, (iii)
an amount equal to the Third Tier Room Revenue Percentage of all year to date
Room Revenues in excess of the Cumulative Monthly Portion of the Annual Room
Revenues Second Break Point, (iv) an amount equal to the First Tier Food Sales
Percentage of the Cumulative Monthly Portion of all year to date Food Sales and
Beverage Sales up to (but not exceeding) the Cumulative Monthly Portion of the
Annual
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(1) The Rent payable under each Operating Lease for the balance of 1997 year
shall be based upon the per diem amount applicable to each of the Group One
Properties set forth on Schedule A attached hereto.
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Food Sales Break Point, (v) an amount equal to the Second Tier Food Sales
Percentage of all year to date Food Sales and Beverage Sales in excess of the
Cumulative Monthly Portion of the Annual Food Sales Break Point, and (vi) an
amount equal to the Other Income Percentage of year to date revenues from Other
Income.
(c) Officer's Certificates. Within 21 days after each of the first
three quarters of each Lease Year (or part thereof) in the Term, Lessee shall
deliver to Lessor an Officer's Certificate reasonably acceptable to Lessor,
setting forth the calculation of the Participating Rent payment for the three
(3) months comprising such quarter, based on the formulas set forth in Section
3.1(b). There shall be no reduction in the Base Rent regardless of the result
of the Revenues Computation.
In addition, on or before forty-five days after the end of each
year, commencing with, February 14, 1999, Lessee shall deliver to Lessor an
Officer's Certificate reasonably acceptable to Lessor setting forth the
computation of the actual Participating Rent that accrued for each month of the
Lease Year that ended on the immediately preceding December 31. Additionally, if
the annual Participating Rent due and payable for any Lease Year (as shown in
the applicable Officer's Certificate) exceeds the amount actually paid as
Participating Rent by Lessee for such year, Lessee also shall pay such excess to
Lessor at the time such certificate is delivered. If the Participating Rent
actually due and payable for such Lease Year is shown by such certificate to be
less than the amount actually paid as Participating Rent for the applicable
Lease Year, at the option of Lessee, Lessor shall reimburse such amount to
Lessee or credit such amount against subsequent months' Base Rent and, to the
extent necessary, subsequent months' Participating Rent payments, or, if none,
then such amounts shall be paid to Lessee. Any such credit to Base Rent shall
not be applied for purposes of calculating Participating Rent payable for any
subsequent month.
Any difference between the annual Participating Rent due and payable
for any Lease Year (as shown in the applicable Officer's Certificate or as
adjusted pursuant to Section 3.1(d)) and the total amount actually paid by
Lessee as Participating Rent for such Lease Year, whether in favor of Lessor or
Lessee, shall bear interest at the Base Rate, which interest shall accrue from
the due date of the last monthly Participating Rent payment for the Lease Year
until the amount of such difference shall be paid or otherwise discharged. Any
such interest payable to Lessor shall be deemed to be and shall be payable as
Additional Charges.
The obligation to pay Participating Rent shall survive the
expiration or earlier termination of the Term, and a final reconciliation,
taking into account, among other relevant adjustments, any adjustments which are
accrued after such
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expiration or termination date but which related to Participating Rent accrued
prior to such termination date, shall be made not later than ninety (90) days
after such expiration or termination date.
(d) CPI Adjustments. For each Lease Year during the Term beginning
with the Lease Year commencing January 1, 1999, the Base Rent then in effect,
the Annual Room Revenues First Break Point and the Annual Room Revenues Second
Break Point (together, the "Annual Room Revenues Break Points"), and the Annual
Food Sales Break Point then included in the Revenues Computation set forth in
Section 3.1(b), shall be increased as follows:
(i) For the Lease Year commencing January 1, 1999 and for each
Lease Year thereafter during the Term, the Consumer Price Index for the day
before the day that the new Lease Year commences (the "Measurement Date") shall
be divided by the Consumer Price Index for the day that is twelve months
preceding the Measurement Date;
(ii) The new Base Rent for the then current Lease Year shall
be the product of the Base Rent in effect in the most recently ended Lease Year
and the quotient obtained under subparagraph (1) above;
(iii) The new Annual Room Revenues Break Points in the
Revenues Computation described in Section 3.1(b) above for the Lease Year
commencing January 1, 1999 shall be the product of the Annual Room Revenues
Break Points in effect in the Lease Year ending December 31, 1998 and the
quotient obtained in subparagraph (1) above, and the new Annual Room Revenues
Break Points in the Revenues Computation for the Lease Year beginning with the
Lease Year commencing January 1, 1999 and for each Lease Year thereafter during
the Term, shall be the product of (a) the Annual Room Revenues Break Points in
effect in the most recently ended Lease Year and (b) the quotient obtained in
subparagraph (1) above plus seventy-five one hundredths percent (.75%), ***
[when applicable as shown the on the Smith Barney,. Inc. model LANGUAGE TO BE
PROVIDED FOR EACH LEASE BASED ON THE SMITH BARNEY, INC. MODEL]***; and
(iv) The new Annual Food Sales Break Point in the Revenues
Computation described in Section 3.1(b) above for the Lease Year commencing
January 1, 1999 shall be the product of the Annual Food Sales Break Point in
effect in the Lease Year ending December 31, 1998 and the quotient obtained in
subparagraph (1) above, and the new Annual Food Sales Break Point in the
Revenues Computation for the Lease Year beginning with the Lease Year commencing
January 1, 1999 and for each Lease Year thereafter during the Term, shall be the
product of (a) the Annual Food Sales Break Point in effect in the most recently
ended Lease Year
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and (b) the quotient obtained in subparagraph (1) above plus seventy-five one
hundredths percent (.75%), ***[when applicable s shown the on the Smith
Barney, Inc. model LANGUAGE TO BE PROVIDED FOR EACH LEASE BASED ON THE SMITH
BARNEY, INC. MODEL] ***.
In no event shall the Base Rent, the Annual Room Revenues Break
Points or the Annual Food Sales Break Point be reduced as a result of any
changes in the Consumer Price Index.
Adjustments calculated as set forth above in the Base Rent, the
Annual Room Revenues Break Points and the Annual Food Sales Break Point shall be
effective on the first day of each calendar Lease Year to which such adjusted
amounts apply. If Rent is paid prior to the determination of the amount of any
adjustment to Base Rent, the Annual Room Revenues Break Points or the Annual
Food Sales Break Point applicable for such period, whether because of a delay in
the publication of the Consumer Price Index for the Measurement Date or because
of any other reason, payment adjustments for any shortfall in or overpayment of
Rent paid shall be made with the first Base Rent and Participating Rent payments
due after the amount of the adjustments are determined.
If (1) a significant change is made in the number or nature (or
both) of items used in determining the Consumer Price Index, or (2) the Consumer
Price Index shall be discontinued for any reason, the Bureau of Labor Statistics
shall be requested to furnish a new index comparable to the Consumer Price
Index, together with information which will make possible a conversion to the
new index in computing the adjusted Base Rent, Annual Room Revenues Break
Points, and Annual Food Sales Break Point hereunder. If for any reason the
Bureau of Labor Statistics does not furnish such an index and such information,
the parties will instead mutually select, accept and use such other index or
comparable statistics on the cost of living in various U.S. cities that is
computed and published by an agency of the United States or a responsible
financial periodical of recognized authority.
The portion of the aggregate of Base Rent and Participating Rent
designated on Exhibit C payable for each Lease Year shall be attributed to the
rights to the Franchise Agreement granted by Lessor to Lessee pursuant to
Section 1.1(g).
3.2 Confirmation of Participating Rent. Lessee shall utilize, or
cause to be utilized, an accounting system for the Leased Property in accordance
with its usual and customary practices, and in accordance with GAAP and the
Uniform System, that will accurately record all data necessary to compute
Participating Rent, and Lessee shall retain, for at least five (5) years after
the expiration of each Lease Year, reasonably adequate records conforming to
such accounting system showing all
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data necessary to conduct Lessor's Audit and to compute Participating Rent for
the applicable Lease Years. Lessor shall have the right from time to time by its
accountants or representatives to audit such information in connection with
Lessor's Audit, and to examine all Lessee's records (including supporting data
and sales and excise tax returns) reasonably required to complete Lessor's Audit
and to verify Participating Rent, subject to any prohibitions or limitations on
disclosure of any such data under Legal Requirements. If any Lessor's Audit
discloses a deficiency in the payment of Participating Rent, and either Lessee
agrees with the result of Lessor's Audit or the matter is otherwise determined
or compromised, then promptly after such agreement or determination Lessee shall
pay to Lessor the amount of the deficiency, together with interest at the
Overdue Rate from the date when said payment should have been made to the date
of payment thereof; provided, however, that as to any Lessor's Audit that is
commenced more than one (1) year after the end of any Lease Year, the
deficiency, if any, with respect to such Participating Rent shall bear interest
at the Overdue Rate only from the date such determination of deficiency is made
unless such deficiency is the result of gross negligence or willful misconduct
on the part of Lessee, in which case interest at the Overdue Rate will accrue
from the date such payment should have been made to the date of payment thereof.
If any Lessor's Audit discloses a deficiency in the payment of Participating
Rent which, as finally agreed or determined exceeds 4%, Lessee shall pay the
costs of the portion of Lessor's Audit allocable to the determination of Gross
Revenues (the "Revenue Audit"). In no event shall Lessor undertake a Lessor's
Audit more than three (3) years after the last day of the Lease Year for which
such audit is requested. If any Lessor's Audit discloses an excess in the
payment of Participating Rent, Lessor, at its option, shall reimburse such
amount to Lessee or credit such amount against subsequent weeks' Base Rent, and,
to the extent necessary, subsequent quarters' Participating Rent payments, or,
if none, then such amount shall be paid to Lessee. Any credit to Base Rent shall
not be applied for purposes of calculating Participating Rent payable for any
subsequent quarter. Any proprietary information obtained by Lessor pursuant to
the provisions of this Section shall be treated as confidential, except that
such information may be used, subject to appropriate confidentiality safeguards,
in any arbitration or litigation between the parties and except further that
Lessor may disclose such information to prospective lenders and investors and to
any other persons to whom disclosure is necessary to comply with applicable
laws, regulations and government requirements. The obligations of Lessee
contained in this Section shall survive the expiration or earlier termination of
this Lease. Any dispute as to the existence or amount of any deficiency in the
payment of Participating Rent as disclosed by Lessor's Audit shall, if not
otherwise settled by the parties, be submitted to arbitration pursuant to the
provisions of Section 40.2.
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3.3 Additional Charges. In addition to the Base Rent and
Participating Rent, (a) Lessee also will pay and discharge as and when due and
payable all other amounts, liabilities, obligations and Impositions that Lessee
assumes or agrees to pay under this Lease, including, without limitation any
fees, charges and assessments required to be paid pursuant to any
[condominium](2) association or other like agreement pursuant to which charges
or fees may be assessed against the Leased Property, and (b) in the event of any
failure on the part of Lessee to pay any of those items referred to in clause
(a) of this Section 3.3, Lessee also will promptly pay and discharge every fine,
penalty, interest and cost that may be added for nonpayment or late payment of
such items (the items referred to in clauses (a) and (b) of this Section 3.3
being additional rent hereunder and being referred to herein collectively as the
"Additional Charges"), and Lessor shall have all legal, equitable and
contractual rights, powers and remedies provided either in this Lease or by
statute or otherwise in the case of non-payment of the Additional Charges as in
the case of non-payment of the Base Rent. If any installment of Base Rent,
Participating Rent or Additional Charges (but only as to those Additional
Charges that are payable directly to Lessor) shall not be paid on its due date,
Lessee will pay Lessor within ten (10) days of demand, as Additional Charges, a
late charge (to the extent not in violation of any usury statutes and otherwise
permitted by law) computed at the Overdue Rate on the amount of such
installment, from the due date of such installment to the date of payment
thereof. To the extent that Lessee pays any Additional Charges to Lessor
pursuant to any requirement of this Lease, Lessee shall be relieved of its
obligation to pay such Additional Charges to the entity to which they would
otherwise be due and Lessor shall pay same from monies received from Lessee.
3.4 No Set Off. Except as provided in this Section 3.4, Rent shall
be paid to Lessor without set off, deduction or counterclaim, subject to any
other provisions of this Lease that expressly provide for adjustment or
abatement of or set offs against Rent or other charges, and further subject to
Lessee's right to assert any claim or mandatory counterclaim in any action
brought by either party under this Lease.
3.5 Annual Budget. Lessee shall prepare and submit to Lessor, by not
later than ninety (90) days prior to the commencement of each Lease Year a
capital budget (the "Capital Budget") and an estimate of Gross Revenues, and by
not later than thirty (30) days prior to the commencement of each Lease Year, an
operating budget (the "Operating Budget"), each of which shall be prepared in
accordance with the requirements of this Section 3.5. The Operating Budget and
the Capital Budget (together, the
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(2) Only include as to (Crossroads) Mahwah, New Jersey Lease.
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"Annual Budget") shall be prepared in accordance with the Uniform System to the
extent applicable and show by month and quarter and for the year as a whole in
the degree of detail specified by the Uniform System for monthly statements, and
in accordance with the detail level of monthly financial statements, the
following:
(a) Lessee's reasonable estimate of Gross Revenues (including room
rates and Room Revenues) for the forthcoming Lease Year itemized on schedules on
a monthly and quarterly basis as approved by Lessor and Lessee, together with
the assumptions, in narrative form, forming the basis of such schedules.
(b) An estimate of any amounts Lessor will be requested to provide
for Capital Improvements during the current and the next Lease Year, subject to
the limitations set forth in Article XXXVIII, including a reasonably detailed
breakdown of all hard and soft costs for each Capital Improvement.
(c) A cash flow projection.
(d) A narrative description of the program for advertising and
marketing the Facility for the forthcoming Lease Year containing a detailed
budget itemization of the proposed advertising expenditures by category and the
assumptions, in narrative form, forming the basis of such budget itemization.
(e) Lessee's reasonable estimate for each quarter of the Lease Year
of Participating Rent including Room Revenues, Food Sales, Beverage Sales and
Other Income.
Lessor shall have thirty (30) days after the date on which it
receives the Capital Budget to review, approve, disapprove or change the entries
and information appearing in the Capital Budget. If the parties are not able to
reach agreement on the Capital Budget for any Lease Year during Lessor's thirty
(30) day review period, the parties shall attempt in good faith during the
subsequent thirty (30) day period to resolve any disputes, which attempt shall
include, if requested by either party, at least one (1) meeting of
executive-level officers of Lessor and Lessee. The Capital Budget shall be
finalized at least thirty (30) days prior to the commencement of each Lease
Year, provided that in the event the parties are still not able to reach
agreement on the Capital Budget for any particular Lease Year after complying
with the foregoing requirements of this Section 3.5, the parties shall adopt
such portions of the Capital Budget as they may have agreed upon, and any
matters not agreed upon shall be referred to arbitration as provided for in
Section 40.2 hereof. Notwithstanding the foregoing, if Lessor believes that the
amount budgeted for any particular Capital Improvement is in excess of the
actual total cost for which such Capital Improvement could be built or
installed, Lessor, in its sole discretion, may insist that the amount allocated
for such
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Improvement is in excess of the actual total cost for which such Capital
Improvement could be built or installed, Lessor, in its sole discretion, may
insist that the amount allocated for such Capital Improvement in the Capital
Budget be reduced to the amount for which Lessor believes it can be built or
installed and Lessor shall be responsible for supervising the design,
installation and/or construction of such Capital Improvement, for which it shall
be reimbursed in accordance with Article XXXVIII below. Pending the results of
any arbitration or the earlier agreement of the parties, if the Capital Budget
has not been agreed upon, no Capital Expenditures shall be made unless the same
are set forth in a previously approved Capital Budget, are specifically required
by Lessor or are otherwise required to comply with Legal Requirements, to make
Emergency Expenditures or to comply with the Franchise Agreement. Lessee shall
provide Lessor with copies of any revisions to the Annual Budget which it may
desire or otherwise deem appropriate to make from time to time during any Lease
Year, but no such revision shall require Lessor's approval or constitute a
change in the Annual Budget for the purposes of any provisions of this Lease.
The Capital Budget, once approved and as approved, shall form the basis on which
expenditures for Capital Improvements shall be made. Subject to the terms and
provisions of Article XXXVIII hereof, Lessor will be obligated to make all
Capital Expenditures which are reflected on a Capital Budget which has been
approved. Unless such expenditures are otherwise permitted in writing by Lessor
or are Emergency Expenditures or are required by the Franchise Agreement, Lessee
agrees not to cause or permit any such expenditures for a Lease Year in excess
of those set forth in the Capital Budget. Lessee shall promptly report to Lessor
in writing any actual or anticipated deviation from the Capital Budget of any
material or long-term consequence. Representatives of Lessee and Lessor shall
meet as requested by Lessor but not less frequently than monthly to review and
discuss the previous and future quarters' operating statements, Gross Revenues,
Capital Expenditures and the general concerns of Lessee and Lessor. In the event
that Lessee fails to make expenditures for Capital Improvements in accordance
with the provisions of the Capital Budget as set forth in this Section 3.5, then
Lessor, in addition to its other rights and remedies under this Lease and under
applicable law, shall have the right to submit the matter to arbitration under
Section 40.1 hereof.
Lessor shall have thirty (30) days after the date on which it
receives the Operating Budget to review the same and notify Lessee of its
approval or disapproval. Any Notice of disapproval of the Operating Budget shall
state with particularity the line items appearing therein to which Lessor
disapproves and the amount Lessor is willing to approve for each such line item
in Lessor's reasonable judgement. The Operating Budget shall be finalized by the
commencement of each Lease Year. If the parties are not able to reach agreement
as to an entry for
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approved Operating Budget of the immediately preceding year and with respect to
all other line items contained in the Operating Budget for the particular Lease
Year in question which have not been disapproved with particularity by Lessor,
the parties shall use the amounts set forth in such Operating Budget. Lessor and
Lessee shall attempt in good faith during the subsequent sixty (60) day period
to resolve any disputes, which attempt shall include, if requested by either
party, at least one (1) meeting of executive-level officers of Lessor and
Lessee, provided that in the event the parties are still not able to reach
agreement on the Operating Budget for any particular Lease Year after complying
with the foregoing requirements of this Section 3.5, the parties shall submit
the matter to arbitration under Section 40.2 hereof.
3.6 Books and Records. Lessee shall keep full and adequate books of
account and other records reflecting the results of operation of the Facility on
an accrual basis, all in accordance with the Uniform System and GAAP and the
obligations of Lessee under this Lease. The books of account and all other
records relating to or reflecting the operation of the Facility shall be kept
either at the Facility or at Lessee's offices in Fairfield, New Jersey and shall
be available to Lessor and its representatives and its auditors or accountants,
at all reasonable times for examination, audit, inspection, and transcription.
All of such books and records pertaining to the Facility including, without
limitation, books of account, guest records and front office records, at all
times shall be the property of Lessor and shall not be removed from the Facility
or Lessee's offices without Lessor's prior written approval. Lessee shall be
entitled to make copies of any or all such books and records for its own files.
Lessee's obligations under this Section 3.6 shall survive termination of this
Lease for any reason.
3.7 [Intentionally omitted.]
3.8 Hotel Operations.
(a) Lessee covenants to operate the Facility as a "full service
hotel". A full service hotel is a hotel that operates a restaurant and meeting
facilities and may have some or all of the following: conference facilities,
banquet space, lounge areas, gift shops, recreational facilities (including
swimming pool), and guest services (including room service, valet service and
laundry). If, during the Term, Lessee desires to provide food and beverage
operations at the Facility (other than those that are presently provided at the
Facility and complimentary continental breakfast) or to discontinue any such
operations which are presently provided (any such action, a "Change in
Operations"), Lessee shall give notice of such desire to Lessor. Lessor and
Lessee shall then commence negotiations to
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adjust Rent to reflect the proposed change to the operation of the Facility,
each acting reasonably and in good faith. All other terms of this Lease will
remain substantially the same. During negotiations, which shall not extend
beyond 60 days, Lessee shall not implement the proposed Change in Operations and
shall continue fulfilling its obligations under the existing terms of this
Lease. If no agreement is reached after such 60-day period, (i) if Lessee in its
reasonable judgment believes the failure to accomplish the proposed Change in
Operations will have an adverse economic impact on Lessee's operation of the
Facility, Lessee may submit the adjustment to Rent to arbitration in accordance
with Section 40.1, otherwise, (ii) Lessee shall withdraw such notice and shall
not be entitled to implement the proposed Change in Operations, and this Lease
shall continue in full force. Lessee further covenants and agrees that at all
times during the Term of this Lease when Manager is managing the Leased
Property, Manager shall manage the Leased Property without compensation (except
for reimbursement of its actual out-of-pocket expenses incurred on behalf of
Lessee), and that Lessee shall not *** [All Leases except Crowne Plaza Las Vegas
enter into any management agreement or other similar agreement]*** ***[Crowne
Plaza Las Vegas Lease only voluntarily terminate the Management Agreement with
Manager or terminate such agreement pursuant to a right to terminate therein,
subject to Section 36.1 hereof]*** or otherwise engage any Person or Affiliate
to act as manager of the Leased Property, without Lessor's prior written
consent. Lessee hereby agrees that Lessee shall not have the right to terminate
any manager of the Leased Property, including Manager, during the Term of this
Lease without Lessor's prior written consent.
(b) Notwithstanding anything to the contrary contained herein, no
adjustment of Rent pursuant to a Change in Operations described above shall be
implemented without the receipt by Lessor of an opinion from its tax counsel,
satisfactory to Lessor in form and substance, that such adjustment will not
adversely affect the Company's ability to qualify as a real estate investment
trust under the applicable provisions of the Code.
3.9 Allocation of Revenues. In the event that individuals or groups
purchase rooms, food and beverage and/or the use of other hotel facilities or
services together or as part of a package, Lessee agrees that revenues shall be
allocated among Room Revenues, Food Sales, Beverage Sales and/or other revenue
categories, as applicable, in a reasonable manner consistent with the historical
allocation of such revenues.
3.10 Performance Standard. (a) Within thirty (30) days after
Lessor's receipt of documentation or other evidence of the occurrence of a
RevPAR Decline for a Lease Year, Lessor shall have the option to terminate this
Lease, upon 30 days' prior written Notice to Lessee thereof, unless such failure
is caused
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by Unavoidable Occurrences or Lessor's failure to make Capital Expenditures to
maintain the RevPAR Yield Index of the Leased Property or occurs during any
Lease Year of the Term that the new Manager is responsible for managing and
operating the Leased Property pursuant to Article XXXVI hereof. Notwithstanding
the foregoing, in the event Lessee shall receive such Notice from Lessor and on
or before the termination date set forth in such Notice Lessee pays to Lessor as
additional Base Rent an amount (reasonably calculated by Lessor and specified in
such notice) equal to the sum Lessor would have received had this Lease met the
minimum criteria to avoid such RevPAR Decline (the "Shortfall Cure Amount"),
then this Lease shall continue in full force and effect notwithstanding such
Notice. Upon the occurrence of a RevPAR Decline at the Leased Property for
three (3) consecutive Lease Years, except to the extent such failure is caused
by an Unavoidable Occurrence or Lessor's failure to make Capital Expenditures to
maintain the RevPAR Yield Index of the Leased Property or during any Lease Year
of the Term that the new Manager is responsible for managing and operating the
Leased Property pursuant to Article XXXVI hereof, then, notwithstanding any
payments by Lessee of the Shortfall Cure Amount during such period, Lessor shall
have the right to terminate this Lease by Notice to Lessee, and upon the date
set forth in Lessor's Notice, this Lease shall automatically terminate and
neither party shall have any further obligations or liabilities to the other
hereunder, except as expressly stated in this Lease to survive such termination.
(b) Prior to the commencement of each Lease Year, Lessor and Lessee
shall work in good faith to determine any additions and deletions, if any, to
the Competitive Set for the Leased Property. Any adjustments made to the
Competitive Set shall be finalized on or before December 15th of each Lease
Year, with such adjusted Competitive Set for the Leased Property to be
applicable to the following Leased Year. In the event Lessor and Lessee are
unable to agree to the Leased Property's Competitive Set, such matter shall be
determined by a nationally recognized accounting firm with a hospitality
division chosen by Lessor and Lessee.
ARTICLE IV
4.1 Payment of Impositions. Subject to the right of Lessor to
contest the same, Lessor shall pay all Real Estate Taxes, Personal Property
Taxes, and Capital Impositions before any fine, penalty, interest or cost may be
added for non-payment, to the extent the failure to do so materially and
adversely affects the rights of the Lessee under this Lease, such payments to be
made directly to the taxing or other authorities where feasible. Subject to
Article XII relating to permitted contests, Lessee will pay, or cause to be
paid, all Impositions (other than
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Capital Impositions, Real Estate Taxes and Personal Property Taxes) before any
fine, penalty, interest or cost may be added for nonpayment, such payments to be
made directly to the taxing or other authorities where feasible, and will
promptly furnish to Lessor copies of official receipts or other satisfactory
proof evidencing such payments. Lessee's obligation to pay such Impositions
shall be deemed absolutely fixed upon the date such Impositions become a lien
upon the Leased Property or any part thereof subject to Lessee's right to
contest pursuant to Article XII. If any such Imposition may, at the option of
the taxpayer, lawfully be paid in installments (whether or not interest shall
accrue on the unpaid balance of such Imposition), Lessee may exercise the option
to pay the same (and any accrued interest on the unpaid balance of such
Imposition) in installments and in such event, shall pay such installments and
any unpaid balance of such Impositions prior to the expiration or earlier
termination of the Term hereof (subject to Lessee's right of contest pursuant to
the provisions of Article 12) as the same respectively come due and before any
fine, penalty, premium, further interest or cost may be added thereto. Lessor,
at its expense, shall, to the extent required or permitted by applicable law,
prepare and file all tax returns in respect of Lessor's net income, gross
receipts, sales and use, single business, transaction privilege, rent, ad
valorem, franchise taxes, Real Estate Taxes, Personal Property Taxes and taxes
on its capital stock, and Lessee, at its expense, shall, to the extent required
or permitted by applicable laws and regulations, prepare and file all other tax
returns and reports in respect of any Imposition as may be required by
governmental authorities. If any refund shall be due from any taxing authority
in respect of any Imposition paid by Lessee, the same shall be paid over to or
retained by Lessee if no Event of Default shall have occurred hereunder and be
continuing. If an Event of Default shall have been declared by Lessor and be
continuing, any such refund shall be paid over to or retained by Lessor. Any
such funds retained by Lessor due to an Event of Default shall be applied as
provided in Article XVI. Lessor and Lessee shall, upon request of the other,
cooperate with the other party and otherwise provide such data as is maintained
by the party to whom the request is made with respect to the Leased Property as
may be necessary to prepare any required returns and reports. Notwithstanding
the foregoing provisions of this Section, Lessee shall file all Personal
Property Tax returns in such jurisdictions where it is legally required to so
file. Lessor, to the extent it possesses the same, and Lessee, to the extent it
possesses the same, will provide the other party, upon request, with cost and
depreciation records necessary for filing returns for any property classified as
personal property. Where Lessor is legally required to file Personal Property
Tax returns, Lessee shall provide Lessor with copies of assessment notices in
sufficient time for Lessor to file a protest. Lessor, may, upon notice to
Lessee, at Lessor's option and at Lessor's sole expense, protest, appeal, or
institute such other proceedings (in
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its or Lessee's name) as Lessor may deem appropriate to effect a reduction of
real estate or personal property assessments for those Impositions to be paid by
Lessor, and Lessee, at Lessor's expense as aforesaid, shall fully cooperate with
Lessor in such protest, appeal, or other action. Lessor hereby agrees to
indemnify, defend, and hold harmless Lessee from and against any claims,
obligations, and liabilities against or incurred by Lessee in connection with
such cooperation. Lessee may, upon notice to Lessor, at Lessor's option and at
Lessee's sole expense, protest, appeal or institute such other proceedings (in
its or Lessor's name) as Lessee may deem appropriate to effect a reduction of
Impositions to be paid by Lessee, and Lessor, at Lessee's expense, shall fully
cooperate with Lessee in such protest, appeal or other action. Lessee hereby
agrees to indemnify, defend and hold harmless Lessor from and against any
claims, obligations and liabilities against or incurred by Lessor in connection
with such cooperation. Billings for reimbursement of Personal Property Taxes by
Lessee to Lessor shall be accompanied by copies of a bill therefor and payments
thereof which identify the personal property with respect to which such payments
are made. Lessor, however, reserves the right to effect any such protest, appeal
or other action and, upon notice to Lessee, shall control any such activity,
which shall then go forward at Lessor's sole expense. Upon such notice, Lessee,
at Lessor's expense, shall cooperate fully with such activities. To the extent
received by it, Lessee shall furnish Lessor with copies of all assessment
notices for Real Estate Taxes and Personal Property Taxes in sufficient time for
Lessor to file a protest and pay such taxes without penalty. Lessor shall within
thirty (30) days after making such payment furnish Lessee with evidence of
payment of Capital Impositions, Real Estate Taxes and Personal Property Taxes.
4.2 Notice and Accrual of Impositions. Lessor shall give prompt
Notice to Lessee of all Impositions payable by Lessee hereunder of which Lessor
at any time has knowledge, provided that Lessor's failure to give any such
Notice shall in no way diminish Lessee's obligations hereunder to pay such
Impositions, but if Lessee did not otherwise have knowledge of such Imposition
sufficient to permit it to pay same, such failure shall obviate any default
hereunder for a reasonable time after Lessee receives Notice of any Imposition
which it is obligated to pay during the first taxing period applicable thereto,
and Lessor will reimburse Lessee for any fine, penalty or interest arising from
such delay. If requested by Lessor or required by the holder of a Mortgage,
Lessee shall accrue and set aside on a monthly basis a portion (as Lessor or
such holder shall designate) of Rent for the payment of those Impositions that
are payable by Lessor, and such accruals shall be deposited with such holder, if
so required by it, or as otherwise approved by Lessor.
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4.3 Adjustment of Impositions. Impositions payable by Lessee which
are imposed in respect of the tax-fiscal period during which the Term terminates
shall be adjusted and prorated between Lessor and Lessee, whether or not such
Imposition is imposed before or after such termination, and Lessee's obligation
to pay its prorated share thereof after termination shall survive such
termination.
4.4 Utility Charges. Lessee will be solely responsible for obtaining
and maintaining utility services to the Leased Property and will pay or cause to
be paid all charges for electricity, gas, oil, water, sewer and other utilities
used in the Leased Property during the Term.
4.5 Franchise Fees. Lessee will pay or cause to be paid all fees and
other charges payable pursuant to the Franchise Agreement with respect to the
Facility.
4.6 Ground Rent. In the event that Lessor's interest in the Land is
pursuant to a ground lease or a sublease, Lessor shall be solely responsible for
payment of any ground rent or subrent, as the case may be, due with respect to
the Leased Property.
