EXHIBIT 10.23
AGREEMENT OF PURCHASE AND SALE
THE SELLER PARTIES
Identified herein
"SELLER"
ASHFORD HOSPITALITY LIMITED PARTNERSHIP,
a Delaware limited partnership
"BUYER"
AGREEMENT OF PURCHASE AND SALE
INDEX
ARTICLE I. ASSETS PURCHASED AND SOLD.............................................................................11
SECTION 1.01 PURCHASE AND SALE.....................................................................11
SECTION 1.02 PERSONAL PROPERTY.....................................................................11
SECTION 1.03 OPERATING AGREEMENTS..................................................................11
SECTION 1.04 INTANGIBLE PROPERTY...................................................................12
SECTION 1.05 MANAGEMENT AGREEMENTS.................................................................12
SECTION 1.06 LAND AND HOTELS.......................................................................13
SECTION 1.07 OPERATING LEASES......................................................................13
ARTICLE II. PURCHASE PRICE.......................................................................................13
SECTION 2.01 PRICE.................................................................................13
SECTION 2.02 DEPOSIT...............................................................................13
SECTION 2.03 BALANCE OF PURCHASE PRICE.............................................................14
SECTION 2.04 ESCROW AGENT..........................................................................14
SECTION 2.05 RESERVE ACCOUNTS......................................................................15
SECTION 2.06 PROPERTY IMPROVEMENT PLAN EXPENDITURES................................................15
ARTICLE III. OPERATION OF THE PROPERTY...........................................................................15
SECTION 3.01 OPERATION IN THE ORDINARY COURSE OF BUSINESS..........................................15
ARTICLE IV. PRORATIONS AND ADJUSTMENTS...........................................................................15
SECTION 4.01 CLOSING STATEMENT/OPERATIONS SETTLEMENT...............................................15
SECTION 4.02 TAXES AND RENTS.......................................................................16
SECTION 4.03 UTILITIES.............................................................................16
SECTION 4.04 ASSIGNED OPERATING AGREEMENTS.........................................................17
SECTION 4.05 ROOM REVENUES; RESERVATIONS; TRAY LEDGER; ACCOUNTS RECEIVABLE AND HOUSE FUNDS.........17
1
SECTION 4.06 ACCOUNTS PAYABLE AND EXPENSES.........................................................18
SECTION 4.07 2005 CAPITAL EXPENDITURE AND PROPERTY IMPROVEMENT PLAN EXPENSES.......................19
ARTICLE V. EMPLOYEES.............................................................................................19
SECTION 5.01 SALARIES, ETC.........................................................................19
ARTICLE VI. REPRESENTATIONS AND WARRANTIES OF SELLER.............................................................19
SECTION 6.01 EXISTENCE AND GOOD STANDING...........................................................19
SECTION 6.02 AUTHORITY.............................................................................19
SECTION 6.03 NO CONFLICT...........................................................................19
SECTION 6.04 SELLER IS NOT A "FOREIGN PERSON"......................................................19
SECTION 6.05 NO COMMITMENTS........................................................................19
SECTION 6.06 INSURANCE.............................................................................20
SECTION 6.07 NO SPECIAL TAXES......................................................................20
SECTION 6.08 LITIGATION............................................................................20
SECTION 6.09 CONDEMNATION..........................................................................20
SECTION 6.10 TITLE TO PERSONAL PROPERTY............................................................20
SECTION 6.11 COMPLIANCE WITH APPLICABLE LAW........................................................20
SECTION 6.12 TAXES.................................................................................20
SECTION 6.13 FINANCIAL STATEMENTS..................................................................20
SECTION 6.14 OPERATING AGREEMENTS..................................................................20
SECTION 6.15 MANAGEMENT AGREEMENTS.................................................................20
ARTICLE VII. REPRESENTATIONS AND WARRANTIES OF BUYER.............................................................21
SECTION 7.01 EXISTENCE AND GOOD STANDING...........................................................21
SECTION 7.02 AUTHORITY.............................................................................21
SECTION 7.03 NO CONFLICT...........................................................................21
SECTION 7.04 AS IS.................................................................................21
2
ARTICLE VIII. REMEDIES...........................................................................................23
SECTION 8.01 SELLER'S REMEDIES.....................................................................23
SECTION 8.02 BUYER'S REMEDIES......................................................................23
SECTION 8.03 POST-CLOSING MATTERS..................................................................23
ARTICLE IX. CONDITIONS...........................................................................................24
SECTION 9.01 SELLERS' OBLIGATION...................................................................24
SECTION 9.02 BUYER'S OBLIGATION....................................................................24
ARTICLE X. CONVEYANCE OF ASSETS..................................................................................24
SECTION 10.01 INSTRUMENTS OF CONVEYANCE.............................................................24
SECTION 10.02 PERSONAL PROPERTY.....................................................................25
ARTICLE XI. TITLE TO REAL PROPERTY...............................................................................25
SECTION 11.01 TITLE INSURANCE COMMITMENTS...........................................................25
SECTION 11.02 TITLE DEFECTS.........................................................................26
SECTION 11.03 SURVEY................................................................................26
SECTION 11.04 ACCESS TO PROPERTY; DUE DILIGENCE MATERIALS...........................................26
ARTICLE XII. THE CLOSING.........................................................................................26
SECTION 12.01 TIME AND PLACE.......................................................................26
SECTION 12.02 PAYMENT OF PURCHASE PRICE.............................................................26
SECTION 12.03 CLOSING COSTS.........................................................................27
SECTION 12.04 REVENUE AND EXPENSE PRORATIONS........................................................28
SECTION 12.05 CLOSING DOCUMENTS.....................................................................28
ARTICLE XIII. INSURANCE, CONDEMNATION AND CASUALTY...............................................................28
SECTION 13.01 INSURANCE.............................................................................28
SECTION 13.02 CONDEMNATION AND CASUALTY.............................................................29
ARTICLE XIV. MISCELLANEOUS COVENANTS AND PROVISIONS..............................................................29
3
SECTION 14.01 ASSIGNMENT; SUCCESSORS AND ASSIGNS....................................................29
SECTION 14.02 COUNTERPARTS..........................................................................30
SECTION 14.03 WAIVER................................................................................30
SECTION 14.04 AMENDMENTS............................................................................30
SECTION 14.05 FURTHER AGREEMENTS....................................................................30
SECTION 14.06 ATTORNEYS' FEES.......................................................................30
SECTION 14.07 ENTIRE AGREEMENT......................................................................30
SECTION 14.08 BROKERS AND FINDERS...................................................................30
SECTION 14.09 NOTICES...............................................................................30
SECTION 14.10 SECTION HEADINGS; INTERPRETATION......................................................31
SECTION 14.11 GOVERNING LAW.........................................................................32
SECTION 14.12 DISCLOSURE OF CONFIDENTIAL INFORMATION/ PUBLIC ANNOUNCEMENTS/ COMMUNICATION
WITH GOVERNMENTAL AUTHORITIES/ COMMUNICATION WITH EMPLOYEES...........................32
SECTION 14.13 TIME OF ESSENCE.......................................................................34
EXHIBIT "A" - Legal Description of Land
EXHIBIT "B" - Assignment and Assumption of Intangible Property
EXHIBIT "C" - Assignment and Assumption of Management Agreements
EXHIBIT "D" - Assignment and Assumption of Operating Agreements
EXHIBIT "E" - Intentionally Left Blank
EXHIBIT "F" - Bill of Sale (Personal Property)
EXHIBIT "G" - Schedule of Assumed Management Agreements
EXHIBIT "H" - Schedule of Operating Agreements
EXHIBIT "I" - Schedule of Operating Leases
EXHIBIT "J" - Schedule of Operating Tenants
EXHIBIT "K" - Purchase Price Allocation Schedule
EXHIBIT "L" - Schedule of Sellers
EXHIBIT "M" - Litigation Schedule
EXHIBIT "N" - Form of New Management Agreements
EXHIBIT "O" - Beverage Facilities Agreement
EXHIBIT "P" - Schedule of Title Objections
EXHIBIT "Q" - Schedule of Properties With Non-Assumed Management Agreements
4
AGREEMENT OF PURCHASE AND SALE
AGREEMENT OF PURCHASE AND SALE made and entered into as of April 26,
2005, by and between Sellers and Buyer.
DEFINITIONS
For the purposes of this Agreement, the parties agree that the
following terms shall have the following meanings:
1. Accounts Receivable: All accounts receivable relating to the
Hotels, other than the Tray Ledgers, accruing prior to the
Transfer Time (including, without limitation, receivables and
revenues for food, beverage and telephone use).
2. Agreement: This Agreement of Purchase and Sale by and between
Buyer and Sellers providing for the sale and purchase of the
Property.
3. Assignment and Assumption of Ground Lease: An assignment and
assumption of the Ground Lease, pursuant to which with respect
the Ground Lease (i) the relevant Seller shall assign and
transfer to Buyer all of such Seller's right, title and
interest in and to, and Buyer shall assume all of such
Seller's obligations and liabilities under, the Ground Lease
first accruing from and after Closing, and (ii) such
assignment shall be free and clear of all encumbrances save
and except for the Permitted Exceptions relating to the
Property which is the subject of the Ground Lease. The
Assignment and Assumption of Ground Lease shall be a special
warranty assignment in the form as is customary for commercial
transaction in the jurisdiction in which the relevant Hotel is
located.
4. Assignment and Assumption of Intangible Property: An
assignment and assumption of the Intangible Property in the
form attached hereto as EXHIBIT "B" and by this reference
incorporated herein, pursuant to which each Seller and/or
Operating Tenant shall assign and transfer to Buyer all of
such Seller's and/or Operating Tenant's right, title and
interest in and to, and Buyer or its operating lessee shall
assume all of such Seller's and/or Operating Tenant's
obligations and liabilities under, the Intangible Property
first accruing from and after Closing, to the extent that such
assignments are legally and contractually permitted.
5. Assignment and Assumption of Management Agreements: An
assignment and assumption of the Assumed Management Agreements
and the Owner Agreements relating thereto in the form attached
hereto as EXHIBIT "C" and by this reference incorporated
herein, pursuant to which each Seller and Operating Tenant
shall assign and transfer to Buyer or its operating lessee all
of such Seller's and Operating Tenant's right, title and
interest in and to, and Buyer or its operating lessee shall
assume all of such Operating Tenant's obligations and
liabilities under, the Assumed Management Agreements and Owner
Agreements relating thereto first accruing from and after
Closing.
5
6. Assignment and Assumption of Operating Agreements: An
assignment and assumption of the Operating Agreements in the
form attached hereto as EXHIBIT "D" and by this reference
incorporated herein, pursuant to which each Seller and/or
Operating Tenant shall assign and transfer to Buyer or its
operating lessee all of such Seller's and/or Operating
Tenant's right, title and interest in and to, and Buyer or its
operating lessee shall assume all of such Seller's and/or
Operating Tenant's obligations and liabilities under, the
Operating Agreements first accruing from and after Closing.
7. Assumed Management Agreements: Those certain Management
Agreements between an Operating Tenant and a Manager which are
more particularly described on EXHIBIT "G" attached hereto and
by this reference incorporated herein, pursuant to which the
Manager manages and operates the applicable Hotel subject to
the applicable Assumed Management Agreement. Each of the
Assumed Management Agreements is at times herein referred to
as an Assumed Management Agreement.
