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EXHIBIT 10.10
AGREEMENT OF PURCHASE AND SALE
THIS AGREEMENT OF PURCHASE AND SALE ("Agreement"), dated as of the
Date of this Agreement defined hereinafter, between WINN Limited Partnership, a
North Carolina limited partnership, or its assigns, with offices at 2209
Century Drive, Suite 300, Raleigh, North Carolina 27622 ("Purchaser") and WJS
Associates - Perimeter II, Inc., a North Carolina corporation ("Seller").
NOW, THEREFORE, for $1.00 and other good and valuable consideration,
the receipt and sufficiency of which is hereby mutually acknowledged, and the
mutual covenants contained herein, the parties hereto, intending to legally
bound, hereby agree as follows:
I. PURCHASE AND SALE OF PROPERTY AND BUSINESS
On the terms and subject to all of the conditions set forth in this
Agreement, the Purchaser agrees to purchase and the Seller agrees to sell, for
the Purchase Price defined herein, all of the following property (collectively,
the "Premises"):
(a) the real estate described on Schedule 1 attached hereto and
made a part hereof by this reference, containing 1.7369 acres of land, together
with all tenements, appurtenances, easements, agreements, development rights,
air rights, rights-of-way, strips, gores, rights in adjacent avenues, streets
and alleys, rights and uses appurtenant thereto, specifically including all of
the easements, right, title and interest of Seller set forth in that certain
Easement Agreement recorded in Book 18408, Page 173, Fulton County Records
(collectively the "Real Property");
(b) all improvements now or hereafter located on the Real Property,
including but not limited to that certain 131 room Hampton Inn located on
Hammond Drive, Atlanta, Georgia, and all fixtures which are affixed to the Real
Property or Improvements (the "Improvements");
(c) all furniture, fixtures (not part of the Real Property and
Improvements or affixed thereto), equipment, machinery, furnishings, carpets,
drapes, blinds or mini-blinds, service and maintenance equipment, linens (not
less than two and one-half (2 1/2) turns of linens shall be included), tools,
signs, landscaping equipment, supplies, pool equipment, telephone systems,
television systems, intercom equipment and systems, and replacement parts (the
"Equipment");
(d) moneys advanced for future reservations ("Prepaid Items");
(e) all contracts, agreements, licenses, contract rights, rights
to use and other similar rights used in connection with the Real Property and
Improvements and set forth on Schedule 2 attached
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hereto and made a part hereof by this reference and which the Purchaser elects
to purchase and assume (the "Contracts");
(f) all leases and rights to use the Improvements, Equipment or
all or any part thereof in third parties as more particularly identified on
Schedule 3 attached hereto and made a part hereof by this reference and which
the Purchaser elects to purchase and assume (the "Leases");
(g) all permits, licenses, government licenses, certificates of
occupancy and approvals necessary to operate the Real Property, Improvements,
Equipment, Contracts, Leases, Intangible Rights and the other property and
rights transferred under this Agreement (the "Permits");
(h) all inventory, supplies and other materials used in connection
with the Real Property and Improvements and the hotel business operated thereon
(the "Inventory");
(i) all plans, specifications and "as-built" drawings and surveys
relating to the Real Property and Improvements, all books and records relating
to the operation or management of the Real Property and Improvements and all
warranties and guaranties of Seller pertaining to the Premises; and
(j) all intangible property, guest ledgers, customer and mailing
lists, catalogues and brochures, telephone numbers and similar property used in
connection with the operation of the Real Property, Improvements and the
business known as the Hampton Inn located on Hammond Drive, Atlanta, Georgia
(the "Hotel"), and any telephone numbers assigned thereto (the "Intangible
Rights").