ARTICLE V
5.1 No Termination. Abatement. etc. Except as otherwise specifically
provided in this Lease, Lessee, to the extent permitted by law, shall remain
bound by this Lease in accordance with its terms and shall neither take any
action without the written consent of Lessor to modify, surrender or terminate
the same, nor seek nor be entitled to any abatement, deduction, deferment or
reduction of the Rent, or setoff against the Rent, nor shall the obligations of
Lessee be otherwise affected by reason of (a) any damage to, or destruction of,
any Leased Property or any portion thereof from whatever cause or any Taking of
the Leased Property or any portion thereof, (b) any bankruptcy, insolvency,
reorganization, composition, readjustment, liquidation, dissolution, winding up
or other proceedings affecting Lessor or any assignee or transferee of Lessor,
or (c) for any other cause whether similar or dissimilar to any of the foregoing
other than a discharge of Lessee from any such obligations as a matter of law.
Lessee hereby specifically waives all rights, arising from any default under
this Lease by Lessor which may now or hereafter be conferred upon it by law to
(1) modify, surrender or terminate this Lease or quit or surrender the Leased
Property or any portion thereof, or (2) entitle Lessee to any abatement,
reduction, suspension or deferment of or set off against the Rent or other sums
payable by Lessee hereunder, except to the extent that Lessor's action
constitutes constructive eviction and except as otherwise
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specifically provided in this Lease. The obligations of Lessee hereunder shall
be separate and independent covenants and agreements and the Rent and all other
sums payable by Lessee hereunder shall continue to be payable in all events
unless the obligations to pay the same shall be terminated, abated or modified
pursuant to the express provisions of this Lease or by termination of this Lease
other than by reason of an Event of Default.
ARTICLE VI
6.1 Ownership of the Leased Property. Lessee acknowledges that the
Leased Property is the property of Lessor and that Lessee has only the right to
the possession and use of the Leased Property upon the terms and conditions of
this Lease.
6.2 Lessee's Personal Property.
(a) Upon commencement of the Term, Lessor shall make available at no
charge to Lessee, for Lessee's use in connection with the operation and
management of the Facility, all Inventory located at the Facility on the
Commencement Date (the "Initial Inventory"). The parties acknowledge and agree
that as of the date of this Lease the amount of Initial Inventory at the
Facility is consistent with the amount of Inventory customarily maintained in a
hotel of the type and character of the Facility and as otherwise is required to
operate the Leased Property in the manner contemplated by this Lease and in
compliance with the Franchise Agreement and all Legal Requirements. Throughout
the Term, Lessee shall maintain a full stock of Inventory at the Facility at the
levels substantially similar to or greater than those existing on the date
hereof. As the Initial Inventory is depleted, Lessee shall purchase, at its sole
cost and expense, any replacement Inventory which may be required. The
Inventory, including any additions and/or replacements thereof, shall be and
remain the property of Lessee. Lessee may (and shall as provided hereinbelow),
at its expense, install, affix or assemble or place on any parcels of the Land
or in any of the Leased Improvements, any items of personal property (including
Inventory, Furniture and Equipment) owned by Lessee (collectively, the "Lessee's
Personal Property"). All of Lessee's Personal Property, other than Inventory,
not removed by Lessee within thirty (30) days following the expiration or
earlier termination of the Term shall be considered abandoned by Lessee and may
be appropriated, sold, destroyed or otherwise disposed of by Lessor without
first giving Notice thereof to Lessee without any payment to Lessee and without
any obligation to account therefor. Lessee will, at its expense, restore the
Leased Property to the condition required by Section 9.1(d), including repair of
all damage to the Leased Property caused by the removal of Lessee's Personal
Property, whether effected by Lessee or Lessor.
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(b) Upon the expiration or earlier termination of the Term for any
reason, Lessee shall surrender the Inventory to Lessor in the amounts and at the
levels existing on the date of this Lease. In the event that the amount of
Inventory at the time of such expiration or termination is less than that
provided by Lessor on the date hereof (an "Inventory Deficiency"), Lessee shall
promptly pay to Lessor the amount equal to the Fair Market Value of the
Inventory Deficiency.
(c) If, during the Term, as a result of additions, modifications or
improvements to the Leased Property, the ratio (expressed as a percentage) of
(x) the adjusted basis for Federal income tax purposes of that portion of the
Leased Property consisting of personal property, to (y) the adjusted basis for
such purposes of the Leased Property, shall exceed l5%, Lessor, at its option,
may sell to Lessee (and Lessee shall purchase from Lessor) a sufficient quantity
of such personal property as shall be necessary so that the aforesaid percentage
does not exceed l5%. The aforesaid sale shall be at Fair Market Value for the
items sold and shall otherwise be in accordance with the provisions of Section
18.1 below (including a contemporaneous equitable reduction of the Rent payable
under Section 3.1).
ARTICLE VII
7.1 Condition of the Leased Property. Lessee acknowledges receipt
and delivery of possession of the Leased Property. Lessee has examined and
otherwise has knowledge of the condition of the Leased Property and has found
the same to be satisfactory for its purposes hereunder. Lessee is leasing the
Leased Property "as is", "with all faults", and in its present condition. Except
as otherwise specifically provided herein, Lessee waives any claim or action
against Lessor in respect of the condition of the Leased Property. LESSOR MAKES
NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF THE LEASED
PROPERTY, OR ANY PART THEREOF, EITHER AS TO ITS FITNESS FOR USE, DESIGN OR
CONDITION FOR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE, AS TO QUALITY OF THE
MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING AGREED THAT ALL SUCH
RISKS ARE TO BE BORNE BY LESSEE. LESSEE ACKNOWLEDGES THAT THE LEASED PROPERTY
HAS BEEN INSPECTED BY LESSEE AND IS SATISFACTORY TO IT. Lessor shall have the
right to proceed against any predecessor in title for breaches of warranties or
representations or for latent defects in the Leased Property, and Lessor shall,
if requested by Lessee, assign any such right to Lessee if and to the extent
Lessor determines not to exercise such right. If either party determines to
exercise such right, the other party shall fully cooperate in the prosecution of
any such claim, in Lessor's or Lessee's name, all at the cost and expense of the
prosecuting party, who hereby agrees to indemnify, defend and hold harmless the
other party from and against any claims, obligations and
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liabilities against or incurred by such other party in connection with such
cooperation, and who further agrees to apply all amounts realized from the
prosecution of such claim, less its expenses in connection therewith, to remedy
such breach or cure such defect.
7.2 Use of the Leased Property.
(a) Lessee covenants that it will proceed with all due diligence and
will exercise its best efforts to obtain and to maintain all approvals needed to
use and operate the Leased Property and the Facility under applicable local,
state and federal law.
(b) Lessee shall use or cause to be used the Leased Property only as
a hotel facility, and for such other uses as may be necessary or incidental to
such use, or such other use as otherwise approved by Lessor (the "Primary
Intended Use") Lessee shall not use the Leased Property or any portion thereof
for any other use without the prior written consent of Lessor. No use shall be
made or permitted to be made of the Leased Property, and no acts shall be done,
which will cause the cancellation of any insurance policy covering the Leased
Property or any part thereof (unless another adequate policy satisfactory to
Lessor is available and Lessee pays any premium increase), nor shall Lessee
sell or permit to be kept, used or sold in or about the Leased Property any
article which is prohibited by law or fire underwriter's regulations. Lessee
shall comply with all of the requirements pertaining to the Leased Property of
any insurance board, association, organization or company necessary for the
maintenance of insurance, as herein provided, covering the Leased Property and
Lessee's Personal Property, which compliance shall be performed at Lessee's sole
cost except to the extent that such compliance requires the performance of a
Capital Improvement or the payment of a Capital Imposition which are Lessor's
responsibilities.
(c) Subject to the provisions of Articles XIV and XV, Lessee
covenants and agrees that during the Term it will either directly or through an
approved manager (1) operate continuously (subject to Unavoidable Occurrences)
the Leased Property as a hotel facility, (2) keep in full force and effect and
comply in all material respects with all the provisions of the Franchise
Agreement, except Lessee shall have no obligation to complete any Capital
Improvements required by Franchisor as set forth in Article XXXVII hereof, (3)
not terminate or amend in any respect the Franchise Agreement without the
consent of Lessor, (4) maintain appropriate certifications and licenses for such
use and (5) keep Lessor advised of the status of any material litigation
affecting the Leased Property.
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(d) Lessee shall not commit any waste on the Leased Property, or in
the Facility nor shall Lessee cause or permit any nuisance thereon.
(e) Lessee shall neither use nor permit the Leased Property or any
portion thereof, or Lessee's Personal Property, to be used in such a manner as
(1) would impair Lessor's (or Lessee's, as the case may be) title thereto or to
any portion thereof, or (2) would support a claim or claims of adverse usage or
adverse possession by the public, as such, or of implied dedication of the
Leased Property or any portion thereof.
7.3 Lessor to Grant Easements. etc. Lessor will, from time to time,
so long as no Event of Default has occurred and is continuing, at the request of
Lessee and at Lessee's cost and expense (but subject to the approval of Lessor,
which approval may be granted or denied in Lessor's sole discretion), (a) grant
easements and other rights in the nature of easements with respect to the Leased
Property to third parties, (b) release existing easements or other rights in the
nature of easements which are for the benefit of the Leased Property, (c)
dedicate or transfer unimproved portions of the Leased Property for road,
highway or other public purposes, (d) execute petitions to have the Leased
Property annexed to any municipal corporation or utility district, (e) execute
amendments to any covenants and restrictions affecting the Leased Property and
(f) execute and deliver to any person any instrument appropriate to confirm or
effect such grants, releases, dedications, transfers, petitions and amendments
(to the extent of its interests in the Leased Property), but only upon delivery
to Lessor of an Officer's Certificate stating that such grant, release,
dedication, transfer, petition or amendment does not interfere with the proper
conduct of the business of Lessee on the Leased Property and does not materially
reduce the value of the Leased Property.
ARTICLE VIII
8.1 Compliance with Legal and Insurance Requirements, etc. Subject
to Sections 8.2, 8.3(b) and Article XII or any other provision of this Agreement
relating to permitted contests, Lessee, at its expense, will promptly (a) comply
with all applicable Legal Requirements and Insurance Requirements in respect of
the use, operation, maintenance, repair and restoration of the Leased Property,
subject however to the provisions of Section 9.1(b), and (b) procure, maintain
and comply with all appropriate licenses and other authorizations required for
any use of the Leased Property and Lessee's Personal Property then being made,
and for the proper erection, installation, operation and maintenance of the
Leased Property or any part thereof. Notwithstanding the foregoing, in the event
the parties are unable to agree as to whether (i) a Legal
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Requirement requires an expenditure which is an obligation of Lessee hereunder
or constitutes a Capital Improvement (it being agreed that Lessee has no
obligation to make such a Capital Improvement notwithstanding anything to the
contrary contained herein), and/or (ii) a Capital Improvement should be made to
comply with a certain Legal Requirement (any such Capital Improvement to be made
by Lessor, subject to Section 40.2 hereof), then Lessee shall have the right to
terminate this Lease upon thirty (30) days prior written notice to Lessor
whereupon, this Lease shall terminate and neither party shall have any further
obligations hereunder except for (i) Lessee's obligation to pay all Rent accrued
through the termination date and (ii) any other obligations or indemnities
herein expressly stated to survive the termination hereof.
8.2 Legal Requirements Covenants. Subject to Section 8.3(b) below,
Lessee covenants and agrees that the Leased Property and Lessee's Personal
Property shall not be used for any unlawful purpose, and that Lessee shall not
permit or suffer to exist any unlawful use of the Leased Property by others.
Lessee shall acquire and maintain all appropriate licenses, certifications,
permits and other authorizations and approvals needed to operate the Leased
Property in its customary manner for the Primary Intended Use, and any other
lawful use conducted on the Leased Property as may be permitted from time to
time hereunder including, but not limited to, the sale and service of alcoholic
beverages (provided that Lessor shall cooperate at Lessee's sole cost and
expense, in obtaining liquor licenses to the extent necessary). Lessee further
covenants and agrees that Lessee's use of the Leased Property and maintenance,
alteration, and operation of the same, and all parts thereof, shall at all times
conform to and comply with all Legal Requirements, unless the same are finally
determined by a court of competent jurisdiction to be unlawful (and Lessee shall
cause all such subtenants, invitees or others to so comply with all Legal
Requirements). Lessee may, however, upon prior notice to Lessor, contest the
legality or applicability of any such Legal Requirement or any licensure or
certification decision if Lessee maintains such action in good faith, with due
diligence, without prejudice to Lessor's rights hereunder and at Lessee's sole
expense. If compliance with a Legal Requirement pending the prosecution of any
such proceeding may legally be delayed without the incurrence of any lien,
charge or liability of any kind against the Facility and without subjecting
Lessee or Lessor to any liability for failure to so comply therewith, Lessee may
delay compliance therewith until final determination of such proceeding. If any
lien, charge or liability would be incurred by reason of any such delay, Lessee,
on the prior written consent of Lessor (which consent shall not be unreasonably
withheld) and the Holder of any Mortgage, may nonetheless contest and delay as
aforesaid, provided that such contest or delay would not subject Lessor to
criminal liability and Lessee both (a) furnishes to
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Lessor security reasonably satisfactory to Lessor against any loss or injury by
reason of such contest or delay, and (b) prosecutes the contest with due
diligence and good faith.
8.3 Environmental Covenants. Lessor and Lessee (in addition to, and
not in diminution of, Lessee's covenants and undertakings in Sections 8.1 and
8.2 hereof) covenant and agree as follows:
(a) At all times hereafter until Lessee completely vacates the
Leased Property and surrenders possession of the same to Lessor, Lessee shall
fully comply with all Environmental Laws applicable to the Leased Property and
the operations thereon, except to the extent that such compliance would require
the remediation of Environmental Liabilities for which Lessee has no indemnity
obligations under Section 8.3(b). Lessee agrees to give Lessor prompt written
notice of (1) all Environmental Liabilities; (2) all pending, threatened or
anticipated Proceedings, and all notices, demands, requests or investigations,
relating to any Environmental Liability or relating to the issuance, revocation
or change in any Environmental Authorization required for operation of the
Leased Property; (3) all Releases at, on, in, under or in any way affecting the
Leased Property, or any Release known by Lessee at, on, in or under any property
adjacent to the Leased Property; and (4) all facts, events or conditions that
could reasonably lead to the occurrence of any of the above-referenced matters.
(b) Lessee hereby agrees to defend, indemnify and save harmless any
and all Lessor Indemnified Parties from and against any and all Environmental
Liabilities which relate to events or occurrences which occurred during the Term
of this Lease EXCEPT TO THE EXTENT THAT THE SAME (I) ARE CAUSED BY LESSOR OR
LESSOR'S AGENTS, EMPLOYEES OR CONTRACTORS, OR (II) RESULT FROM CONDITIONS
EXISTING AT THE LEASED PROPERTY AT THE DATE OF THIS LEASE (AN "EXISTING
CONDITION") OR FROM RELEASES OR OTHER VIOLATIONS OF ENVIRONNENTAL LAWS
ORIGINATING ON ADJACENT PROPERTY BUT AFFECTING THE LEASED PROPERTY (A
"MIGRATION"), provided that in either case such exclusions shall not apply to
the extent that the Existing Condition or the Migration has been exacerbated by
Lessee's intentional act, negligent act or negligent failure to act.
(c) Lessor hereby agrees to defend, indemnify and save harmless any
and all Lessee Indemnified Parties from and against any and all Environmental
Liabilities to the extent that the same arise from an Existing Condition or
Migration (except as provided in Section 8.3(b) above), were caused by Lessor or
Lessor's agents, employees or contractors or relate to occurrences after the
expiration of the Term.
(d) If any Proceeding is brought against any Indemnified Party in
respect of an Environmental Liability with
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respect to which such Indemnified Party may claim indemnification under either
Section 8.3(b) or (c), the Indemnifying Party, upon request, shall at its sole
expense resist and defend such Proceeding, or cause the same to be resisted and
defended by counsel designated by the Indemnifying Party and approved by the
Indemnified Party, which approval shall not be unreasonably withheld; provided,
however, that such approval shall not be required in the case of defense by
counsel designated by any insurance company undertaking such defense pursuant to
any applicable policy of insurance. Each Indemnified Party shall have the right
to employ separate counsel in any such Proceeding and to participate in the
defense thereof, but the fees and expenses of such counsel will be at the sole
expense of such Indemnified Party unless a conflict of interest prevents
representation of such Indemnified Party by the counsel selected by the
Indemnifying Party and such separate counsel has been approved by the
Indemnifying Party, which approval shall not be unreasonably withheld. The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
made without its consent, which shall not be unreasonably withheld, but if
settled with the consent of the Indemnifying Party, or if settled without its
consent (if its consent shall be unreasonably withheld), or if there be a final,
nonappealable judgment for an adversary party in any such Proceeding, the
Indemnifying Party shall indemnify and hold harmless the Indemnified Parties
from and against any liabilities incurred by such Indemnified Parties by reason
of such settlement or judgment.
(e) If at any time any Indemnified Party has reason to believe
circumstances exist which could reasonably result in an Environmental Liability,
upon reasonable prior written notice to Lessee or Lessor, as appropriate,
stating such Indemnified Party's basis for such belief, an Indemnified Party
shall be given immediate access to the Leased Property (including, but not
limited to, the right to enter upon, investigate, drill wells, take soil
borings, excavate, monitor, test, cap and use available land for the testing of
remedial technologies), Lessee's employees, and to all relevant documents and
records regarding the matter as to which a responsibility, liability or
obligation is asserted or which is the subject of any Proceeding; provided that
such access may be conditioned or restricted as may be reasonably necessary to
ensure compliance with law and the safety of personnel and facilities or to
protect confidential or privileged information. All Indemnified Parties
requesting such immediate access and cooperation shall endeavor to coordinate
such efforts to result in as minimal interruption of the operation of the Leased
Property as practicable. In addition to the aforesaid access, Lessor shall also
have similar access upon prior written notice to Lessee in the event that Lessor
requires such access in connection with a proposed sale or mortgage of the
Leased Property or for any other reasonable purpose. Lessor hereby agrees to
indemnify and hold harmless Lessee from and
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against any and all liabilities, costs, damages, charges, fees or expenses
arising from or related to the access to or use of the Leased Property by a
Lessor Indemnified Party pursuant to this subparagraph (e).
(f) The indemnification rights and obligations provided for in this
Article VIII shall be in addition to any indemnification rights and obligations
provided for elsewhere in this Lease.
(g) The indemnification rights and obligations provided for in this
Article VIII shall survive the termination of this Agreement.
For purposes of this Section 8.3, all amounts for which any
Indemnified Party seeks indemnification shall be computed net of (a) any actual
income tax benefit resulting therefrom to such Indemnified Party, (b) any
insurance proceeds received (net of tax effects) with respect thereto, and (c)
any amounts recovered (net of tax effects) from any third parties based on
claims the Indemnified Party has against such third parties which reduce the
damages that would otherwise be sustained; provided that in all cases, the
timing of the receipt or realization of insurance proceeds or income tax
benefits or recoveries from third parties shall be taken into account in
determining the amount of reduction of damages. Each Indemnified Party agrees to
use its reasonable efforts to pursue, or assign to Lessee or Lessor, as the case
may be, any claims or rights it may have against any third party which would
materially reduce the amount of damages otherwise incurred by such Indemnified
Party.
ARTICLE IX
9.1 Maintenance and Repair.
(a) Except as provided in Section 9.1(b), Lessee will keep the
Leased Property and all private roadways, sidewalks and curbs appurtenant
thereto that are under Lessee's control, including windows and plate glass,
parking lots, HVAC, mechanical, electrical and plumbing systems and equipment
(including conduit and ductware), and non-load bearing interior walls, in good
order and repair, except for ordinary wear and tear (whether or not the need for
such repairs occurred as a result of Lessee's use, any prior use, the elements
or the age of the Leased Property, or any portion thereof but subject to the
obligation to make necessary and appropriate repairs and replacements as
provided in this Section 9.1(a)), and, except as otherwise provided in Section
9.1(b), Article XIV, Article XV or Article XXXVIII, with reasonable promptness,
make all necessary and appropriate repairs, replacements and improvements
thereto of every kind and nature, whether interior or exterior, ordinary or
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extraordinary, foreseen or unforeseen or arising by reason of a condition
existing prior to the commencement of the Term of this Lease, or required by any
governmental agency having jurisdiction over the Leased Property. Lessee,
however, shall be permitted to prosecute claims against Lessor's predecessors in
title for breach of any representation or warranty or for any latent defects in
the Leased Property to be maintained by Lessee unless Lessor is already
diligently pursuing such a claim. All repairs shall, to the extent reasonably
achievable, be at least equivalent in quality to the original work. Lessee will
not take or omit to take any action, the taking or omission of which might
materially impair the value or the usefulness of the Leased Property or any part
thereof for its Primary Intended Use (except to the extent such actions are the
responsibility of Lessor pursuant to Section 9.1(b), Article XIV, Article XV or
Article XXXVIII). If Lessee fails to make any required repairs or replacements
after fifteen (15) days' notice from Lessor, or after such longer period as may
be reasonably required provided that Lessee at all times diligently proceeds
with such repair or replacement, then Lessor shall have the right, but shall not
be obligated, to make such repairs or replacements on behalf of and for the
account of Lessee. In such event, such work shall be paid for in full by Lessee
as Additional Charges.
(b) Notwithstanding Lessee's obligations under Section 9.1(a) above
but subject to the limitations on Lessor's obligations for Capital Expenditures
set forth in Article XXXVIII, unless caused by Lessee's negligence or willful
misconduct or that of its employees, contractors or agents, Lessor shall be
required to make all Capital Expenditures. Except as set forth in the preceding
sentence, Lessor shall not under any circumstances be required to build or
rebuild any improvement on the Leased Property, or to make any repairs,
replacements, alterations, restorations or renewals of any nature or description
to the Leased Property, whether ordinary or extraordinary, foreseen or
unforeseen, or to make any expenditure whatsoever with respect thereto, in
connection with this Lease, or to maintain the Leased Property in any way.
Lessee hereby waives, to the extent permitted by law, the right to make repairs
at the expense of Lessor pursuant to any law in effect at the time of the
execution of this Lease or hereafter enacted. Lessor shall have the right to
give, record and post, as appropriate, notices of non-responsibility under any
mechanic's lien laws now or hereafter existing.
If Lessor fails to make any required Capital Expenditures after the
expiration of all applicable notice and cure periods set forth in Article XXXIX,
then Lessee shall have the right, but not the obligation, to make such Capital
Expenditures on behalf of and for the account of Lessor, whereupon Lessor shall
reimburse Lessee therefor promptly upon receipt of all documentation evidencing
such Capital Expenditure.
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Notwithstanding the foregoing, if Lessor shall fail to make any Emergency
Expenditure after the expiration of all applicable notice and cure periods,
Lessee shall have the right to terminate this Lease upon thirty (30) days' prior
notice to Lessor, whereupon this Lease shall terminate and neither party shall
have any further rights or obligations hereunder except for (i) Lessee's
obligation to pay all Rent accrued through the termination date and (ii) any
other obligations or indemnities herein expressly stated to survive the
termination hereof.
(c) Nothing contained in this Lease and no action or inaction by
Lessor shall be construed as (1) constituting the request of Lessor, expressed
or implied, to any contractor, subcontractor, laborer, materialman or vendor to
or for the performance of any labor or services or the furnishing of any
materials or other property for the construction, alteration, addition, repair
or demolition of or to the Leased Property or any part thereof, or (2) giving
Lessee any right, power or permission to contract for or permit the performance
of any labor or services or the furnishing of any materials or other property in
such fashion as would permit the making of any claim against Lessor in respect
thereof or to make any agreement that may create, or in any way be the basis for
any right, title, interest, lien, claim or other encumbrance upon the estate of
Lessor in the Leased Property, or any portion thereof.
(d) Lessee will, upon the expiration or prior termination of the
Term, vacate and surrender the Leased Property to Lessor in the condition in
which the Leased Property was originally received from Lessor, except as
repaired, rebuilt, restored, altered or added to as permitted or required by the
provisions of this Lease and except for ordinary wear and tear (subject to the
obligation of Lessee to maintain the Leased Property in good order and repair in
accordance with Section 9.1(a) above, or damage by casualty or Condemnation
(subject to the obligation of Lessee or Lessor, as applicable, to restore or
repair as set forth in this Lease)
ARTICLE X
10.1 Alterations. Subject to first obtaining the written approval of
Lessor, which shall not be unreasonably withheld, Lessee shall have the right,
but not the obligation, to make such additions, modifications or improvements to
the Leased Property from time to time as Lessee deems desirable for its
permitted uses and purposes, provided that such action will not alter the
character or purposes of the Leased Property or detract from the value or
operating efficiency thereof and will not impair the revenue-producing
capability of the Leased Property or adversely affect the ability of the Lessee
to comply with the provisions of this Lease. All such work shall be performed in
a
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first class manner in accordance with all applicable governmental rules and
regulations and after receipt of all required permits and licenses. If
reasonably required by Lessor all such work shall be covered by performance
bonds issued by bonding companies reasonably acceptable to Lessor. The cost of
such additions, modifications or improvements to the Leased Property shall be
paid by Lessee, and all such additions, modifications and improvements shall,
without payment by Lessor at any time, be included under the terms of this Lease
and upon expiration or earlier termination of this Lease shall pass to and
become the property of Lessor. Subject to the terms and provisions of Article
XXXVIII, nothing in this Section 10.1 shall abrogate or limit Lessor's
obligation to make the Capital Expenditures set forth in the approved Capital
Budget.
10.2 Salvage. All materials which are scrapped or removed in
connection with the making of repairs pursuant to Article IX or X shall be or
become the property of Lessor or Lessee depending on which party is paying for
or providing the financing of such work.
10.3 Lessor Alterations. Lessor shall have the right, without
Lessee's consent, to make or cause to be made alterations to the Leased Property
required in connection with (i) Emergency Situations, (ii) Legal Requirements,
(iii) maintenance of the Franchise Agreement, (iv) any Mortgage (v) any Capital
Improvement which Lessor has elected to build or install itself, as provided in
Section 3.5 hereof, or (vi) the performance by Lessor of its obligations under
this Lease. Lessor shall further have the right, but not the obligation, to make
such other additions to the Leased Property as it may reasonably deem
appropriate during the term of the Lease, subject to Lessee's approval which
shall not be unreasonably withheld. All such work unless necessitated by
Lessee's acts or omissions or unless otherwise required to be performed by
Lessee under this Lease (in which event work shall be paid for by Lessee) shall
be performed at Lessor's expense and shall be done after reasonable notice to
and coordination with Lessee, so as to minimize any disruptions or interference
with the operation of the Facility. In the event such work materially interferes
with the operation of the Facility, Base Rent shall be equitably abated. If
Lessee withholds its consent to any additions or other work which Lessor has the
right, but not the obligation, to make pursuant to the foregoing provisions of
this Section 10.3, or if the extent of abatement of Rent cannot be agreed upon,
the matter shall be referred to arbitration pursuant to the provisions of
Article XL.
ARTICLE XI
Liens. Subject to the provision of Article XII relating to permitted
contests, Lessee will not directly or
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indirectly create or allow to remain and will promptly discharge at its expense
any lien, encumbrance, attachment, title retention agreement or claim upon the
Leased Property resulting from the action or inaction of Lessee, or any
attachment, levy, claim or encumbrance in respect of the Rent, excluding,
however, (a) this Lease, (b) the matters, if any, included as exceptions or
insured against in the title policy insuring Lessor's interest in the Leased
Property, (c) restrictions, liens and other encumbrances which are consented to
in writing by Lessor, (d) liens for those taxes which Lessee is not required to
pay hereunder, (e) subleases permitted by Article XXI hereof, (f) liens for
Impositions or for sums resulting from noncompliance with Legal Requirements to
the extent Lessee is responsible hereunder for such compliance so long as (1)
the same are not yet delinquent or (2) such liens are in the process of being
contested as permitted by Article XII, (g) liens of mechanics, laborers,
suppliers or vendors for sums either disputed or not yet due provided that any
such liens for disputed sums are in the process of being contested as permitted
by Article XII hereof, and (h) liens and encumbrances created by Lessor.
ARTICLE XII
Permitted Contests. Lessee shall have the right to contest the
amount or validity of any Imposition to be paid by Lessee or any Legal
Requirement or any lien, attachment, levy, encumbrance, charge or claim (any
such Imposition, Legal Requirement, lien, attachment, levy, encumbrance, charge
or claim herein referred to as "Claims") not otherwise permitted by Article XI,
by appropriate legal proceedings in good faith and with due diligence (but this
shall not be deemed or construed in any way to relieve, modify or extend
Lessee's covenants to pay or its covenants to cause to be paid any such charges
at the time and in the manner as in this Article provided), on condition,
however, that such legal proceedings shall not operate to relieve Lessee from
its obligations hereunder and shall not cause the sale or loss of any portion of
the Leased Property, or any part thereof, or cause Lessor or Lessee to be in
default under any Mortgage. Upon the request of Lessor, as security for the
payment of such claims, Lessee shall either (a) provide a bond or other
assurance reasonably satisfactory to Lessor (and to any Holder, if approval
thereof is required by such Holder's Mortgage) that all Claims which may be
assessed against the Leased Property together with interest and penalties, if
any, thereon and legal fees anticipated to be incurred in connection therewith
will be paid, or (b) deposit within the time otherwise required for payment with
a bank or trust company as trustee upon terms reasonably satisfactory to Lessor
or with any Holder upon terms satisfactory to such Holder, money in an amount
sufficient to pay the same, together with interest and penalties thereon and
legal fees anticipated to be incurred in connection therewith, as
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to all Claims which may be assessed against or become a Claim on the Leased
Property, or any part thereof, in said legal proceedings. Lessee shall furnish
Lessor and any Holder with reasonable evidence of such deposit within five days
of the same. Lessor agrees to join in any such proceedings if the same be
required to legally prosecute such contest of the validity of such Claims;
provided, however, that Lessor shall not thereby be subjected to any liability
for the payment of any costs or expenses in connection with any proceedings
brought by Lessee; and Lessee covenants to indemnify and save harmless Lessor
from any such costs or expenses. Lessee shall be entitled to any refund of any
Claims and such charges and penalties or interest thereon which have been paid
by Lessee or paid by Lessor and for which Lessor has been fully reimbursed. In
the event that Lessee fails to pay any Claims when due or to provide the
security therefor as provided in this paragraph and to diligently prosecute any
contest of the same, Lessor may, upon ten days advance Notice to Lessee, pay
such charges together with any interest and penalties and the same shall be
repayable by Lessee to Lessor as Additional Charges at the next Payment Date
provided for in this Lease. Lessor reserves the right to contest any of the
Claims not pursued by Lessee at Lessor's expense. Lessor and Lessee agree to
cooperate in coordinating the contest of any Claims.