8. Bill of Sale (Personal Property): A bill of sale in the form
attached hereto as EXHIBIT "F" and by this reference
incorporated herein, pursuant to which each Seller and/or
Operating Tenant shall transfer and convey to Buyer and/or its
operating lessee the Personal Property owned by such Seller
and/or Operating Tenant in an "AS IS, WHERE IS" condition and
without recourse or express or implied warranty other than
such Seller's and/or Operating Tenant's limited warranty of
title and freedom from encumbrance (other than (i) any liens
or mortgages assumed or entered into by Buyer; or (ii) any
personal property sales tax or other tax) first accruing from
and after the Transfer Time.
9. Broker: Banc of America Securities LLC.
10. Buyer: Ashford Hospitality Limited Partnership, a Delaware
limited partnership or its Permitted Assignee(s).
11. Closing: The consummation of the transactions contemplated by
this Agreement which shall occur on the Closing Date.
12. Closing Date: June 17, 2005 or such earlier date agreed to by
Sellers and Buyer.
13. Closing Statement: As defined in Section 4.01.
14. Data Room Web Site: A secure web site established by Sellers
in which various due diligence materials relating to the
Property have been or will be made available to Buyer.
15. Deeds: The deeds pursuant to which each Seller shall convey to
Buyer all of such Seller's right, title and interest in and to
the Land and Hotel which such Seller owns free and clear of
all encumbrances save and except for the Permitted Exceptions
relating to such Land and Hotels. Such Deeds shall be by
special
6
warranty deeds in the form as is customary for commercial
transactions in the jurisdiction in which each Hotel is
located.
16. Deposit: The sum of Fifteen Million and No/100 Dollars
($15,000,000.00) and any interest accrued thereon.
17. Effective Date: The date on which this Agreement is executed
and accepted by the last of Buyer and all Sellers, such date
to be entered into the first paragraph of this Agreement.
18. Employees: Those individuals employed by Managers at the
Hotels.
19. Escrow Agent: The Talon Group, Orlando Commercial Services
Division, a division of First American Title Insurance
Company, whose address is 111 North Orange Avenue, Suite 1285,
Orlando, Florida 32801, Attention: Michael Moore.
20. Ground Lease: That certain lease agreement by and between
Commonwealth Trust Company, Trustee for Chopin Trust, as
landlord, and RFP Group, Inc., dated November 30, 1987, as
amended and assigned, pursuant to which the Seller of the
Wilmington, Delaware Residence Inn holds a leasehold interest
in and to the Hotel and that portion of the Land located in
Wilmington, Delaware.
21. Hotels: The hotel buildings and all accessory buildings and
structures, if any, and all fixtures placed on or attached
thereto, owned by Sellers and located on the parcels
comprising the Land. Each of the Hotels is at times herein
referred to individually as a Hotel.
22. House Funds: Cash on hand at or for the Hotels, including,
without limitation, petty cash funds and cashiers' banks but
exclusive of Reserve Funds.
23. Intangible Property: All of Sellers' and Operating Tenants'
respective right, title and interest in and to all intangible
property in the possession of Sellers and Operating Tenants
and used in connection with the Land, Hotels or Personal
Property, including without limitation, all licenses and
permits (but specifically excluding any and all licenses and
permits to sell alcohol), approvals, authorizations and other
entitlements, all guaranties and warranties related to the
Hotels and the Personal Property or the construction,
fabrication or maintenance thereof, all plans and
specifications relating to the Improvements and any
landscaping, all tradenames, logos, telephone numbers,
websites and domains (including access to FTP file content)
and signage rights used by Sellers and Operating Tenants in
connection with the operation of the Hotels, and all books,
records, reports, test results, environmental assessments,
surveys and other documents and materials related to Sellers'
and Operating Tenants' operation of the Hotels and Sellers'
and Operating Tenants' maintenance and repair of the Property.
24. Inventory: All inventory located at the Hotels, including
without limitation, all mattresses, pillows, bed linens,
towels and Operating Supplies.
7
25. Knowledge: The actual knowledge of (A) Marcel Verbaas and (B)
the current general managers of each of the Hotels (provided
that the actual knowledge of such current general manager
shall be limited to such general manager's actual knowledge of
matters relating to the Hotel for which such individual serves
as the general manager), without any duty of inquiry or
investigation, and expressly excluding the knowledge of any
other shareholder, partner, member, trustee, beneficiary,
director, officer, manager, employee, agent or representative
of the Sellers or any of their Affiliates. For the purposes of
this definition, the term "actual knowledge" means, with
respect to any person, the conscious awareness of such person
at the time in question, and expressly excludes any
constructive or implied knowledge of such person.
26. Land: Those certain parcels of land more particularly
described in EXHIBIT "A" annexed hereto and incorporated
herein by reference, and all rights and appurtenances thereto.
27. Management Agreements: The Assumed Management Agreements and
the Non-Assumed Management Agreements.
28. Managers: Each "Manager" of a Hotel under and pursuant to the
Management Agreements.
29. Material Operating Agreements: Those Operating Agreements that
(A)(i) require more than thirty (30) days notice to terminate,
or (ii) are terminable upon notice of thirty (30) days or less
and require payment of a termination fee, and (B) either (i)
require aggregate annual payments (including any termination
fee) in excess of Twenty Thousand and No/100 Dollars
($20,000.00) per Operating Agreement for any year during the
term of such Operating Agreement after the Closing, or (ii)
have an unexpired term following the Closing (including any
mandatory renewal terms that are exercisable by the
counterparty thereto) of more than one (1) year.
30. Non-Assumed Management Agreements: Those certain Management
Agreements between an Operating Tenant and a Manager which
relate to the management and operation of the Hotels more
particularly described on EXHIBIT "Q" attached hereto and by
this reference incorporated herein pursuant to which the
applicable Manager manages and operates the applicable Hotel.
31. Operating Agreements: All contracts, agreements, leases
(including, but not limited to, commercial leases and
equipment leases), maintenance agreements and service
contracts, to which Sellers are a party, which are in effect
on the Closing Date and which relate to the ownership and/or
operation of the Hotels, including, without limitation, any
such agreements as are listed in EXHIBIT "H" annexed to this
Agreement and incorporated herein by this reference, but
specifically excluding the Ground Leases, Operating Leases and
the Management Agreements.
8
32. Operating Leases: Those certain lease agreements by and
between each Seller, as "Landlord", and each Operating Tenant,
as amended, and more particularly described on EXHIBIT "I"
attached hereto and by this reference incorporated herein,
pursuant to which each Operating Tenant leases its respective
Hotel.
33. Operations Settlement: A final accounting prepared by Sellers'
and Buyer's accountants in the period between eight o'clock
p.m. (local time) on the day prior to the Closing Date and
eight o'clock a.m. (local time) on the Closing Date, the
results of which shall be incorporated into the closing
statement.
34. Operating Supplies: Any and all operating supplies, whether
consumables or non-consumables, used or consumed in the
ordinary course of business at the Hotels and owned by Sellers
or Operating Tenants, including without limitation, paper
products, soap, cleaning supplies, food, and alcoholic and
non-alcoholic beverages.
35. Operating Tenants: Those entities identified as the Operating
Tenant of each Hotel on EXHIBIT "J" attached hereto which are
affiliates of Sellers. Each such entity is at times herein
referred to as an "Operating Tenant."
36. Other Revenues: All revenues earned by Sellers from the
operation of the Hotels other than Room Revenues, including,
without limitation, revenues from the sale of food, the sale
of alcoholic and nonalcoholic beverages, rental of meeting and
banquet rooms, telephone sales, pay television sales, valet
and parking services, and other similar revenues, together
with any sales tax or other taxes thereon.
37. Owner Agreements: Those certain Owner Agreements between a
Seller, Operating Tenant and a Manager which relate to Hotels
with Assumed Management Agreements. Each of the Owner
Agreements is at times herein referred to as an Owner
Agreement.
38. Permitted Assignee: An entity wholly owned by Buyer which
shall be formed by Buyer following the Effective Date and
prior to the Closing Date for purposes of acquiring all or any
portion of or interest in the Property.
39. Permitted Exceptions: Any and all (i) restrictions, easements,
reservations, covenants and other matters of record
(including, without limitation, all instruments, matters and
items set forth as exceptions to title in the Title
Commitments) and zoning and land use ordinances and laws of
any governmental authority (except for monetary liens,
mortgages and encumbrances which shall be paid by Sellers
prior to Closing and other matters to be cured by Seller
pursuant to this Agreement); (ii) general taxes and
assessments for the year of the Closing and thereafter, and
special taxes and assessments first becoming due and payable
after the Closing Date; (iii) encroachments, overlaps,
boundary line disputes, unrecorded easements or other matters
disclosed or indicated by or shown on the Surveys or their
updates or which would be disclosed or indicated by or shown
on a current, accurate survey or a personal inspection of the
Property; (iv) leases and
9
tenancies in writing for any areas of the Land or Hotels which
are to be assumed by Buyer; (v) disputed liens or encumbrances
for which Sellers shall have provided bond or security
satisfactory to the Title Company; and (vi) liens, mortgages
and encumbrances created by Buyer.
40. Personal Property: All furniture, furnishings, fixtures,
equipment, vehicles, machinery, appliances, dishes, utensils,
cookware, materials and Inventory, located at the Hotels,
owned by any Seller or any Operating Tenant, and used solely
in connection with the operation of the Hotels, but (subject
to the provisions of Section 1.02) specifically excluding any
Personal Property that is leased by any Seller from a
third-party.
41. PIPs: The property improvement or other similar plans for the
Hotels contemplated by the Management Agreements.
42. Property: A collective term which shall mean all of the Land,
Hotels, Intangible Property and Personal Property.
43. Purchase Price: The amount specified in Section 2.01 as the
purchase price for the Property.
44. Purchase Price Allocation Schedule: The schedule attached
hereto as EXHIBIT "K" pursuant to which the Purchase Price is
allocated among each Property for the purposes of calculating
title insurance premiums and other closing costs.
45. Reserve Funds: All funds held in reserve accounts for
furniture, fixtures and equipment, for capital expenditures,
or for other matters relating to the operation of the Hotels,
whether such accounts are held in the name of the Sellers,
Operating Tenants or Managers on behalf of Sellers or
Operating Tenants.
46. Room Revenues: All revenues from the rental of guest rooms of
the Hotels (but excluding any items included in the definition
of Other Revenues), together with any and all sales or other
taxes thereon.
47. Sellers: Shall mean those entities more particularly described
on EXHIBIT "L" attached hereto and by this reference
incorporated herein. Each such entity is at times herein
referred to as a "Seller."
48. Surveys: The surveys of each parcel comprising the Land and
the Hotel located on such parcel obtained by Buyer prior to
execution of this Agreement. Each of the Surveys is at times
herein referred to as a "Survey".
49. Title Company: First American Title Insurance Company through
the Talon Group, Orlando Commercial Services Division, a
division of First American Title Insurance Company, whose
address is 111 North Orange Avenue, Suite 1285, Orlando,
Florida 32801, Attention: Michael Moore.