II. TERMS OF PURCHASE AND SALE
The purchase price for the Premises (the "Purchase Price") shall be
and consist of the items set forth in this Article II. The Purchase Price for
the Premises shall be determined and paid as follows:
A. By assumption of the outstanding balances as of the Closing Date
of those certain indebtednesses evidenced and described as follows: (1)
promissory note in the original principal amount of $4,875,000.00 payable to
the order of Branch Banking and Trust Company, dated June 28, 1994, secured by
the lien of a deed to secure debt encumbering the Real Property and
Improvements recorded in Book 18408, Page 286, Fulton County Records; (2)
promissory note in the original principal amount of $725,000.00 payable to the
order of Branch Banking and Trust Company, dated April 12, 1995, secured by the
lien of a deed to secure debt encumbering the Real Property and Improvements
recorded in Book 19445, Page 104, Fulton County Records and, (3) all other
indebtedness, secured or unsecured, incurred by Seller with respect to the
construction of the Hotel.
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Seller shall determine and verify the aggregate outstanding amount of such
indebtednesses as soon as reasonably possible upon the completion of the
construction of the Hotel and payment of all costs and expenses associated
therewith. Seller shall be responsible for all payments due under such
indebtednesses up to the Closing Date, including all interest accrued thereon.
B. Seller shall accept limited partnership units in Purchaser
having an aggregate value of One Million Two Hundred Thirty Thousand and N0/100
Dollars ($1,230,000.00) ("Units"). The number of Units issued shall be
determined and based upon the average closing price of the stock of Purchaser's
general partner, Winston Hotels, Inc., a North Carolina corporation, on the
NASDAQ market for the ten (10) days of trading immediately preceding the
Closing Date.
C. Upon the Closing, the Seller shall deliver to the Purchaser the
Premises, including but not limited to the Real Property, Improvements,
Equipment and Inventory, free and clear of all liens and encumbrances of
whatever type or description other than the Permitted Exceptions as defined in
Article IV, Paragraph A hereof and the indebtednesses to be assumed by
Purchaser pursuant to Paragraph A of this Article II.
III. PURCHASER'S CONTINGENCIES
A. Purchaser's obligation to close this transaction shall be
conditioned on the Purchaser's receipt, on or before the Closing Date, of an
acceptable Hampton Inn franchise license agreement for the Hotel with a term of
not less than ten (10) years.
B. Purchaser's obligation to close this transaction shall be
conditioned on Purchaser having received, effective as of the Closing Date, all
necessary governmental approvals and licenses for operation of the Premises as
a hotel, provided that Purchaser has made good faith and timely applications
for such approvals and licenses and has provided the applicable governmental
authorities with all required information reasonably necessary for such
authority to grant such approval or license.
C. Seller acknowledges that Purchaser is a real estate investment
trust and in accordance therewith, Purchaser's obligation to close this
transaction shall be conditioned upon Purchaser obtaining the approval of this
Agreement and the transaction contemplated herein from the board of directors
of the general partner of Purchaser, which approval shall be obtained or denied
within seventy five (75) days from and after the Date of this Agreement.
The Purchaser and its representatives and agents shall be provided
with access to the Premises at all reasonable times, in order to inspect the
Premises, including but not limited to, taking
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soil samples and test borings, and conducting environmental studies,
engineering studies and other such inspections and reviews that the Purchaser
shall deem reasonably necessary to determine the condition and financial status
of the Premises. Purchaser shall and does hereby agree to indemnify and hold
Seller harmless from and against any and all liability, damage, cost and
expense resulting from the exercise of the foregoing access and rights to the
Premises by Purchaser and its representatives and agents.
IV. TITLE; TITLE POLICY; SURVEY
A. On the date of this Agreement Seller shall furnish to Purchaser
copies of Sellers' existing owner's title insurance policies insuring the title
of Seller in and to the Real Property ("the Existing Title Policy").
Thereafter, Purchaser, at Purchaser's expense, shall obtain through update,
tacking or other means as may be necessary, a title insurance commitment from
First American Title Insurance Company or such other title insurance company as
may be acceptable to Purchaser in Purchaser's sole and absolute discretion (the
"Title Company") pursuant to which the Title Company shall commit (collectively
the "Title Commitment") to issue a current A.L.T.A. Form B owner's fee simple
title insurance policy or other policy of title insurance as shall be
reasonably satisfactory to Purchaser and to any lender of Purchaser (the
"Lender") in the amount of the Purchase Price (the "Title Policy") insuring
that the Purchaser shall receive at closing, good, marketable and indefeasible
fee simple title to the Real Property, free and clear of all liens, exceptions,
encumbrances or defects other than the matters expressly approved in writing by
Purchaser as permitted exceptions to title as set forth hereinafter (the
"Permitted Exceptions"). Seller shall furnish to Purchaser copies of all
liens, exceptions, encumbrances or defects set forth in the Existing Title
Policy at the same time as the Existing Title Policy are so furnished to
Purchaser.