ARTICLE XIII
13.1 General Insurance Requirements.
(a) Coverages. During the Term of this Lease, the Leased Property
shall at all times be insured with the kinds and amounts of insurance described
below. This insurance shall be written by companies authorized to issue
insurance in the State. The policies must name the party obtaining the policy as
the insured and the other party as an additional named insured, and the Manager
shall also be named as an additional insured under the coverages described in
Sections 13.1(a)(iii) through (xi). The Holder of any Mortgage shall be named
as an additional insured and loss payee, to the extent required under the terms
of the Mortgage. Losses shall be payable, for the benefit of the respective
insureds, to Lessor or Lessee as provided in this Lease (subject to the rights
of the Holder of any Mortgage). Any loss adjustment for coverage insuring
multiple parties shall require the written consent of each of them, each acting
reasonably and in good faith. Evidence of insurance shall be deposited with
Lessor. The policies on the Leased Property, including the Leased Improvements,
Fixtures and Lessee's Personal Property, shall at all times satisfy the
requirements of the Franchise Agreement and of any Mortgage (so long as Lessee
has been furnished with a copy of such Mortgage), affecting the Leased Property
and at a minimum shall include:
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(i) Building insurance on the "Special Form" (formerly "All
Risk" form) (including earthquake, flood and sink hole in reasonable amounts if
and as determined by Lessor) in an amount not less than 100% of the then full
replacement cost thereof (as defined in Section 13.2) or such other amount which
is acceptable to Lessor, and personal property insurance on the "Special Form"
in the full amount of the replacement cost thereof;
(ii) Insurance for loss and damage (direct and indirect) from
steam boilers, pressure vessels or similar apparatus, air conditioning systems,
piping and machinery, and sprinklers, if any, now or hereafter installed in the
Facility, in the minimum amount of $5,000,000 or in such greater amounts as are
then customary;
(iii) Loss of income insurance on the "Special Form", in the
amount of one year of the greater of Base Rent or Participating Rent (based on
the last Lease Year of operation or, to the extent the Leased Property has not
been operated for an entire 12-month Lease Year, based on prorated Participating
Rent) for the benefit of Lessor, and business interruption insurance on the
"Special Form" in the amount of one year of gross profit, for the benefit of
Lessee;
(iv) Commercial general liability insurance, with amounts not
less than $1,000,000 combined single limit for each occurrence and $2,000,000
for the aggregate of all occurrences within each policy year, as well as excess
liability (umbrella) insurance with limits of at least $25,000,000 per
occurrence, covering each of the following: bodily injury, death, or property
damage liability per occurrence, personal and advertising injury, general
aggregate, products and completed operations, with respect to Lessor, Lessee and
Manager, and "all risk legal liability" (including liquor law or "dram shop"
liability, if liquor or alcoholic beverages are served on the Leased Property)
with respect to Lessor, Lessee and Manager;
(v) Fidelity bonds or blanket crime policies with limits and
deductibles as may be reasonably determined by Lessor, covering Lessee's or
Manager's employees in job classifications normally bonded under prudent hotel
management practices in the United States or otherwise required by law;
(vi) Workers' compensation insurance to the extent necessary
to protect Lessor, Lessee and Manager and the Leased Property against Lessee's
or Manager's worker's compensation claims to the extent required by applicable
state laws;
(vii) Comprehensive form vehicle liability insurance for
owned, non-owned and hired vehicles, in the amount of $1,000,000;
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(viii) Garagekeeper's legal liability insurance covering both
comprehensive and collision-type losses with a limit of liability in keeping
with prudent hotel management practice;
(ix) Innkeeper's legal liability insurance covering property
of guests while on the Leased Property for which Lessor is legally responsible
(other than property in a safe deposit box), with a limit of not less than
$5,000 for any one occurrence or $25,000 in the aggregate;
(x) Safe deposit box legal liability insurance covering
property of guests while in a safe deposit box on the Leased Property for which
Lessor is legally responsible, with a limit of not less than $100,000 for any
one occurrence; and
(xi) Insurance covering such other liabilities or hazards
(such as plate glass or other common risks) and in such amounts as may be (A)
required by a Holder or (B) customary for comparable properties in the area of
the Leased Property and is available from insurance companies, insurance pools
or other appropriate companies authorized to do business in the State at rates
which are economically practicable in relation to the risks covered as may be
reasonably determined by Lessor.
(b) Responsibility for Insurance. Lessee shall obtain the insurance
and pay the premiums for the coverages described in Sections 13.1(a)(iii)
through (x), and Lessor shall obtain the insurance and pay the premiums for the
coverage described in Sections 13.1(a)(i) and (ii), provided that Lessee shall
reimburse Lessor immediately after demand therefor for any premiums paid by
Lessor for the coverages required under Sections 13.1(a)(i) and (ii) to the
extent that the premiums relate to coverages for property owned by Lessee or
coverages which benefit Lessee or Manager. Insurance required by Section
13.1(a)(xi) shall be obtained and paid for by Lessor to the extent that it
relates to risks of the type covered by the insurance obtained pursuant to
Section 13.1(a)(i) through (ii), and obtained and paid for by Lessee if it
relates to risks of the type covered by the insurance obtained pursuant to
Sections 13.1(a)(iv) through (x). The party responsible for the premium for any
insurance coverage shall also be responsible for any and all deductibles and
self-insured retentions in connection with such coverages. In the event that
either party can obtain comparable insurance coverage required to be carried by
the other party from comparable insurers and at a cost significantly less than
that at which such other party can obtain such coverage, the parties shall
cooperate in good faith to obtain such coverage at the lower cost and shall
allocate the premiums therefor in accordance with the provisions of the first
sentence of this Section 13.1(b).
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13.2 Replacement Cost. The term "full replacement cost" as used
herein shall mean the actual replacement cost of the Leased Property requiring
replacement from time to time including an increased cost of construction
endorsement, if available, and the cost of debris removal. In the event either
party believes that full replacement cost has increased or decreased at any time
during the Lease Term, it shall have the right to have such full replacement
cost redetermined.
13.3 [Intentionally omitted.]
13.4 Waiver of Subrogation. All insurance policies carried by Lessor
or Lessee covering the Leased Property, the Fixtures, the Facility or Lessee's
Personal Property, including, without limitation, contents, fire and casualty
insurance, shall expressly waive any right of subrogation on the part of the
insurer against the other party and Manager to the extent available without
additional cost, provided, however, if there is an additional cost, the other
party may, but shall not be obligated to, pay the same.
13.5 Form Satisfactory, etc. All of the policies of insurance
referred to in this Article XIII shall be written in a form, with deductibles
and by insurance companies satisfactory to Lessor and Lessee and shall satisfy
the requirements of any ground lease, Mortgage, and the Franchise Agreement. The
party responsible for obtaining any policy shall pay all of the premiums
therefor, and deliver copies of such policies or certificates thereof to the
other party prior to their effective date (and, with respect to any renewal
policy, 10 days prior to the expiration of the existing policy), and in the
event of the failure of the responsible party either to effect such insurance as
herein called for or to pay the premiums therefor, or to deliver such policies
or certificates thereof to the other party at the times required, such other
party shall be entitled, but shall have no obligation, after 10 days' Notice to
the responsible party, to effect such insurance and pay the premiums therefor,
and to be reimbursed for any such premiums upon written demand therefor. Each
insurer mentioned in this Article XIII shall agree, by endorsement to the policy
or policies issued by it, or by independent instrument furnished to the party
not responsible hereunder for obtaining such policy, that it will give to such
party 10 days' Notice before the policy or policies in question shall be
materially altered, allowed to expire or canceled.
13.6 Increase in Limits. If either Lessor or Lessee at any time
deems the limits of the personal injury or property damage under the
comprehensive public liability insurance then carried to be either excessive or
insufficient, Lessor and Lessee shall endeavor in good faith to agree on the
proper and reasonable limits for such insurance to be carried and such
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insurance shall thereafter be carried with the limits thus agreed on until
further change pursuant to the provisions of this Section. If the parties fail
to agree on such limits, the matter shall be referred to arbitration as provided
for in Article XL. In no event, however, shall such limits fail to satisfy the
requirements of the Franchise Agreement and of any ground lease or Mortgage.
13.7 Blanket Policy. Notwithstanding anything to the contrary
contained in this Article XIII, Lessee or Lessor may bring the insurance
provided for herein within the coverage of a so-called blanket policy or
policies of insurance carried and maintained by Lessee or Lessor; provided,
however, that the coverage afforded to Lessor, Lessee and Manager will not be
reduced or diminished or otherwise be different from that which would exist
under a separate policy meeting all other requirements of this Lease by reason
of the use of such blanket policy of insurance, and provided further that the
requirements of this Article XIII are otherwise satisfied.
13.8 Separate Insurance. Neither Lessor nor Lessee shall on its own
initiative or pursuant to the request or requirement of any third party, take
out separate insurance concurrent in form or contributing in the event of loss
with that required in this Article XIII to be furnished, or increase the amount
of any then existing insurance by securing an additional policy or additional
policies, unless all parties having an insurable interest in the subject matter
of the insurance, including in all cases Lessor, are included therein as
additional insureds, and the loss is payable under such additional separate
insurance in the same manner as losses are payable under this Lease. Each party
shall immediately notify the other party that it has obtained any such separate
insurance or of the increasing of any of the amounts of the then existing
insurance.
13.9 Reports on Insurance Claims. Lessee shall promptly investigate
and make a complete and timely written report to the appropriate insurance
company as to all accidents, all claims for damage relating to the ownership,
operation, and maintenance of the Facility, and any damage or destruction to the
Facility and the estimated cost of repair thereof and shall prepare any and all
reports required by any insurance company in connection therewith. All such
reports shall be timely filed with the insurance company as required under the
terms of the insurance policy involved, and a copy of all such reports shall be
furnished to Lessor. Lessee shall not adjust, settle or compromise any insurance
loss, or execute proofs of such loss, without Lessor's prior written consent in
each instance, except that such consent shall not be required with respect to
any single casualty or other event which does not exceed the aggregate amount of
$5,000. Notwithstanding anything to the contrary set forth in this Section 13.9,
with respect to any
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insurance loss under liability policies relating to any single liability claim,
Lessee may adjust, settle or compromise any such loss without Lessor's consent
so long as Lessee shall deliver to Lessor a release relinquishing Lessor from
all liability under such claim.
ARTICLE XIV
14.1 Insurance Proceeds. All proceeds of the insurance contemplated
by Sections 13.1(a)(i) and (ii) payable by reason of any loss or damage to the
Leased Property, or any portion thereof, and insured under any policy of
insurance required by Article XIII of this Lease shall, subject to the terms of
any Mortgage and/or ground lease, be paid to Lessor and held in trust by Lessor
in an interest-bearing account, and made available, if applicable, for
reconstruction or repair, as the case may be, of any damage to or destruction of
the Leased Property or any portion thereof, and, if applicable, shall be paid
out by Lessor from time to time for the reasonable costs of such reconstruction
or repair upon satisfaction of reasonable terms and conditions specified by
Lessor. Any excess proceeds of insurance remaining after the completion of the
restoration or reconstruction of the Leased Property shall be paid to Lessor. If
neither Lessor nor Lessee is required or elects to repair and restore, and the
Lease is terminated as described in Section 14.2, all such insurance proceeds
shall be retained by Lessor except for any amount thereof paid with respect to
Lessee's Personal Property. All salvage resulting from any risk covered by
insurance shall belong to Lessor, except to the extent of salvage relating to
Lessee's Personal Property.
14.2 Reconstruction in the Event of Damage or Destruction Covered by
Insurance. Except as provided in Section 14.6, if during the Term the Leased
Property is totally or partially destroyed by a risk covered by the insurance,
and the limits thereof, described in Article XIII and the Facility thereby is
not rendered Unsuitable for its Primary Intended Use, Lessor shall restore the
Facility to substantially the same condition as existed immediately before the
damage or destruction and otherwise in accordance with the terms of this Lease.
Except as provided in Section 14.6, if during the Term the Leased Property is
totally or partially destroyed by a risk covered by the insurance, and the
limits thereof, described in Article XIII and the Facility thereby is rendered
Unsuitable for its Primary Intended Use, Lessor may, at Lessor's option, either
(1) restore the Facility to substantially the same condition as existed
immediately before the damage or destruction and otherwise in accordance with
the terms of this Lease, or (2), terminate this Lease. If Lessor terminates the
Lessee as aforesaid, Lessor shall be entitled to retain all insurance proceeds.
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14.3 Reconstruction in the Event of Damage or Destruction Not
Covered by Insurance. Except as provided in Section 14.6, if during the Term the
Facility is totally or partially damaged or destroyed by a risk not covered by
the insurance described in Article XIII, whether or not such damage or
destruction renders the Facility Unsuitable for its Primary Intended Use, Lessor
may at its option either, (a) at Lessor's sole cost and expense, restore the
Facility to substantially the same condition it was in immediately before such
damage or destruction and such damage or destruction shall not terminate this
Lease, or (b) terminate this Lease. Notwithstanding the foregoing, if such
damage or destruction is not material, Lessor shall, at Lessor's sole cost and
expense, restore the Facility to substantially the same condition as existed
immediately before the damage or destruction and otherwise in accordance with
the terms of the Lease, and such damage or destruction shall not terminate the
Lease.
14.4 Lessee's Property and Business Interruption Insurance. All
insurance proceeds payable by reason of any loss of or damage to any of Lessee's
Personal Property and the business interruption insurance maintained for the
benefit of Lessee shall be paid to Lessee; provided, however, no such payments
shall diminish or reduce the insurance payments otherwise payable to or for the
benefit of Lessor hereunder.
14.5 Abatement of Rent. Any damage or destruction due to casualty
notwithstanding, this Lease shall remain in full force and effect but Lessee's
obligation to make rental payments and to pay all other charges required by this
Lease shall abate during any period required for the applicable repair and
restoration to the extent the Facility is Unsuitable for its Primary Intended
Use (unless such damage was caused by Lessee's negligence or wilful misconduct
and then only to the extent such rental payments and charges are not paid to
Lessor from proceeds of insurance).
14.6 Damage Near End of Term. Notwithstanding any provisions of
Section 14.2 or 14.3 appearing to the contrary, if damage to or destruction of
the Facility rendering it Unsuitable for its Primary Intended Use occurs during
the last 24 months of the Term, then Lessee shall have the right to terminate
this Lease by giving Notice to Lessor within 30 days after the date of damage or
destruction, whereupon all accrued Rent shall be paid immediately, and this
Lease shall automatically terminate five (5) days after the date of such notice
and the parties shall have no further liabilities or obligations hereunder,
except as expressly stated in this Lease to survive such termination.
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ARTICLE XV
15.1 Definitions.
(a) "Condemnation" means a Taking resulting from (1) the exercise of
any governmental power, whether by legal proceedings or otherwise, by a
Condemnor, and (2) a voluntary sale or transfer by Lessor to any Condemnor,
either under threat of condemnation or while legal proceedings for condemnation
are pending.
(b) "Date of Taking" means the date the Condemnor has the right to
possession of the property being condemned.
(c) "Award" means all compensation, sums or anything of value
awarded, paid or received on a total or partial Condemnation.
(d) "Condemnor" means any public or quasi-public authority, or
private corporation or individual, having the power of Condemnation.
15.2 Parties' Rights and Obligations. If during the Term there is
any Condemnation of all or any part of the Leased Property or any interest in
this Lease, the rights and obligations of Lessor and Lessee shall be determined
by this Article XV, subject to the provisions of any Mortgage.
15.3 Total Taking. If title to the fee of the whole of the Leased
Property is condemned by any Condemnor, this Lease shall cease and terminate as
of the Date of the Taking by the Condemnor. If title to the fee of less than the
whole of the Leased Property is so taken or condemned, which nevertheless
renders the Leased Property Unsuitable or Uneconomic for its Primary Intended
Use, then either Lessee or Lessor shall have the option, by notice to the other,
at any time prior to the Date of Taking, to terminate this Lease as of the Date
of Taking. Upon such date, if such Notice has been given, this Lease shall
thereupon cease and terminate. All Base Rent, Participating Rent and Additional
Charges paid or payable by Lessee hereunder shall be apportioned as of the Date
of Taking, and Lessee and Lessor shall promptly pay the other any amounts due
thereby.
15.4 Allocation of Award. The total Award made with respect to the
Leased Property or for loss of rent, or for Lessor's loss of business beyond the
Term, shall be solely the property of and payable to Lessor. Any Award made for
loss of Lessee's business during the remaining Term, if any, for the taking of
Lessee's Personal Property, or for removal and relocation expenses of Lessee in
any such proceedings shall be the sole property of and payable to Lessee. In any
Condemnation proceedings Lessor and Lessee shall each seek its Award in
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conformity herewith, at its respective cost. Neither Lessor nor Lessee shall
initiate, prosecute or acquiesce in any proceedings that may result in a
diminution of any Award payable to the other, except that Lessor and Lessee
shall equitably apportion their respective Awards to the extent that they can
not comply with the provisions of this Section.
15.5 Partial Taking. If title to less than the whole of the Leased
Property is condemned, and the Leased Property is still suitable for its Primary
Intended Use, and not Uneconomic for its Primary Intended Use, or if Lessee or
Lessor is entitled but neither elects to terminate this Lease as provided in
Section 15.3, Lessee at its cost shall with all reasonable dispatch, but only to
the extent of any condemnation awards made available to Lessee and other sums
advanced by Lessor pursuant to the next sentence, restore the untaken portion of
any Leased Improvements so that such Leased Improvements constitute a complete
architectural unit of the same general character and condition (as nearly as may
be possible under the circumstances) as the Leased Improvements existing
immediately prior to the Condemnation. If the condemnation awards are not
adequate to restore the Facility as aforesaid, each of the Lessor and Lessee
shall have the right to terminate this Lease, without in any way affecting any
Other Leases for Other Properties then in effect between Lessor and Lessee, by
giving Notice to the other; provided, however, that if such termination is by
Lessee, Lessor shall have the right, in Lessor's sole discretion, to keep this
Lease in full force and effect by providing, within thirty (30) days after
Lessee's Notice of termination, a Notice to Lessee of Lessor's unconditional,
legally binding obligation to be responsible for all restoration costs in excess
of the condemnation awards. Lessor shall in good faith seek a fair and equitable
allocation of any Award among restoration, taken Leasehold Improvements and
other elements. Lessor shall contribute to the cost of restoration that part of
its Award specifically allocated to such restoration, together with severance
and other damages awarded for the taken Leased Improvements; provided, however,
that the amount of such contribution shall not exceed such cost. In the event of
a partial taking after which this Lease shall not be terminated, the Base Rent
shall be abated in the manner and to the extent that is fair, just and equitable
to both Lessee and Lessor, taking into consideration, among other relevant
factors, the number of usable rooms, or the revenues affected by such partial
taking. If Lessor and Lessee are unable to agree upon the amount of such
abatement within thirty (30) days after such partial taking, the matter may be
submitted by either party to arbitration in accordance with Section 40.1 below
for resolution.
15.6 Temporary Taking. If the whole or any part of the Leased
Property or of Lessee's interest under this Lease is condemned by any Condemnor
for its temporary use or occupancy,
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this Lease shall not terminate by reason thereof, and Lessee shall continue to
pay, in the manner and at the times herein specified, the full amounts of Base
Rent and Additional Charges, but only to the extent of the net (i.e. after
deduction of all costs, expenses, and other obligations attendant to such
Condemnation have been paid) Award made to Lessee for such Condemnation
allocable to the term of this Lease. In addition, to the extent of the remaining
balance, if any, of the net Award made for such Condemnation allowable to the
term of this Lease (after payment of Base Rent and Additional Charges), Lessee
shall pay Participating Rent at a rate equal to the average Participating Rent
during the last three preceding Lease Years (or if three Lease Years shall not
have elapsed, the average during the preceding Lease Years). Except only to the
extent that Lessee may be prevented from so doing pursuant to the terms of the
order of the Condemnor, Lessee shall continue to perform and observe all of the
other terms, covenants, conditions and obligations hereof on the part of the
Lessee to be performed and observed, as though such Condemnation had not
occurred. In the event of any Condemnation as in this Section 15.6 described,
the entire amount of any Award made for such Condemnation allocable to the Term
of this Lease, whether paid by way of damages, rent or otherwise, shall be paid
to Lessee. Lessee covenants that upon the termination of any such period of
temporary use or occupancy it will, to the extent that its Award is sufficient
therefor and subject to Lessor's contribution as set forth below, restore the
Leased Property as nearly as may be reasonably possible to the condition in
which the same was immediately prior to such Condemnation, unless such period of
temporary use or occupancy extends beyond the expiration of the Term, in which
case Lessee shall not be required to make such restoration. If restoration is
required hereunder, Lessor shall, having sought a fair and equitable allocation
as provided in Section 15.5 above, contribute to the cost of such restoration
that portion of its entire Award that is specifically allocated to such
restoration in the judgment or order of the court, if any.
ARTICLE XVI
16.1 Events of Default. Any one or more of the following events
shall constitute an Event of Default hereunder:
(a) if Lessee fails to make any payment of Base Rent, Participating
Rent or Additional Charges within ten (10) days after receipt by the Lessee of
Notice from Lessor that the same has become due and payable; or
(b) if Lessee fails to observe or perform any other term, covenant
or condition of this Lease and such failure is not curable, or if curable is not
cured by Lessee within a period of 30 days after receipt by the Lessee of Notice
thereof from
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Lessor, unless such failure is curable but cannot with due diligence be cured
within a period of 30 days, in which case it shall not be deemed an Event of
Default if (i) Lessee, within such 30 day period, proceeds with due diligence to
commence to cure the failure and thereafter diligently completes the curing
thereof within 180 days, and (ii) the failure does not result in a notice or
declaration of default under any material contract or agreement to which Lessor,
the Company, or any Affiliate of either of them is a party or by which any of
their assets are bound; or
(c) if Lessee shall (i) be generally not paying its debts as they
become due, (ii) file, or consent by answer or otherwise to the filing against
it of, a petition for relief or reorganization or arrangement or any other
petition in bankruptcy, for liquidation or to take advantage of any bankruptcy
or insolvency law of any jurisdiction, (iii) make a general assignment for the
benefit of its creditors, (iv) consent to the appointment of a custodian,
receiver, trustee or other officer with similar powers with respect to it or
with respect to any substantial part of its assets, (v) be adjudicated insolvent
or (vi) take corporate action for the purpose of any of the foregoing; or if a
court or governmental authority of competent jurisdiction shall enter an order
appointing, without consent by Lessee, a custodian, receiver, trustee or other
officer with similar powers with respect to it or with respect to any
substantial part of its assets, or if an order for relief shall be entered in
any case or proceeding for liquidation or reorganization or otherwise to take
advantage of any bankruptcy or insolvency law of any jurisdiction, or ordering
the dissolution, winding-up or liquidation of Lessee, or if any petition for any
such relief shall be filed against Lessee and such order or petition shall not
be rescinded or dismissed within 120 days; or
(d) if Lessee is liquidated or dissolved, or commences proceedings
toward such liquidation or dissolution, or, in any manner, ceases to do business
or permits the sale or divestiture of all or substantially all of its assets; or
(e) if the estate or interest of Lessee in the Leased Property or
any part thereof is voluntarily or involuntarily transferred, assigned,
conveyed, levied upon or attached in any Proceeding, except (i) where Lessee is
contesting and is diligently prosecuting the contest of such lien or attachment
in good faith in accordance with the terms of this Agreement, (ii) the transfer
of the ownership interest of the Lessee in the case of a merger, consolidation
or sale of all of the assets of Prime Hospitality Corp., subject to the
provisions of Section 36.1, and; or (iii) as otherwise expressly permitted in
this Agreement.
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(f) if, except as a result of and to the extent required by damage,
destruction, Condemnation or Unavoidable Delay, Lessee voluntarily ceases
operations on the Leased Property for a period in excess of three (3) days; or
(g) if notice of a default or an event of default has been given by
the franchisor under the Franchise Agreement with respect to the Facility on the
Leased Property as a result of any action or failure to act by the Lessee or any
Person with whom the Lessee contracts for management services approved by Lessor
at the Facility (including any Manager) which default or event of default is not
cured within applicable cure periods and does not arise from Lessor's breach of
any of its obligations under this Lease which are required to maintain the
Franchise Agreement in effect; provided that if Lessee is in good faith
disputing an assertion of default by the franchisor or is proceeding diligently
to cure such default, there shall be no default or event of default pursuant to
this subsection (g) for such reasonable period of time as Lessee continues to
dispute in good faith or diligently proceeds to cure and so long as the Facility
continues to be operated under the Franchise Agreement.
(h) if an Event of Default occurs under any of the Other Leases.
An Event of Default under this Section 16.1 shall constitute an
Event of Default hereunder and under all of the Other Leases.
No Event of Default (other than a failure to make a payment of
money) shall be deemed to exist under clause (b) during any time the curing of a
failure described in clause (b) is prevented by an Unavoidable Delay, provided
that upon the cessation of such Unavoidable Delay, Lessee proceeds to remedy
such failure as provided in clause (b) without further delay.
If litigation is commenced with respect to any alleged default under
this Lease, the prevailing party in such litigation shall receive, in addition
to its damages incurred, such sum as the court shall determine as its reasonable
attorneys' fees, and all costs and expenses incurred in connection therewith.
16.2 Remedies. Upon the occurrence of an Event of Default, Lessor
shall have the right, at Lessor's option, to elect to do any one or more of the
following without further notice or demand to Lessee: (a) terminate this Lease,
in which event Lessee shall immediately surrender the Leased Property and the
Inventory to Lessor, and, if Lessee fails to so surrender, Lessor shall have the
right, without notice, to enter upon and take possession of the Leased Property
and the Inventory and to expel or remove Lessee and its effects without being
liable for prosecution or any claim for damages therefor, to the extent
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permitted by applicable law; and Lessee shall, and hereby agrees to, indemnify
Lessor for all loss and damage which Lessor suffers by reason of such
termination, including without limitation, damages in an amount equal to the
total of (1) the reasonable costs of recovering the Leased Property and the
Inventory in the event that Lessee does not promptly surrender the same, and all
other reasonable expenses incurred by Lessor in connection with Lessee's
default, including without limitation the following: (i) expenses for cleaning,
repairing or restoring the Leased Property; (ii) expenses for removing,
transporting, and storing any of Lessee's property left at the Leased Property
(although Lessor shall have no obligation to remove, transport, or store any
such property); (iii) expenses of reletting the Leased Property including
without limitation, brokerage commissions and reasonable attorneys' fees; (iv)
reasonable attorneys' fees and court costs; and (v) costs of carrying the Leased
Property such as repairs, maintenance, taxes and insurance premiums, utilities
and security precautions (if any); (2) the worth at the time of award of the
unpaid Rent which had been earned at the time of termination; (3) the worth at
the time of award of the amount by which the Rent which would have been earned
after termination until the time of award exceeds the amount of such rental loss
that Lessee proves could have been reasonably avoided; (4) the worth at the time
of award (computed by discounting at the discount rate of the Federal Reserve
Bank of San Francisco at the time of award plus one percent) of the amount by
which the Rent for the balance of the Term after the time of award exceeds the
amount of such rental loss that Lessee proves could be reasonably avoided; and
(5) all other sums of money and damages owing by Lessee to Lessor; or (b) enter
upon and take possession of the Leased Property without terminating this Lease
and without being liable to prosecution or any claim for damages therefor, to
the extent permitted by applicable law, and, if Lessor elects, relet the Leased
Property on such terms as Lessor deems advisable, in which event Lessee shall
pay to Lessor on demand the reasonable cost of repossessing the Leased Property
and any deficiency between the Rent payable hereunder (including Participating
Rent as determined below) and the rent paid under such reletting; provided,
however, that Lessee shall not be entitled to any excess payments received by
Lessor from such reletting. Lessor's failure to relet the Leased Property shall
not release or affect Lessee's liability for Rent or for damages; or (c) enter
the Leased Property without terminating this Lease and without being liable for
prosecution or any claim for damages therefor, and maintain the Leased Property
and repair or replace any damage thereto or do anything for which Lessee is
responsible hereunder. Lessee shall reimburse Lessor immediately upon demand for
any expense which Lessor incurs in thus effecting Lessee's compliance under this
Lease, and Lessor shall not be liable to Lessee for any damages with respect
thereto. Notwithstanding anything herein to the contrary, Lessee shall not be
liable to Lessor for consequential, punitive or exemplary damages.
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The rights granted to Lessor in this Section 16.2 shall be
cumulative of every other right or remedy provided in this Lease or which Lessor
may otherwise have at law or in equity or by statute, and the exercise of one or
more rights or remedies shall not prejudice or impair the concurrent or
subsequent exercise of other rights or remedies or constitute a forfeiture or
waiver of Rent or damages accruing to Lessor by reason of any Event of Default
under this Lease.
Participating Rent for the purposes of this Section 16.2 shall be a
sum equal to (i) the average of the annual amounts of the Participating Rent for
the three 12-month Lease Years immediately preceding the Lease Year in which the
termination, re-entry or repossession takes place, or (ii) if three 12-month
Lease Years shall not have elapsed, the average of the Participating Rent during
the preceding 12-month Lease Years during which the Lease was in effect, or
(iii) if one 12-month Lease Year has not elapsed, the amount derived by
annualizing the Participating Rent from the effective date of this Lease.
16.3 [Intentionally omitted.]
16.4 Waiver. Lessee waives, to the extent permitted by applicable
law, any rights of redemption available to Lessee upon the occurrence of an
Event of Default. Each party waives, to the extent permitted by applicable law,
any right to a trial by jury in any proceedings brought by either party to
enforce the provisions of this Lease, including, without limitation, proceedings
to enforce the remedies set forth in this Article XVI. Lessee waives, to the
extent permitted by applicable law, the benefit of any laws now or hereafter in
force exempting property from liability for rent or for debt, and Lessor waives,
to the extent permitted by applicable law, any right to assert an "alter ego" of
Lessee or its partners or to "pierce the corporate veil" of Lessee or its
partners other than to the extent funds shall have been inappropriately paid
following a default resulting in an Event of Default to any Person directly or
indirectly having an ownership interest in Lessee.
16.5 Application of Funds. Any payments received by Lessor under any
of the provisions of this Lease during the existence or continuance of any Event
of Default shall be applied to Lessee's obligations in the order that Lessor may
determine or as may be prescribed by the laws of the State.