10
50. Title Insurance Commitments: The commitments of title
insurance issued by Title Company and provided by Sellers to
Buyer with respect to each parcel comprising the Land prior to
the execution of this Agreement. Each of the Title Commitments
is at times herein referred to as a "Title Commitment".
51. Title Policies: The owner's policies of title insurance to be
issued to Buyer pursuant to the terms of the Title Insurance
Commitments and this Agreement. Each of the Title Policies is
at times herein referred to as a "Title Policy".
52. Transfer Time: 12:01 a.m. (local time) on the Closing Date.
53. Tray Ledgers: Any accounts receivable of registered guests who
have not checked out and who are occupying rooms on the
evening prior to, and the morning of, the Closing Date.
AGREEMENT
ARTICLE I.
ASSETS PURCHASED AND SOLD
Section 1.01. Purchase and Sale. Subject to the terms and conditions of
this Agreement and in consideration of the performance of the covenants
contained herein, Buyer agrees to purchase from Sellers and Sellers agree to
sell to Buyer, all of Sellers' right, title and interest in and to the Property.
Section 1.02. Personal Property. Subject to the terms and conditions of
this Agreement, at Closing Sellers agree to assign, transfer and convey to Buyer
all of Sellers' right, title and interest in and to the Personal Property
pursuant to the Bill of Sale (Personal Property). In the event that any Personal
Property is owned by any Operating Tenant, Sellers agree to cause such Operating
Tenant to assign, transfer and convey to Buyer any such Personal Property at
Closing, pursuant to a bill of sale in the same form as the Bill of Sale
(Personal Property).
Section 1.03. Operating Agreements. At Closing, each Seller shall
assign and transfer to Buyer or its operating lessee all of such Seller's right,
title and interest in and to, and Buyer or its operating lessee shall assume all
of such Seller's obligations and liabilities first arising from and after
Closing under, the Operating Agreements pursuant to the Assignment and
Assumption of Operating Agreements. Sellers have, to Sellers' knowledge,
provided Buyers with complete copies of all Material Operating Agreements which
were in effect as of the Effective Date. Seller shall promptly provide Buyer
with complete copies of any Operating Agreements entered into subsequent to the
Effective Date and prior to the Closing Date. Notwithstanding the foregoing,
Sellers reserve the right to provide Buyer with access to all such Operating
Agreements via the Data Room Web Site in lieu of delivering hard copies of such
Operating Agreements to Buyer, provided, however, that Sellers shall give prior
notice to Buyer of any new Operating Agreements entered into subsequent to the
Effective Date that are provided in the Data Room Web Site. Buyer shall execute
any financial statements, applications, assumption agreements and/or other
documents which may be required to effect the assignment and assumption of such
Operating Agreements. Buyer shall pay all out of pocket fees and expenses of
third parties under the Operating Agreements in regard to such assignments or
transfers,
11
including any transfer charges reasonably necessary to obtain the consent of any
such third party. Buyer understands and agrees that it is solely Buyer's
responsibility to obtain any and all Operating Agreements necessary to conduct
business at the Hotels from and after the Closing Date. Buyer's failure to
obtain any Operating Agreements which are necessary or convenient to the
operation of the Hotels shall not affect or delay the performance of Buyer's
obligations under this Agreement. In the event that any Operating Tenant is a
party to and holder of rights under any Operating Agreement, Sellers agree to
cause such Operating Tenant to assign and transfer such rights to Buyer or its
operating lessee at Closing, pursuant to an assignment and assumption agreement
in the same form as the Assignment and Assumption of Operating Agreements. Buyer
shall indemnify, defend and hold Sellers and Operating Tenants harmless from any
claim, liability, cost or expense (including without limitation reasonable
attorneys' fees) arising out of any Operating Agreement from and after the
Transfer Time. Sellers and Operating Tenants shall indemnify, defend and hold
Buyer harmless from any claim, liability, cost or expense (including without
limitation reasonable attorneys' fees and costs) arising out of any Operating
Agreement for the period prior to the Transfer Time.
Section 1.04. Intangible Property. At Closing, each Seller shall assign
and transfer to Buyer or its operating lessee all of such Seller's right, title
and interest in and to, and Buyer or its operating lessee shall assume all of
Seller's obligations and liabilities first arising from and after Closing under,
the Intangible Property, pursuant to the Assignment and Assumption of Intangible
Property. Sellers have, to Sellers' knowledge, provided Buyers with copies of
all documents comprising the Intangible Property which were in Sellers'
possession or control and in effect as of the Effective Date. Seller shall
promptly provide Buyer with copies of any documents comprising Intangible
Property issued to Sellers or entered into by Sellers subsequent to the
Effective Date and prior to the Closing Date. Notwithstanding the foregoing,
Sellers reserve the right to provide Buyer with access to all such documents
comprising Intangible Property via the Data Room Web Site in lieu of delivering
hard copies of such documents comprising Intangible Property to Buyer; provided,
Sellers shall give prior notice to Buyer of any new Intangible Property received
subsequent to the Effective Date that are provided in the Data Room Web Site.
Buyer understands and agrees that it is solely Buyer's responsibility to obtain
any and all Intangible Property necessary to conduct business at the Hotels from
and after the Closing Date. Buyer's failure to obtain any Intangible Property
which are necessary or convenient to the operation of the Hotels shall not
affect or delay the performance of Buyer's obligations under this Agreement. In
the event that any Operating Tenant is the holder of rights under any Intangible
Property, Sellers agree to cause such Operating Tenant to assign and transfer
such rights to Buyer or its operating lessee at Closing, pursuant to an
assignment and assumption agreement in the same form as the Assignment and
Assumption of Intangible Property.
Section 1.05. Management Agreements. (a)Prior to the execution of this
Agreement, Sellers have furnished Buyer with copies of all Assumed Management
Agreements in Sellers' possession or control or made such Assumed Management
Agreements available to Buyer via the Data Room Web Site in lieu of delivering
hard copies of the Assumed Management Agreements to Buyer.
(b) At Closing, Sellers shall cause the Operating Tenants
under the Assumed Management Agreements to assign and transfer to Buyer or its
operating lessee all of such Operating Tenants' right, title and interest in and
to, and Buyer or its operating lessee shall
12
assume all of Operating Tenants' obligations and liabilities under first arising
from and after Closing, under the Assumed Management Agreements, pursuant to the
Assignment and Assumption of Management Agreements.
(c) Seller, at its sole cost and expense, shall cause the
Non-Assumed Management Agreements to be terminated as of the Closing Date. Buyer
shall enter into new management agreements with Managers with respect to those
Hotels which are managed pursuant to Non-Assumed Management Agreements. Such
management agreements will be in the form attached hereto as EXHIBIT "N".
(d) Seller shall use reasonable efforts to secure from
Managers written confirmation that as a result of the contemplated sale of the
Property, no additional change in ownership PIPs will be required other than the
scope of work outlined in the current PIPs and capital expenditure plans
previously provided to Buyer by Sellers. Subject to Section 2.06 of this
Agreement, the parties hereto agree that in no event, however, shall the
Purchase Price be subject to adjustment based on the level or extent of PIPs or
capital expenditures.
Section 1.06. Land and Hotels. At Closing, Sellers shall convey title
to the Land and Hotels owned by Sellers to Buyer pursuant to the Deeds and shall
convey its leasehold interest in the Land and Hotel which the applicable Seller
occupies pursuant to the Ground Lease by the Assignment and Assumption of Ground
Lease.
Section 1.07. Operating Leases. At or prior to Closing, Sellers, at
Sellers' sole cost and expense, shall terminate the Operating Leases.
ARTICLE II.
PURCHASE PRICE
Section 2.01. Price. The Purchase Price for the Property shall be Four
Hundred Sixty-Five Million and No/100 Dollars ($465,000,000.00), all cash,
subject to closing adjustments as provided in this Agreement.
Section 2.02. Deposit. Provided that the Deposit has not already been
lodged with Escrow Agent prior to execution of this Agreement, upon execution of
this Agreement by Buyer, the Deposit, in the form of a cashier's or certified
check or wire transfer, shall be immediately deposited with the Escrow Agent by
Buyer. Such amount to be deposited by the Escrow Agent into an interest-bearing,
fully-insured account. In the event that the Deposit has not been lodged with
Escrow Agent within one (1) business day following the Effective Date, this
agreement shall immediately terminate. The Deposit shall be applied to payment
of the Purchase Price at Closing or shall otherwise be paid as herein provided.
Buyer acknowledges and agrees the Deposit is "At Risk" and is not refundable to
Buyer except in the event of a default by Sellers under this Agreement or as
otherwise expressly provided in this Agreement. All interest earned in said
account of the Escrow Agent shall be reported by the Escrow Agent to the
Internal Revenue Service as income to Buyer (and Buyer agrees to execute a W-9
form and any other federal tax documents necessary in connection therewith).
13
Section 2.03. Balance of Purchase Price. (a) The balance of the
Purchase Price for the Property (subject to the adjustments and/or prorations
provided in this Agreement) shall be paid by Buyer by wire transfer of good
funds to Escrow Agent at Closing as set forth in Section 12.02.
Section 2.04. Escrow Agent.
(a) The Escrow Agent in its capacity as holder of the Deposit
in escrow joins in the execution of this Agreement for the limited purpose of
acknowledging and agreeing to the provisions of this Section 2.04.
(b) The duties of the Escrow Agent shall be as follows:
(1) The Escrow Agent shall hold and disburse the Deposit
in accordance with the terms and provisions of this Agreement.
(2) If this Agreement shall be terminated by the mutual
written agreement of Sellers and Buyer, or if the Escrow Agent shall be unable
to determine at any time to whom the Deposit should be paid, or if a dispute
shall develop between Sellers and Buyer concerning to whom the Deposit should be
paid and delivered, then and in any such event, the Escrow Agent shall pay and
deliver such in accordance with the joint written instructions of Sellers and
Buyer. In the event that such written instructions shall not be received by the
Escrow Agent within ten (10) days after the Escrow Agent has served a written
request for instructions upon Sellers and Buyer, then the Escrow Agent shall
have the right to pay and deliver the Deposit into an appropriate court of
proper jurisdiction in the state of Florida, and interplead Sellers and Buyer in
respect thereof, and thereupon the Escrow Agent shall be discharged of any
obligations in connection with this Agreement.
(c) If costs or expenses are incurred by the Escrow Agent in
its capacity as holder of the Deposit in escrow because of litigation or a
dispute between Sellers and Buyer arising out of the holding of the Deposit in
escrow, Sellers and Buyer shall each pay the Escrow Agent one-half of such
reasonable costs and expenses not to exceed a total of $10,000.00. Except for
such costs or expenses, no fee or charge shall be due and payable to the Escrow
Agent for its services as escrow holder only.
(d) By joining herein, the Escrow Agent undertakes only to
perform the duties and obligations imposed upon the Escrow Agent under the terms
of this Agreement and expressly does not undertake to perform any of the other
covenants, terms and provisions incumbent upon Sellers and Buyer hereunder.
(e) Buyer and Sellers hereby agree and acknowledge that the
Escrow Agent assumes no liability in connection herewith except for its
negligence or willful misconduct; that the Escrow Agent shall never be
responsible for the validity, correctness or genuineness of any document or
notice referred to under this Agreement; and that in the event of any dispute
under this Agreement, the Escrow Agent may seek advice from its own legal
counsel and shall be fully protected in any action taken by it in good faith in
accordance with the good faith opinion of its legal counsel.