Within seventy five (75) days from and after the Date of this
Agreement, the Purchaser shall notify (the "Title Notice") the Seller as to
which of the liens, defects, encumbrances or exceptions set forth in the Title
Commitments are objectionable to Purchaser ("the Title Defects") and which of
such matters are acceptable to Purchaser as the Permitted Exceptions. Within
ten (10) days after receipt by Seller of the Title Notice, the Seller shall
cure the Title Defects to the reasonable satisfaction of the Purchaser. In the
event the Seller is unable to cure the Title Defects to the reasonable
satisfaction of the Purchaser (except for those Title Defects that can be cured
with the payment of money and will be satisfied of record by Seller at or prior
to Closing) within such ten (10) day period or the Purchaser does not agree to
waive such Title Defects, then this Agreement shall terminate and shall be
null, void and without further force or effect, and neither party shall have
any further liability to the other. Notwithstanding the
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foregoing, the Seller shall be obligated to remove and be responsible for
removing all Title Defects capable of being removed or discharged by payment of
money, including but not limited to, money judgments and mechanic's liens, but
excluding these deeds to secure debt which Purchaser shall assume pursuant to
Article II, Paragraph A.
B. On the date of this Agreement Seller shall furnish to
Purchaser a copy of Seller's existing as built survey of the Real Property and
the Improvements currently located thereon ("the Existing Survey"), prepared by
a surveyor duly licensed under the laws of the State of Georgia, reasonably
acceptable to the Purchaser and the Lender in accordance with ALTA or such
other standards as shall be reasonably satisfactory to Purchaser. The Existing
Survey shall be in form and substance satisfactory to the Purchaser, the Title
Company and the Lender. Within seventy five (75) days from and after the Date
of this Agreement, Purchaser shall, at Purchaser's election, cause the Existing
Survey to be updated, obtain a new survey or, if acceptable to the Title
Company and Lender, obtain a certification from Seller that there have been no
improvements, structures or other changes subsequent to the date of the
Existing Survey which would be revealed by a more current survey thereof,
whereby the elected method shall be certified to the Purchaser, Title Company
and Lender (the form of certification to be satisfactory to the Title Company,
Purchaser and Lender) ("the Current Survey"). The Current Survey shall show,
among other things, that all buildings are within lot and building lines, the
location of such lines, the dimensions and total area of the Real Property and
Improvements, the location and number of parking spaces, ingress and egress to
adjoining streets, all benefiting and burdening easements, improvements,
appurtenances, rights of way and utilities whether above or below ground, all
encroachments from or into the Premises, all structures and improvements on the
Real Property and all easements, rights-of-way and other restrictions of record
properly identified with recording information and certifying that the Premises
are not within a flood plain or other flood hazard area. The Current Survey
shall be made in accordance with the Minimum Standard Detail Requirements for
Land Title Surveys adopted by the American Land Title Association. The Current
Survey and certification shall be sufficient to remove the survey exception
from the Title Policy without indemnity by Purchaser or additional premium.
Within seventy five (75) days from and after the Date of this Agreement, the
Purchaser shall notify the Seller of any objections of Seller or Lender to the
Current Survey ("Survey Defects"). Survey Defects shall be deemed to be Title
Defects for purposes of this Agreement and Seller shall cure such Survey
Defects according to the same procedure as for Title Defects.
C. On the date of this Agreement Seller shall deliver to
Purchaser copies of all existing environmental reports and studies of which
Seller has knowledge which have been previously prepared and compiled with
respect to the Premises.