ARTICLE XVII
Lessor's Right to Cure Lessee's Default. If Lessee fails to make any
payment or to perform any act required to be made or performed under this Lease
including, without limitation, Lessee's failure to comply with the terms of any
Franchise
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Agreement, and fails to cure the same within the relevant time periods, if any,
provided in Section 16.1, Lessor, without waiving or releasing any obligation or
default, may (but shall be under no obligation to) at any time thereafter upon
Notice to Lessee make such payment or perform such act for the account and at
the expense of Lessee, and may, to the extent permitted by law, enter upon the
Leased Property for such purpose and, subject to Section 16.2, take all such
action thereon as, in Lessor's opinion, may be necessary or appropriate
therefor. No such entry shall be deemed an eviction of Lessee. All sums so paid
by Lessor and all costs and expenses (including, without limitation, reasonable
attorneys' fees and expenses, in each case to the extent permitted by law) so
incurred, together with a late charge thereon (to the extent permitted by law)
at the Overdue Rate from the date on which such sums or expenses are paid or
incurred by Lessor, shall be paid by Lessee to Lessor on demand. The obligations
of Lessee and rights of Lessor contained in this Article shall survive the
expiration or earlier termination of this Lease.
ARTICLE XVIII
18.1 Personal Property Limitation. Anything contained in this Lease
to the contrary notwithstanding, the average of the adjusted tax bases of the
items of Lessor's personal property that are leased to the Lessee under this
Lease at the beginning and at the end of any Lease Year shall not exceed 15% of
the average of the aggregate adjusted tax bases of the Leased Property at the
beginning and at the end of such Lease Year (the "Personal Property
Limitation"). Lessor and Lessee shall at all times cooperate in good faith and
use their best efforts to permit Lessor to comply with the Personal Property
Limitation, which compliance may include, by way of example only and not by way
of limitation, the purchase by Lessee at Fair Market Value of personal property
in excess of the Personal Property Limitation and an equitable reduction of the
Rent payable by Lessee. All such compliance shall be effected in a manner which
has no material net economic detriment to Lessee and will not jeopardize the
Company's status as a real estate investment trust under the applicable
provisions of the Code. This Section 18.1 is intended to ensure that the Rent
qualifies as "rents from real property," within the meaning of Section 856(d) of
the Code, or any similar or successor provisions thereto, and shall be
interpreted in a manner consistent with such intent.
18.2 Sublease Rent Limitation. Anything contained in this Lease to
the contrary notwithstanding, Lessee shall not sublet the Leased Property or
enter into any similar arrangement on any basis such that the rental or other
amounts to be paid by the sublessee thereunder would be based, in whole or in
part, on either (a) the net income or profits derived by the business
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activities of the sublessee, or (b) any other formula such that any portion of
the Rent would fail to qualify as "rents from real property" within the meaning
of Section 856(d) of the Code, or any similar or successor provision thereto.
18.3 Sublease Lessee Limitation. Anything contained in this Lease to
the contrary notwithstanding, Lessee shall not sublease the Leased Property to,
or enter into any similar arrangement with, any Person in which the Company
owns, directly or indirectly, a 10% or more interest, within the meaning of
Section 856(d)(2)(B) of the Code, or any similar or successor provisions
thereto.
18.4 Lessee Ownership Limitation. Anything contained in this Lease
to the contrary notwithstanding, Lessor shall not take, or permit an Affiliate
of Lessor to take, any action that would cause the Company to own, directly or
indirectly, a 10% or more interest in the Lessee within the meaning of Section
856(d)(2)(B) of the Code, including applicable attribution rules provide in
Sections 856(d) and 318(a) of the Code, or any similar or successor provision
thereto. Anything contained in this Lease to the contrary notwithstanding,
Lessee shall not take, or permit an Affiliate of Lessee to take, any action that
would cause the Company to own, directly or indirectly, a 10% or more interest
in the Lessee within the meaning of Section 856(d)(2)(B) of the Code, including
applicable attribution rules provide in Sections 856(d) and 318(a) of the Code,
or any similar or successor provision thereto.
18.5 Lessee Net Worth. At all times during the Term of this Lease,
Lessee shall maintain a Net Worth equal to or greater than the following: (i)
from the Commencement Date through December 31, 1998, $3,400,000, and (ii) from
January 1, 1999 through the end of the Term, an amount equal to seventeen and
one-half percent (17.5%) of the Rent paid or payable under this Lease and the
Other Leases on account of the prior Lease Year. Such Net Worth shall be in the
form of cash or marketable securities or an irrevocable, unconditional letter of
credit payable to Lessor (the "LC"), or any combination thereof. In the event
that all or any portion of the foregoing Net Worth requirement is maintained by
an LC, such LC shall be in a form reasonably acceptable to Lessor and Lessee and
issued by a bank rated AA or better by a recognized financial institution rating
service such as Moodys or Standard & Poor's and otherwise reasonably acceptable
to Lessor. Lessee shall deposit any LC with an escrow agent reasonably
acceptable to Lessor and Lessee (the "Escrow Agent") pursuant to an escrow
agreement reasonably acceptable to Lessor and Lessee (the "Escrow Agreement").
The LC shall permit partial draws. The Escrow Agreement shall provide, among
other things, (i) that the Escrow Agent shall release the LC to Lessor or a
partial draw, as applicable, at such time as Lessor has obtained a final
non-appealable judgment against
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Lessee for an amount certain, (ii) that the Escrow Agent shall notify the
parties to the Escrow Agreement not less than thirty (30) nor more than sixty
(60) days prior to the expiration of the LC of the scheduled expiration date of
the LC, (iii) that if an extension of the LC or a replacement LC with an
expiration date not less than one (1) year after the expiration date of the
existing LC is not delivered to Escrow Agent within ten (10) business days prior
to the expiration date of the existing LC, the existing LC shall be drawn down
by Escrow Agent and the proceeds received therefrom held in escrow pursuant to
the Escrow Agreement, (iv) that the amount of the LC shall be increased or
decreased in accordance with the Net Worth requirements of this Section 18.5,
and (v) such other reasonable terms and provisions as to which the parties shall
agree in good faith. Upon the execution of a New Management Agreement (as
defined in Section 36.1) pursuant to Section 36.1 of this Lease, Lessee's Net
Worth requirement may be satisfied by way of a demand note from Prime
Hospitality Corp in the required amount payable upon an unsatisfied final
non-appealable judgement and in such case, Escrow Agent shall release the LC to
Lessee promptly upon receipt by Escrow Agent of evidence of such demand note.
*** [FOR LEASES IN WHICH MAHWAH HOLDING CORP. OR FAIRFIELD HOLDING CORP. IS THE
LESSEE. Notwithstanding the foregoing, Lessee's Net Worth requirements under
this Section 18.5 will be satisfied by delivering to Lessor a guaranty of the
Lessee's obligations hereunder in the form attached hereto (the "Guaranty") made
by its Affiliate, Clifton Holding Corp. ("Clifton"), provided Clifton has
satisfied such Net Worth requirements. Any LC posted by Clifton pursuant to the
provisions of the Other Leases to which it is a party shall also secure
Clifton's obligations under any such Guaranty.
18.6 No Other Business. It is a material inducement to Lessor that
Lessee covenant and agree, and Lessee hereby covenants and agrees, that at all
times during the Term of this Lease, Lessee will not engage, participate in, or
otherwise enter into any business of any kind, nature or description,
individually or with others, other than the leasing and operation of the Leased
Property and the Other Properties.
ARTICLE XIX
Holding Over. If Lessee for any reason remains in possession of the
Leased Property after the expiration or earlier termination of the Term, such
possession shall be as a tenant at sufferance during which time Lessee shall pay
as rental each month two times the aggregate of (a) one-twelfth of the aggregate
Base Rent and Participating Rent payable with respect to the last Lease Year of
the Term, (b) all Additional Charges accruing during the applicable month and
(c) all other sums, if any, payable by Lessee under this Lease with respect to
the Leased
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Property. During such period, Lessee shall be obligated to perform and observe
all of the terms, covenants and conditions of this Lease, but shall have no
rights hereunder other than the right to the extent given by law to tenancies at
sufferance, to continue its occupancy and use of the Leased Property. Nothing
contained herein shall constitute the consent, express or implied, of Lessor to
the holding over of Lessee after the expiration or earlier termination of this
Lease.
ARTICLE XX
Indemnification. Lessee will protect, indemnify, hold harmless and
defend Lessor Indemnified Parties from and against all liabilities, obligations,
claims, damages, penalties, causes of action, costs and expenses (including,
without limitation, reasonable attorneys' fees and expenses) to the extent
permitted by law, EXCLUDING THOSE RESULTING FROM A LESSOR INDEMNIFIED PARTY'S
NEGLIGENCE OR WILLFUL MISCONDUCT, imposed upon or incurred by or asserted
against Lessor Indemnified Parties by reason of: (a) any accident, injury to or
death of persons or loss of or damage to property occurring on or about the
Leased Property or adjoining sidewalks during the Term, including without
limitation any claims under liquor liability, "dram shop" or similar laws, (b)
any present or future use, misuse, non-use, condition, management, maintenance
or repair by Lessee or any of its agents, employees or invitees of the Leased
Property or Lessee's Personal Property or any litigation, proceeding or claim by
governmental entities or other third parties to which a Lessor Indemnified Party
is made a party or participant related to such use, misuse, non-use, condition,
management, maintenance, or repair thereof by Lessee or any of its agents,
employees or invitees, including any failure of Lessee or any of its agents,
employees or invitees to perform any obligations under this Lease or imposed by
applicable law (other than arising out of Condemnation proceedings and save and
except any capital improvements mandated by law which shall be the
responsibility of Lessor), (c) any impositions that are the obligations of
Lessee pursuant to the applicable provisions of this Lease, (d) any failure on
the part of Lessee to perform or comply with any of the terms of this Lease on
the part of Lessee to be performed or complied with, and (e) the nonperformance
of any of the terms and provisions of any and all existing and future subleases
of the Leased Property to be performed by the landlord thereunder.
Lessor shall indemnify, save harmless and defend Lessee Indemnified
Parties from and against all liabilities, obligations, claims, damages,
penalties, causes of action, costs and expenses imposed upon or incurred by or
asserted against Lessee Indemnified Parties as a result of (a) the negligence or
willful misconduct of a Lessor Indemnified Party arising in connection with this
Lease or (b) any failure on the part of the
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Lessor to perform or comply with any of the terms of this Lease or (c) any
events occurring subsequent to the expiration or earlier termination of this
Lease.
Any amounts that become payable by an Indemnifying Party under this
Section shall be paid within ten days after liability therefor on the part of
the Indemnifying Party is determined by litigation or otherwise, and if not
timely paid, shall bear a late charge (to the extent permitted by law) at the
Overdue Rate from the date of such determination to the date of payment. Any
such amounts shall be reduced by insurance proceeds received and any other
recovery (net of costs) obtained by the Indemnified Party. An Indemnifying
Party, at its expense, shall contest, resist and defend any such claim, action
or proceeding asserted or instituted against the Indemnified Party. The
Indemnified Party, at its expense, shall be entitled to participate in any such
claim, action, or proceeding, and the Indemnifying Party, at its expense, shall
be entitled to participate in any such claim, action, or proceeding, and the
Indemnifying Party may not compromise or otherwise dispose of the same without
the consent of the Indemnified Party, which may not be unreasonably withheld.
Nothing herein shall be construed as indemnifying a Lessor Indemnified Party
against its own negligent acts or omissions or willful misconduct.
Lessee's or Lessor's liability for a breach of the provisions of
this Article shall survive any termination of this Lease.
ARTICLE XXI
21.1 Subletting and Assignment. Subject to the provisions of Article
XVIII, Section 21.2 and any other express consents, conditions, limitations or
other provisions set forth herein, Lessee shall not, either directly or
indirectly, assign this Lease or hereafter sublease all or any part of the
Leased Property, or mortgage, pledge or encumber this Lease, or the Lessee's
leasehold estate in and to the Land or the Leased Improvements or any portion
thereof, without first obtaining the prior written consent of Lessor, which
consent may be granted or withheld in Lessor's sole and absolute discretion.
Notwithstanding the foregoing consents, Lessor's consent shall not be
unreasonably withheld for any sublease of a retail portion (excluding a
restaurant portion) of the Leased Improvements provided that (i) the annual rent
to be derived from such sublease does not equal or exceed 5% of Gross Revenues
for the preceding Lease Year, and (ii) in Lessor's judgment reasonably
exercised, such sublease will not materially and adversely change the character
of the Facility. For the purposes of the foregoing, the transfer of a majority
equity interest in Lessee or the transfer of control of Lessee shall be deemed
an
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assignment of this Lease. In the case of a permitted subletting, the sublease
shall comply with the provisions of Section 21.2, and in the case of a permitted
assignment, the assignee shall assume in writing and agree to keep and perform
all of the terms of this Lease on the part of Lessee to be kept and performed
and shall be, and become, jointly and severally liable with Lessee for the
performance thereof. In case of either an assignment or subletting made during
the Term, Lessee shall remain primarily liable, as principal rather than as
surety, for the prompt payment of the Rent and for the performance and
observance of all of the covenants and conditions to be performed by Lessee
hereunder. An original counterpart of any such sublease or assignment and
assumption, duly executed by Lessee and such sublessee or assignee, as the case
may be, in form and substance satisfactory to Lessor, shall be delivered
promptly to Lessor. Notwithstanding anything contained in this Lease to the
contrary, Lessee shall not enter into any sublease which sublease would have the
effect of producing income for the Lessor that is not "rents from real property"
as such term is defined in Section 856(d) of the Code.
21.2 Attornment. Lessee shall insert in each future sublease
permitted under Section 21.1 provisions to the effect that (a) such sublease is
subject and subordinate to all of the terms and provisions of this Lease and to
the rights of Lessor hereunder, (b) if this Lease terminates before the
expiration of such sublease, the sublessee thereunder will, at Lessor's option,
attorn to Lessor and waive any right the sublessee may have to terminate the
sublease or to surrender possession thereunder as a result of the termination of
this Lease, and (c) if the sublessee receives a written Notice from Lessor or
Lessor's assignees, if any, stating that an uncured Event of Default exists
under this Lease, the sublessee shall thereafter be obligated to pay all rentals
accruing under said sublease directly to the party giving such Notice, or as
such party may direct. All rentals received from the sublessee by Lessor or
Lessor's assignees, if any, as the case may be, shall be credited against the
amounts owing by Lessee under this Lease.
ARTICLE XXII
Officer's Certificates; Financial Statements; Lessor's Estoppel
Certificates and Covenants.
(a) At any time and from time to time upon not less than 10 days
Notice by Lessor, Lessee will furnish to Lessor an Officer's Certificate
certifying that this Lease is unmodified and in full force and effect (or that
this Lease is in full force and effect as modified and setting forth the
modifications), the date to which the Rent has been paid, whether to the
knowledge of Lessee there is any existing default or Event of Default
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hereunder by Lessor or Lessee, and such other information as may be reasonably
requested by Lessor. Any such certificate furnished pursuant to this Section may
be relied upon by Lessor, any lender, any underwriter and any prospective
purchaser of the Leased Property.
(b) Lessee will furnish the following statements and operating
information to Lessor:
(1) the most recent Consolidated Financials of Lessee within
20 days after each quarter of any fiscal year (or, in the case of the final
quarter in any fiscal year, the most recent audited Consolidated Financial of
Lessee within 45 days);
(2) with reasonable promptness, such other information
respecting the financial condition, operations and affairs of Lessee and the
Leased Property (A) as Lessor or the Company may be required or may deem
desirable in its reasonable discretion to file with or provide to the SEC or any
other governmental agency or any other Person, all in the form, and either
audited or unaudited, as Lessor may request in Lessor's reasonable discretion
and all to be prepared at Lessor's expense to the extent that such information
is not otherwise maintained by Lessee in the normal course of its business.
(3) on the second business day after the 7th, 14th, 21st and
the last day of each month a weekly report of revenues, by department for the
then current month which shall compare actual revenues to the prior year period.
Such weekly revenue report shall contain the adjusted daily rate, occupancy,
RevPAR, the total Food and Beverage Sales and Room Revenues of the Leased
Property. Such weekly revenue report shall also contain the revenue budget for
the month and a new revenue forecast for the month. Such forecast shall be
updated with the weekly revenue report due on the second business day after the
14th of the month. In addition, Lessee will inform Lessor of any material
changes to the revenue budget for the two months immediately following the then
current month.
(4) on the tenth (10th) day of each month, a monthly lease
calculation of the then current month, prepared in the format required by Lessor
and forwarded to Lessor via e-mail or facsimile, reflecting the revenues at the
Facility, by department, and the actual lease calculation for the month and year
to date.
(5) on the tenth (10th) Business Day of each month, complete
financial reporting statements shall be forwarded to Lessor. The financial
reporting statements shall include, but shall not be limited to, an income
statement, balance sheet and statistical reports.
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(6) on the 20th day of each month, a balance sheet, and
detailed profit and loss and cash flow statements showing the financial position
of the Facility as at the end of the preceding month (including the average
daily rate and occupancy of the Facility), and the results of operation of the
Facility for such preceding month and the Lease Year to date (including a
comparison to the Operating Budget as approved); and
(7) at the end of each of March, June and September of each
year, Lessee shall engage Coopers & Lybrand or other nationally recognized
accounting firm, approved by Lessor, at Lessor's expense, to review the revenues
of the Facility and the monthly Lease calculations. Such review shall be
completed by the 20th day following the end of each of March, June and September
of each year and Lessee shall cause such auditor's to provide Lessor with a
letter stating that the review has been completed and such letter shall also
state whether any material errors were found and the nature of such errors. The
quarterly operating statements reviewed at such dates prepared by the Manager,
shall be accompanied by explanations of any variances, which explanations shall
be in a form suitable for use in the Security Exchange Commission ("SEC")
required disclosure analysis.
(8) in January of each year, Lessee shall engage Coopers &
Lybrand or other nationally recognized accounting firm, approved by Lessor, at
Lessor's expense, to review the revenues of the Facility and the monthly Lease
calculations. Such review shall be completed by the 20th day of January of each
year and Lessee shall cause such auditor's to provide Lessor with a letter
stating that the review has been completed and such letter shall also state
whether any material errors were found and the nature of such errors. A complete
audit financial package must be provided to Lessor by the tenth (10th) Business
day of February of each year. The quarterly operating statement reviewed at such
date, prepared by Manager, shall be accompanied by explanations of any
variances, which explanations shall be in a form suitable for use in the SEC
required disclosure analysis.
(9) within ten (10) days of Lessee's receipt thereof, any
inspection reports or notices of default received from the franchisor under the
Franchise Agreement.
(c) Lessee shall at all times during the term of this Lease, at no
cost or expense to Lessee, cooperate with Lessor's accountants and provide them
with access to all financial and other information relating to Lessee and the
Leased Property, and access to Lessee's accountants, work papers and to
otherwise assist in minimizing the cost of the audit, sufficient to enable the
Company to prepare audited financial statements in conformity with Regulation
S-X of the SEC and to enable the Company to satisfy its reporting obligations
under the Securities Exchange
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Act of 1934, as amended, or to prepare a registration statement, report or
disclosure statement for filing with the SEC on behalf of the Company and/or its
Affiliates and Lessee shall execute any representation letters reasonably
requested by Lessor's accountants in connection with the foregoing.
(d) At any time and from time to time upon not less than 10 days
notice by Lessee, Lessor will furnish to Lessee or to any person designated by
Lessee an estoppel certificate certifying that this Lease is unmodified and in
full force and effect (or that this Lease is in full force and effect as
modified and setting forth the modifications), the date to which Rent has been
paid, whether to the knowledge of Lessor there is any existing default or Event
of Default on Lessee's part hereunder, and such other information as may be
reasonably requested by Lessee. Any such certificate furnished pursuant to this
section may be relied upon by Lessee, any lender, any underwriter and any
purchaser of the assets of Lessee.
ARTICLE XXIII
Lessor's Right to Inspect. Lessee shall permit Lessor and its
authorized representatives as frequently as reasonably requested by Lessor to
inspect the Leased Property and Lessee's accounts and records pertaining thereto
and make copies thereof, during usual business hours upon reasonable advance
notice, subject only to any business confidentiality requirements reasonably
requested by Lessee. In conducting such inspections Lessor shall not
unreasonably interfere with the conduct of Lessee's business. Lessee will
provide customary gratuitous accommodations, services and amenities at the
Leased Property to Lessor and its authorized representatives in connection with
such inspections.
ARTICLE XXIV
No Waiver. No failure by Lessor or Lessee to insist upon the strict
performance of any term hereof or to exercise any right, power or remedy
consequent upon a breach thereof, and no acceptance of full or partial payment
of Rent during the continuance of any such breach, shall constitute a waiver of
any such breach or of any such term. To the extent permitted by law, no waiver
of any breach shall affect or alter this Lease, which shall continue in full
force and effect with respect to any other then existing or subsequent breach.
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ARTICLE XXV
Remedies Cumulative. To the extent permitted by law but subject to
Article XXXIX and any other provisions of this Lease expressly limiting the
rights, powers and remedies of either Lessor or Lessee, each legal, equitable or
contractual right, power and remedy of Lessor or Lessee now or hereafter
provided either in this Lease or by statute or otherwise shall be cumulative and
concurrent and shall be in addition to every other right, power and remedy and
the exercise or beginning of the exercise by Lessor or Lessee of any one or more
of such rights, powers and remedies shall not preclude the simultaneous or
subsequent exercise by Lessor or Lessee of any or all of such other rights,
powers and remedies.
ARTICLE XXVI
Acceptance of surrender. No surrender to Lessor of this Lease or of
the Leased Property or any part thereof, or of any interest therein, shall be
valid or effective unless agreed to and accepted in writing by Lessor, and no
act by Lessor or any representative or agent of Lessor, other than such a
written acceptance by Lessor, shall constitute an acceptance of any such
surrender.
ARTICLE XXVII
No Merger of Title. There shall be no merger of this Lease or of the
leasehold estate created hereby by reason of the fact that the same person or
entity may acquire, own or hold, directly or indirectly: (a) this Lease or the
leasehold estate created hereby or any interest in this Lease or such leasehold
estate and (b) the fee estate in the Leased Property.
ARTICLE XXVIII
28.1 Conveyance by Lessor. Lessor shall have the unrestricted right
to mortgage or otherwise convey the Leased Property to a Holder. If Lessor
conveys the Leased Property in accordance with the terms hereof other than to a
Holder, and the grantee or transferee of the Leased Property expressly assumes
all obligations of Lessor hereunder arising or accruing from and after the date
of such conveyance or transfer, Lessor shall thereupon be released from all
future liabilities and obligations of Lessor under this Lease arising or
accruing from and after the date of such conveyance or other transfer as to the
Leased Property and all such future liabilities and obligations shall thereupon
be binding upon the new owner. If Lessee is not reasonably satisfied that the
new owner is a capable, reliable and qualified Person of good reputation and
character, Lessee may
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terminate this Lease upon sixty (60) days' Notice to Lessor given within thirty
(30) days after Lessee receives Notice of such conveyance. Notwithstanding any
of the foregoing to the contrary, Lessor shall not, without the prior written
consent of Lessee, convey the Leased Property to anyone other than a Subsidiary
of Lessor or a Holder during the No Sale Period.
28.2 Other Interests. Without the consent of Lessee, Lessor may from
time to time, directly or indirectly, create or otherwise cause to exist deeds
to secure debt, deeds of trust, mortgages, heretofore or hereafter granted by
Lessor or which otherwise encumber or affect the Leased Property and to any and
all advances to be made thereunder and to all renewals, modifications,
consolidations, replacements, substitutions, and extensions thereof (all of
which are herein called the "Mortgage"). This Lease and Lessee's interest
hereunder shall at all times be subject and subordinate to the lien and security
title of any Mortgage, provided, however, that such subordination is conditioned
upon delivery to Lessee of a subordination, nondisturbance and attornment
agreement, in form and substance reasonably satisfactory to Lessee and Holder,
which agreement shall provide, among other things, that, provided an Event of
Default is not then continuing under this Lease, Lessee (i) shall be entitled
to receive all Gross Revenues of the Facility, and (ii) shall not be disturbed
in its possession of the Leased Property hereunder following a foreclosure of
such Mortgage. In confirmation of such subordination Lessee shall, at Lessor's
request, promptly execute, acknowledge and deliver any instrument which may be
required to evidence subordination to any Mortgage and to the holder thereof. In
the event of Lessee's failure to deliver such subordination and if the Mortgage
does not change any term of this Lease, Lessor may, in addition to any other
remedies for breach of covenant hereunder, execute, acknowledge, and deliver the
instrument as the agent or attorney-in-fact of Lessee, and Lessee hereby
irrevocably constitutes Lessor its attorney-in-fact for such purpose, Lessee
acknowledging that the appointment is coupled with an interest and is
irrevocable.
Lessee shall, upon the request of Lessor or any existing or future
Holder, (i) provide Holder with copies of all licenses, permits, occupancy
agreements, operating agreements, leases, contracts and similar agreements
reasonably requested in connection with any existing or proposed financing of
the Leased Property, and (ii) execute, or cause the Manager or other appropriate
party to execute, such estoppel agreements and collateral assignments with
respect to the Facility's liquor license and any of the other aforementioned
agreements as Holder may reasonably request in connection with any such
financing, provided that no such estoppel agreement or collateral assignment
shall in any way affect the Term or affect adversely in any material respect any
rights of Lessee under this Lease.
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No act or failure to act on the part of Lessor which would entitle
Lessee under the terms of this Lease, or by law, to be relieved of any of
Lessee's obligations hereunder (including, without limitation, its obligation to
pay Rent) or to terminate this Lease, shall result in a release or termination
of such obligations of Lessee or a termination of this Lease unless, subject to
the provisions of the next succeeding paragraph: (i) Lessee shall have first
given written notice of Lessor's act or failure to act to the Holder, specifying
the act or failure to act on the part of Lessor which would give basis to
Lessee's rights; and (ii) the Holder, after receipt of such notice, shall have
failed or refused to correct or cure the condition complained of within a
reasonable time thereafter (in no event more than sixty (60) days), provided
that such cure period shall include a reasonable time for such Holder to obtain
possession of the Leased Property, if possession is reasonably necessary for the
Holder to correct or cure the condition, or to foreclose such Mortgage, if the
Holder notifies the Lessee of its intention to take possession of the Leased
Property or to foreclosure such Mortgage commences necessary foreclosure actions
within said sixty (60) days, unconditionally commits to correct or cure such
condition, and diligently pursues such cure to completion. If such Holder is
prohibited by any process or injunction issued by any court or by reason of any
action by any court having jurisdiction or any bankruptcy, debtor
rehabilitation or insolvency proceedings involving Lessor from commencing or
prosecuting foreclosure or other appropriate proceedings in the nature thereof,
provided however, that the Lease shall continue to be in full force and effect,
the times for commencing or prosecuting such foreclosure or other proceedings
shall be extended for the period of such prohibition.
Lessee shall deliver by notice delivered in the manner provided in
Article XXX to any Holder who gives Lessee written notice of its status as a
Holder, at such Holder's address stated in the Holder's written notice or at
such other address as the Holder may designate by later written notice to
Lessee, a duplicate copy of any and all notices regarding any default which
Lessee may from time to time give or serve upon Lessor pursuant to the
provisions of this Lease. Copies of such notices given by Lessee to Lessor shall
be delivered to such Holder simultaneously with delivery to Lessor. No such
notice by Lessee to Lessor hereunder shall be deemed to have been given unless
and until a copy thereof has been mailed to such Holder.
At any time, and from time to time, upon not less than ten (10)
days' notice by a Holder to Lessee, Lessee shall deliver to such Holder an
estoppel certificate certifying as to the information required in paragraph (a)
of Article XXII, and such other information as may be reasonably requested by
such Holder. Any such certificate may be relied upon by such Holder.
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Lessee shall cooperate in all reasonable respects, and, as generally
described in Section 33.2 of this Lease, with any transfer of the Leased
Property to a Holder that succeeds to the interest of Lessor in the Leased
Property (including, without limitation, in connection with the transfer of any
franchise, license, lease, permit, contract, agreement, or similar item to such
Holder or such Holder's designee necessary or appropriate to operate the Leased
Property), provided that all costs and expenses associated with such transfer
shall be the responsibility of Lessor or Holder, as they shall choose. Lessor
and Lessee shall cooperate in (i) including in this Lease by suitable amendment
from time to time any provision which may be requested by any proposed lender,
or may otherwise be reasonably necessary, to implement the provisions of this
Article and (ii) entering into any further agreement with or at the request of
any Holder which may be reasonably requested or required by such Holder in
furtherance or confirmation of the provisions of this Article; provided,
however, that any such amendment or agreement shall not in any way affect the
Term nor affect adversely in any material respect any rights of Lessor or Lessee
under this Lease.
Lessee acknowledges and agrees that Lessor may assign to a Holder,
as further security for the obligations secured by its Mortgage, the rights,
titles and interests assigned to Lessor by Lessee as security for this Lease,
pursuant to Article XXXII.
ARTICLE XXIX
Quiet Enjoyment. So long as Lessee pays all Rent as the same becomes
due and complies with all of the terms of this Lease and performs its
obligations hereunder, in each case within the applicable grace and/or cure
periods, if any, Lessee shall peaceably and quietly have, hold and enjoy the
Leased Property for the Term hereof, free of any claim or other action by Lessor
or anyone claiming by, through or under Lessor and not claiming by, through or
under Lessee, but subject to all liens and encumbrances subject to which the
Leased Property was conveyed to Lessor or hereafter consented to by Lessee or
provided for herein. Lessee shall have the right by separate and independent
action to pursue any claim it may have against Lessor as a result of a breach by
Lessor of the covenant of quiet enjoyment contained in this Section.
ARTICLE XXX.
Notices. All notices, demands, requests, consents approvals and
other communications ("Notice" or "Notices") hereunder shall be in writing
and shall be delivered by express mail, overnight courier or commercial
overnight mail service, or
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registered or certified mail, return receipt requested and postage prepaid,
addressed as follows:
(i) if to Lessor at:
5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
Attention: Steven D. Jorns and
Bruce G. Wiles
(ii) if to Lessee at:
700 Route 46 East
P.O. Box 2700
Fairfield, New Jersey 07007
Attention: General Counsel
or to such other address or addresses as either party may hereafter designate.
Notice given by express mail, overnight courier or overnight mail service shall
be effective on the day of timely delivery of such Notice to such company, and
Notice given by registered or certified mail shall be complete at the time of
deposit in the U.S. Mail system, but any prescribed period of Notice and any
right or duty to do any act or make any response within any prescribed period or
on a date certain after the service of such Notice given by registered or
certified mail shall be extended five days.