14
Section 2.05. Reserve Accounts. (a) Except as set forth in Section 4.07
hereof, Reserve Funds shall be retained by Sellers at Closing. In the event that
any Reserve Funds are held by a Manager, Buyer shall at Closing pay to such
Manager an amount equal to the amount of such Reserve Funds held by such Manager
and the parties hereto shall cause such Manager to return such Reserve Funds to
Seller at Closing.
Section 2.06. Property Improvement Plan Expenditures. (a) Sellers have
heretofore in the calendar year 2005, and will continue to incur expenditures
with respect to the portion of the Property comprising the Residence Inn Ft.
Worth River Plaza Hotel, Residence Inn Salt Lake City Cottonwood Hotel,
Residence Inn Tyler Hotel and/or Residence Inn Palm Desert Hotel, pursuant to
PIPs and/or existing capital expenditure plans prior to Closing. Subject to the
final sentence of this Section 2.06, Buyer shall reimburse Sellers for such
expenditures at Closing. Prior to the Effective Date, the Sellers have delivered
the current budget for the expenditures contemplated by this Section 2.06, all
renovation or capital improvement contracts entered into by Sellers with respect
to such expenditures, and written evidence verifying all expenditures made by
Sellers prior to the Effective Date which are subject to reimbursement. Sellers
agree to not change the scope of the work contemplated by such budgets and to
obtain Buyer's written consent before undertaking any expenditures in excess of
those contemplated by the budgets for any of the aforementioned Hotels or that
portion of the Land associated therewith.
ARTICLE III.
OPERATION OF THE PROPERTY
Section 3.01. Operation in the Ordinary Course of Business. Sellers
shall not (and Seller shall cause Operating Tenants and Manager to not), without
the prior written consent of Buyer, except in the ordinary course of business,
(i) enter into any leases or tenancies with respect to the Property, (ii) enter
into any service or maintenance agreements which are not terminable upon thirty
(30) days notice, (iii) engage or retain new or additional employees, entities
or independent contractors whose compensation may be assumable by Buyer (or
reimbursable by Buyer to Manager), (iv) modify or release any warranties or
guaranties with respect to the Property, or (v) grant any encumbrances on the
Property or contract for any construction or service for the Property which may
impose any mechanics or materialmen's lien on the Property beyond Closing.
Sellers shall and shall cause Operating Tenants to, subject to the terms of the
Management Agreements, use reasonable efforts to cause the Managers to maintain
inventory levels consistent with Managers' prior practices and continue to
operate the Property in the ordinary course of business.
ARTICLE IV.
PRORATIONS AND ADJUSTMENTS
Section 4.01. Closing Statement/Operations Settlement.
(a) Closing Statement. Taxes, rents, revenues and expenses
pertaining to assigned Operating Agreements, prepaid utility charges, and
material deviations, if any, in the amount of the Personal Property at the
Hotels occurring in the period between the first and second inventories provided
for in Section 10.02 shall be allocated and prorated between Buyer and Sellers
pursuant to a written Closing Statement to be prepared by Sellers and executed
by
15
Buyer and Sellers at the Closing. Any additional amounts owed by Buyer or
credits due to Buyer shall be reflected in such statement and the Purchase Price
shall be adjusted accordingly.
(b) Operations Settlement. Room Revenues for the night prior
to the Closing Date (e.g., if the Closing Date is June 15, 2005, Room Revenues
for the period of time commencing on the evening of June 14, 2005 and ending on
the morning of June 15, 2005), prepaid deposits for confirmed reservations,
hotel facilities and services for periods after the Transfer Time; and the
purchase price for the Tray Ledgers, House Funds and Accounts Receivable shall
be determined by the Operations Settlement. As the Closing Date's financial
results are necessary for completion of the Operations Settlement, Buyer agrees
to the Hotel's employees' completion of posting of financial activity, all
schedules, credit card billings, and all other activities normally associated
with the daily activity of the Hotels. Any amounts determined to be due and
owing to Sellers by Buyer or to Buyer by Sellers pursuant to the Operations
Settlement shall be incorporated into the Closing Statements but to the extent
that any of the foregoing information is unavailable or is found to be
inaccurate, the same shall be handled as a post-closing adjustment, the
obligations of which shall survive the Closing.
Section 4.02. Taxes and Rents. At Closing, all general real estate and
personal property taxes for the year of the Closing and special taxes and
assessments shall be prorated as of the Closing Date (with Buyer to pay taxes
attributed to the Closing Date and all periods thereafter) using the latest
available tax rates and assessments and taking advantage of any discounts or
rebates available for early payment and/or payment before delinquency. Except as
set forth herein, the parties shall have no obligation to readjust such
prorations after the Closing; provided, however, if the proration is based upon
the previous tax year's bills, the parties shall make an appropriate adjustment
upon receipt of the current tax year's bills. Sellers shall pay general real
estate and personal property taxes for all years prior to the year of the
Closing and all special taxes or assessments then due and payable as of the
Closing Date, except that, if any assessment against the Property, or any
portion thereof, is payable in installments, Buyer shall pay any and all of such
installments which may be paid after the Closing Date, and any installment
relating to the year of Closing shall be prorated as of the Closing Date (with
Buyer to pay all portions of such installment attributed to the Closing Date and
all periods thereafter). Buyer acknowledges that Sellers are currently pursuing
tax appeals with respect to certain of the Hotels. Buyer agrees to continue any
such appeals that relate to current tax years at Buyer's expense; provided,
however, that such expense shall be paid out of the proceeds of the tax refund
resulting from such appeal, if any, prior to the proration of such refund as
contemplated hereby. Seller shall be entitled to continue all such appeals that
relate to previous tax years. Any tax refunds or rebates occurring or accruing
with respect to any and all time periods before the Closing Date shall remain
the property of Seller, and, if Buyer collects or receives same, Buyer shall
promptly remit same to Seller. The provisions of the immediately preceding
sentence shall survive the Closing. All taxes or assessments which become due
and payable on or after the Closing Date shall be paid by Buyer.
Section 4.03. Utilities. Prior to the Closing, Sellers shall notify all
utility companies servicing their respective portions of the Property of the
anticipated change in ownership of the Property and request that all billings
after the Transfer Time be made to Buyer at the addresses of the Hotel located
on their portion of the Property. Utility meters will be read, to the extent
that the utility company will do so, during the daylight hours on the Closing
Date, with charges
16
to that time paid by Seller and charges thereafter paid by Buyer. Prepaid
utility charges shall be adjusted on the Closing Statement and paid for at
Closing. Charges for utilities which are unmetered, or the meters for which have
not been read on the Closing Date, will be prorated between Buyer and Seller as
of the Transfer Time based upon utility billings received after Closing. Seller
or Buyer, as appropriate, shall, upon receipt, submit a copy of the utility
billings for any such charges to the other party and such party shall pay its
pro rata share of such charges to the party requesting payment within seven (7)
days from the date of any such request. This obligation shall survive Closing.
Buyer shall be responsible for paying, before the Closing, all deposits
required by utility companies in order to continue service at the Hotels for
periods after the Transfer Time and shall take any other action and make any
other payments required to assure uninterrupted availability of utilities at the
Hotels and the Land for all periods after Closing. Following Closing, all
utility deposits made by any Seller shall be refunded directly to Seller by the
utility company holding same. This obligation shall survive Closing.
Section 4.04. Assigned Operating Agreements.
(a) All income and expenses with respect to the assigned Operating
Agreements will be prorated as of the Closing Date (with income and expenses for
the Closing Date and thereafter to be allocated to Buyer). There shall be added
to the amount due to Sellers at Closing, on the Closing Statement, the amount of
any amounts paid by Sellers under any Operating Agreements attributable to
periods including and after the Closing Date, and there shall be deducted from
the amount due Sellers at Closing, on the Closing Statement, any such amounts
paid to and collected by Sellers under any Operating Agreements attributable to
periods including and after the Closing Date.
(b) Sellers shall be responsible for all management fees and other
amounts payable or reimbursable under the Assumed Management Agreements that
accrue for the period prior to the Closing Date, including, without limitation,
any accrued incentive fees under the Assumed Management Agreements. Buyer shall
be responsible for all management fees and other amounts payable or reimbursable
under the Assumed Management Agreements that accrue for the period from and
after the Closing Date, including, without limitation, any incentive fees that
accrue to the period from and after the Closing Date under the Assumed
Management Agreements.
Section 4.05. Room Revenues; Reservations; Tray Ledger; Accounts
Receivable and House Funds.
(a) Room Revenues for the night prior to the Closing Date
(e.g., if the Closing Date is June 15, 2005, Room Revenues for the period of
time commencing on the evening of June 14, 2005 and ending on the morning of
June 15, 2005) shall be divided equally between Buyer and Sellers pursuant to
the Operations Settlement. Other Revenues for the night prior to the Closing
Date shall belong solely to Seller.
(b) Buyer will honor, for its account, the terms and rates of
all pre-closing reservations confirmed by Sellers or Managers for dates after
the Closing Date. Buyer
17
authorizes Sellers and Managers to continue to accept reservations for periods
after the Closing in the ordinary course of Sellers' or Managers' business.
Buyer recognizes that such reservations may include discounts or other benefits
provided in the ordinary course of business, including, without limitation,
benefits under any awards programs, sports team, corporate, government or group
discounts, weekend discounts or requirements that ancillary food, beverage or
other benefits be delivered by Buyer to the guest(s) holding such reservations.
Buyer agrees to honor all such reservations in accordance with their terms. Any
pre-closing deposits made to Sellers with respect to confirmed reservations for
dates after the Closing Date will be credited to Buyer at the Operations
Settlement. Any post-closing deposits received by Sellers with respect to
confirmed reservations for dates after the Closing Date will be forwarded to
Buyer upon receipt.
Buyer will honor, for its account, all of Sellers room allocation
agreements and banquet facility and service agreements entered into in the
ordinary course of business which have been granted to groups, persons or other
customers for periods after the Closing Date at the rates and terms provided in
such agreements.
Buyer agrees that Sellers cannot make and have made no representation
or warranty that any party holding a room reservation or agreement for Hotel
facilities or services will utilize such reservation or honor such agreement.
Buyer, by the execution hereof, assumes the risk of non-utilization of
reservations and nonperformance of such agreements.
The provisions of this Section 4.05(b), including, without limitation,
the assumptions of risk and indemnities by Buyer set forth above, shall survive
the Closing.
(c) Buyer shall purchase the Tray Ledgers from Sellers
pursuant to the Operations Settlement, with deduction for the portion of the
Tray Ledger consisting of one-half of the Room Revenues for the night prior to
the Closing Date.
(d) Buyer shall purchase the House Funds, exclusive of any
non-cash items, from Sellers pursuant to the Operations Settlement.