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D. The Purchaser and Seller shall each be responsible for the
payment of its own transaction costs, including counsel fees. Purchaser shall
be responsible for the costs incurred with any physical inspection of the Real
Property and Improvements, including any environmental and engineering studies.
At Closing, Purchaser shall pay all premiums for the Title Policy. The
Purchaser shall pay for the Title Commitment and the Current Survey. Any and
all transfer taxes, real estate excise taxes and sales taxes payable in
connection with the transfer of the Premises, or any portion thereof, and the
Personalty (as hereinafter defined) shall be paid by Seller. Unless otherwise
stated in this Agreement, the Purchaser and Seller shall pay all costs in
connection with the Closing of this transaction as are customary in Atlanta,
Georgia.
V. CLOSING
A. The closing of this transaction shall occur within fifteen
(15) days following the conclusion of a successful secondary public offering of
Winston Hotels, Inc.'s common stock or such earlier time as may be elected by
Purchaser ("the Closing Date"). The occurrence of such secondary public
offering shall not be a requirement for closing under this Agreement. The
closing shall occur at the offices of Brown & Bunch, 4900 Falls of Neuse Road,
Suite 210, Raleigh, North Carolina 27609. The exact Closing Date shall be
determined at the election of Purchaser upon at least ten (10) days prior
notice to Seller. The closing of the transaction contemplated by this
Agreement shall be deemed effective as of 12:01 a.m. on the Closing Date
("Closing"). If the date of Closing falls on a Saturday, Sunday or banking
holiday, the Closing shall take place on the next business day thereafter.
B. At the Closing, the Seller, shall deliver to Purchaser and
perform the following:
1. A General Warranty Deed for the Real Property conveying good,
marketable, insurable and indefeasible fee simple title to the Real Property
free and clear of all defects, exceptions, liens or encumbrances, except for
the Permitted Exceptions and the indebtednesses to be assumed by Purchaser
pursuant to Article II, Paragraph A.
2. Seller shall pay and discharge any special assessment which on or
before the date of Closing, (a) has been levied, imposed, or confirmed against
the Premises, (b) affects or is a lien upon the Premises or (c) although not
yet a lien upon the Premises, is attributable to improvements which benefit or
will benefit the Premises or the property in the vicinity of the Premises for
which improvement work has been commenced. If any of the foregoing assessments
may be paid in installments, all installments shall be deemed payable as of the
day prior to the Closing, and shall be discharged of record by Seller. If, at
the Closing, any amount which Seller is required to pay with respect to the
foregoing has
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not been determined, Seller agrees to pay such amount as can be reasonably
estimated at the Closing and the final amount shall be adjusted within ten (10)
days after Purchaser gives Seller notice that same has been determined. This
provision shall survive the Closing and delivery of the Deeds.
3. A Bill of Sale conveying the Equipment, Inventory, Real Property not
conveyed by other instruments provided for herein, and other personal property
and intangible property included in the Premises ("Personalty"), free and clear
of any lien or encumbrance, other than the Permitted Exceptions, and containing
a general warranty of title to the Equipment, Inventory and Personalty and an
inventory of all Equipment, Inventory and Personalty.
4. An assignment of Seller's interest in and to all Permits,
Contracts to be assumed by Purchaser, Leases to be assumed by Purchaser,
Intangible Rights, Prepaid items and other items of the Premises, free and
clear of any lien or encumbrance, together with written evidence satisfactory
to Purchaser of any required third party consent to such assignment. Seller
shall deliver to Purchaser all original Contracts and Leases which Purchaser
has elected to purchase; the Permits, including the certificates of occupancy
for the Premises, evidence that the Premises are legally constructed and
properly zoned in accordance with all applicable laws; all warranties and
guarantees (and assignments thereof to Purchaser) issued in connection with the
initial construction of the Real Property and Improvements; any Personalty, and
any repairs or additions thereto; cash bank; moneys advanced for future
registrations; guest registration records; keys; permits, approvals and
licenses issued by all appropriate governmental authorities and fire
underwriting organizations with respect to the construction and use of the
Premises or any part thereof; and any existing copies of architectural plans
and specifications, blueprints and building plans which may be in Seller's
possession.