ARTICLE XXXI
Appraisers. If it becomes necessary to determine the fair market
value or fair market rental of the Leased Property for any purpose of this
Lease, then, except as otherwise expressly provided in this Lease, the party
required or permitted to give Notice of such required determination shall
include in the Notice the name of a person selected to act as appraiser on its
behalf. Within 10 days after Notice, Lessor (or Lessee, as the case may be)
shall by Notice to Lessee (or Lessor, as the case may be) appoint a second
person as appraiser on its behalf. The appraisers thus appointed, each of whom
must be a member of the American Institute of Real Estate Appraisers (or any
successor organization thereto) with at least five years experience in the State
appraising property similar to the Leased Property, shall, within 10 days after
the date of the Notice appointing the second appraiser, proceed to appraise the
Leased Property to determine the fair market value or fair market rental thereof
as of the relevant date (giving effect to the impact, if any, of inflation from
the date of their decision to the relevant
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date); provided, however, that if only one appraiser shall have been so
appointed, then the determination of such appraiser shall be final and binding
upon the parties. If two appraisers are appointed and if the difference between
the amounts so determined does not exceed 5% of the lesser of such amounts, then
the fair market value or fair market rental shall be an amount equal to 50% of
the sum of the amounts so determined. If the difference between the amounts so
determined exceeds 5% of the lesser of such amounts, then such two appraisers
shall have 10 days to appoint a third appraiser. If no such appraiser shall have
been appointed within such 10 days or within 60 days of the original request for
a determination of fair market value or fair market rental, whichever is
earlier, either Lessor or Lessee may apply to any court having jurisdiction to
have such appointment made by such court. Any appraiser appointed by the
original appraisers or by such court shall be instructed to determine the fair
market value or fair market rental within 30 days after appointment of such
appraiser. The determination of the appraiser which differs most in the terms of
dollar amount from the determinations of the other two appraisers shall be
excluded, and 50% of the sum of the remaining two determinations shall be final
and binding upon Lessor and Lessee as the fair market value or fair market
rental of the Leased Property, as the case may be. This provision for
determining by appraisal shall be specifically enforceable to the extent such
remedy is available under applicable law, and any determination hereunder shall
be final and binding upon the parties except as otherwise provided by applicable
law. Lessor and Lessee shall each pay the fees and expenses of the appraiser
appointed by it and each shall pay one-half of the fees and expenses of the
third appraiser and one-half of all other costs and expenses incurred in
connection with each appraisal.
ARTICLE XXXII
Security Assignment of Agreements. As security for Lessee's
performance of the terms and provisions of this Lease, Lessee shall, to the
extent permitted by law and which will not result in a default under the
Franchise Agreement, assign to Lessor and grant to Lessor a perfected first lien
security interest in all interests, agreements, contracts and other assets of
Lessee related to the Leased Property including, without limitation, (i) all
management, franchise, concession and license agreements (including the
management or .agency agreement with Manager, if any, and the Franchise
Agreement, (ii) all of Lessee's right, title and interest in and to the rents,
issues, profits, revenues, rights and benefits from the Leased Property and all
leases affecting the Leased Property and the guaranties thereof and security
deposits thereunder, and (iii) all of Lessee's right, title and interest in and
to funds on deposit, accounts receivable, and income and revenues generated by
the Leased Property or arising from the use or enjoyment of the
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Leased Property. The aforesaid assignments shall be by such instruments as
Lessor may reasonably request.
ARTICLE XXXIII
33.1 Miscellaneous. Anything contained in this Lease to the contrary
notwithstanding, all claims against, and liabilities of, Lessee or Lessor
arising prior to any date of termination of this Lease shall survive such
termination. If any term or provision of this Lease or any application thereof
is invalid or unenforceable, the remainder of this Lease and any other
application of such term or provisions shall not be affected thereby. If any
late charges or any interest rate provided for in any provision of this Lease is
based upon a rate in excess of the maximum rate permitted by applicable law, the
parties agree that such charges shall be fixed at and limited to the maximum
permissible rate. Neither this Lease nor any provision hereof may be changed,
waived, discharged or terminated except by a written instrument signed by Lessor
and Lessee. All the terms and provisions of this Lease shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns. The headings in this Lease are for convenience of reference only and
shall not limit or otherwise affect the meaning hereof. This Lease shall be
governed by and construed in accordance with the laws of the State, but not
including its conflicts of laws rules. Lessor shall not become or be deemed a
partner or joint venturer with Lessee by reason of the provisions of this Lease.
33.2 Transition Procedures. Upon the expiration or termination of
the Term of this Lease, for whatever reason, Lessor and Lessee shall do the
following (and the provisions of this Section 33.2 shall survive the expiration
or termination of this Lease until they have been fully performed) and, in
general, shall cooperate in good faith to effect an orderly transition of the
Facility. Nothing contained herein shall limit Lessor's rights and remedies
under this Lease if such termination occurs as the result of an Event of
Default.
(a) Transfer of Licenses. Upon the expiration or earlier termination
of the Term, Lessee shall use its best efforts (i) to transfer to Lessor or
Lessor's nominee all licenses, operating permits and other governmental
authorizations and all contracts, including contracts with governmental or
quasi-governmental entities, that may be necessary for the operation of the
Facility (collectively, "Licenses"), or (ii) if such transfer is prohibited by
law or Lessor otherwise elects, to cooperate with Lessor or Lessor's nominee in
connection with the processing by Lessor or Lessor's nominee of any applications
for all Licenses, including Lessee continuing to operate the liquor operations
under its licenses (in which case Lessor hereby agrees
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to indemnify and hold Lessee harmless as a result thereof, except for the
negligence or willful misconduct of Lessee); provided, in either case, that the
costs and expense of any such transfer or the processing of any such application
shall be paid by Lessor or Lessor's nominee.
(b) Leases and Concessions. Lessee shall assign to Lessor or
Lessor's nominee simultaneously with the termination of this Agreement, and the
assignee shall assume, all leases, contracts, concessions agreements and
agreements in effect with respect to the Facility then in Lessee's name;
provided, however, that Lessor need not assume any contract whose term will
expire more than one year after the date of the assignment by Lessee unless (i)
Lessor has previously consented to the provisions of such contract (which
consent shall not be unreasonably withheld), or (ii) this Agreement shall have
been terminated by Lessor pursuant to the provisions of Article XXXVI.
(c) Books and Records. To the extent that Lessor has not already
made or received copies thereof, all books and records (including computer
records) for the Facility kept by Lessee pursuant to Section 3.6 shall be
promptly made available to Lessor or Lessor's nominee for photocopying or other
duplication.
(d) Receivables and Payables, etc. Lessee shall be entitled to
retain all cash, bank accounts and house banks, and to collect all Gross
Revenues and accounts receivable accrued through the termination date. Lessee
shall be responsible for the payment of Rent, all operating expenses of the
Facility and all other obligations of Lessee accrued under this Lease as of the
termination date, and Lessor shall be responsible for all operating expenses of
the Facility accruing after the termination date, and any such operating
expenses relating to periods both prior to and after the termination date shall
be prorated. Lessee shall surrender the Leased Property with the amount of
inventory required by Section 6.2(b), or otherwise pay Lessor for the amount of
the Inventory Deficiency as provided in that Section.
(e) Hotel Employees. Upon the expiration or termination of this
Lease, Lessee shall pay or cause to be paid, with respect to all of the
employees working at the Facility (the "Hotel Employees"), all sums due or
payable to them, for the period up to an including the termination date, all
accrued (whether or not earned) wages, salaries, bonuses, vacation, sick,
bereavement, personal and other similar days or benefits, workers' compensation,
welfare benefits, deferred compensation, savings, pension, profit-sharing, 401K
and other retirement plan payments, and similar payments, reimbursements or
benefits, and Lessee expressly indemnifies Lessor and any successor employer of
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any or all of the Hotel Employees from and against any and all liability
therefor.
33.3 Standard of Discretion. In any provision of this Lease
requiring or permitting the exercise by Lessor or Lessee of such party's
approval, election, decision, consent, judgment, determination or words of
similar import (collectively, an "Approval"), such Approval may, unless
otherwise expressly specified in such provision, be given or withheld in such
party's reasonable discretion. Any Approval which by the terms of this Lease may
not be unreasonably withheld shall also not be unreasonably delayed.
33.4 Action for Damages. In any suit or other claim brought by
either party seeking damages against the other party for breach of its
obligations under this Lease, the party against whom such claim is made shall be
liable to the other party only for actual damages and not for consequential,
punitive or exemplary damages.
33.5 Limitation on Liability. Notwithstanding any provision to the
contrary contained in this Lease, none of the directors, officers, shareholders,
partners, employees or agents of Lessee or Lessor shall have any personal
liability with respect to this Lease and the matters covered by this Lease.
33.6 *** [FOR CROSSROADS, MAHWAH, NEW JERSEY ONLY Condominium
Association Voting Rights. It is agreed and understood that Lessor or any Person
representing Lessor on the Board of Trustees of the Crossroads Condominium
Association, Inc. shall at all times vote in a manner it deems appropriate and
consistent with Lessor's interest in the Leased Property, provided that Lessee
shall have the right to pre-approve the vote of Lessor or its representative, as
applicable, which pre-approval shall not be unreasonably withheld or delayed,
with respect to any assessments being considered by said Board of Trustees for
items of an extraordinary nature which would materially impact the Lessee's
obligations to operate and maintain the Leased Property under this Lease.]***
ARTICLE XXXIV
Memorandum of Lease. Lessor and Lessee shall promptly upon the
request of either enter into a short form memorandum of this Lease, in form
suitable for recording under the laws of the State in which reference to this
Lease, and all options contained herein, shall be made. The party requesting the
short form memorandum shall pay all costs and expenses of recording such
memorandum of this Lease.
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ARTICLE XXXV
[Intentionally omitted.]
ARTICLE XXXVI
36.1 Option to Terminate Lease-Appointment of Manager. (a) Lessor
may terminate this Lease for any reason or no reason, in its sole and absolute
discretion, by giving not less than 60 days prior Notice to Lessee of Lessor's
election to terminate this Lease; provided that such termination shall not occur
prior to the earlier of (i) the third (3rd) anniversary of the date of this
Agreement or (ii) December 31, 2000. In addition, in the event that there is a
change of control (as defined below) in Lessee or Manager at any time, Lessor
shall have the right to terminate this Lease on not less than 60 days Notice to
Lessee. Effective as of the date set forth in any such Notice (which date shall
not be less than 60 days after the giving of such Notice), this Lease shall
terminate and be of no further force and effect except as to any obligations of
the parties existing as of such date that survive termination of this Lease, and
all Rent shall be adjusted as of the termination date. Notwithstanding the
foregoing, in the event Lessee shall receive Notice from Lessor of an election
to terminate this Lease pursuant to this Section 36.1, Lessee shall have the
right to keep this Lease in full force and effect by appointing American General
Hospitality, Inc ("AGHI") as the Manager of the Leased Property and (prior to
the stated termination date) entering into a New Management Agreement with AGHI,
for the remainder of the Term of this Lease, commencing on the termination date
set forth in such Notice. In the event that AGHI refuses or is otherwise
unwilling to accept such appointment, Lessee shall then have the right to keep
this Lease in full force and effect by appointing as Manager of the Leased
Property any experienced hotel management company (which is not an Affiliate of
Lessee), subject to Lessor's reasonable approval, and Lessee and such new
Manager shall enter into a New Management Agreement on terms satisfactory to
Lessor, Lessee and such new Manager by not later than the termination date set
forth in Lessor's Notice of termination. Any New Management Agreement entered
into pursuant to this Article XXXVI shall include, inter alia, an
indemnification of Lessee against any and all liability, damage, cost, or
expense (including reasonable attorneys' fees and disbursements) as a result of
any claims arising from or related to the Leased Property or any contractual
obligation related to the management, repair, maintenance or operation of the
Leased Property from and after the commencement date thereof.
Any New Management Agreement entered into pursuant to this Section
36.1 shall provide that as compensation for such management services, the new
manager shall be entitled to a
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management fee equal to 95% of Lessee's Profit under this Lease (defined as
Lessee's Gross Revenues minus (i) all expenses for which Lessee is liable under
this Lease and (ii) all Rent). The new Manager shall pay all operating expenses
at the Leased Property and shall remit the Rent and the balance of Lessee's
Profit directly to Lessee. In the event that Lessee does not generate a Lessee's
Profit, as defined above, no management fee will be paid to the new Manager.
Upon transfer of the management of the Leased Property to the new Manager, the
Franchise Agreement will be transferred to the new Manager, at no cost or
expense to Lessee (other than Lessee's obligation to pay all charges incurred
thereunder through the date of such transfer), and all of Lessee's obligations
under the Lease will be assumed by the new Manager with the exception of
Lessee's obligation to pay Rent under Section 3.1 and Lessee's obligation to
maintain the Net Worth required under Section 18.5 hereof and except for this
Article XXXVI and Article XXXVII hereof, Lessor and the new manager shall have
the right to amend the terms of this Lease, including the Rent payable
hereunder, in their sole discretion, and Lessee agrees to promptly execute any
such amendment to this Lease pursuant to this Article XXXVI. The new Manager
shall indemnify Lessee, in a form reasonably satisfactory to Lessee and such new
Manager, from and against any and all liability, damage, cost or expense
(including reasonable attorneys' fees and disbursements) resulting from such
Manager's failure to perform and observe all of the Lessee's obligations assumed
by such new Manager. Without limiting the foregoing, Lessee may require that the
new Manager maintain a Net Worth as required by Section 18.5 of this Lease as of
the date hereof in cash, marketable securities or an LC (as defined in Section
18.5) or any combination thereof, as such Net Worth may be increased or
decreased pursuant to such Section.
For purposes of this Section, the term "change of control" shall
mean: (x) any merger or consolidation of Lessee or Manager or the parent of
either of them (each an "Entity"), as the case may be, with or into any Person,
or any sale, transfer or other conveyance, whether direct or indirect, of all or
substantially all of the beneficial ownership of Entity, in one transaction or a
series of related transactions, if, immediately after giving effect to such
transaction any Person, is or becomes, directly or indirectly the beneficial
owner of more than fifty percent (50%) of the shares of the total voting power
of the Entity; or (y) any Person obtains the power to direct or cause the
direction of the management policies of the Entity, whether through voting
securities or by contract or otherwise.
(b) As compensation for the transfer of management services or the
early termination of this Lease under this Article XXXVI, as applicable, Lessor
shall pay to Lessee an amount equal to (i) two and one-half (2.5) times the
Lessee's Profit for the preceding 12 months, minus (ii) five percent (5%)
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of Lessee's Profit under this Lease estimated for the remainder of the Term of
this Lease, discounted to present value using a discount rate equal to the Base
Rate plus two (2%) percent.
(c) In the event that AGHI (or if AGHI is unwilling to manage the
Leased Property, such other new Manager designated by Lessee and approved by
Lessor), enters into the New Management Agreement pursuant to the provisions of
this Article XXXVI, the parties agree that, on and after the effective date of
such New Management Agreement, Hotel Employees employed by Lessee or Manager
immediately prior to the effective date will either be employed by the new
manager, or the new manager will take such other action with respect to their
employment, which may include notification of the prospective termination of
their employment, so as, in any case, to insure that Lessee does not incur any
liability pursuant to the WARN Act. Lessor hereby agrees to defend, indemnify
and hold harmless Lessee from and against any and all manner of claims, actions,
liabilities, costs and expenses (including, without limitation, reasonable
attorneys' fees and disbursements) relating to or arising from the new manager's
breach of this covenant, including, without limitation, any liability, costs and
expenses arising out of asserted or actual violation of the requirements of the
WARN Act. Further, the new manager shall assume all severance pay, accrued
vacation or personal leave, COBRA and similar liabilities and obligations to the
Hotel Employees, which Lessee and Manager shall or may incur in connection with
the New Management Agreement, and Lessor hereby agrees to defend, indemnify and
hold harmless Lessee and Manager from and against any and all manner of claims,
actions, liabilities, costs and expenses (including, without limitation,
reasonable attorneys' fees and disbursements) relating to or resulting from
Lessor's breach of the foregoing covenant, including, without limitation, any
liability, costs and expenses arising out of asserted or actual violation of the
requirements of the COBRA legislation; provided, however, that Lessee or Manager
shall pay to such Hotel Employees all sums due or payable to them for the period
prior to the date of the commencement of the New Management Agreement as
provided in Section 33.2 above. Upon Lessor's written request to Lessee, Lessee
shall take all action prudent and proper as Lessee, to notify, advise and
cooperate with Lessor in order to assist Lessor to comply with the WARN Act or
COBRA legislation and to mitigate Lessor's expense or liability with respect to
the WARN Act and COBRA legislation. In the event that a new Manager is appointed
for the management of the Lease Property pursuant to this Section 36.1, Lessee
shall be released from all obligations and liabilities accruing pursuant to this
Lease from and after the date of such transfer of management, other than the
obligation to pay Rent and the maintenance of Net Worth under Section 18.5
hereof, and Lessor acknowledges that, in enforcing its rights hereunder or in
satisfaction of any judgment obtained for any matter other than non-payment of
Rent or the maintenance of the Net Worth
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requirement, Lessor shall proceed solely against such new Manager and in no
event shall proceed against Lessee, its directors, officers, shareholders,
agents, employees or successors.
(d) At any time during the Term of this Lease after the appointment
of the new Manager, if Lessor notifies Lessee of a default hereunder, Lessee
shall promptly terminate the New Management Agreement, appoint a replacement
Manager and enter into a management agreement with such replacement Manager, all
subject to Lessor's reasonable approval and all in accordance with the
provisions and within the time periods set forth in this Article XXXVI.
Notwithstanding the foregoing, during the period after the termination of the
New Management Agreement but prior to the execution of the replacement
management agreement, Lessee agrees to operate and manage the Leased Property in
accordance with the terms of this Lease.
ARTICLE XXXVII
37.1 Compliance with Franchise Agreement. To the extent any of the
provisions of the Franchise Agreement impose a greater obligation on Lessee than
the corresponding provisions of this Lease, Lessee shall be obligated to comply
with, and to take all reasonable actions necessary to prevent breaches or
defaults under the provisions of the Franchise Agreement, except to the extent
that Lessee is prevented from complying with the Franchise Agreement because of
Lessor's acts such as its breach of its obligations pursuant to Article
XXXVIII. In the event Lessor's failure to fund any Capital Expenditure and/or to
fulfill any PIP requirements of the franchisor under the Franchise Agreement,
required to comply with the Franchise Agreement shall result in a termination
thereof, Lessee shall not be deemed in default hereunder and Lessor shall pay
all termination fees and penalties incurred in connection therewith. It is the
intent of the parties hereto that Lessee shall comply in every respect with the
provisions of the Franchise Agreement so as to avoid any default thereunder
during the term of this Agreement. Lessee shall not terminate or enter into any
modification of the Franchise Agreement without in each instance first obtaining
Lessor's written consent. Lessor and Lessee agree to cooperate fully with each
other in the event it becomes necessary (in the sole determination of Lessor) to
obtain, at Lessor's sole cost and expense, a franchise extension or modification
or a new franchise for the Leased Property, and in any transfer, at Lessor's
sole cost and expense, of the Franchise Agreement to Lessor or any Affiliate
thereof or any other successor to Lessee upon the termination of this Lease.
Notwithstanding anything contained in this Article XXXVII, at any time after the
Commencement Date, Lessor may, in Lessor's sole and absolute discretion,
terminate (or direct Lessee to terminate) the Franchise Agreement and enter (or
direct Lessee to enter) into a new franchise for the Leased
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Property, provided that Lessor shall pay all termination fees and penalties
including, but not limited to, liquidated damages, if any, arising from or
related to such termination and any application fees, costs or expenses payable
in connection with any new franchise of the Leased Property obtained by Lessor.
37.2 For Crowne Plaza Las Vegas Only Compliance with Management
Agreement. Lessee shall comply with the provisions of the Management Agreement
with Manager so as to avoid any default thereunder during the term of this
Agreement, except to the extent that Lessee is prevented from complying with
such Management Agreement because of Lessor's acts such as its breach of its
obligations pursuant to Article XXXVIII. Lessee shall not terminate the
Management Agreement without first obtaining Lessor's written consent. Lessor
and Lessee agree to cooperate fully with each other in the event it becomes
necessary to obtain a modification of such Management Agreement.
ARTICLE XXXVIII
38.1 Capital Expenditures.
(a) Lessor shall be obligated to set up and maintain a reserve (the
"Capital Expenditures Reserve") in an amount equal to 4% of Gross Revenues from
the Facility during each Lease Year for Capital Expenditures at the Facility
and/or the Other Properties during such Lease Year. Upon written request by
Lessee to Lessor stating the specific use to be made and subject to the
reasonable approval thereof by Lessor, such funds shall be made available by
Lessor for Capital Expenditures set forth in the Capital Budget; provided,
however, that no Capital Expenditures shall be used to purchase property (other
than "real property" within the meaning of Treasury Regulations Section
1.856-3(d)), to the extent that doing so would cause the Lessor to recognize
income other than "rents from real property" as defined in Section 856(d) of the
Code. Lessor's obligation to fund the Capital Expenditures Reserve shall be
cumulative, but not compounded, and any amounts that have accrued hereunder
shall be payable in future periods for such uses and in accordance with the
procedure set forth herein. Lessee shall have no interest in any accrued
obligation of Lessor hereunder after the termination of this Lease. All Capital
Improvements shall be owned by Lessor subject to the provisions of this Lease.
(b) Lessor's obligation for Capital Expenditures and for compliance
with the provisions of this Lease which may require the availability of funds
for Capital Improvements shall be limited to amounts available in the Capital
Expenditures Reserve and such additional amounts as Lessor may agree to make
available to Lessee in Lessor's sole discretion; provided, however, that if
additional Capital Expenditures are required to
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meet Emergency Situations, Lessor shall make such amounts available to Lessee
and receive a pro rata credit therefor against amounts which Lessor is obligated
to contribute to the Capital Expenditures Reserve during the ensuing five (5)
Lease Years. No arbitration resulting from the failure of Lessor and Lessee to
agree on the Capital Budget shall increase Lessor's obligation for Capital
Expenditures beyond the amount set forth in the immediately preceding sentence.
In the event there is a Capital Improvement in the Capital Budget which exceeds
the amounts Lessor is obligated to provide under this Article XXXVIII and Lessor
declines to make such Capital Improvement, if Lessee shall disagree with such
decision, the matter may be submitted to arbitration pursuant to Section 40.2
hereof. To the extent that Lessee's obligations under this Lease (including,
without limitation, the obligations set forth in Sections 7.2, 8.1 and 9.1 and
in Article XXXVII) are dependent upon the availability of amounts for Capital
Expenditures which exceed the amounts that Lessor is obligated to provide
pursuant to this Article XXXVIII, such obligations of Lessee shall be
correspondingly diminished.
(c) Prior to the final three (3) Lease Years of the Term, the
implementation of all Capital Improvements made pursuant to the requirements of
the Capital Budget shall be subject to the approval of Lessor and Lessee. Such
approval shall extend both to the plans and specifications (including matters of
design and decor) and to the contracting and purchasing of all labor, services
and materials. In the event that Lessor and Lessee are unable to agree on any
aspect of the implementation of a Capital Improvement to be made pursuant to the
Capital Budget prior to the final three (3) Lease Years, such matter shall be
referred to arbitration as provided in Section 40.2. During the final three (3)
Lease Years, Lessor shall have sole authority with regard to the implementation
of all such Capital Improvements but shall consult Lessee in connection
therewith.
(d) If requested by Lessor, Lessee (or Manager, if Lessee so
directs) shall be responsible for supervising the design, installation and
construction of all Capital Improvements. Lessor shall reimburse Lessee for
Lessee's (or Manager's) actual reasonable expenses incurred in performing these
services, provided that any such reimbursement shall be in an approved Capital
Budget, shall be paid as a Capital Expenditure and shall be subject to the
limitations of the provisions of subsection (b) and Section 3.5(e) hereof. These
reimbursements shall include a reasonable allocation (as determined in good
faith by Lessee) of the salaries, bonuses, benefits, travel, and related
expenses incurred by Lessee's (or Manager's) personnel in the performance of
these services.
38.2 Major Renovation. If in any Lease Year during the Term of
this Lease, a renovation of the Facility is required,
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either pursuant to (i) the agreed upon Capital Budget, or (ii) as otherwise
agreed to by Lessor, and the total cost of such renovation (including, but not
limited to, any termination fees and penalties, including liquidated damages, if
such renovation is incurred in connection with a change of the existing
franchise), is or will be equal to or greater than eight percent (8%) of actual
or projected Gross Revenues derived or to be derived from the Leased Property
for such Lease Year (a "Major Renovation"), Lessor and Lessee hereby agree that
the Rent payable under Section 3.1 hereof shall be adjusted, based upon the
following formula: First, an amount equal to the sum of 4% of the actual Gross
Revenues derived from the Leased Property for each Lease Year of the Term for
the period commencing from January, 1998 to and including the then current Lease
Year, based upon 4% of the actual or projected Gross Revenues for such Lease
Year in which the Major Renovation shall occur (the "Cumulative Capital
Expenditure Reserve") shall be compared to the total amount of Capital
Expenditures actually paid by Lessor for the Leased Property during such period
(the "Cumulative Capital Expenditures"). If the Cumulative Capital Expenditure
Reserve exceeds the Cumulative Capital Expenditures, the excess amount shall be
subtracted from the total cost of the Major Renovation, and the Rent shall be
increased by an amount equal to 7% of the difference from and after the date on
which such Major Renovation has been substantially completed (the "Completion
Date"). If the Cumulative Capital Expenditures exceed the Cumulative Capital
Expenditure Reserve, the excess amount shall be added to the total cost of the
Major Renovation, and the Rent shall be increased by an amount equal to 7% of
the sum from and after the Completion Date. In the event that Lessor and Lessee
are unable to agree to the Rent adjustment or the Completion Date pursuant to
this Section, after using good faith efforts to do so, the matter shall be
submitted to arbitration under Section 40.2 hereof.
ARTICLE XXXIX
39.1 Lessor's Default. It shall be a breach of this Lease if Lessor
fails to observe or perform any term, covenant or condition of this Lease on its
part to be performed and such failure continues for a period of 30 days after
Notice thereof from Lessee, unless such failure cannot with due diligence be
cured within a period of 30 days, in which case such failure shall not be deemed
a breach if Lessor proceeds within such 30-day period, with due diligence, to
commence to cure the failure and thereafter diligently completes the curing
thereof. The time within which Lessor shall be obligated to cure any such
failure also shall be subject to extension of time due to the occurrence of any
Unavoidable Delay. If Lessor does not cure any such failure within the
applicable time period as aforesaid, Lessee
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may declare the existence of a "Lessor Default" by a second Notice to Lessor.
Thereafter, subject to the provisions of the following paragraph, Lessee may
forthwith cure the same. Except as otherwise expressly provided in this Lease or
in the event of a constructive eviction by Lessor, Lessee shall have no right to
terminate this Lease for any Lessor Default and no right, for any such Lessor
Default, to offset or counterclaim against any Rent or other charges due
hereunder.
If Lessor shall in good faith dispute the occurrence of any Lessor
Default and Lessor, before the expiration of the applicable cure period, shall
give Notice thereof to Lessee, setting forth, in reasonable detail, the basis
therefor, no Lessor Default shall be deemed to have occurred and Lessor shall
have no obligation with respect thereto until final adverse determination
thereof, whether through arbitration or otherwise; provided, however, that in
the event of any such adverse determination, Lessor shall pay to Lessee interest
on any disputed funds at the Overdue Rate, from the date demand for such funds
was made by Lessee until paid. If Lessee and Lessor shall fail, in good faith,
to resolve any such dispute within ten (10) days after Lessor's Notice of
dispute, either may submit the matter for determination by arbitration, but only
if such matter is required to be submitted to arbitration pursuant to any
provision of this Lease, or otherwise by a court of competent jurisdiction.
39.2 Limitation of Lessor's Liability. Notwithstanding any provision
to the contrary contained in this Lease, Lessee acknowledges that, in enforcing
its rights hereunder or in satisfaction of any judgment obtained against Lessor,
Lessee's sole recourse shall be the right, title and interest of Lessor in and
to the Leased Property.
ARTICLE XL - ARBITRATION
40.1 Arbitration. Except as set forth in Section 40.2, in each case
specified in this Lease in which it shall become necessary to resort to
arbitration, such arbitration shall be determined as provided in this Section
40.1. The party desiring such arbitration shall give Notice to that effect to
the other party, and an arbitrator shall be selected by mutual agreement of the
parties, or if they cannot agree within thirty (30) days of such notice, by
appointment made by the American Arbitration Association ("AAA") from among the
members of its panels who are qualified and who have experience in resolving
matters of a nature similar to the matter to be resolved by arbitration.
40.2 Alternative Arbitration. In each case specified in this
Lease for a matter to be submitted to arbitration
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pursuant to the provisions of this Section 40.2, Lessor and Lessee shall
designate any nationally recognized accounting firm with a hospitality division
to serve as arbitrator of such dispute within fifteen (15) days after written
demand for arbitration is received or sent by a party. In the event the parties
shall fail to make such designation within such fifteen (15) day period, or no
nationally recognized accounting firm satisfying such qualifications is
available and willing to serve as arbitrator, the arbitration shall instead be
administered as set forth in Section 40.1.
40.3 Arbitration Procedures. In any arbitration commenced pursuant
to Section 40.1 or 40.2, a single arbitrator shall be designated and shall
resolve the dispute. The arbitrator's decision shall be binding on all parties
and shall not be subject to further review or appeal except as otherwise allowed
by applicable law. Upon the failure of either party (the "non-complying party")
to comply with his decision, the arbitrator shall be empowered, at the request
of the other party, to order such compliance by the non-complying party and to
supervise or arrange for the supervision of the non-complying party's obligation
to comply with the arbitrator's decision, all at the expense of the
non-complying party. To the maximum extent practicable, the arbitrator and the
parties, and the AAA if applicable, shall take any action necessary to insure
that the arbitration shall be concluded within ninety (90) days of the filing of
such dispute. The fees and expenses of the arbitrator shall be shared equally by
Lessor and Lessee except as otherwise specified in this Section 40.3. Unless
otherwise agreed in writing by the parties or required by the arbitrator or AAA,
if applicable, arbitration proceedings hereunder shall be conducted in the
State. Notwithstanding formal rules of evidence, each party may submit such
evidence as each party deems appropriate to support its position and the
arbitrator shall have access to and right to examine all books and records of
Lessee and Lessor regarding the Facility during the arbitration.
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IN WITNESS WHEREOF, the parties have executed this Lease by their
duly authorized representatives as of the date first above written.