(e) At Closing, Sellers shall receive a credit for all
Accounts Receivable in an amount equal to: (i) one hundred percent (100%) of all
such Accounts Receivable which are unpaid for not more than ninety (90) days;
plus (ii) ninety percent (90%) of all such Accounts Receivable which are unpaid
for more than ninety (90) days, but not more than one hundred twenty (120) days;
plus (iii) eighty-five percent (85%) of all such Accounts Receivable which are
unpaid for more than one hundred twenty (120) days, but not more than one
hundred fifty (150) days; plus (iv) eighty percent (80%) of all such Accounts
Receivable which are unpaid for more than one hundred fifty (150) days.
Section 4.06. Accounts Payable and Expenses. All accounts payable and
expenses related to operations of the Property which have accrued before the
Transfer Time shall be paid by Sellers. Buyer understands and agrees that
Sellers may postpone and/or contest payment of any account payable or expense
which is the subject of a bona fide dispute, or for which a bill is not rendered
until after Closing. All accounts payable and expenses accruing after the
Transfer Time will be Buyer's responsibility.
18
Section 4.07. 2005 Capital Expenditure and Property Improvement Plan
Expenses. Sellers agree that in the event Sellers do not expend Three Million
Five Hundred Thousand and No/100 Dollars ($3,500,000.00) on capital expenditures
(including PIPs) on Hotels (other than the PIPs contemplated in section 2.06
hereof) between January 1, 2005 and the Closing Date, the sum representing the
difference between Three Million Five Hundred Thousand and No/100 Dollars
($3,500,000.00) and the capital expenditures made by Sellers shall remain in
reserve accounts at Closing for the benefit of, and be the property of, Buyer.
Buyer shall not be obligated to reimburse Sellers for, or to pay for, such sums.
ARTICLE V.
EMPLOYEES
Section 5.01. Salaries, etc. Sellers shall not be responsible for the
payment of the salaries, vacation pay, wages or benefits of any employees of the
Hotels accruing after the Transfer Time.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
Section 6.01. Existence and Good Standing. Sellers are duly organized,
validly existing and in good standing under the laws of the state of their
respective organization.
Section 6.02. Authority. Sellers have, and on the Closing Date will
have, all requisite power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated herein pursuant to the terms and
conditions of this Agreement.
Section 6.03. No Conflict. The execution and delivery of this Agreement
and the consummation of the transactions contemplated herein will not conflict
with, breach, result in a default under, or violate any commitment, document or
instrument to which Seller is a party or by which it is bound.
Section 6.04. Seller Is Not a "Foreign Person". None of the Sellers is
a "foreign person" within the meaning of Section 1445 of the Internal Revenue
Code, as amended (i.e., none of Sellers is a foreign corporation, foreign
partnership, foreign trust, foreign estate or foreign person as those terms are
defined in the Internal Revenue Code and regulations promulgated thereunder).
Section 6.05. No Commitments. Except as reflected by the Permitted
Exceptions or due diligence materials delivered or otherwise made available by
Sellers to Buyer, no commitments have been made by Sellers to any governmental
authority, utility company, school board, church or other religious body, or any
homeowners' association or any other organization, group or individual, relating
to the Property which would impose an obligation upon Buyer to make any
contribution or dedication of money or land or to construct, install or maintain
any improvements of a public or private nature on or off the Property.
19
Section 6.06. Insurance. To Sellers' Knowledge, all insurance policies
held with respect to the Property by Seller or Manager are valid and in full
force and effect and Sellers have and, to Sellers' Knowledge, Manager has
complied with all requirements or recommendations of the insurance carriers of
the insurance policies.
Section 6.07. No Special Taxes. Except as disclosed by the Permitted
Exceptions or due diligence materials delivered or otherwise made available by
Seller, Seller has no Knowledge of, nor has it received any notice of, any
special taxes or assessments relating to the Property or any part thereof or any
planned public improvements that may result in a special tax or assessment
against the Property.
Section 6.08. Litigation. Except as set forth on the schedule attached
as EXHIBIT "M" hereto, there is no pending and Sellers have no Knowledge of any
threatened litigation with respect to the Property in which any Seller is named
a party which has not been resolved, settled or dismissed.
Section 6.09. Condemnation. Sellers have not received any written
notice of any pending condemnation proceeding or other proceeding in eminent
domain, and to the Sellers' Knowledge, no such condemnation proceeding or
eminent domain proceeding is threatened affecting the Property or any portion
thereof. Seller has no Knowledge of any change or proposed change in the route,
grade or width of, or otherwise affecting, any street, creek or road adjacent to
or serving the Land.
Section 6.10. Title to Personal Property. Except as set forth in
writing by any Seller, the Sellers have good and valid title to all tangible
Personal Property, which shall be free and clear of all liens and encumbrances
as of the Closing.
Section 6.11. Compliance with Applicable Law. Sellers have not received
any written notice of a violation of any applicable law with respect to the
Property which have not been cured or dismissed.
Section 6.12. Taxes. All property, sales use and occupancy taxes which
accrue prior to the Closing Date will be paid in full or prorated at Closing.
Section 6.13. Financial Statements. To Sellers' Knowledge, the
financial statements delivered by Sellers to Buyer are complete, accurate and
fairly represent the historical results of the operations and financial
condition of the Hotels.
Section 6.14. Operating Agreements. Sellers is in compliance in all
material respects with the Operating Agreements. To Seller's Knowledge, the
schedule of Operating Agreements attached hereto as EXHIBIT "H" includes the
Material Operating Agreements.
Section 6.15. Management Agreements. There are no Events of Default
under any Management Agreement (as defined therein), Sellers have received no
written notice of an Event of Default under any Management Agreement (as defined
therein), and, to Sellers' Knowledge, all sums due and payable thereunder as of
Closing have been paid. To Seller's Knowledge, the Assumed Management Agreements
delivered by sellers to Buyer are true and correct copies of the Assumed
Management Agreements.
20
The representations and warranties in this Article 6 shall survive the
Closing for a period of one (1) year following the Closing Date; provided,
however, that the representation contained in Section 6.13 above shall survive
the Closing for a period of six (6) months following the Closing Date.
ARTICLE VII.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
Section 7.01. Existence and Good Standing. Buyer is a corporation, and
is duly organized, validly existing and in good standing under the laws of the
state of its organization.
Section 7.02. Authority. Buyer has, and on the Closing Date will have,
all requisite power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated herein pursuant to the terms and
conditions of this Agreement. The Board of Directors of Buyer have approved this
Agreement and certified resolutions evidencing such approval will be delivered
to Sellers at Closing.
Section 7.03. No Conflict. To Buyer's knowledge, the execution and
delivery of this Agreement and the consummation of the transactions contemplated
herein will not conflict with, breach, result in a default under, or violate any
commitment, document or instrument to which Buyer is a party or by which it is
bound.
Section 7.04. AS IS. BUYER EXPRESSLY ACKNOWLEDGES AND AGREES THAT THE
PROPERTY IS BEING SOLD TO BUYER AND THAT BUYER AGREES TO PURCHASE AND ACCEPT THE
PROPERTY, AND EACH AND EVERY PART AND COMPONENT THEREOF, IN AN "AS IS, WHERE IS"
CONDITION AS OF THE CLOSING WITH NO REPRESENTATIONS OR WARRANTIES FROM SELLERS,
EITHER EXPRESS OR IMPLIED EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT. BUYER
AGREES THAT BUYER IS NOT RELYING UPON, AND HAS NOT RECEIVED OR BEEN GIVEN, ANY
REPRESENTATIONS (EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT), STATEMENTS OR
WARRANTIES (ORAL OR WRITTEN, IMPLIED OR EXPRESS) OF OR BY ANY OFFICER, EMPLOYEE,
AGENT OR REPRESENTATIVE OF SELLER, OR ANY SALESPERSON OR BROKER (IF ANY)
INVOLVED IN THIS TRANSACTION, AS TO THE PROPERTY OR ANY PART OR COMPONENT
THEREOF IN ANY RESPECT, INCLUDING, BUT NOT LIMITED TO, ANY REPRESENTATIONS,
STATEMENTS OR WARRANTIES AS TO THE PHYSICAL OR ENVIRONMENTAL CONDITION OF THE
PROPERTY, THE FITNESS OF THE PROPERTY FOR USE AS A HOTEL, THE FINANCIAL
PERFORMANCE OR POTENTIAL OF THE PROPERTY, THE COMPLIANCE OF THE PROPERTY WITH
APPLICABLE BUILDING, ZONING, SUBDIVISION, ENVIRONMENTAL, LIFE SAFETY OR LAND USE
LAWS, CODES, ORDINANCES, RULES, ORDERS, OR REGULATIONS, OR THE STATE OF REPAIR
OF THE PROPERTY, AND BUYER, FOR ITSELF AND ITS HEIRS, LEGAL REPRESENTATIVES,
SUCCESSORS AND ASSIGNS, WAIVES ANY RIGHT TO ASSERT ANY CLAIM OR DEMAND AGAINST
SELLERS AT LAW OR IN EQUITY RELATING TO ANY SUCH MATTER, WHETHER LATENT OR
PATENT, DISCLOSED OR
21
UNDISCLOSED, KNOWN OR UNKNOWN, NOW EXISTING OR HEREAFTER ARISING. EXCEPT FOR ANY
TITLE OR SURVEY MATTERS CREATED SOLELY BY SELLER IN VIOLATION OF THIS AGREEMENT,
BUYER AGREES THAT IT SHALL HAVE NO RECOURSE WHATSOEVER AGAINST SELLER, AT LAW OR
IN EQUITY, SHOULD THE SURVEY OR THE TITLE INSURANCE COMMITMENTS OR THE TITLE
POLICIES FAIL TO DISCLOSE ANY MATTER AFFECTING THE PROPERTY OR REVEAL ANY SUCH
MATTER IN AN INACCURATE, MISLEADING OR INCOMPLETE FASHION OR OTHERWISE BE IN
ERROR. BUYER ACKNOWLEDGES THAT IT SHALL REVIEW THE SURVEY AND THE TITLE
INSURANCE COMMITMENTS (AS SAME MAY BE MARKED AT CLOSING) AND TO DISCUSS THEIR
CONTENTS WITH THE INDEPENDENT CONTRACTORS WHO PREPARED OR ISSUED EACH OF THEM.
BUYER ACCORDINGLY AGREES TO LOOK SOLELY TO THE PREPARER OF THE SURVEY AND THE
ISSUER OF THE TITLE INSURANCE COMMITMENTS AND TITLE POLICIES FOR ANY CLAIM
ARISING OUT OF OR IN CONNECTION WITH SUCH INSTRUMENTS AND HEREBY RELEASES
SELLERS FROM ANY SUCH CLAIM (EXCEPT FOR ANY CLAIM THAT SELLERS AGREE TO CURE AS
SET FORTH IN THIS AGREEMENT).
Buyer recognizes that the Hotels and Personal Property are not new and
that there exists a possibility that the Property is not in compliance with the
requirements which would be imposed on a newly constructed hotel by presently
effective federal, state and local building, plumbing, electrical, fire, health,
handicap, environmental and life safety laws, codes, ordinances, rules, orders
and/or regulations (collectively, the "building codes"). The Hotels and other
improvements on the Land may contain substances or materials no longer permitted
to be used in newly constructed buildings including, without limitation,
asbestos or other insulation materials, lead or other paints, wiring,
electrical, or plumbing materials and may not contain other materials or
equipment required to be installed in a newly constructed building. Buyer has
had the opportunity, as set forth in Section 11.04, to conduct such
investigations and inspections of the Property as Buyer deemed necessary with
respect to all such matters. Buyer agrees to accept and shall the Property in an
"AS-IS, WHERE IS" condition and at Closing to accept and assume the risk of
noncompliance of the Property with all such building codes. Except with respect
to those representations set forth in Section 6 hereof, Buyer waives any right
to excuse (except as set forth in Section 11.04 below) or delay performance of
its obligations under this Agreement or to assert any claim against Sellers
(before or after Closing) arising out of any failure of the Property to comply
with any such building codes.