5. At Purchaser's option, an assignment of all fire and extended coverage
insurance policies, liability policies and loss of rental policies, affecting
any of the Premises to the extent assignable (if assigned, premiums to be
adjusted at Closing).
6. Tax certificates or other evidence of payment from all appropriate
taxing authorities certifying the payment of all real and personal property
taxes through the current tax year.
7. A certificate of Seller dated as of the Closing that Seller is not a
foreign person or corporation within the meaning of Sections 1445 and 7701 of
the Internal Revenue Code (the "IRC").
8. A bring down certificate dated as of the Closing certifying the truth
and accuracy of each representation and warranty set forth in Article XII as of
the Closing Date.
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9. An affidavit of title reasonably satisfactory to the Title
Company enabling the Title Company to issue the Title Policy without exception
for mechanic's or materialman's or other statutory liens or for the rights of
parties in possession other than temporary hotel patrons.
C. At the Closing, the Purchaser shall deliver to the Seller the
following:
1. Proof of authority for Purchaser to complete the transaction
reasonably satisfactory to Seller.
2. The Units.
3. Evidence of the assumption of the indebtednesses set forth in
Article II, Paragraph A.
VI. DELIVERY OF POSSESSION
Seller shall deliver actual and exclusive possession of the Premises
to Purchaser on the Closing Date.
Seller hereby grants to Purchaser the right to enter the Premises at
any reasonable time after the date hereof for the purpose of inspecting,
testing and examining the Premises.
VII. DAMAGE TO PROPERTY
Seller shall give Purchaser immediate notice of any fire or other
casualty or of any pending or threatened condemnation occurring to all or any
portion of the Premises between the date hereof and the Closing. If prior to
the Closing, there shall occur:
(i) damage to the Hotel caused by fire or other
casualty, which would cost $100,000.00 or more to repair or replace; or
(ii) the taking or condemnation of all or any portion the
Hotel (including any parking areas) as would materially interfere with the use
thereof, as determined by Purchaser; then, if any of the events set forth in
(i) or (ii) above occurs, Purchaser, at its option, may terminate this
Agreement by written notice given to Seller within fifteen (15) days after
Purchaser has received the notice referred to above or at the Closing,
whichever is earlier. If Purchaser does not elect to terminate this Agreement,
the Closing shall take place as provided herein without an abatement of the
Purchase Price and there shall be assigned to the Purchaser at Closing, all
interest of the Seller in and to any insurance proceeds or condemnation awards
which may be payable to Seller on account of such occurrence.
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If, prior to the Closing, there shall occur:
(x) damage to the Hotel caused by fire or other casualty which
would cost less than $100,000.00 to repair or replace; or
(y) the taking or condemnation of all or any portion of the Hotel
which is not material to the use thereof, as determined by
Purchaser;
then, if any of the events set forth in (x) or (y) above occurs, Purchaser
shall have no right to terminate this Agreement (solely as a result of the
occurrence of such events), and Seller shall, at its sole expense, with respect
to subparagraph (x), restore or replace the damaged Premises to its original
condition; and, with respect to subparagraph (y), there shall be assigned to
Purchaser at Closing all interest of Seller in and to any insurance proceeds or
condemnation awards which may be payable to Seller on account of any such
occurrence.
VIII. REMEDIES
A. If this transaction is not consummated by reason of:
(i) the inability of Purchaser to obtain any approval or
consent required pursuant to or otherwise satisfy any
condition or contingency set forth in Article III
hereof;
(ii) the occurrence of any of the events described in
Article VII;
(iii) Title Defects and Survey Defects which are not cured
as provided in this Agreement (except for those Title
Defects or Survey Defects which Seller is obligated
to cure); or
(iv) cancellation by Purchaser pursuant to any other
applicable provisions of this Agreement,
then this Agreement shall be null and void and all parties relieved from any
further liability hereunder, unless Purchaser elects to waive any of the items
or occurrences set forth in this Article VIII, Paragraph B. The items
enumerated in this Article VIII, Paragraph B are for Purchaser's benefit only
and the non-occurrence of a state of facts sufficient to satisfy any of such
items may not be used or pleaded by Seller as a defense to the enforceability
of this Agreement.