LESSOR
LESSEE
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ADDENDUM TO LEASE AGREEMENT
GUARANTY
In order to induce Lessor to lease the Leased Property to Lessee,
notwithstanding the Lessee's failure to satisfy the Net Worth requirements set
forth in Section 18.5 of the Lease, Clifton Holding Corp., a Delaware
corporation ("Clifton"), an affiliate of Lessee and the lessee under certain of
the Other Leases referred to in the Lease, hereby guarantees to Lessor, and
Lessor's successors and assigns, the full and timely performance of all of the
obligations of Lessee under the Lease (the "Lessee's Obligations"). This
Guaranty is a primary obligation of Clifton, joint and several with that of
Lessee, and Clifton acknowledges that this Guaranty and its obligations under
this Guaranty are and shall at all times be absolute and unconditional in all
respects, and is and shall at all times be valid and enforceable irrespective of
any other agreements or circumstances of any nature whatsoever which might
otherwise constitute a defense to this Guaranty and the obligations of the
undersigned under this Guaranty or the obligations of Lessee relating to this
Guaranty or otherwise with respect to the Lessee's Obligations. Clifton agrees
that, with or without notice or demand; provided that if and to the extent any
such notice is required under the applicable provision of the Lease Lessor
agrees to provide the same, Clifton will promptly reimburse Lessor for all costs
and expenses (including, without limitation, reasonable attorneys' fees and
disbursements) incurred by Lessor in connection with any action or proceeding
brought by Lessor to enforce the obligations of the undersigned under this
Guaranty. The undersigned hereby irrevocably and unconditionally waives any and
all right to trial by jury in any action, suit or counterclaim arising in
connection with, out of or otherwise relating to this Guaranty.
In Witness Whereof, the undersigned has set forth its hand and seal this
__ day of January, 1998.
WITNESS CLIFTON HOLDING CORP., a
Delaware corporation
- -------------------------
By:
-----------------------------
- ------------------------- Name:
Title:
177
EXHIBIT A - Other Properties
Sheraton
15 Howard Blvd.
Mt. Arlington, NJ 07445
St. Tropez Hotel
455 East Harmon Avenue
Las Vegas, NV 89109
Crowne Plaza
4255 Paradise Road
Las Vegas, NV 89109-7111
Ramada Inn
275 Research Parkway
Meriden, CT 06450
Sheraton Crossroads
Crossroads Corporate Center
Mahwah, NJ 07495
Ramada Inn
180 Route 17 South
Mahwah, NJ 07430
Crowne Plaza
14811 Kruse Oaks Blvd.
Portland (Lake Oswego), OR 97035
Ramada Plaza Hotel
780 Bridgeport Avenue
Shelton, CT 06484
178
EXHIBIT B
[See attached legal description]
179
EXHIBIT C
Effective _________________, ___, the following applies:
Base Rent -
First Tier Room Revenue Percentage -
Second Tier Room Revenue Percentage -
Third Tier Room Revenue Percentage -
Annual Room Revenue First Break Point -
Annual Room Revenue Second Break Point -
First Tier Food Sales Percentage -
Second Tier Food Sales Percentage -
Annual Food Sales Break Point -
Other Income Percentage -
Effective ________________, ____, the preceding parameters shall be
replaced by the following:
Base Rent -
First Tier Room Revenue Percentage -
Second Tier Room Revenue Percentage -
Third Tier Room Revenue Percentage -
Annual Room Revenue First Break Point -
Annual Room Revenue Second Break Point -
First Tier Food Sales Percentage -
Second Tier Food Sales Percentage -
Annual Food Sales Break Point -
Other Income Percentage -
There will be an additional adjustment to the room department Participating Rent
thresholds of _____ in _____ and _____ in _____.
180
The portion of Base Rent and Participating Rent attributable to the Franchise
Agreement is ________%.
C-2
181
Exhibit D
SUBJECT: Fixed Asset and Repair and Maintenance Accounting Policies
I. General Policies
A. Capitalization Classifications
1. Addition - Extension, enlargement or expansion made to an
existing asset.
2. Renovation/Remodeling - Major remodeling of an existing asset
or replacement of an existing asset or unit by an improved or
superior asset or unit that would extend the life.
3. Replacement - The removal of an existing asset or a major
component of an existing asset and the replacement with a new
unit of essentially the same type.
Expenditures represented by these three classifications must
extend the original useful asset lives and/or increase the
quality, quantity or services obtained from the assets, must
have a minimum useful life of three years and must have a unit
cost greater than $300 (unless part of a major renovation,
hotel addition, new hotel construction or an exception noted
in Part II and Addendum A).
B. Repairs and Maintenance
1. Recurring expenditures necessary to maintain a given quantity
and quality of services that do not add to the original useful
value of the asset, but are necessary to keep the asset in
operating condition are charged to Repairs and Maintenance as
a period expense. See Addendum B for examples of repairs and
maintenance items.
2. Minor additions, improvements, replacements and renewals are
charged to repairs and maintenance as a period expense unless
they meet the unit cost criteria as specified in Section II A.
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II. Fixed Asset Policies
A. Capitalization Policy Guidelines - The following criteria must be
satisfied for capitalization of an expenditure:
1. Generally, if a capital project has a unit cost price of $300
or greater (including freight, sales tax, installation and
fees) and the project acquired has an expected useful service
life of at least three years, or extends the useful life of an
existing asset for more than three years, the item is
capitalized as a fixed asset. If the item acquired meets the
useful life criteria but the unit cost amount is less than
$300, the expenditure is charged to Repairs and Maintenance as
a period expense.
2. Exceptions to the capitalization guidelines are:
a. If an item costs less than $300 but is a component of a
capital project such as a hotel addition, renovation or
construction of a new hotel.
b. Certain items will always be treated as a capital
project and are not subject to the unit cost guidelines.
See Addendum A for these items.
c. Managed properties will follow these same guidelines
during the operating year. Once per year the owner may
elect to charge certain items to Repairs and Maintenance
as a period expense, in accordance with their own
capitalization policy. These adjustments will have no
impact on the reported operating performance of the
property and are solely for the owner's tax return.
B. Capitalized Cost - The cost of the capital project to be capitalized
is determined as follows:
1. Outside Vendors - Total billed price on invoice including
freight, sales tax, labor and wiring for installation and any
other costs related to the acquisition. "Total Item Cost"
excludes consideration of available cash discounts.
2. Fees Charged by Managing Agent for services rendered will also
be considered a component cost of the capital project.
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3. Freight Billed or Paid Separately - Amounts for freight that
are billed or paid separately from vendors invoices should be
identified and charged to the appropriate project number.
As a practical guideline, freight billed or paid separately
will be expenses as a period expense if the amount is under
$100. Freight in the amount of $100 or more should be
capitalized in the appropriate asset category.
C. Additions - An addition is not a replacement of an existing fixed
asset; it is an increase to fixed assets. This increase may be
represented by separate units, such as chairs and mattresses, or by
component parts, such as floor or wall tile where there was none
previously. Additions which meet the service life criteria for fixed
asset should be treated similar to original expenditures.
To allow the Finance and Construction department to determine if the
purchase is an addition or replacement, Hotel personnel should
provide them with sufficient information for a proper decision. In
instances where the nature of the expenditure cannot be ascertained
from information available, the expenditure will be treated as a
replacement and either capitalized or expensed in accordance with
the guidelines for replacements.
D. Capital Improvement/Replacement and Renewal
1. General - For those replacement expenditures which are not
clearly repairs and maintenance, if it can be determined that
any part of the expenditure is a capital improvement
(substitution of an improved or superior unit), that part of
the expenditure should be capitalized. Similarly, a change in
or modification of an asset should be capitalized, such as
cutting a new entrance and extending air conditioning ducts.
Relocations and alterations which increase the value of the
asset and/or prolong the service life should also be
capitalized.
E. Linen, China, Glass & Silver - When linen, china, glassware or
silver are purchased as a result of a room addition, enlargement,
renovation, or a construction of a new hotel property, such
expenditures will be capitalized and accounted for on fixed par
basis.
All replacements of linen, china, glassware or silver will be
expensed.
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F. Automobiles - All vehicle purchases are capitalized. Whenever an
automobile, van, bus, etc. is sold, the Home Office Facilities
Management and Finance departments must be notified immediately in
order to prepare the proper paperwork and record the gain or loss on
the sale.
The Finance department will need to know the selling price or, if
the car was traded in, the trade-in value.
III. Capital Improvement - It is very important for each hotel property to be
aware of all their approved capital improvement projects as described in
the Annual Capital Improvement Plan. If there is an active project at your
location, but you are unaware of the project number, please call the Home
Office Construction department Project Administrator to insure that a
project number has been assigned.
The project number must be written on the transmittal form as well as on
the vendor invoice when submitting invoices for payment.
Each Capital Improvement project will either be capitalized or expensed
depending on the nature of the project. Please be as specific and accurate
as possible in describing the nature of the project in order to provide
the Finance Department with sufficient information to make a
capitalization decision.
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FIXED ASSET CLASSIFICATIONS
AND DEPRECIABLE LIVES
GENERAL FINANCIAL TAX
LEDGER STATEMENT RETURN
ACCOUNT ACCOUNT DESCRIPTION LIVES LIVES
- ------- ------------------- --------- ------
149-00 Land N/A N/A
148-00 Land Improvements 15 years 15 years
(New Account) Parking Lots
Curbing
Landscaping - New area
156-00 Buildings 40 years 31 1/2 years
Original Structure
156-01 Building - Addition Remaining 31 1/2 years
(New Account) Guest Rooms Life of
Public Space Building
Restaurant & Banquet
166-01 Building Improvement Lesser of
(New Account) Roofs 15 year or 31 1/2 years
Swimming Pool Remaining 31 1/2 years
Sewer Life of 31 1/2 years
Satellite Dish Building 7 years
Signs Owned 7 years
Interior Walls Relocation expense
Central A/C and Cooling 31 1/2 years
Equipment 31 1/2 years
166-00 Leasehold Improvements Lesser of 31 1/2 years
Same as building 15 years or
Improvements Remaining
Life of
Lease
160-00 Furniture Fixtures & Equip. 10 years
Office Furniture 7 years
Laundry Equipment 7 years
Permanent Restaurant & 31 1/2 years
Bar Equipment
Telephone Equipment 7 years
154-00 Other Furniture & Equip. -5 yr 5 years 5 years
Office Equipment 5 years
Televisions 7 years
A/C Window Units 7 years
A/C Parts
Hotel Furniture
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GENERAL FINANCIAL TAX
LEDGER STATEMENT RETURN
ACCOUNT ACCOUNT DESCRIPTION LIVES LIVES
- ------- ------------------- --------- ------
157-00 Other Furniture & Equip.-3 yr 3 years 3 years
Vacuum Cleaners 7 years
Removable Restaurant,
Banquet & Bar Equipment 7 years
Misc. Hotel Equipment 7 years
168-00 Refurbishing 5 years 7 years
Mattresses & Box Springs
Carpeting
Curtains, Lamps, Drapes
Bedspreads
Vinyl Wall Coverings
172-00 Motor Vehicles 3 years 5 years
(New Account) Automobiles
Vans
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Addendum A
Items Not Subject to the $300 Unit Cost Guidelines That are Capitalized at All
Times
Drapes/Curtains
Bedspreads
Air Conditioning Parts - Compressors, Condensers, etc.
Television Sets
Vinyl/Wallpaper
Ballroom Tables
Conference Chairs (Ballroom and Restaurant)
Office Desks and Chairs
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Addendum B
Items Classified as Repair and Maintenance Expense
The following items are considered repair and maintenance and are not
subject to the unit cost guidelines except where noted. They may only be
capitalized as part of a hotel addition, major renovation (including newly
instituted franchise requirements) or construction of a new hotel.
Painting
Sealing and Caulking
Landscaping (only trees with a unit cost over $300 may be capitalized)
Waterproofing
Telephone Parts
Auto Parts
Patching Parking Lots
Tile Replacement
Locks (unless part of a new security system)
Sidewalk & Concrete Repair
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SCHEDULE A
PRIME HOSPITALITY PORTFOLIO
12/03/97
CALCULATION OF LEASE RENT-1998
PER DIEM
COST BASIS OF PORTFOLIO $138,407,000
RENT FACTOR 10.500%
ANNUAL YIELD $14,532,735
DAILY PER DIEM RENT $39,816
Cost Basis 10.5 Annual Rent Daily Rental
Sheraton Crossroads $24,695,000 $2,592,975 $7,104.04
Ramada Shelton 14,225,000 1,493,625 54,092.12
Crowne Plaza-Las Vegas 26,500,000 2,782,500 57,623.29
Four Points-Mt. Arlington 4,690,000 492,450 $1,349.18
Crowne Plaza-Portland 24,575,000 2,580,375 $7,069.52
Ramada-Mahwah 8,182,000 859,110 $2,353.73
Ramada-Meriden 9,485,000 995,925 $2,728.56
St. Tropez-Las Vegas 26,055,000 2,735,775 $7,495.27
$138,407,000 $14,532,735 $39,815.71
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Exhibit I
List of Personal Property and Equipment Subject to UCC Financing
Statements
Certain of the Leased FF&E listed on Exhibit T below.
191
Exhibit J
Registration Rights Agreement
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and entered
into as of _____, 1997 by and among American General Hospitality Corporation, a
Maryland corporation, which operates as a real estate investment trust (the
"Company"), American General Hospitality Operating Partnership, L.P., a Delaware
limited partnership (the "Operating Partnership"), and the other parties, if
any, which are signatories hereto (each a "Holder" and collectively the
"Holders").
WHEREAS, on the date hereof, the Operating Partnership is acquiring, among
other things, certain partnership interests in which the Holders own direct or
indirect interests pursuant to a Purchase and Sale agreement dated as of ____,
1997 (the "Purchase Agreement") by and among the Operating Partnership and Prime
Hospitality Corp., and in connection therewith the Holders will receive units of
limited partnership interest in the Operating Partnership (such units of limited
partnership interest being referred to hereinafter as the "OP Units");
WHEREAS, the Company, the Operating Partnership and the Holders are
parties to an Exchange Rights Agreement which provides the Holders, among other
things, with the right to demand the Operating Partnership redeem their limited
partnership units for cash and, at the option of the Company, the Company may
satisfy that redemption request on behalf of the Operating Partnership through
the issuance of Common Stock; and
WHEREAS, in order to induce the Holders to consummate the closings
contemplated under the Purchase Agreement, the Company has agreed to grant to
Holders the registration rights set forth in Section 2 hereof,
NOW, THEREFORE, the parties hereto, in consideration of the foregoing, the
mutual covenants and agreements hereinafter set forth, and other good and
valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, hereby agree as follows:
1. Definitions.
As used in this Agreement, the following capitalized defined terms shall
have the following meanings:
"Common Stock" shall mean shares of common stock, $0.01 par value per
share, of the Company.
"Company" shall have the meaning set forth in the Preamble and also shall
include the Company's successors.
192
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended
from time to time.
"Exchange Rights Agreement" shall mean the Exchange Rights Agreement,
dated as of the date hereof, among the Company, the Operating Partnership and
the other parties thereto.
"Holder" or "Holders" shall have the meaning set forth in the Preamble and
each successor and assign thereof pursuant to Section 6(c).
"NASD" shall mean the National Association of Securities Dealers, Inc.
"OP Units" shall have the meaning set forth in the Preamble.
"Operating Partnership" shall have the meaning set forth in the Preamble
and also shall include the Operating Partnership's successors.
"Person" shall mean an individual, partnership, corporation, trust,
estate, or unincorporated organization, or other entity, or a government or
agency or political subdivision thereof.
"Prospectus" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement with respect to the terms
of the offering of any portion of the Registrable Securities covered by a Shelf
Registration Statement, and by all other amendments and supplements to such
prospectus, including post-effective amendments, and in each case including all
material incorporated by reference therein.
"Registrable Securities" shall mean the Stock, excluding (i) Stock for
which a Registration Statement relating to the sale thereof shall have become
effective under the Securities Act and which have been disposed of under such
Registration Statement or (ii) Stock sold or eligible for sale pursuant to Rule
144 promulgated under the Securities Act.
"Registration Expenses" shall mean any and all expenses incident to
performance of or compliance with this Agreement, including, without limitation:
(i) all SEC, stock exchange or NASD registration and filing fees; (ii) all fees
and expenses incurred in connection with compliance with state securities or
"blue sky" laws (including reasonable fees and disbursements of counsel in
connection with "blue sky" qualification of any of the Registrable Securities
and the preparation of a Blue Sky Memorandum) and compliance with the rules of
the NASD; (iii) all expenses of any Persons in preparing or assisting in
preparing, word processing, printing and distributing any Registration
Statement, any Prospectus, certificates and other documents relating to the
performance of and compliance with this Agreement; (iv) all fees and expenses
incurred in connection with the listing, if any, of any of the Registrable
Securities on any securities exchange or exchanges pursuant to Section 3(1)
hereof; and (v) the fees and disbursements of counsel for the Company and of the
independent public accountants of the Company, including the expenses of any
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special audits or "cold comfort" letters required by or incident to such
performance and compliance. Registration Expenses shall specifically exclude
underwriting discounts and commissions, the fees and disbursements of counsel
representing a selling Holder, and transfer taxes, if any, relating to the sale
or disposition of Registrable Securities by a selling Holder, all of which shall
be borne by such Holder in all cases.
"Registration Statement" or "Shelf Registration Statement" shall mean a
"shelf" registration statement of the Company and any other Person required to
be a registrant with respect to such shelf registration statement pursuant to
the requirements of the Securities Act which covers the issuance or resale of
the Registrable Securities on Form S-3 or otherwise under Rule 415 promulgated
under the Securities Act, or any similar rule that may be adopted by the SEC,
and all amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all materials incorporated by reference
therein.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended from
time to time.
"Shelf Registration" shall mean a registration required to be effected
pursuant to Section 2 hereof.
"Stock" shall mean any Common Stock issued or to be issued to the Holders
upon the exchange of their OP Units pursuant to the Exchange Rights Agreement.
2. Shelf Registration Under the Securities Act.
(a) Filing of Shelf Registration Statement. Within 60 days after the
six month anniversary date of the date hereof, the Company shall cause to be
filed a Shelf Registration Statement providing for the sale by the Holders of
the Registrable Securities and will use its reasonable best efforts to cause
such Shelf Registration Statement to be declared effective by the SEC as soon as
practicable. The Company agrees to use its reasonable best efforts to keep the
Shelf Registration Statement continuously effective for a period expiring on the
date on which all of the Registrable Securities covered by the Shelf
Registration Statement have been sold pursuant to the Shelf Registration
Statement or have become eligible for sale pursuant to Rule 144 promulgated
under the Securities Act and, subject to Section 3(b) and Section 3(i) hereof,
further agrees to supplement or amend the Shelf Registration Statement, if and
as required by the rules, regulations or instructions applicable to the
registration form used by the Company for such Shelf Registration Statement or
by the Securities Act or by any other rules and regulations thereunder for shelf
registration; provided, however, that the Company shall not be deemed to have
used its reasonable efforts to keep a Registration Statement effective during
the applicable period if it voluntarily takes any action that would result in
selling Holders covered thereby not being able to sell such Registrable
Securities during that period, unless such action is required under applicable
law or the Company has filed a post-effective amendment to the Registration
Statement and the SEC has not
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declared it effective. Notwithstanding the foregoing, the Company shall not be
required to file a Registration Statement or to keep a Registration Statement
effective if the negotiation or consummation of a transaction is pending or an
event has occurred, which negotiation, consummation or event would require
additional disclosure by the Company in the Registration Statement of material
information which the Company has a bona fide business purpose for keeping
confidential and the nondisclosure of which in the Registration Statement might
cause the Registration Statement to fail to comply with applicable disclosure
requirements; provided, however, that the Company may not delay, suspend or
withdraw a Registration Statement for such reason for more than 60 days or more
often than twice during any period of 12 consecutive months. The Company is not
required to file a separate Registration Statement, but may file one
Registration Statement covering the Registrable Securities held by more than one
Holder.
(b) Expenses. The Company shall pay all Registration Expenses in
connection with any registration pursuant to Section 2(a). Each Holder shall pay
all underwriting discounts, if any, sales commissions, the fees and
disbursements of counsel representing such Holder and transfer taxes, if any
relating to the sale or disposition of such Holder's Registrable Securities
pursuant to the Shelf Registration Statement or Rule 144 promulgated under the
Securities Act.
(c) Inclusion in Shelf Registration Statement. Any Holder who does not
within 10 days of a request provide the information reasonably requested by the
Company in connection with the Shelf Registration Statement shall not be
entitled to have its Registrable Securities included in the Shelf Registration
Statement.
3. Registration Procedures.
In connection with the obligations of the Company with respect to the
Registration Statement required to be filed pursuant to Section 2 hereof, the
Company shall, to the extent applicable:
(a) prepare and file with the SEC within the time period set forth in
Section 2 hereof, a Shelf Registration Statement, which Shelf Registration
Statement (i) shall be available for the sale of the Registrable Securities in
accordance with the intended method or methods of distribution by the selling
Holders thereof, and (ii) shall comply as to form in all material respects with
the requirements of the applicable form of registration statement and include
all financial statements required by the SEC to be filed therewith;
(b) subject to the last two sentences of this Section 3(b), (1) prepare
and file with the SEC such amendments and post-effective amendments to each such
Registration Statement as may be necessary to keep such Registration Statement
effective for the applicable period; (ii) cause each such Prospectus to be
supplemented by any required prospectus supplement, and as so supplemented to be
filed pursuant to Rule 424 or any similar rule that may be adopted under the
Securities Act; (iii) respond as promptly as practicable to any comments
received from the SEC with respect to the Shelf Registration Statement, or any
amendment, post-effective amendment or supplement relating thereto; and (iv)
comply with the provisions of the Securities Act with respect
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to the disposition of all securities covered by each Registration Statement
during the applicable period in accordance with the intended method or methods
of distribution by the selling Holders thereof. All Holders shall promptly
provide to the Company such information as the Company reasonably requests in
order to identify such Holder and the method of distribution in a post-effective
amendment to the Registration Statement or a supplement to the Prospectus. Such
Holder also shall notify the Company in writing upon completion of any offer or
sale or at such time as such Holder no longer intends to make offers or sales
under the Registration Statement;
(c) furnish to each Holder of Registrable Securities, without charge, as
many copies of each Prospectus, including each preliminary Prospectus, and any
amendment or supplement thereto and such other documents as such Holder may
reasonably request, in order to facilitate the public sale or other disposition
of the Registrable Securities; the Company consents to the use of the
Prospectus, including each preliminary Prospectus, by each such Holder of
Registrable Securities in connection with the offering and sale of the
Registrable Securities covered by the Prospectus or the preliminary Prospectus;
(d) use its reasonable efforts to register or qualify the Registrable
Securities by the time the applicable Registration Statement is declared
effective by the SEC under all applicable state securities or "blue sky" laws of
such jurisdictions as any Holder of Registrable Securities covered by a
Registration Statement shall reasonably request in writing, keep each such
registration or qualification effective during the period such Registration
Statement is required to be kept effective, and do any and all other acts and
things which may be reasonably necessary or advisable to enable such Holder to
consummate the disposition in each such jurisdiction of such Registrable
Securities owned by such Holder; provided, however, that the Company shall not
be required to (i) qualify generally to do business in any jurisdiction or to
register as a broker or dealer in such jurisdiction where it would not otherwise
be required to qualify but for this Section 3(d), (ii) subject itself to
taxation in any such jurisdiction, or (iii) submit to the general service of
process in any such jurisdiction;
(e) notify each Holder of Registrable Securities promptly and, if
requested by such Holder, confirm such notification in writing (i) when a
Registration Statement has become effective and when any post-effective
amendments and supplements thereto become effective, (ii) of the issuance by the
SEC or any state securities authority of any stop order suspending the
effectiveness of a Registration Statement or the initiation of any proceedings
for that purpose, (iii) if the Company receives any notification with respect to
the suspension of the qualification of the Registrable Securities for sale in
any jurisdiction or the initiation of any proceeding for such purpose, and (iv)
of the happening of any event during the period a Registration Statement is
effective which is of a type specified in the last sentence of Section 2(a)
hereof or as a result of which such Registration Statement or the related
Prospectus contains any untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made (in
the case of the Prospectus), not misleading;
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(f) make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement at the earliest
possible moment;
(g) furnish to each Holder of Registrable Securities, without charge, at
least one conformed copy of each Registration Statement and any post-effective
amendment thereto (without documents incorporated therein by reference or
exhibits thereto, unless requested);
(h) cooperate with the selling Holders of Registrable Securities to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold and not bearing any Securities Act legend; and
enable certificates for such Registrable Securities to be issued for such
numbers of shares of Common Stock and registered in such names as the selling
Holders may reasonably request at least two business days prior to any sale of
Registrable Securities;
(i) subject to the last sentence of Section 2(a) hereof and the last two
sentences of Section 3(b) hereof, upon the occurrence of any event contemplated
by Section 3(e)(iv) hereof, use its reasonable efforts promptly to prepare and
file a supplement or prepare, file and obtain effectiveness of a post-effective
amendment to a Registration Statement or the related Prospectus or any document
incorporated therein by reference or file any other required document so that,
as thereafter delivered to the purchasers of the Registrable Securities, such
Prospectus will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading;
(j) make available for inspection by representatives of the Holders of the
Registrable Securities and any counsel or accountant retained by such Holders,
all financial and other records, pertinent corporate documents and properties of
the Company, and cause the respective officers, directors and employees of the
Company to supply all information reasonably requested by any such
representative, counsel or accountant in connection with a Registration
Statement; provided, however, that such records, documents or information which
the Company determines, in good faith, to be confidential and notifies such
representatives, counsel or accountants in writing that such records, documents
or information are confidential shall not be disclosed by such representatives,
counsel or accountants unless (i) the disclosure of such records, documents or
information is necessary to avoid or correct a material misstatement or omission
in a Registration Statement, (ii) the release of such records, documents or
information is ordered pursuant to a subpoena or other order from a court of
competent jurisdiction, or (iii) such records, documents or information have
been generally made available to the public;
(k) a reasonable time prior to the filing of any Registration Statement,
any Prospectus, any amendment to a Registration Statement or amendment or
supplement to a Prospectus, provide copies of such document (not including any
documents incorporated by reference therein unless requested) to the Holders of
Registrable Securities;
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(l) use its reasonable efforts to cause all Registrable Securities to be
listed on any securities exchange on which similar securities issued by the
Company are then listed;
(m) provide a CUSIP number for all Registrable Securities, not later than
the effective date of a Registration Statement;
(n) otherwise use its reasonable efforts to comply with all applicable
rules and regulations of the SEC and make available to its security holders, as
soon as reasonably practicable, an earnings statement covering at least 12
months which shall satisfy the provisions of Section 11(a) of the Securities Act
and Rule 158 promulgated thereunder; and
(o) use its reasonable efforts to cause the Registrable Securities covered
by a Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary by virtue of the
business and operations of the Company to enable Holders to consummate the
disposition of such Registrable Securities.
The Company may require each Holder of Registrable Securities to furnish
to the Company in writing such information regarding the proposed distribution
by such Holder of such Registrable Securities as the Company may from time to
time reasonably request in writing.
In connection with and as a condition to the Company's obligations with
respect to the Registration Statement required to be filed pursuant to Section 2
hereof and this Section 3, each Holder agrees that (i) it will not offer or sell
its Registrable Securities under the Registration Statement until it has
received copies of the supplemental or amended Prospectus contemplated by
Section 3(b) hereof and receives notice that any post-effective amendment has
become effective, (ii) upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 3(e)(iv) hereof, such
Holder will forthwith discontinue disposition of Registrable Securities pursuant
to a Registration Statement until such Holder receives copies of the
supplemented or amended Prospectus contemplated by Section 3(i) hereof and
receives notice that any post-effective amendment has become effective, and, if
so directed by the Company, such Holder will deliver to the Company (at the
expense of the Company) all copies in its possession, other than permanent file
copies then in such Holder's possession, of the Prospectus covering such
Registrable Securities current at the time of receipt of such notice.
4. Indemnification; Contribution.
(a) Indemnification by the Company. The Company agrees to indemnify and
hold harmless each Holder and its officers and directors and each Person, if
any, who controls any Holder within the meaning of Section 15 of the Securities
Act as follows:
(a) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement (or any amendment thereto) pursuant to which Registrable
Securities were registered under the Securities Act, including all
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documents incorporated therein by reference, or the omission or alleged
omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading or arising out of
any untrue statement or alleged untrue statement of a material fact
contained in any Prospectus (or any amendment or supplement thereto),
including all documents incorporated therein by reference, or the omission
or alleged omission therefrom of a material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading;
(b) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or investigation or proceeding by
any governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement is effected with
the written consent of the Company, which consent shall not be
unreasonably withheld or delayed; and
(c) against any and all expense whatsoever, as incurred
(including reasonable fees and disbursements of counsel), reasonably
incurred in investigating, preparing or defending against any litigation,
or investigation or proceeding by any governmental agency or body,
commenced or threatened, in each case whether or not a party, or any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, to the extent that any such expense
is not paid under subparagraph (i) or (ii) above;
provided, however, that the indemnity provided pursuant to this Section 4(a)
does not apply to any Holder with respect to any loss, liability, claim, damage
or expense to the extent arising out of (x) any untrue statement or omission or
alleged untrue statement or omission made in reliance upon and in conformity
with written information furnished to the Company by such Holder expressly for
use in a Registration Statement (or any amendment thereto) or any Prospectus (or
any amendment or supplement thereto) or (y) such Holder's failure to deliver an
amended or supplemental Prospectus, after having been provided copies of any
such amended or supplemental Prospectus by the Company, if such loss, liability,
claim, damage or expense would not have arisen had such delivery occurred.
(b) Indemnification by Holders. Each Holder severally agrees to indemnify
and hold harmless the Company and the other selling Holders, and each of their
respective directors and officers (including each director and officer of the
Company who signed the Registration Statement), and each Person, if any, who
controls the Company or any other selling Holder within the meaning of Section
15 of the Securities Act, to the same extent as the indemnity contained in
Section 4(a) hereof (except that any settlement described in Section 4(a)(ii)
shall be effected with the written consent of such Holder which consent shall
not be unreasonably withheld or delayed), but only insofar as such loss,
liability, claim, damage or expense arises out of or is based upon any untrue
statement or omission, or alleged untrue statements or omissions, made in a
Registration Statement (or any amendment thereto) or any Prospectus (or any
amendment or supplement
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thereto) in reliance upon and in conformity with written information furnished
to the Company by such selling Holder expressly for use in such Registration
Statement (or any amendment thereto) or such Prospectus (or any amendment or
supplement thereto).