Except with respect to those representations set forth in Section 6
hereof, it is specifically understood and agreed by Sellers and Buyer that
Sellers do not make, and shall not be deemed to have made, any representation,
warranty or covenant with respect to (i) any Environmental Laws that may affect
any of the Property or (ii) the presence or absence of any Hazardous or Toxic
Substances in, on, above, under or about any of the Property. As used in this
Section 7.04, (A) the term "Environmental Laws" means all federal, State and
local laws, codes, ordinances, rules, orders and regulations now or hereafter in
effect relating to pollution or the protection of the environment, including
without limitation, all laws, codes, ordinances, rules, orders and regulations
governing the generation, use, collection, treatment, storage, transportation,
recovery, removal, discharge, spill or disposal of any or all Hazardous or Toxic
Substances, and (B) the term "Hazardous Substances" or "Toxic Substances" means
materials and substances defined as "hazardous substances", "hazardous wastes",
"toxic substances" or "toxic wastes" in (I) the
22
Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. Sections 9601-9675, as amended by the Superfund Amendments and
Reauthorization Act of 1988, and any further amendments thereto and rules,
orders and regulations thereunder; (II) the Resource Conservation and Recovery
Act of 1976, 42 U.S.C. Sections 6901-6992, as amended by the Hazardous and Solid
Waste Amendments of 1984, and any further amendments thereto and rules, orders
and regulations thereunder; or (III) any other Environmental Laws.
It is understood and agreed by Sellers and Buyer that in the event of
any conflict between the terms and provisions of this Section 7.04 and any other
term or provision to this Agreement, the relevant term or provision of this
Section 7.04 shall control and govern. The provisions of this Section 7.04 shall
survive Closing.
ARTICLE VIII.
REMEDIES
Section 8.01. Seller's Remedies. If Buyer defaults under any provision
of this Agreement before the Closing, Buyer and Sellers agree that the damages
that Sellers will sustain as a result thereof will be substantial, but the
actual damages will be difficult or impossible to ascertain. Accordingly, Buyer
and Sellers agree that, in the event of Buyer's default, Sellers may, as their
sole and exclusive remedies, terminate this Agreement by written notice to Buyer
in which event Sellers shall receive the Deposit as liquidated damages for such
default, the amount of which Deposit Buyer and Sellers agree is not punitive or
a penalty but is just, fair and reasonable, and the Escrow Agent shall
immediately pay the Deposit to Sellers.
Section 8.02. Buyer's Remedies. In the event of a default hereunder on
the part of any Seller, Buyer's sole and exclusive remedies hereunder shall be
either: (1) the right to terminate this Agreement and receive a return of the
full amount of the Deposit, plus interest thereon; or (2) the right to seek
specific performance hereof, provided that Buyer must file a suit for specific
performance in the appropriate jurisdiction within ninety (90) days from the
date of such default by such Seller.
The parties waive all damages and remedies for defaults prior to
Closing except as provided in this Agreement.
Section 8.03. Post-Closing Matters. Notwithstanding the terms and
provisions of Sections 8.01 and 8.02 or any other term or provision of this
Agreement, Sellers and Buyer shall each retain the right to seek and obtain
relief for events occurring after the Closing Date provided that: (a) this
transaction in fact closes; (b) the obligations for which relief is sought are
obligations which by their express terms are to survive Closing or which by
their express terms are to performed following Closing (including any
indemnities hereunder, if any); and (c) such relief shall be limited to a suit
for monetary damages, unless expressly otherwise provided in this Agreement.
Except for obligations which by their express terms are to survive Closing or
which by their express terms are to be performed following Closing, the terms
and provisions of this Agreement shall not survive the Closing and shall merge
into the Deeds from Sellers to Buyer. The provisions of this Section 8.05 shall
survive Closing.
23
ARTICLE IX.
CONDITIONS
Section 9.01. Sellers' Obligation. In addition to any other conditions
precedent for the benefit of Sellers expressly set forth in this Agreement, the
obligation of Sellers to perform this Agreement is subject to the following
conditions unless waived in writing by Sellers:
(a) The representations and warranties of Buyer in this
Agreement shall be true and correct in all material respects as of the Closing
Date as if made on and as of the Closing Date.
(b) Buyer shall have performed all obligations required to be
performed by it under this Agreement on or prior to the Closing Date.
Section 9.02. Buyer's Obligation. In addition to any other conditions
precedent for the benefit of Buyer expressly set forth in this Agreement, the
obligation of Buyer to perform this Agreement is subject to the following
conditions unless waived in writing by Buyer:
(a) The representations and warranties of Sellers in this
Agreement shall be true and correct in all material respects as of the Closing
Date as if made on and as of the Closing Date.
(b) Sellers shall have performed all obligations required to
be performed by them under this Agreement on or prior to the Closing Date.
(c) There shall be no litigation instituted after the
execution of this Agreement with respect to the Property which, if adversely
determined, would have a material and adverse impact on the Property or the
operation of the Hotels.
(d) Seller shall have received and delivered to Buyer a
consent, in the form and substance specified in the Ground Lease (if any), from
the lessor under the Ground Lease to the Assignment and Assumption of Ground
Lease (to the extent required by the Ground Lease) together with an estoppel
certificate (to the extent the Seller has a right to request and the ground
lessor has an obligation to provide an estoppel certificate pursuant to the
terms of the Ground Lease) in form and substance required under the Ground
Lease, if any.
(e) Sellers shall have paid to Marriott International, Inc.,
or its affiliates, the sum of Ten Million Five Hundred Thousand and No/100
Dollars ($10,500,000.00) in satisfaction of accumulated loans.
ARTICLE X.
CONVEYANCE OF ASSETS
Section 10.01. Instruments of Conveyance. At Closing, Sellers (and/or
Operating Tenant) and Buyer (and/or its operating lessee) shall execute and
deliver to each other the following documents:
24
(a) Sellers, unless such Seller holds title to its portion of
the Land pursuant to a Ground Lease, shall execute and deliver to Buyer the
Deeds.
(b) Each Seller which holds title to its portion of the Land
pursuant to a Ground Lease and Buyer shall execute and deliver to each other
counterparts of the Assignment and Assumption of Ground Leases.
(c) Each Seller and/or Operating Tenant and Buyer and/or its
operating lessee shall execute and deliver to each other a Bill of Sale
(Personal Property).
(d) Each Seller and/or Operating Tenant and Buyer and/or its
operating lessee shall execute and deliver to each other counterparts of an
Assignment and Assumption of Intangible Property.
(e) Each Seller and/or Operating Tenant and Buyer or its
operating lessee shall execute and deliver to each other counterparts of an
Assignment and Assumption of Operating Agreements.
(f) Each Operating Tenant and Buyer or its operating lessee
shall execute and deliver to each other counterparts of an Assignment and
Assumption of Management Agreements.
(g) Sellers and Buyer shall execute a closing statement.
(h) Each Seller shall execute and deliver, at Closing, a
so-called "Non-Foreign Affidavit" (pursuant to Section 1445 of the Internal
Revenue Code).
(i) Buyer shall complete and deliver at Closing a Form 1099 as
required by the Internal Revenue Code.
(j) Buyer and Sellers shall execute such other affidavits,
authorizing resolutions, and documents as may be reasonably required by the
Title Company.
Section 10.02. Personal Property. Seller shall maintain levels of
personal property at the Hotels, at all times prior to Closing, consistent with
the levels of personal property maintained as of the Effective Date hereof.
ARTICLE XI.
TITLE TO REAL PROPERTY
Section 11.01. Title Insurance Commitments. Prior to the execution of
this Agreement, Sellers shall have obtained the Title Insurance Commitments and
delivered the same to Buyer. Buyer hereby acknowledges that Buyer has approved
the Title Commitments and has accepted the Title Insurance Commitments as so
delivered to Buyer as evidence of the status of Sellers' title to the Hotels and
Land. If requested by Buyer, Seller will provide policies of coinsurance
provided that any incremental costs therefore shall be paid by the Buyer as
contemplated in Section 12.03(b)(3) hereof.
25
Section 11.02. Title Defects. Prior to the execution of this Agreement,
Buyer has objected to, and Sellers have agreed to cure, those title matters, if
any, set forth on EXHIBIT "P" attached hereto and by this reference incorporated
herein (the "Title Defects"). Sellers shall have thirty (30) days from the
Effective Date to cure any such Title Defects except for monetary liens and
encumbrances which may be paid at Closing. If Sellers fail to cure any of the
Title Defects (other than monetary liens and encumbrances, which Seller shall be
obligated to cure at Closing), Buyer's sole and exclusive remedy shall be to
either (i) terminate this Agreement by written notice to Sellers given on or
before the Closing Date without recourse against Sellers and to obtain a refund
of the Deposit from the Escrow Agent, or (ii) to accept title to the Land and
Hotels in their then condition without reduction of the Purchase Price or
reservation of any claim against Seller.
Section 11.03. Survey. Prior to the execution of this Agreement,
Sellers have provided Buyer with copies of any surveys of the Land which Sellers
have in their possession or control. Prior to the execution of this Agreement,
Buyer has obtained and provided Sellers and Title Company with a copy of,
Surveys of the Hotels and Land prepared by a licensed surveyor in the state in
which the Hotel which is the subject of the Survey is located and otherwise
meeting the ALTA requirements and standards. Prior to the execution of this
Agreement, Buyer has objected to, and Sellers have agreed to cure, those survey
matters, if any, set forth on EXHIBIT "P" attached hereto and by this reference
incorporated herein (the "Survey Defects"). Sellers shall have thirty (30) days
from the Effective Date to cure any such Survey Defects. If Seller fails to cure
any of the Survey Defects, Buyer's sole and exclusive remedy shall be to either
(i) terminate this Agreement by written notice to Sellers given on or before the
Closing Date without recourse against Sellers and to obtain a refund of the
Deposit from the Escrow Agent, or (ii) to accept the condition of the Land and
Hotels in their then condition without reduction of the Purchase Price or
reservation of any claim against Seller.
Section 11.04. Access to Property; Due Diligence Materials. Buyer
acknowledges that prior to the execution of this Agreement, Buyer has had the
opportunity to inspect and conduct a full inspection and investigation of the
Property and accepts the condition of the Property in its "AS IS" "WHERE IS"
condition and acknowledges that Buyer has no right to terminate this Agreement
except in the event of a default by Sellers hereunder or except as otherwise
expressly provided in this Agreement.
ARTICLE XII.