(c) Conduct of Indemnification Proceedings. Each indemnified party shall
give reasonably prompt notice to each indemnifying party of any action or
proceeding commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party (i) shall not relieve
it from any liability which it may have under the indemnity agreement provided
in Section 4(a) or 4(b) above, unless and to the extent it did not otherwise
learn of such action and the lack of notice by the indemnified party results in
the forfeiture by the indemnifying party of substantial rights and defenses and
(ii) shall not, in any event, relieve the indemnifying party from any
obligations to any indemnified party other than the indemnification obligation
provided under Section 4(a) or 4(b) above. If the indemnifying party so elects
within a reasonable time after receipt of such notice, the indemnifying party
may assume the defense of such action or proceeding at such indemnifying party's
own expense with counsel chosen by the indemnifying party and approved by the
indemnified parties defendant in such action or proceeding, which approval shall
not be unreasonably withheld; provided, however, that, if such indemnified party
or parties reasonably determine that a conflict of interest exists where it is
advisable for such indemnified party or parties to be represented by separate
counsel or that, upon advice of counsel, there may be legal defenses available
to them which are different from or in addition to those available to the
indemnifying party, then the indemnifying party shall not be entitled to assume
such defense and the indemnified party or parties shall be entitled to one
separate counsel at the indemnifying party's or parties' expense. If an
indemnifying party is not entitled to assume the defense of such action or
proceeding as a result of the proviso to the preceding sentence, such
indemnifying party's counsel shall be entitled to conduct such indemnifying
party's defense and counsel for the indemnified party or parties shall be
entitled to conduct the defense of such indemnified party or parties, it being
understood that both such counsel will cooperate with each other to conduct the
defense of such action or proceeding as efficiently as possible. If an
indemnifying party is not so entitled to assume the defense of such action or
does not assume such defense, after having received the notice referred to in
the first sentence of this paragraph, the indemnifying party or parties will pay
the reasonable fees and expenses of counsel for the indemnified party or parties
as incurred. In such event, however, no indemnifying party will be liable for
any settlement effected without the written consent of such indemnifying party,
which consent may not be unreasonably withheld or delayed. If an indemnifying
party is entitled to assume, and assumes, the defense of such action or
proceeding in accordance with this paragraph, such indemnifying party shall not
be liable for any fees and expenses of counsel for the indemnified parties
incurred thereafter in connection with such action or proceeding.
(d) Contribution. In order to provide for just and equitable contribution
in circumstances in which the indemnity agreement provided for in this Section 4
is for any reason held to be unenforceable although applicable in accordance
with its terms, the Company and the selling Holders shall contribute to the
aggregate losses, liabilities, claims, damages and expenses of the nature
contemplated by such indemnity agreement incurred by the Company and the selling
Holders, in such proportion as is appropriate to reflect the relative fault of
and benefits to the
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Company on the one hand and the selling Holders on the other (in such
proportions that the selling Holders are severally, not jointly, responsible for
the balance), in connection with the statements or omissions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative benefits to the indemnifying
party and indemnified parties shall be determined by reference to, among other
things, the total proceeds received by the indemnified party and indemnified
parties in connection with the offering to which such losses, claims, damages,
liabilities or expenses relate. The relative fault of the indemnifying party and
indemnified parties shall be determined by reference to, among other things,
whether the action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such indemnifying party or
the indemnified parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action.
The parties hereto agree that it would not be just or equitable if
contribution pursuant to this Section 4(d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 4(d), no selling Holder shall be
required to contribute any amount in excess of the amount by which the total
price at which the Registrable Securities of such selling Holder were offered to
the public exceeds the amount of any damages which such selling Holder would
otherwise have been required to pay by reason of such untrue statement or
omission.
Notwithstanding the foregoing, no Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 4(d), each Person, if
any, who controls a Holder within the meaning of Section 15 of the Securities
Act and directors and officers of a Holder shall have the same rights to
contribution as such Holder, and each director of the Company, each officer of
the Company who signed the Registration Statement and each Person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act
shall have the same rights to contribution as the Company.
5. Filing of Exchange Act Reports: Rule 144 Sales.
(a) The Company covenants that it will file the reports required to be
filed by the Company under the Securities Act and the Exchange Act so as to
enable any Holder to sell Stock pursuant to Rule 144 promulgated under the
Securities Act.
(b) In connection with any sale, transfer or other disposition by any
Holder of any Stock pursuant to Rule 144 promulgated under the Securities Act,
the Company shall cooperate with such Holder to facilitate the timely
preparation and delivery of certificates representing Stock to be sold and not
bearing any Securities Act legend, and enable certificates for such Stock to be
for such number of shares and registered in such names as the selling Holders
may reasonably request at least two business days prior to any sale of Stock.
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201
6. Miscellaneous.
(a) Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given without the written consent of the Company and the Holders of a majority
in amount of the outstanding Registrable Securities; provided, however, that no
amendment, modification or supplement or waiver or consent to the departure with
respect to the provisions of Sections 2, 4 or 5 hereof shall be effective as
against any Holder unless consented to in writing by such Holder. Notice of any
amendment, modification or supplement to this Agreement adopted in accordance
with this Section 6(a) shall be provided by the Company to each Holder at least
thirty (30) days prior to the effective date of such amendment, modification or
supplement.
(b) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, telecopier, or any courier guaranteeing overnight
delivery, to the parties at their respective addresses set forth opposite their
signatures below or at such other address as a party may indicate by written
notice to the other party or parties and with respect to the Company at 5605
MacArthur Boulevard, Suite 1200, Irving, Texas 75038, Attn: President.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; three (3)
business days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt is acknowledged, if telecopied; or
at the time delivered, if delivered by an air courier guaranteeing overnight
delivery.
(c) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors, assigns and transferees of each of the
parties, including, without limitation and without the need for an express
assignment, subsequent Holders. If any successor, assignee or transferee of any
Holder shall acquire Registrable Securities, in any manner, whether by operation
of law or otherwise, such Registrable Securities shall be held subject to all of
the terms of this Agreement, and by taking and holding such Registrable
Securities such Person shall be entitled to receive the benefits hereof and
shall be conclusively deemed to have agreed to be bound by all of the terms and
provisions hereof.
(d) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(e) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
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202
(f) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND WITHOUT GIVING EFFECT TO THE
CONFLICTS OF LAW PROVISIONS THEREOF.
(g) Specific Performance. The parties hereto acknowledge that there would
be no adequate remedy at law if any party fails to perform any of its
obligations hereunder, and accordingly agree that each party, in addition to any
other remedy to which it may be entitled as law or in equity, shall be entitled
to compel specific performance of the obligations of any other party under this
Agreement in accordance with the terms and conditions of this Agreement in any
court of the United Stares or any State thereof having jurisdiction.
(h) Entire Agreement. This Agreement is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
Signature Page to Registration Rights Agreement by and among American
General Hospitality Corporation, American General Hospitality Operating
Partnership, L.P., the undersigned and the other parties thereto.
Address:
5605 MacArthur Blvd. AMERICAN GENERAL HOSPITALITY
Suite 1200 CORPORATION
Irving, Texas 75038
By:
--------------------------------
Name:
Title:
5605 MacArthur Blvd. AMERICAN GENERAL HOSPITALITY
Suite 1200 OPERATING PARTNERSHIP, L.P.
Irving, Texas 75038
By: AGH GP, INC., General Partner
By:
----------------------------
Name:
Title
-12-
203
Signature Page to Registration Rights Agreement by and among American
General Hospitality Corporation, American General Hospitality Operating
Partnership, L.P., the undersigned and the other parties thereto, if any.
HOLDER(S):
Address:
700 Route 46 East PRIME HOSPITALITY CORP.
Fairfield, NJ 07007-2700
By:
--------------------------------
Name:
Title:
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204
================================================================================
REGISTRATION RIGHTS AGREEMENT
Dated as of ______, 1997
by and among
AMERICAN GENERAL HOSPITALITY CORPORATION
and
Certain Direct and Indirect Holders of Limited Partnership Interests
of American General Hospitality Operating Partnership, L.P.
================================================================================
205
Exhibit K
List of Space Leases and Security Deposits
Mahwah Sheraton Crossroads
None
206
Exhibit L
Form of Subordination, Nondisturbance and Attornment Agreement
THIS SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT (the
"Agreement ") is made as of the ____ day of January, 1998 by and between MAHWAH
HOLDING CORP., a Delaware corporation ("Tenant") and Bank One, Texas, N.A., as
administrative agent (the "Agent") for the Banks (as hereinafter defined).
RECITALS:
A. Tenant is the tenant of those certain premises located on that
certain lot, tract and parcel of real property in the Crossroads Corporate
Center, Mahwah, New Jersey and more particularly described on Exhibit A attached
hereto and made a part hereof (the "Premises") pursuant to that certain
Operating Lease dated January __, 1998 between Tenant, as tenant, and American
General Hospitality Operating Partnership, L.P., a Delaware limited partnership
("Owner"), as owner (the "Lease").
B. Owner, Administrative Agent, as Administrative Agent, Societe
Generale, Southwest Agency, as Arranger, Syndication Agent and Documentation
Agent, The Bank of Nova Scotia, as Co-Agent, Wells Fargo Bank, National
Association as Co-Agent and the banks and other lenders party thereto
(collectively the "Banks") entered into that certain Amended and Restated Credit
Agreement dated as of June 25, 1997 (as amended or modified from time to time,
the "Credit Agreement"). The Banks have agreed to make a loan (the "Loan")
pursuant to the Credit Agreement to Owner in the original principal amount of
Three Hundred Million Dollars ($300,000,000) to be secured by a mortgage (the
"Mortgage") on the Premises to Agent for the benefit of the Banks, subject to
the condition that the Lease be subordinated to the lien of the Mortgage. The
documents evidencing and securing the Loan shall be referred to collectively in
this Agreement as the "Loan Documents".
C. Pursuant to that certain Amended and Restated Purchase and Sale
Agreement dated January ___, 1998 and the Lease, Tenant has agreed to
subordinate the Lease and fees and other sums due to it as Tenant under the
Lease to the lien and security interests of Mortgage on certain terms and
conditions as set forth herein.
NOW THEREFORE, in consideration of the mutual covenants and promises
set forth in this Agreement and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, Tenant and Lender agree
as follows:
1. Tenant's Representations. Tenant represents and warrants to
Lender, as of the date hereof, that the following are true and correct:
207
(a) The document attached hereto as Exhibit B is a true, correct and
complete copy of the Lease, including all modifications and amendments thereto,
if any.
(b) Owner is not in default in the performance of any of its
obligations under the Lease and all payments and fees required to be paid by
Owner to Tenant thereunder have been paid to the date hereof, except as set
forth on Exhibit C attached hereto.
2. Tenant's Agreements. Notwithstanding the terms of the Lease,
Tenant hereby consents to and covenants and agrees as follows:
(a) Notices of Defaults. Tenant shall deliver to Agent at the
address stated above or such other address as Agent shall notify Tenant thereof
in writing, by certified mail, a copy of any notice of default served upon Owner
relating to defaults of Owner with respect to the Lease contemporaneously with
the delivery of such notice to Owner. No notice to Owner shall be effective, no
applicable cure period shall begin to run and neither Agent nor the Banks nor
any person succeeding to their respective interests shall have any obligation to
cure defaults of Owner unless and until Agent has received a copy of such
notice. Before Tenant may exercise any remedies available to Tenant under a
Lease by virtue of Owner's default thereunder, Agent, on behalf of Banks, shall
be permitted (but shall not be obligated) to cure any such default by Owner with
respect to the Lease within thirty (30) days after receipt of such notice. If
such default cannot be cured within the aforesaid thirty (30) days, then Agent
shall have such additional period of time as may be necessary to cure such
default, if within such thirty (30) days, Agent has commenced and is diligently
pursuing the remedies necessary to cure such default (including without
limitation the commencement of foreclosure proceedings if necessary to effect
such a cure), in which event any remedies of Tenant under the Lease, including,
without limitation, such right, if any, as Tenant might otherwise have to
terminate the Lease, shall not be exercised while such remedies are being so
diligently pursued. [In addition, Tenant agrees to promptly deliver to Agent a
copy of any written notice of default received from or given to any franchisor,
licensor, manager, or liquor license company with which Tenant has entered into
an agreement or contract related to the Premises.]
(b) No Termination of Lease. Tenant shall not terminate the Lease
without Agent's prior written consent. Notwithstanding the foregoing, but
subject to the provisions in the Section 2(a) above, Tenant shall have the right
to terminate the Lease for default by Owner with respect to non-payment of any
fee due thereunder or any costs of operating the Premises in accordance with the
Lease by giving Agent thirty (30) days' prior written notice of such
termination. In the event Agent (or Owner) shall cure such non-payment default
in the aforesaid
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208
thirty (30) day period, then any termination notice related to such cause shall
be of no further force or effect.
(c) Subordination of Lease to Lien of Mortgage. The Lease and any
and all liens, rights and interests (whether constitutional, statutory,
contractual, choate or inchoate and including, without limitations all
mechanic's and materialmen's liens under applicable law) owed, claimed or held
by Tenant in and to the Premises and/or the rents, issues, profits and income
therefrom, are and shall be in all respects subordinate and inferior to Agent's
right to payment under the Loan Documents and the liens and security interests
created or to be created for the benefit of Agent for the benefit of the Banks
and securing the repayment of the Loan including, without limitation, those
created under the Mortgage covering, among other things, the Premises, and filed
or to be filed of record in the public records maintained for the recording of
mortgages in the jurisdiction where the Premises is located, and all renewals,
extensions, increases, supplements, amendments, modifications and replacements
thereof, provided, however, that notwithstanding the foregoing subordination,
neither Lender not any successor or assignee thereof shall name or join Tenant
as a party defendant in any foreclosure or otherwise in any suit, action or
proceeding commenced or maintained for the purpose of foreclosure of the
Mortgage or to recover possession of the Premises or any portion thereof unless
Tenant or any person claiming through or under Tenant is deemed a necessary
party under the law of the applicable jurisdiction or by the court, in which
event the Tenant or such party may be so named or joined but such naming or
joinder shall not otherwise be in derogation of the rights of Tenant set forth
in this Agreement.
3. Nondisturbance and Attornment.
(a) If at any time Agent or any entity controlled by the Banks (a
"Successor Owner") shall succeed to the rights of Owner under the Lease or
otherwise obtain possession of the Premises as a result of the exercise of
Agent's rights upon the occurrence of an event of default under the Mortgage or
any other Loan Document prior to the expiration date of the Lease, each
Successor Owner, by and upon acquiring title to the Premises, agrees that: (a)
Tenant shall not be disturbed in the right to manage the Premises pursuant to
the Lease, (b) the Lease shall not terminate as result of the Agent's actions
and (c) such Successor Owner shall assume the obligations and liabilities of
Owner under the Lease (including without limitation the obligation to pay Tenant
the sums due with respect to the Premises under the terms of the Lease) which
accrue from and after the date of such succession; in such circumstances, Tenant
agrees that Tenant shall attorn to and recognize the Successor Owner as the
"Owner" under the Lease and shall continue performance, on behalf of and for the
benefit of such Successor Owner of Tenant's obligations under the Lease. The
Lease thereafter shall continue in full force and effect as, or as if
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209
it were, a direct Lease with the successor Owner and Tenant upon and subject to
all of the executory terms, conditions and covenants as are set forth in the
Lease.
(b) In the event of such succession or possession by a Successor
Owner, no such successor shall: (w) be liable to Tenant for any act, omission or
default of Owner under the Lease which shall have occurred prior to the
Successor Owner taking title to the Premises; (x) be subject to any offset,
defense, counterclaim, credit, deduction or abatement which shall have accrued
to the Tenant against Owner under such Lease at any time prior to the Successor
Owner taking title to the Premises; (y) be bound to make any payment to Tenant
required under the Lease or otherwise required to be made prior to the Successor
Owner taking title to the Premises; or (z) be bound by any agreement amending,
modifying or terminating the Lease made without Agent's prior written consent;
provided that neither the provisions of this subparagraph (b) or any other
provision of this Agreement shall not be deemed to relieve a Successor Owner of
the obligation to cure Owner defaults relating to payment of real estate taxes,
insurance premiums and ground rents, to the extent set forth in the Lease, which
accrued prior to such Successor Owner obtaining title to the Premises.
(c) If the Lease is rejected or disaffirmed pursuant to any
bankruptcy law or any other law affecting creditors rights generally or
terminated by the actions of a receiver, should any Successor Owner thereafter
become a successor Owner by foreclosure or by deed in lieu thereof, it and
Tenant shall, within thirty (30) days after Lender shall obtain ownership of the
Premises, enter into a new agreement for the management of the Premises on
substantially the same terms and conditions as are contained in the Lease and
applicable provisions of this Agreement for the remainder of the term of the
Lease.
4. Further Assurances. Tenant further agrees to (i) execute such
affidavits and certificates as Agent may reasonably require to further evidence
the agreements herein contained, (ii) on request from Agent, furnish Agent with
copies of such information as Owner is entitled to receive under the Lease, and
(iii) cooperate with Agent's representative in any inspection of all or any
portion of the Premises.
5. No Amendment Without Agent's Consent. Tenant shall not amend,
modify, supplement or replace the Lease without Agent's prior written consent.
6. No Joint Venture. Tenant shall not be a third party beneficiary
with respect to any of Agent's or the Banks' obligations to Owner set forth in
the Loan Documents. The relationship of the Banks to Owner, is one of a creditor
to a debtor, and Agent and the Banks are not a joint venturer or partner of
Owner or Tenant.
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210
7. Books, Records. On the effective date of termination of the Lease
in accordance with the terms of this Agreement, Tenant shall turn over to any
Successor Owner all books and records relating to the Premises (copies of which
may be retained by Tenant at Tenant's expense), together with such
authorizations and letters of direction addressed to tenants, suppliers,
employees, banks and other parties, lists of all hotel guests, and such other
information relating to the Property, all as such Successor Owner may reasonably
require at Owner's expense unless such termination of the Lease is for cause,
and Tenant shall cooperate with such Successor Owner in the transfer of the
management responsibilities to such Successor Owner or its designee at Owner's
expense unless such termination of the Lease is for cause. A final accounting of
unpaid fees (if any) due to Tenant under the Lease shall be made by Tenant and
reasonably approved by the Successor Owner within 60 days after the effective
date of termination, but such Successor Owner shall not have any liability or
obligation to Tenant for unpaid fees or other amounts payable to Tenant under
the Lease which accrue before such Successor Owner acquires title to the
Premises or for any other matter for which such party would not be liable under
Section 3(b) hereof.
8. Estoppel Certificate. Tenant shall deliver to Agent, within ten
(10) days after written request, a written statement duly acknowledged by an
authorized representative of Tenant certifying (i) whether or not the Lease has
been modified (and, if it has, specifying the date of each modification), (ii)
whether or not the Lease is in full force and effect, (iii) that, to the best
knowledge of Tenant, there exists no default, or condition or event which, with
the giving of notice and/or lapse of time would constitute a default under the
Lease or, if any such default, condition or event exists, specifying to the
knowledge of Tenant the nature and period of the existence thereof and what
action is being taken or is proposed to be taken with respect thereto and (iv)
that, to the knowledge of Tenant, it has no rights of offset, defenses or
counterclaims under the Lease (or, if it has any, specifying the same).
9. Irrevocable Directions to Pay; Payment of Rents to Banks. Tenant
hereby acknowledges receipt of that certain Irrevocable Direction to Pay (the
"Direction to Pay") executed by Owner and certain affiliates of Owner. Tenant
hereby agrees that Tenant shall pay all base rent, participating rent and all
other amounts as may become due and payable by Tenant to Owner under and
pursuant to the Lease directly to the Agent pursuant to the Direction to Pay
until such time as the Agent shall notify the Tenant that the Loan has been paid
and performed in full.
10. Consent Waiver. Tenant hereby consents to the collateral
assignment by Owner to Agent of the Lease and Owner's rights, title and
interests thereunder, including without limitation any liens or security
interests held by Owner, pursuant to the Loan Documents as security for the
repayment
5
211
of the Loan and agrees that Owner shall not be in default under the Lease by
reason of having made such assignments. Tenant acknowledges and agrees that
until the Loan Documents burdening the Premises are released [(a) no consent by
Owner under the Lease shall be effective without the written consent of Agent]
and (b) Agent shall have the right, but not the obligation, to take any action
permitted Owner under the Lease in connection with a default by Tenant
thereunder to the extent permitted by the Loan Documents.
11. Miscellaneous.
(a) Successors and Assigns. This Agreement shall be binding upon,
and inure to the benefit of, Tenant, Agent, and their respective successors and
assigns.
(b) Choice of Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of New Jersey.
(c) Entire Agreement. This Agreement is the entire agreement between
the parties in connection with the subordination of the Lease. There are no oral
promises, conditions, representations, understandings, interpretations, or terms
of any kind as conditions or inducements to the execution hereof or in effect
between the parties. No change or addition may be made to this Agreement except
by written agreement executed by both parties hereto.
(d) Notices. All notices, requests, demands and other communications
(collectively, the "Notices") to or upon the parties hereto shall be in writing
and shall be deemed to have been duly given or made when received or refused, if
personally delivered by messenger or national overnight courier service, or
three (3) business days after deposit in the United States mail, if sent by
registered or certified mail, postage prepaid, return receipt requested,
addressed to the party to which such Notice is being given at the address set
forth below, or at such other address as any of the parties hereto may hereafter
notify the others by notice given hereunder:
If to Tenant:
Mahwah Holding Corp.
c/o Prime Hospitality Corp.
700 Route 46 East
Fairfield, New Jersey 07707-2700
Attention: General Counsel
6
212
with a copy to:
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, NY 10022
Attention: Eugene A. Pinover, Esq.
If to Lender:
1717 Main Street, 4th Floor
Commercial Real Estate Department
Dallas, Texas 75201
Attention: Mr. Eddie Hodges, Vice President
with a copy to:
Bracewell & Patterson, L.L.P.
711 Louisiana, Suite 2900
Houston, Texas 77002
Attention: David W. Locascio
(e) This Agreement may be executed in counterparts each of which shall
be an original and all of which together shall constitute one and
the same document.
(f) This Agreement may be recorded in the real property records for the
county in which the Premises are located by any party hereto.
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213
IN WITNESS WHEREOF, Tenant and Lender have caused this Assignment to
be duly and properly executed under seal as of the date and year first above
written.
TENANT:
MAHWAH HOLDING CORP.
By: ________________________
Richard Szymanski
Vice President
Attest: _____________________
Joseph Bernadino
Secretary
AGENT:
BANK ONE, TEXAS, N.A., as Agent
By: ___________________________
Name:
Title:
Attest: _______________________
Name:
Title:
8
214
Consent of Owner
The undersigned, as owner of the Premises (as defined in that
certain Subordination, Non-Disturbance and Attornment Agreement (the
"Agreement") between Mahwah Holding Corp., as Tenant and Bank One, Texas, N.A.,
as Agent, attached hereto), hereby consents to the terms, covenants and
conditions set forth in Agreement and agrees to be bound by the provisions
thereof.
AMERICAN GENERAL HOSPITALITY OPERATING
PARTNERSHIP, L.P., a Delaware limited
partnership
By: AGH GP, Inc., its sole general partner
By: __________________________
Bruce G. Wiles
Executive Vice President
215
[NEW JERSEY]
STATE OF ____________)
: ss.:
COUNTY OF ___________)
I certify that on January __, 1998 _______________ personally came
before me and this person acknowledged under oath, to my satisfaction, that:
(a) this person signed, sealed and delivered the attached document
as the _________ of BANK ONE TEXAS, N.A., as Agent, the corporation named in
this document;
(b) this document was signed, and made by the corporation as its
voluntary act and deed by virtue of authority from its Board of Directors.
---------------------
Notary Public
My commission expires: ___________
STATE OF NEW YORK)
: ss.:
COUNTY OF NEW YORK)
I certify that on January __, 1998, Richard Szymanski personally
came before me and this person acknowledged under oath, to my satisfaction,
that:
(a) this person signed, sealed and delivered the attached document
as the Vice President of MAHWAH HOLDING CORP., the corporation named in this
document;
(b) this document was signed, and made by the corporation as its
voluntary act and deed by virtue of authority from its Board of Directors.
---------------------
Notary Public
My commission expires: ___________
216
EXHIBIT A
LEGAL DESCRIPTION OF PREMISES
217
EXHIBIT B
COPY OF LEASE
218
EXHIBIT C
EXCLUSIONS TO TENANT REPRESENTATIONS
219
Exhibit L
Form of Subordination, Nondisturbance and Attornment Agreement
THIS SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT (the
"Agreement ") is made as of the ____ day of January, 1998 by and between CLIFTON
HOLDING CORP., a Delaware corporation ("Tenant") and Bank One, Texas, N.A., as
administrative agent (the "Agent") for the Banks (as hereinafter defined).
RECITALS:
A. Tenant is the tenant of those certain premises located on that
certain lot, tract and parcel of real property at 275 Research Parkway, Meriden,
Connecticut and more particularly described on Exhibit A attached hereto and
made a part hereof (the "Premises") pursuant to that certain Operating Lease
dated January, 1998 between Tenant, as tenant, and American General Hospitality
Operating Partnership, L.P., a Delaware limited partnership ("Owner"), as owner
(the "Lease").
B. Owner, Administrative Agent, as Administrative Agent, Societe
Generale, Southwest Agency, as Arranger, Syndication Agent and Documentation
Agent, The Bank of Nova Scotia, as Co-Agent, Wells Fargo Bank, National
Association as Co-Agent and the banks and other lenders party thereto
(collectively the "Banks") entered into that certain Amended and Restated Credit
Agreement dated as of June 25, 1997 (as amended or modified from time to time,
the "Credit Agreement"). The Banks have agreed to make a loan (the "Loan")
pursuant to the Credit Agreement to Owner in the original principal amount of
Three Hundred Million Dollars ($300,000,000) to be secured by a mortgage (the
"Mortgage") on the Premises to Agent for the benefit of the Banks, subject to
the condition that the Lease be subordinated to the lien of the Mortgage. The
documents evidencing and securing the Loan shall be referred to collectively in
this Agreement as the "Loan Documents".
C. Pursuant to that certain Amended and Restated Purchase and Sale
Agreement dated January __, 1998 between Prime Hospitality Corp., a Delaware
corporation, and Owner, and the Lease, Prime Hospitality Corp. has agreed to
cause Tenant, and Tenant has agreed, to subordinate the Lease and fees and other
sums due to it as Tenant under the Lease to the lien and security interests of
Mortgage on certain terms and conditions as set forth herein.
NOW THEREFORE, in consideration of the mutual covenants and promises
set forth in this Agreement and other good and
220
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Tenant and Lender agree as follows:
1. Tenant's Representations. Tenant represents and warrants to
Lender, as of the date hereof, that the following are true and correct:
(a) The document attached hereto as Exhibit B is a true, correct and
complete copy of the Lease, including all modifications and amendments thereto,
if any.
(b) Owner is not in default in the performance of any of its
obligations under the Lease and all payments and fees required to be paid by
Owner to Tenant thereunder have been paid to the date hereof, except as set
forth on Exhibit C attached hereto.
2. Tenant's Agreements. Notwithstanding the terms of the Lease,
Tenant hereby consents to and covenants and agrees as follows:
(a) Notices of Defaults. Tenant shall deliver to Agent at the
address stated above or such other address as Agent shall notify Tenant thereof
in writing, by certified mail, a copy of any notice of default served upon Owner
relating to defaults of Owner with respect to the Lease contemporaneously with
the delivery of such notice to Owner. No notice to Owner shall be effective, no
applicable cure period shall begin to run and neither Agent nor the Banks nor
any person succeeding to their respective interests shall have any obligation to
cure defaults of Owner unless and until Agent has received a copy of such
notice. Before Tenant may exercise any remedies available to Tenant under a
Lease by virtue of Owner's default thereunder, Agent, on behalf of Banks, shall
be permitted (but shall not be obligated) to cure any such default by Owner with
respect to the Lease within thirty (30) days after receipt of such notice. If
such default cannot be cured within the aforesaid thirty (30) days, then Agent
shall have such additional period of time as may be necessary to cure such
default, if within such thirty (30) days, Agent has commenced and is diligently
pursuing the remedies necessary to cure such default (including without
limitation the commencement of foreclosure proceedings if necessary to effect
such a cure), in which event any remedies of Tenant under the Lease, including,
without limitation, such right, if any, as Tenant might otherwise have to
terminate the Lease, shall not be exercised while such remedies are being so
diligently pursued. [In addition, Tenant agrees to promptly deliver to Agent a
copy of any written notice of default received from or given to any franchisor,
licensor, manager, or liquor license company with which Tenant has entered into
an agreement or contract related to the Premises.]
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(b) No Termination of Lease. Tenant shall not terminate the Lease
without Agent's prior written consent. Notwithstanding the foregoing, but
subject to the provisions in the Section 2(a) above, Tenant shall have the right
to terminate the Lease for default by Owner with respect to non-payment of any
fee due thereunder or any costs of operating the Premises in accordance with the
Lease by giving Agent thirty (30) days' prior written notice of such
termination. In the event Agent (or Owner) shall cure such non-payment default
in the aforesaid thirty (30) day period, then any termination notice related to
such cause shall be of no further force or effect.
(c) Subordination of Lease to Lien of Mortgage. The Lease and any
and all liens, rights and interests (whether constitutional, statutory,
contractual, choate or inchoate and including, without limitations all
mechanic's and materialmen's liens under applicable law) owed, claimed or held
by Tenant in and to the Premises and/or the rents, issues, profits and income
therefrom, are and shall be in all respects subordinate and inferior to Agent's
right to payment under the Loan Documents and the liens and security interests
created or to be created for the benefit of Agent for the benefit of the Banks
and securing the repayment of the Loan including, without limitation, those
created under the Mortgage covering, among other things, the Premises, and filed
or to be filed of record in the public records maintained for the recording of
mortgages in the jurisdiction where the Premises is located, and all renewals,
extensions, increases, supplements, amendments, modifications and replacements
thereof, provided, however, that notwithstanding the foregoing subordination,
neither Lender not any successor or assignee thereof shall name or join Tenant
as a party defendant in any foreclosure or otherwise in any suit, action or
proceeding commenced or maintained for the purpose of foreclosure of the
Mortgage or to recover possession of the Premises or any portion thereof unless
Tenant or any person claiming through or under Tenant is deemed a necessary
party under the law of the applicable jurisdiction or by the court, in which
event the Tenant or such party may be so named or joined but such naming or
joinder shall not otherwise be in derogation of the rights of Tenant set forth
in this Agreement.
3. Nondisturbance and Attornment.
(a) If at any time Agent or any entity controlled by the Banks (a
"Successor Owner") shall succeed to the rights of Owner under the Lease or
otherwise obtain possession of the Premises as a result of the exercise of
Agent's rights upon the occurrence of an event of default under the Mortgage or
any other Loan Document prior to the expiration date of the Lease, each
Successor Owner, by and upon acquiring title to the Premises, agrees that: (a)
Tenant shall not be disturbed in the right to
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manage the Premises pursuant to the Lease, (b) the Lease shall not terminate as
result of the Agent's actions and (c) such Successor Owner shall assume the
obligations and liabilities of Owner under the Lease (including without
limitation the obligation to pay Tenant the sums due with respect to the
Premises under the terms of the Lease) which accrue from and after the date of
such succession; in such circumstances, Tenant agrees that Tenant shall attorn
to and recognize the Successor Owner as the "Owner" under the Lease and shall
continue performance, on behalf of and for the benefit of such Successor Owner
of Tenant's obligations under the Lease. The Lease thereafter shall continue in
full force and effect as, or as if it were, a direct Lease with the successor
Owner and Tenant upon and subject to all of the executory terms, conditions and
covenants as are set forth in the Lease.