THE CLOSING
Section 12.01. Time and Place. Subject to the conditions in Article IX,
the casualty and condemnation provisions in Article XIII and an extension of the
Closing Date as a result of Sellers' attempt to cure Title Defects, the Closing
shall take place on the Closing Date at 10:00 a.m. (local time) at the office of
counsel for Buyer, or at such other date, place and time as Buyer and Sellers
may mutually agree upon in writing. At the request of either party, Buyer and
Sellers shall reasonably cooperate to accomplish this Closing "by mail." Buyer
shall take possession of the Property effective as of the Closing Date.
Section 12.02. Payment of Purchase Price. At the Closing, Buyer shall
deliver by wire transfer of good funds the balance of the Purchase Price
(subject to adjustments and/or prorations
26
provided in this Agreement) to the Escrow Agent no later that 2:00 p.m. (Eastern
Time) on the Closing Date. The Deposit and the balance of the Purchase Price (as
adjusted) shall be paid to each of the Sellers, in such amounts as directed by
the Sellers, by the Escrow Agent by wire transfer of good funds to such bank
accounts specified by Sellers after delivery of the closing documents by Sellers
to the Title Company but before recordation of the Deeds or any other instrument
all as more particularly set forth in the escrow closing instructions of Sellers
and Buyer.
Section 12.03. Closing Costs. (a) Sellers shall pay the following costs
and expenses at Closing:
(1) Sellers' prorated share of real estate and
tangible personal property taxes, rents or
assessments as set forth in this Agreement and any
general real estate and personal property taxes for
all years prior to the year of the Closing;
(2) The cost of issuing the Title Insurance
Commitments and the premium for issuance of the Title
Policies together with the cost of reasonable and
customary endorsements to the Title Policies not
relating to Buyer's financing, if any;
(3) Sellers' own legal expenses;
(4) One-half of the closing fee and/or settlement fee
charged by the Escrow Agent;
(5) All costs of satisfying in full any existing debt
secured by the Property and removing any encumbrances
in the form of monetary liens from the Title
Policies; and
(6) Any and all other costs and expenses expressly
allocated to Sellers under this Agreement.
(b) Buyer shall pay the following costs and expenses at
Closing:
(1) Costs of transferring or canceling any Operating
Agreements;
(2) Costs of recording the Deeds and any other
transfer documents requiring recordation;
(3) All premiums and costs for issuing any
endorsements or additional coverage to the Title
Policy which are not to be paid by Sellers or
contemplated hereinabove, any title insurance premium
or cost (including endorsements and additional
coverage with respect thereto) related to Buyer's
financing, and any additional premiums and costs for
coinsurance requested by Buyer;
(4) Costs of supplying tax certificates to the Title
Company;
27
(5) Any sales taxes, transfer taxes or stamp taxes
pertaining to the transfer of the Property from
Sellers to Buyer;
(6) Any indebtedness or mortgage related taxes and
recording or other fees relating to any mortgage,
deed of trust or other security instrument executed
by Buyer;
(7) All fees, costs and expenses incurred with
respect to any purchase money financing incurred by
Buyer;
(8) Buyer's prorated share of all real estate and
tangible personal property taxes, rents, or
assessments as set forth in this Agreement;
(9) Buyer's own legal expenses;
(10) One-half of the cost of closing or settlement
fee charged by the Escrow Agent.
(11) The cost of preparing the Surveys; and
(12) Any termination charges related termination of
any Operating Agreements.
(13) Any UCC searches.
(14) Any costs or expenses incurred by Buyer in
connection with its inspections and due diligence
preformed on the Property.
(15) Any and all other costs and expenses expressly
allocated to Buyer under this Agreement.
Section 12.04 Revenue and Expense Prorations. Pursuant to Article IV,
Sellers and Buyer will make appropriate apportionments and prorations of
expenses, rents, taxes and revenues and settle them by appropriate credits on
the Closing Statement or pursuant to the Operations Settlement, as the case may
be.
Section 12.05 Closing Documents. At the Closing, Buyer and Sellers
shall also execute and deliver such documents as are specified or contemplated
by this Agreement, including, but not limited to, those required by Sections
4.01 and 10.01.
ARTICLE XIII.
INSURANCE, CONDEMNATION AND CASUALTY
Section 13.01 Insurance. All Sellers' insurance policies, including,
without limitation, fire and any additional hazard insurance, shall be cancelled
by Sellers as of the Transfer Time, and any refunded premiums shall be retained
by Sellers. Buyer will be responsible for acquiring and placing its own
insurance in force from and after the Transfer Time.
28
Section 13.02 Condemnation and Casualty. (a) If, before the Closing,
any Seller receives notice that any Hotel or Hotels and any parcel or parcels
comprising the Land are to be wholly condemned, or to be condemned in such
substantial part that the value of the portion of the Hotels and Land so
condemned exceeds Fifty Million and No/100 Dollars ($50,000,000.00), or if one
or more of the Hotels is wholly or partially destroyed by fire or other
casualty, or if so much of the Hotels is damaged by fire or other casualty to
the extent that the cost of repairing such damage shall exceed Fifty Million and
No/100 Dollars ($50,000,000.00) as determined by the casualty insurer(s)
insuring the Hotels, then, in any such event, Buyer and each of the Sellers
shall each have the right to terminate this Agreement by delivering notice of
termination in writing to the other party within thirty (30) days after the
receipt of notice of such condemnation or casualty (but not later than the
Closing Date) (which notice will, to the extent then known, contain the amount
of compensation offered for such condemnation or the amount of insurance
proceeds offered to be paid on account of such casualty, as the case may be) and
upon giving such notice of termination the Deposit shall be returned by the
Escrow Agent to Buyer, and Sellers and Buyer shall each be released and
discharged from any further obligation to each other hereunder except for those
which expressly survive the termination of this Agreement; provided, however,
that if neither Buyer nor Sellers elects to terminate this Agreement, the
purchase contemplated herein shall be consummated without reduction of the
Purchase Price, within the later of (i) fifteen (15) days after the expiration
of such thirty (30) day period or (ii) the Closing Date, but Buyer shall be
entitled to all proceeds of fire or other casualty insurance or condemnation
(other than proceeds relating to business interruption or loss for periods prior
to the Transfer Time), Buyer shall receive a credit to the Purchase Price for
any deductibles with respect to any insurance proceeds and Sellers shall have no
responsibility for the restoration and repair of the Property.
(b) If, before the Closing, any one or more Hotel is damaged by fire or
other casualty to the extent that the cost of repairing or restoring the same
shall be less than an amount equal to Fifty Million and No/100 Dollars
($50,000,000.00), or if any Seller receives notice that any Hotel and/or Land is
to be partially condemned but that the value of the Land and Hotels to be
condemned does not exceed Fifty Million and No/100 Dollars ($50,000,000.00),
then, and in any such event, the Closing shall proceed as scheduled and Sellers
shall assign to Buyer the proceeds (excluding proceeds for business interruption
or loss for periods prior to the Transfer Time) of any casualty insurance or any
condemnation award, as the case may be, Buyer shall receive a credit to the
Purchase Price for any deductibles with respect to any insurance proceeds and
Sellers shall have no responsibility for restoration or repair of the Property.
ARTICLE XIV.
MISCELLANEOUS COVENANTS AND PROVISIONS
Section 14.01 Assignment; Successors and Assigns. Except as otherwise
provided in this Section 14.01, neither this Agreement nor any right or interest
herein may be assigned by Buyer without the prior written approval of Sellers.
Notwithstanding anything to the contrary, Buyer shall have the right to assign
all or any portions of this Agreement to one or more Permitted Assignees without
obtaining Sellers' consent; provided that (1) such Permitted Assignee(s) assumes
in writing all of Buyer's applicable obligations and liabilities hereunder, (2)
a copy of the assignment and assumption of this Agreement is provided to Sellers
promptly following execution thereof and (3) Buyer shall not be released from
any of its obligations to
29
Sellers hereunder. Subject to the foregoing, this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective heirs,
legal representatives, successors and assigns.
Section 14.02 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
shall constitute one and the same instrument.
Section 14.03 Waiver. No failure or delay in acting by any party to
this Agreement shall be deemed a waiver of such party's rights. Any waiver of
rights or remedies shall be required to be signed by the party charged with the
waiver in order for such waiver to be effective.
Section 14.04 Amendments. This Agreement may be modified or amended
only by the written consent of Sellers and Buyer.
Section 14.05 Further Agreements. Each party agrees that it will
execute and deliver to the other party any additional documents, agreements or
instruments necessary or reasonable to give effect to this Agreement or any
provision hereof.
Section 14.06 Attorneys' Fees. In the event that any party is required
to retain the services of an attorney to enforce or otherwise litigate or defend
any matter or claim arising out of or in connection with this Agreement, then
the prevailing party shall be entitled to its reasonable attorneys' fees from
the non-prevailing party.
Section 14.07 Entire Agreement. This Agreement sets forth all the
promises, representations, agreements, conditions and understandings relative to
the transactions set forth herein, and neither Sellers nor Buyer are relying
upon any promises, representations, agreements, conditions or understandings,
either oral or written, (which are hereby superseded in their entirety) other
than those expressed in this Agreement.
Section 14.08 Brokers and Finders. Sellers and Buyer each represent and
warrant to the other that it has not employed, retained or consulted any broker,
agent or other finder with respect to the Property or in carrying on
negotiations relative to this Agreement, except as provided for in this Section
14.08, and Sellers and Buyer shall indemnify and hold the other harmless from
and against any and all claims, demands, causes of action, debts, liabilities,
judgments and damages (including costs and reasonable attorneys' fees incurred
in connection with the enforcement of this indemnity) which may be asserted or
recovered against the other on account of any brokerage fee, commission, or
other compensation arising in breach of this representation and warranty.
Sellers and Buyer hereby acknowledge that Broker, a licensed real estate broker
involved in the negotiation of the transactions contemplated herein, shall be
paid a sales commission by Sellers at Closing if, and only if, the transactions
contemplated by this Agreement are closed and consummated.
Section 14.09 Notices. All notices, demands and requests required,
permitted or given pursuant to the provisions of this Agreement shall be in
writing, and either hand delivered in person or delivered by certified mail,
postage prepaid, return receipt requested, or by Federal Express or other
similar overnight courier service, addressed as follows:
30
If to Buyer: Ashford Hospitality Limited Partnership
14185 Dallas Parkway, Suite 1100
Dallas, Texas 75254
Attention: David A. Brooks
with a copy to:
Andrews Kurth LLP
1717 Main Street, Suite 3700
Dallas, Texas 75201
Attention: Brigitte Kimichik
If to Seller CNL Hotels & Resorts, Inc.
CNL Center at City Commons
450 South Orange Avenue
Orlando, Florida 32801-3336
Attention: Marcel Verbaas
with a copy to:
Lowndes, Drosdick, Doster, Kantor
& Reed, P.A.
215 N. Eola Drive
Orlando, Florida 32802-2809
Attention: Richard J. Fildes
Any notice, demand or request which shall be served upon any of the
parties in the manner aforesaid shall be deemed sufficiently given (i) upon
being hand delivered in person, (ii) transmitted by facsimile transmission
provided a copy is sent pursuant to (iii) or the following business day, or
(iii) upon being deposited with Federal Express or other similar overnight
courier service; provided, however, the time period in which any response to
such notice, demand or request must be given shall commence on the date of
actual delivery of the notice, demand or request to the address to which it is
sent (rather than delivery to the specific addressee). Rejection or other
refusal to accept or the inability to deliver because of changed address of
which no notice was given as provided below shall be deemed delivery of the
notice, demand or request sent. The addresses given above may be changed by any
party by ten (10) days' prior notice to all other parties given in the manner
provided herein.