(b) In the event of such succession or possession by a Successor
Owner, no such successor shall: (w) be liable to Tenant for any act, omission or
default of Owner under the Lease which shall have occurred prior to the
Successor Owner taking title to the Premises; (x) be subject to any offset,
defense, counterclaim, credit, deduction or abatement which shall have accrued
to the Tenant against Owner under such Lease at any time prior to the Successor
Owner taking title to the Premises; (y) be bound to make any payment to Tenant
required under the Lease or otherwise required to be made prior to the Successor
Owner taking title to the Premises; or (z) be bound by any agreement amending,
modifying or terminating the Lease made without Agent's prior written consent;
provided that neither the provisions of this subparagraph (b) or any other
provision of this Agreement shall not be deemed to relieve a Successor Owner of
the obligation to cure Owner defaults relating to payment of real estate taxes,
insurance premiums and ground rents, to the extent set forth in the Lease, which
accrued prior to such Successor Owner obtaining title to the Premises.
(c) If the Lease is rejected or disaffirmed pursuant to any
bankruptcy law or any other law affecting creditors rights generally or
terminated by the actions of a receiver, should any Successor Owner thereafter
become a successor Owner by foreclosure or by deed in lieu thereof, it and
Tenant shall, within thirty (30) days after Lender shall obtain ownership of the
Premises, enter into a new agreement for the management of the Premises on
substantially the same terms and conditions as are contained in the Lease and
applicable provisions of this Agreement for the remainder of the term of the
Lease.
4. Further Assurances. Tenant further agrees to (i) execute such
affidavits and certificates as Agent may reasonably require to further evidence
the agreements herein contained, (ii)
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on request from Agent, furnish Agent with copies of such information as Owner is
entitled to receive under the Lease, and (iii) cooperate with Agent's
representative in any inspection of all or any portion of the Premises.
5. No Amendment Without Agent's Consent. Tenant shall not amend,
modify, supplement or replace the Lease without Agent's prior written consent.
6. No Joint Venture. Tenant shall not be a third party beneficiary
with respect to any of Agent's or the Banks' obligations to Owner set forth in
the Loan Documents. The relationship of the Banks to Owner, is one of a creditor
to a debtor, and Agent and the Banks are not a joint venturer or partner of
Owner or Tenant.
7. Books, Records. On the effective date of termination of the Lease
in accordance with the terms of this Agreement, Tenant shall turn over to any
Successor Owner all books and records relating to the Premises (copies of which
may be retained by Tenant at Tenant's expense), together with such
authorizations and letters of direction addressed to tenants, suppliers,
employees, banks and other parties, lists of all hotel guests, and such other
information relating to the Property, all as such Successor Owner may reasonably
require at Owner's expense unless such termination of the Lease is for cause,
and Tenant shall cooperate with such Successor Owner in the transfer of the
management responsibilities to such Successor Owner or its designee at Owner's
expense unless such termination of the Lease is for cause. A final accounting of
unpaid fees (if any) due to Tenant under the Lease shall be made by Tenant and
reasonably approved by the Successor Owner within 60 days after the effective
date of termination, but such Successor Owner shall not have any liability or
obligation to Tenant for unpaid fees or other amounts payable to Tenant under
the Lease which accrue before such Successor Owner acquires title to the
Premises or for any other matter for which such party would not be liable under
Section 3(b) hereof.
8. Estoppel Certificate. Tenant shall deliver to Agent , within ten
(10) days after written request, a written statement duly acknowledged by an
authorized representative of Tenant certifying (i) whether or not the Lease has
been modified (and, if it has, specifying the date of each modification), (ii)
whether or not the Lease is in full force and effect, (iii) that, to the best
knowledge of Tenant, there exists no default, or condition or event which, with
the giving of notice and/or lapse of time would constitute a default under the
Lease or, if any such default, condition or event exists, specifying to the
knowledge of Tenant the nature and period of the existence thereof and what
action is being taken or is proposed to be taken
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with respect thereto and (iv) that, to the knowledge of Tenant, it has no rights
of offset, defenses or counterclaims under the Lease (or, if it has any,
specifying the same).
9. Irrevocable Directions to Pay; Payment of Rents to Banks. Tenant
hereby acknowledges receipt of that certain Irrevocable Direction to Pay (the
"Direction to Pay") executed by Owner and certain affiliates of Owner. Tenant
hereby agrees that Tenant shall pay all base rent, participating rent and all
other amounts as may become due and payable by Tenant to Owner under and
pursuant to the Lease directly to the Agent pursuant to the Direction to Pay
until such time as the Agent shall notify the Tenant that the Loan has been paid
and performed in full.
10. Consent Waiver. Tenant hereby consents to the collateral
assignment by Owner to Agent of the Lease and Owner's rights, title and
interests thereunder, including without limitation any liens or security
interests held by Owner, pursuant to the Loan Documents as security for the
repayment of the Loan and agrees that Owner shall not be in default under the
Lease by reason of having made such assignments. Tenant acknowledges and agrees
that until the Loan Documents burdening the Premises are released [(a) no
consent by Owner under the Lease shall be effective without the written consent
of Agent] and (b) Agent shall have the right, but not the obligation, to take
any action permitted Owner under the Lease in connection with a default by
Tenant thereunder to the extent permitted by the Loan Documents.
11. Miscellaneous.
(a) Successors and Assigns. This Agreement shall be binding upon,
and inure to the benefit of, Tenant, Agent, and their respective successors and
assigns.
(b) Choice of Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Connecticut.
(c) Entire Agreement. This Agreement is the entire agreement between
the parties in connection with the subordination of the Lease. There are no oral
promises, conditions, representations, understandings, interpretations, or terms
of any kind as conditions or inducements to the execution hereof or in effect
between the parties. No change or addition may be made to this Agreement except
by written agreement executed by both parties hereto.
(d) Notices. All notices, requests, demands and other communications
(collectively, the "Notices") to or upon the parties hereto shall be in writing
and shall be deemed to have
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been duly given or made when received or refused, if personally delivered by
messenger or national overnight courier service, or three (3) business days
after deposit in the United States mail, if sent by registered or certified
mail, postage prepaid, return receipt requested, addressed to the party to which
such Notice is being given at the address set forth below, or at such other
address as any of the parties hereto may hereafter notify the others by notice
given hereunder:
If to Tenant:
Clifton Holding Corp.
c/o Prime Hospitality Corp.
700 Route 46 East
Fairfield, New Jersey 07707-2700
Attention: General Counsel
with a copy to:
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, NY 10022
Attention: Eugene A. Pinover, Esq.
If to Lender:
1717 Main Street, 4th Floor
Commercial Real Estate Department
Dallas, Texas 75201
Attention: Mr. Eddie Hodges, Vice President
with a copy to:
Bracewell & Patterson, L.L.P.
711 Louisiana, Suite 2900
Houston, Texas 77002
Attention: David W. Locascio
(e) This Agreement may be executed in counterparts each of which
shall be an original and all of which together shall constitute one and the same
document.
(f)This Agreement may be recorded in the real property records for
the county in which the Premises are located by any party hereto.
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IN WITNESS WHEREOF, Tenant and Lender have caused this Assignment to
be duly and properly executed under seal as of the date and year first above
written.
TENANT:
CLIFTON HOLDING CORP., a Delaware
corporation
By:
------------------------
Richard Szymanski
Vice President
Attest:
---------------------
Joseph Bernadino
Secretary
AGENT:
BANK ONE, TEXAS, N.A., as Agent
By:
---------------------------
Name:
Title:
Attest:
-----------------------
Name:
Title:
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Consent of Owner
The undersigned, as owner of the Premises (as defined in that
certain Subordination, Non-Disturbance and Attornment Agreement (the
"Agreement") between Clifton Holding Corp., as Tenant and Bank One, Texas, N.A.,
as Agent, attached hereto), hereby consents to the terms, covenants and
conditions set forth in Agreement and agrees to be bound by the provisions
thereof.
AMERICAN GENERAL HOSPITALITY OPERATING
PARTNERSHIP, L.P., a Delaware limited
partnership
By: AGH GP, Inc., its sole general partner
By:
--------------------------
Bruce G. Wiles
Executive Vice President
228
[CONNECTICUT]
STATE OF NEW YORK)
: ss.:
COUNTY OF NEW YORK)
On the ___ day of January, 1998, before me personally appeared
Richard Szymanski, to me known, who, being by me duly sworn did depose and say
that (s)he is the Vice President of CLIFTON HOLDING CORP., the corporation
described in and which executed the above instrument; that (s)he signed his/her
name thereto by authority of the Board of Directors of said corporation.
---------------------
Notary Public,
My commission expires:
-----------
STATE OF NEW YORK)
: ss.:
COUNTY OF NEW YORK)
On the ___ day of January, 1998, before me personally appeared
_____________, to me known, who, being by me duly sworn did depose and say that
(s)he is the ________________ of BANK ONE, TEXAS, N.A., as Agent, the
corporation described in and which executed the above instrument; that (s)he
signed his/her name thereto by authority of the Board of Directors of said
corporation.
---------------------
Notary Public,
My commission expires:
-----------
229
EXHIBIT A
LEGAL DESCRIPTION OF PREMISES
230
EXHIBIT B
COPY OF LEASE
231
EXHIBIT C
EXCLUSIONS TO TENANT REPRESENTATIONS
232
Exhibit O
Form of Accountant Representation Letter
[current date]
Coopers & Lybrand, L.L.P.
1999 Bryan Suite 3000
Dallas, Texas 75201
Gentlemen:
In connection with your audits of the trial balances of the hotel properties
listed on Exhibit A attached hereto (collectively the "Acquisition Hotels") to
be acquired by American General Hospitality Operating Partnership, L.P. and
presented and reported on as a group for the purpose of expressing an opinion as
to whether the Acquisition Hotels financial statements present fairly, in all
material respects, the financial position, results of operations and cash flows
of the Acquisition Hotels in conformity with generally accepted accounting
principles, we confirm, to the best of our knowledge and belief, as of _____,
the following representations made to you during your audits.
Certain representations in this letter are described as being limited to those
matters that are material. Solely for the purpose of preparing this letter, the
term "material," when used in this letter, means any item or group of similar
items involving potential amounts of more than 50% of assets, liabilities,
shareholders' equity, or net income, as appropriate for the item. These
percentages are not intended to represent the materiality threshold for
financial reporting and disclosure purposes. Notwithstanding this, an item is
considered material, regardless of size, if it involves an omission or
misstatement of accounting information that, in the light of surrounding
circumstances, makes it probable that the judgment of a reasonable person
relying on the information would have been changed or influenced by the omission
or misstatement.
1. We are responsible for the fair presentation in the trial balances of the
financial position and results of operations of the Acquisition Hotels in
conformity with generally accepted accounting principles.
2. We have made available to you all financial and accounting records and
related data for the Acquisition Hotels.
3. There are no material transactions that have not been properly recorded
in the accounting records underlying the financial statements for the
Acquisition Hotels.
4. With respect to each of the Acquisition Hotels, there have been no:
a. Irregularities involving management or those employees who have
significant roles in the internal control structure.
233
b. Irregularities involving other employees that could have a material
effect on the financial statements.
c. Violations or possible violations of laws or regulations whose
effects should be considered for disclosure in the financial
statements or as a basis for recording a loss contingency.
We understand the term "irregularities" to mean those matters described
in Statement on Auditing Standards No. 53.
5. There have been no communications from regulatory agencies concerning
noncompliance with or deficiencies in financial reporting practices with
respect to the Acquisition Hotels that could have a material effect on the
trial balances in the event of noncompliance.
6. The Acquisition Hotels have complied with all aspects of debt and other
contractual agreements that would have a material effect on the trial
balances in the event of noncompliance.
7. All liens, encumbrances, and security interests requiring disclosure in
the trial balances for each Acquisition Hotel have been properly
disclosed. Title insurance is carried with respect to each Acquisition
Hotel by the owner thereof.
8. The receivables recorded in the trial balances for each Acquisition Hotel
represent the valid claims against guests for charges arising on or before
the balance sheet date and are not subject to discount. These receivables
have been appropriately reduced to their estimated net realizable value.
9. Provision has been made to reduce excess or obsolete inventories for each
of the Acquisition Hotels to their estimated net realizable value.
10. There are no material liabilities or gain or loss contingencies for any of
the Acquisition Hotels that are required to be accrued or disclosed by
Statement of Financial Accounting Standards No. 5 that have not been
accrued or disclosed. There are no unasserted claims or assessments that
our legal counsel has advised us are probable of assertion and must be
disclosed in accordance with that Statement.
11. Commitments for future purchases for each of the Acquisition Hotels are
for quantities not in excess of anticipated requirements and at prices
that are not anticipated to result in loss. Provision has been made for
any material loss to be sustained in the fulfillment of, or from the
inability to fulfill, any sales commitments with respect to each
Acquisition Hotel.
12. The following have been properly recorded or disclosed in the trial
balances for each of the Acquisition Hotels [if none, include under a
separate item with the introduction "There are no..."]:
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a. Related party transactions and related amounts receivable or
payable, including sales, purchases, loans, transfers, leasing
arrangements, and guarantees.
(We understand the term "related party" to include those entities
described in Statement of Financial Accounting Standards No. 57.)
b. Capital stock repurchase options or agreement or capital stock
reserved for options, warrants, conversions, or other requirements.
c. Arrangements with financial institutions involving compensating
balances, arrangements involving restrictions on cash balances and
lines of credit, or similar arrangements.
d. Financial instruments with off-balance-sheet risk and financial
instruments with concentrations of credit risk.
e. Guarantees, whether written or oral, under which the Hotel is
contingently liable to a bank or other lending institution.
f. Estimates for which both (a) it is at least reasonably possible that
the estimates will change in the near future (i.e., within one year
from the date of the trial balances) due to one or more future
confirming events, and (b) the effect of the change would be
material to the trial balances.
g. Concentrations that make the entity vulnerable to the risk of a
near-term severe impact and for which it is at least reasonably
possible that events that could cause the severe impact will occur
in the near term. For the purpose of this letter, a "severe impact"
is a significant financially disruptive effect on the normal
functioning of the entity.
No events have occurred subsequent to the balance sheet date for each of the
Acquisition Hotels that would require adjustment to, or disclosure in, the trial
balances.
This letter may be relied upon solely by Coopers & Lybrand, L.L.P. in connection
with the acquisition by American General Hospitality Operating Partnership, L.P.
of the Acquisition Hotels. No other party shall be, or be deemed to be, a third
party beneficiary of this letter.
--------------------------------------------
[Name and title of chief executive officer]
--------------------------------------------
[Name and title of chief financial officer]
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Exhibit R
Form of Bill of Sale and Assignment Agreement
THIS BILL OF SALE AND ASSIGNMENT AGREEMENT (the "Bill of Sale and
Assignment") is made as of the ____ day of January, 1998 by and between MAHWAH
HOLDING CORP., a Delaware corporation ("Seller") and AMERICAN GENERAL
HOSPITALITY OPERATING PARTNERSHIP, L.P., a Delaware limited partnership
("Purchaser").
RECITALS:
A. Seller and Purchaser have entered into that certain Amended and
Restated Purchase and Sale Agreement dated January __, 1998 (the "Purchase
Agreement") pursuant to which Seller agreed to sell, assign, transfer and
deliver or to cause to be sold, assigned, transferred and delivered, and
Assignee agreed to assume, with respect to that certain property located in the
Crossroads Corporate Center, Mahwah, New Jersey and more specifically described
on Exhibit A attached hereto (the "Property"), the following (collectively
referred to as the "Assets"):
(i) all supplies, 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 the Property;
(ii) all books, records and files relating to the leasing,
maintenance, management or operation of the Property; and
(iii) all transferable or assignable permits, certificates of
occupancy, operating permits, sign permits, development rights and approvals,
certificates, licenses, warranties and guarantees, telephone exchange numbers
identified with the Property held by Seller and all other transferable
intangible property, miscellaneous rights, benefits and privileges of any kind
or character with respect to the Property held by Seller (other than certain
contract rights), including without limitation all trademarks, trade names,
copyrights, patents or technical processes, owned and used by Seller which
pertain solely to the Property and expressly excluding all trademarks, trade
names, copyrights, patents or technical processes owned or used by Seller with
respect to any other property owned, leased or managed by Seller or with respect
to Seller itself or Seller's affiliates.
B. All capitalized terms in this Bill of Sale and Assignment
Agreement not otherwise defined herein shall have the meaning ascribed to them
in the Purchase Agreement.
236
NOW THEREFORE, in consideration of the mutual covenants and promises
set forth in this Bill of Sale and Assignment and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
Seller and Purchaser agree as follows:
1. Sale, Transfer and Assignment of Assets.
Seller hereby sells, assigns, transfers, conveys and delivers unto
Purchaser, its successors and assigns, all right, title and interest of Seller
in, to and under the Assets from and after the date hereof (the "Effective
Date").
2. Assumption of Assets.
Purchaser hereby accepts the Assets and assumes all covenants,
duties and obligations of Seller, if any, which may arise, directly or
indirectly, in connection with such Assets from and after the Effective Date.
3. Indemnity in favor of Purchaser.
Seller hereby agrees to indemnify, defend and hold Purchaser
harmless from and against any and all claims, demands, suits, causes of action,
judgments, damages, losses, fines, penalties, costs and expenses, including
without limitation, reasonable attorneys' fees and disbursements (collectively,
the "Liabilities") arising from or relating to the Assets prior to the Effective
Date.
4. Indemnity in favor of Seller.
Purchaser hereby agrees to indemnify, defend and hold Seller
harmless from and against any and all Liabilities arising from or relating to
the Assets from and after the Effective Date.
5. Grant of License.
Notwithstanding anything to the contrary contained in this Bill of
Sale and Assignment, Seller hereby grants to Purchaser a non-exclusive license
to use those certain trademarks, trade names, copyrights, patents or technical
processes which or owned or used in connection with the Property and other
properties of Seller or with respect to Seller itself or Seller Subsidiaries
(all as defined in the Purchase Agreement), on the limited terms set forth in
the Purchase Agreement.
6. Miscellaneous.
(a) Successors and Assigns. This Bill of Sale and Assignment shall
be binding upon, and inure to the benefit of, Seller, Purchaser and their
respective successors and assigns.
(b) Choice of Law. This Bill of Sale and Assignment shall be
governed by and construed and enforced in accordance with the laws of the State
of New Jersey.
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237
(c) Entire Agreement. This Bill of Sale and Assignment and the
Purchase Agreement are the entire agreement between the parties in connection
with the sale, transfer, assignment, acceptance and assumption of the Assets.
There are no oral promises, conditions, representations, understandings,
interpretations, or terms of any kind as conditions or inducements to the
execution hereof or in effect between the parties. No change or addition may be
made to this Bill of Sale and Assignment except by written agreement executed by
both parties hereto.
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238
IN WITNESS WHEREOF, Seller and Purchaser have caused this Bill of
Sale and Assignment to be duly and properly executed as of the date and year
first above written.
SELLER:
MAHWAH HOLDING CORP., a Delaware
corporation
By: ________________________
Richard Szymanski
Vice President
PURCHASER:
AMERICAN GENERAL HOSPITALITY OPERATING
PARTNERSHIP, L.P., a Delaware limited
partnership
By: AGH GP, Inc., its sole general partner
By: __________________________
Bruce G. Wiles
Executive Vice President
4
239
Exhibit S
Form of Assignment and Assumption of Space Leases
THIS ASSIGNMENT AND ASSUMPTION OF SPACE LEASES (the "Assignment") is
made as of the ____ day of January, 1998 by and between PRIME HOSPITALITY CORP.,
a Delaware corporation ("Assignor") and MAHWAH HOLDING CORP., a Delaware
corporation ("Assignee").
RECITALS:
A. Pursuant to that certain Amended and Restated Purchase and Sale
Agreement dated January __, 1998 between Assignor and American General
Hospitality Operating Partnership, L.P. (the "Purchase Agreement"), Assignor has
on the date hereof granted, sold, transferred and conveyed all of its right,
title and interest in and to that certain property, more particularly described
on Exhibit A attached hereto (the "Property") to [American General Hospitality
Operating Partnership, L.P. **[or]** ___________] ("Owner").
B. Contemporaneously with the sale of the Property, Assignee is
entering into a Lease with Owner pursuant to which the Property will be leased
to Assignee.
C. At the direction of Owner, Assignor hereby assigns, transfers and
delivers to Assignee all of its right, title and interest under those certain
leases of all or a portion of the Premises which are listed on Exhibit B
attached hereto and made a part hereof (collectively, the "Space Leases").
NOW THEREFORE, in consideration of the mutual covenants and promises
set forth in this Assignment and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, Assignor and Assignee
agree as follows:
1. Assignment of Space Leases.
Assignor hereby sells, assigns, transfers, conveys and delivers unto
Assignee, its successors and assigns, all right, title and interest of Assignor
in, to and under the Space Leases from and after the date hereof (the "Effective
Date").
2. Assumption of Space Leases.
Assignee hereby accepts such assignment and assumes all of
Assignor's right, title and interest in and to the Space Leases and agrees to
perform all covenants, duties and obligations of Assignor pursuant to the Space
Leases which may arise, directly or indirectly, or are applicable to, the period
from and after the Effective Date.
3. Indemnity in favor of Assignee.
240
Assignor hereby agrees to indemnify, defend and hold Assignee
harmless from and against any and all claims, demands, suits, causes of action,
judgments, damages, losses, fines, penalties, costs and expenses, including
without limitation, reasonable attorneys' fees and disbursements (collectively,
the "Liabilities") arising from or relating to the Assignor's performance of, or
failure to perform, the obligations of landlord under the Space Leases prior to
the Effective Date.
4. Indemnity in favor of Assignor.
Assignee hereby agrees to indemnify, defend and hold Assignor
harmless from and against any and all Liabilities arising from or relating to
the Assignee's performance of, or failure to perform, the obligations of
landlord under the Space Leases from and after the Effective Date.
5. Miscellaneous.
(a) Successors and Assigns. This Assignment shall be binding upon,
and inure to the benefit of, Assignor, Assignee and their respective successors
and assigns.
(b) Choice of Law. This Assignment shall be governed by and
construed and enforced in accordance with the laws of the State of [insert
jurisdiction in which Premises is located].
(c) Entire Agreement. This Assignment and the Agreement are the
entire agreement between the parties in connection with the assignment and
assumption of the Space Leases. There are no oral promises, conditions,
representations, understandings, interpretations, or terms of any kind as
conditions or inducements to the execution hereof or in effect between the
parties. No change or addition may be made to this Assignment except by written
agreement executed by both parties hereto.
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241
IN WITNESS WHEREOF, Assignor and Assignee have caused this
Assignment to be duly and properly executed as of the date and year first above
written.
ASSIGNOR:
PRIME HOSPITALITY CORP.
By: __________________________
Name:
Title:
Attest: _____________________
Name:
Title:
ASSIGNEE
By: _______________________
Name:
Title:
Attest: __________________
Name:
Title:
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242
[NEW JERSEY]
STATE OF _________________)
: ss.:
COUNTY OF ________________)
I certify that on _________, 1998 _______________ personally came
before me and this person acknowledged under oath, to my satisfaction, that:
(a) this person signed, sealed and delivered the attached document
as the _________ of PRIME HOSPITALITY CORP., the corporation named in this
document;
(b) this document was signed, and made by the corporation as its
voluntary act and deed by virtue of authority from its Board of Directors.
---------------------
Notary Public
My commission expires: ___________
STATE OF _________________)
: ss.:
COUNTY OF ________________)
I certify that on _________, 1998 _______________ personally came
before me and this person acknowledged under oath, to my satisfaction, that:
(a) this person signed, sealed and delivered the attached document
as the _________ of _______________________, the corporation named in this
document;
(b) this document was signed, and made by the corporation as its
voluntary act and deed by virtue of authority from its Board of Directors.
---------------------
Notary Public
My commission expires: ___________
243
EXHIBIT A
LEGAL DESCRIPTION
244
EXHIBIT B
LIST OF SPACE LEASES
NONE
245
Exhibit T
List Of Leased FF&E For Each Property
RENT OF FURNISHINGS:
Represents payments under long-term leases for furnishings and equipment which
if not leased would be purchased and capitalized. Listed below are the copier
and auto leases included in this category:
Monthly Cost per
Location Vendor Description Term Amount Copy
- -----------------------------------------------------------------------------------------------------------------------------
Copier
Leases:
MS Mahwah Mita Copystar DC3060 Copier, RAD F6 Feeder, 01/09/97-03/09/2000 279.00 0.0135
Crossroads AS 2120 Staple Sorter, Stand
MS Mahwah Mita Copystar DC5590 Copier, AS5120 01/09/97-03/09/2000 628.00 0.0115
Crossroads Stapler/Sorter
MS Mahwah Mita Copystar DC5590 Copier, AS5120 01/09/97-03/09/2000 628.00 0.0115
Crossroads Stapler/Sorter
MS Mahwah Pitney Bowes Mailing Machine - (2) Model 06/30/96-09/30/2000 123.02 N/A
Crossroads #5500/8560
MS Mahwah Hotel Services Inc. Robo Bar Rent 08/01/92-07/31/99 5,200.00 N/A
Crossroads
Vehicle
Leases:
MS Mahwah United States Fleet Super Cargo Van 138" 05/25/96-02/24/00 915.43
Crossroads
-10-
246
Exhibit U
List of Employment Agreements
and Union Contracts
None
247
EXHIBIT V
EXCLUSIONS TO REPRESENTATIONS REGARDING COMPLIANCE WITH
APPLICABLE LAWS
Mahwah Sheraton
State Housing violations to be reinspected
Elevator violation to be reinspected
-2-
248
Exhibit W
Form of Assignment and Assumption of Contracts
THIS ASSIGNMENT AND ASSUMPTION OF CONTRACTS (the "Assignment") is
made as of the ____ day of January, 1998 by and between PRIME HOSPITALITY CORP.,
a Delaware corporation ("Assignor") and CLIFTON HOLDING CORP., a Delaware
corporation ("Assignee").
RECITALS:
A. Pursuant to that certain Amended and Restated Purchase and Sale
Agreement (the "Purchase Agreement") dated January __, 1998 between Assignor and
American General Hospitality Operating Partnership, L.P. ("Owner"), Assignor has
on the date hereof granted, sold, transferred and conveyed all of its right,
title and interest in and to that certain property located at 275 Research
Parkway, Meriden, Connecticut and more particularly described on Exhibit A
attached hereto (the "Property") to Owner.
B. Contemporaneously with the sale of the Property, Assignee is
entering into a Lease with Owner pursuant to which the Property will be leased
to Assignee.
C. At the direction of Owner, Assignor hereby assigns, transfers and
delivers to Assignee all of its right, title and interest in and to all hotel
licensing agreements, service contracts, equipment leases, booking agreements
and other arrangements or agreements to which Assignor is a party affecting the
ownership, repair, maintenance, management, leasing or operation of the
Property, to the extent Assignor's interest therein is assignable (collectively,
the "Contracts").
D. All capitalized terms in this Assignment Agreement not otherwise
defined herein shall have the meaning ascribed to them in the Purchase
Agreement.
NOW THEREFORE, in consideration of the mutual covenants and promises
set forth in this Assignment and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, Assignor and Assignee
agree as follows:
1. Assignment of Contracts.
Assignor hereby sells, assigns, transfers, conveys and delivers unto
Assignee, its successors and assigns, all right, title and interest of Assignor
in, to and under the Contracts from and after the date hereof (the "Effective
Date").
249
2. Assumption of Contracts.
Assignee hereby accepts such assignment and assumes all covenants,
duties and obligations of Assignor, if any, which may arise, directly or
indirectly, in connection with such Contracts from and after the Effective Date.
3. Indemnity in favor of Assignee.
Assignor hereby agrees to indemnify, defend and hold Assignee
harmless from and against any and all claims, demands, suits, causes of action,
judgments, damages, losses, fines, penalties, costs and expenses, including
without limitation, reasonable attorneys' fees and disbursements (collectively,
the "Liabilities") arising from or relating to Assignor's performance of, or
failure to perform, the obligations of the owner/manager under the Contracts
prior to the Effective Date.
4. Indemnity in favor of Assignor.
Assignee hereby agrees to indemnify, defend and hold Assignor
harmless from and against any and all Liabilities arising from or relating to
the Assignee's performance of, or failure to perform, the obligations of the
owner/manager under the Contracts from and after the Effective Date.
5. Miscellaneous.
(a) Successors and Assigns. This Assignment shall be binding upon,
and inure to the benefit of, Assignor, Assignee and their respective successors
and assigns.
(b) Choice of Law. This Assignment shall be governed by and
construed and enforced in accordance with the laws of the State of Connecticut.
(c) Entire Agreement. This Assignment and the Purchase Agreement are
the entire agreement between the parties in connection with the sale, transfer,
assignment, acceptance and assumption of the Contracts. There are no oral
promises, conditions, representations, understandings, interpretations, or terms
of any kind as conditions or inducements to the execution hereof or in effect
between the parties. No change or addition may be made to this Assignment except
by written agreement executed by both parties hereto.
2
250
IN WITNESS WHEREOF, Assignor and Assignee have caused this
Assignment to be duly and properly executed as of the date and year first above
written.
ASSIGNOR:
PRIME HOSPITALITY CORP., a Delaware
corporation
By:
------------------------
Richard Szymanski
Vice President
ASSIGNEE:
CLIFTON HOLDING CORP., a Delaware
corporation
By:
-------------------------
Richard Szymanski
Vice President
3
251
Exhibit A
Legal Description
252
Exhibit A
Legal Description
3
253
Exhibit X
List of Environmental Reports
Prime Hospitality Corp.
Leaseback Properties - Turnpike
- ------------------------------------------------------------------------------------------------
Name Group Appraisal Date Environmental Phase Date
- ------------------------------------------------------------------------------------------------
Mahwah Crossroads Sheraton Cushman & Wakefield 06/25/91
- ------------------------------------------------------------------------------------------------
254
This document is one of several agreements which are substantially
identical in form and substance except as to the description of the property and
purchase price which is outlined as follows:
Property Description Sales Amount
- -------------------- ------------
Las Vegas Crowne Plaza $26,500,000
Las Vegas St. Tropez 26,055,000
Mahwah Ramada 8,182,000
Mahwah Sheraton 24,695,000
Meriden Ramada 9,485,000
Mount Arlington Four Points 4,690,000
Portland Crowne Plaza 24,575,000
Shelton Ramada 14,225,000
------------
$138,407,000
============