Section 14.10 Section Headings; Interpretation. The section headings of
this Agreement are for reference only and shall not be used to construe or
interpret this Agreement. All terms and words used in this Agreement, regardless
of the number or gender in which they are used, shall be deemed to include any
other number and any other gender as the context may require. If any term or
condition of this Agreement or the application thereof to any person or
circumstance shall, to any extent, be held legally invalid or unenforceable, the
remainder of this Agreement, and the application of such terms or conditions to
persons or circumstances other than those as to
31
which it is held legally invalid or unenforceable, shall not be affected thereby
and each term and condition of this Agreement shall be valid to the fullest
extent permitted by law.
Section 14.11 Governing Law. This Agreement shall be governed by the
laws of the state of Florida; provided, however, that with respect to matters
that relate to a specific portion of the Property, then this Agreement shall be
governed by the laws of the state where such Property is located.
Section 14.12 Disclosure of Confidential Information/ Public
Announcements/ Communication with Governmental Authorities/ Communication with
Employees. (a) The parties hereto acknowledge and agree that the existence of
this Agreement, the terms of this Agreement and any other information disclosed
in the due diligence materials delivered to or produced by Buyer or any other
documents, materials, data or other information with respect to the Property
which is not generally known to the public (the "Confidential Information")
shall in all respects remain confidential and shall not be disclosed by the
Buyer except as provided herein. Buyer may disclose Confidential Information to
officers, directors, employees, attorneys, accountants, consultants, lenders,
financial advisors, partners and investors (collectively, "Representatives"),
who in the reasonable business judgment of such party, need to know the
Confidential Information for the purpose of evaluating the transactions
contemplated by this Agreement. Buyer will inform its Representatives of its
confidentiality obligations under this Agreement, and such Representatives shall
agree to be bound by the terms and conditions of this Agreement, before Buyer
may disclose any Confidential Information to its Representatives. The disclosure
of any Confidential Information by any Representative in breach of this
Agreement will constitute a breach of this Agreement by Buyer, for which Buyer
will be liable. If Buyer or any of its Representatives is required by any
subpoena, interrogatories, request for production, or other legal process or by
any applicable law or regulation to disclose any Confidential Information, Buyer
will give (to the extent not prohibited by law) Sellers prompt written notice of
the requirement and will cooperate with the Sellers so that Sellers, at their
expense, may seek an appropriate protective order. In the absence of a
protective order, Buyer and its Representatives may disclose only such
Confidential Information as may in Buyer's reasonable opinion, be necessary to
avoid any penalty, sanction, or other material adverse consequence, and Buyer
will use commercially reasonable efforts to secure confidential treatment of any
Confidential Information so disclosed.
(b) Notwithstanding the foregoing, any party hereto shall have the
right to make a public announcement regarding the transaction described in this
Agreement, provided, however, that, prior to and as a condition precedent to
such public announcement, all other parties hereto shall approve the timing,
form and substance of any such public announcement, except if a party hereto is
required to make a public announcement under any securities law, the party
making such public announcement may do so only after having provided the other
party with a copy of such public announcement and only as long as such public
announcement is made in strict accordance with the applicable law requiring such
public announcement be made.
(c) Without limiting the generality of the provisions in subsection (a)
above, Buyer shall not, through its officers, employees, managers, contractors,
consultants, agents, representatives or any other person (including, without
limitation, Buyer's third party consultants), directly or indirectly,
communicate with any governmental authority or any official,
32
employee or representative thereof, involving any matter with respect to the
Property without the Sellers' prior written consent, which consent shall not be
unreasonably withheld, unless such communication is arranged by the Sellers.
Notwithstanding the foregoing, Buyer and its representatives and consultants
shall have the right to review building department, health department and other
local governmental authority records with respect to the Property and the
operation of the Hotels and request written or verbal confirmation of zoning and
any other compliance by the Land or Hotels with any applicable laws, without any
requirement to obtain the consent of the Sellers. Notwithstanding the foregoing,
Buyer shall have the right to communicate with the applicable governmental
authority in connection with the issuance of any liquor licenses required for
the sale of liquor at the Hotels, and any and all other permits or licenses
required to be transferred or applied for in connection with the sale of the
Hotels, all without the prior consent of the Sellers; provided, however, that
(i) Buyer shall provide Sellers with regular updates regarding the progress of
any and all such communications; and (ii) no inspections of the Hotels by the
applicable governmental authorities shall occur unless a representative of the
Sellers is present during such inspections.
(d) Liquor Licenses. To the extent transferable, Sellers shall transfer
to Buyer or its designee, or cause to be transferred to Buyer or its designee,
all liquor licenses and alcoholic beverage licenses which are necessary to
operate the restaurant, bars and lounges presently located within the Hotel
located in Crystal City, Virginia (the "Crystal City Hotel") and held in the
name of Sellers (and not the Manager). To that end, Sellers and Buyer shall
reasonably cooperate each with the other, and each shall execute such transfer
forms, license applications and other documents as may be necessary to effect
such transfer. The parties shall use good faith efforts to effect such transfer
prior to Closing. If permitted under the laws of the Commonwealth of Virginia,
the parties shall execute and file all necessary transfer forms, applications
and papers with the appropriate liquor and alcoholic beverage authorities prior
to Closing, to the end that the transfer shall take effect, if possible, on the
Closing Date, simultaneously with Closing. If not so permitted, then the parties
agree each with the other that they will promptly execute all transfer forms,
applications and other documents required by the appropriate liquor and
alcoholic beverage authorities in order to effect such transfer at the earliest
date in time possible consistent with the laws of the Commonwealth of Virginia,
in order that all liquor licenses may be transferred from Sellers to Buyer or
its designee at the earliest possible time. If under the laws of the
Commonwealth of Virginia, such licenses cannot be transferred or otherwise will
not be transferred until after Closing, then Sellers covenant and agree that
Sellers shall reasonably cooperate with Buyer in keeping open the bars and
lounges and liquor facilities of the Crystal City Hotel between the Closing Date
and the time when such liquor license transfers actually become effective, by
causing the current Manager of such facilities to continue exercising
supervision and management under Sellers' licenses pursuant to a written
agreement in the substantially the form attached hereto as EXHIBIT "O" until
such time as Buyer obtains licenses for such facilities, but in any event not
later than sixty (60) days after the Closing Date (at which time such written
agreement shall terminate); provided, however, that Buyer, at Buyer's cost and
expense, shall maintain in force and effect at all times insurance reasonably
acceptable to Sellers (with Sellers as additional named insureds) and shall
indemnify and hold Sellers harmless from any liability, damages or claims
encountered in connection with such operations during said period of time,
except for Sellers' gross negligence or willful misconduct and no employees of
said facilities shall be employees of any Seller. All cost and expense of such
operations during said period of time shall be the sole responsibility of and be
promptly paid by Buyer. Buyer
33
covenants and agrees that upon the filing of all necessary transfer forms,
applications and other documents with the appropriate liquor and alcoholic
beverage authorities, Buyer will diligently and in good faith prosecute the
transfer of the liquor licenses to completion.
(e) Communication with Employees. Without limiting the generality of
the provisions in subsection (a) above, Buyer shall not, through its officers,
employees, managers, contractors, consultants, agents, representatives or any
other person (including, without limitation, Buyer's third party consultants),
directly or indirectly, communicate with any Employees or any person
representing any Employees involving any matter with respect to the Property,
the Employees or this Agreement, without the prior written consent of Sellers
and Managers, which consent may be withheld in the sole discretion of Sellers
and Managers, unless such communication is arranged by the Sellers and/or
Managers. Notwithstanding the foregoing, the Sellers shall reasonably cooperate
with Buyer in order to arrange communications, pursuant to a schedule to be
reasonably agreed upon by the parties in order to allow Buyer to interview the
Employees for possible continued employment, and Buyer shall apprise the Sellers
from time to time as to its plans for communicating with such Employees, and to
complete such communications in advance of the Closing.
Section 14.13 Time of Essence. Time is of the essence of this Agreement
and each term and provision hereof; provided, however (unless specifically
provided to the contrary elsewhere in this Agreement), when the date by which
any action, event or condition is to occur or any notice or other communication
is to be given falls on a Saturday, Sunday or legal holiday, the date by which
such action, event or condition is to occur or such notice or other
communication is to be given shall be automatically extended to the business day
immediately succeeding such Saturday, Sunday or legal holiday.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
as of the date first above written.
[SIGNATURES ON FOLLOWING PAGE]
34
BUYER:
ASHFORD HOSPITALITY LIMITED PARTNERSHIP,
a Delaware limited partnership
By: Ashford OP General Partner LLC, its
general partner
By: /s/ DAVID BROOKS
--------------------------------------
Name: David Brooks
Its: Vice President
Date Executed: April 26, 2005
35
CNL HOSPITALITY PARTNERS, LP,
a Delaware limited partnership
By: CNL HOSPITALITY GP CORP.,
a Delaware corporation,
its sole general partner
By: /s/ MARCEL VERBASS
------------------
Name: Marcel Verbass
----------------
Title:
----------------
36
CNL CRYSTAL CITY II HOTEL, LP,
a Delaware limited partnership
By: CNL CRYSTAL CITY II HOTEL GP, LLC,
a Delaware limited liability
company, its sole general partner
By: /s/ MARCEL VERBASS
------------------
Name: Marcel Verbass
----------------
Title:
----------------
37
RFS PARTNERSHIP, L.P.,
a Tennessee limited partnership
By: CNL ROSE GP CORP.,
a Delaware corporation
its sole general partner
By: /s/ MARCEL VERBASS
------------------
Name: Marcel Verbass
----------------
Title:
----------------
38
ROSE SPE 1, LP,
a Delaware limited partnership
By: ROSE SPE 1 GP, LLC,
a Delaware limited liability company,
its sole general partner
By: /s/ MARCEL VERBASS
------------------
Name: Marcel Verbass
----------------
Title:
----------------
39
CNL HOTEL CY-WESTON, LTD.,
a Florida limited partnership
By: CNL CY-WESTON, LLC,
a Florida limited liability company,
its sole general partner
By: /s/ MARCEL VERBASS
------------------
Name: Marcel Verbass
----------------
Title:
----------------
40
CNL FOOTHILL HOTEL PARTNERSHIP, LP,
a Delaware limited partnership
By: CNL FOOTHILL GP CORP.,
a Delaware corporation,
its sole general partner
By: /s/ MARCEL VERBASS
------------------
Name: Marcel Verbass
----------------
Title:
----------------
41
ESCROW AGENT:
THE TALON GROUP, a division of First
American Title Insurance Company
By: /s/ MICHAEL J. MOORE
-----------------------------------
Name: Michael J. Moore
-----------------------------------
Title: Manager
-----------------------------------
Date Executed: April 27, 2005
FOR PURPOSES OF ACKNOWLEDGING AND AGREEING
ONLY TO THE PROVISIONS OF SECTION 2.04 OF
THIS AGREEMENT
42