C. If this transaction is not consummated because of a default on
the part of Seller or if Seller fails to close this
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transaction in breach of its obligation to do so, then Purchaser may seek
specific performance of this Agreement.
IX. PRORATIONS
All income (including cash on hand and accounts receivable), current
operating expenses, accounts payable, real estate taxes, other taxes and
assessments, all utilities, water and sewer charges, licenses or permit fees
relating to the operation of the Premises, real estate and personal property ad
valorem taxes, prepayments made under the Contracts and insurance premiums (if
applicable), shall be adjusted and prorated as of the Closing. All franchise
fees, maintenance and service agreements (whether or not service is continued
by Purchaser) and utility charges shall be determined as of Closing and paid by
Seller or appropriate adjustments made if Purchaser at its option accepts an
assignment of any such agreement. If such charges and expenses are unavailable
on the Closing Date, a re-adjustment of such charges and expenses shall be made
within thirty (30) days after the Closing. The parties agree to cooperate in
good faith in effecting such a final reconciliation and each party shall
promptly pay (or reimburse the other party for) any expense item that is
chargeable to the former party and shall promptly remit any income item to the
other party if entitled thereto. Seller shall use reasonable efforts to
arrange for the rendition of final bills by the utility companies involved as
of the Closing Date.
Guest room revenues of the Premises, whether in cash or in accounts receivable,
arising from occupancy for the night beginning on the day preceding the Closing
Date and ending on the Closing Date shall be credited one-half to Purchaser and
one-half to Seller. Seller shall collect all income and other sums payable by
tenants or guests (or otherwise) and shall be responsible for the payment of
all expenses on account of services and supplies furnished to and for the
benefit of the Premises through and including the Closing. Purchaser shall be
credited with any deposits from tenants or guests of the Premises which are
refundable to such tenants or guests. Seller shall remit to Purchaser at
closing all prepaid income items. Nothing contained in this Article shall be
deemed to prohibit Purchaser and Seller from entering into an agreed settlement
in writing of all prorations at or following Closing.
In the event any adjustments pursuant to this Article are, subsequent
to Closing, found to be erroneous, then either party hereto is entitled to
additional monies and shall invoice the other party for such additional amounts
as may be owing, and such amount shall be paid promptly by the other party upon
receipt of the invoice. Such invoice shall be accompanied by reasonable
substantiating evidence.
Purchaser shall have no obligation with respect to Seller's on site
employees involved in the management and daily operation of the
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Hotel whatsoever, all of whom shall be compensated and terminated by Seller as
of Closing, though Purchaser reserves the right to employ any such employees.
The provisions of this Article IX shall survive the Closing and
delivery of the Deeds.
X. NOTICES
Any notice to be given by either party to this Agreement shall be in
writing and shall be either delivered personally or by certified or registered
U.S. Mail, postage prepaid, or by overnight courier delivery service with
charges to the sender, as follows:
To Seller: WJS Associates - Perimeter II, Inc.
2209 Century Drive, Suite 300
Raleigh, North Carolina 27622
Attention: Charles M. Winston, Sr.
To Purchaser: WINN Limited Partnership
2209 Century Drive, Suite 300
Raleigh, North Carolina 27622
Attention: Robert W. Winston, III
With copies to: William W. Bunch, III, Esquire
Brown & Bunch
4900 Falls of Neuse Road,
Suite 210 (street zip code 27609)
Post Office Box 19409
Raleigh, North Carolina 27619-9409
Notice shall be deemed given if properly addressed and delivered as set forth
herein two (2) days following deposit in the U.S. Mail, one (1) day following
deposit with any generally recognized overnight delivery service and on
personal hand delivery to a person authorized to receive such delivery, on the
day of such hand delivery. Any party may change addresses for notices by
delivering written notice of such change in accordance with this Article X.
XI. INDEMNITY
A. Purchaser and Seller warrant and represent each to the other
that they or it has not employed or utilized the services of a real estate
agent or broker in the transaction contemplated by this Agreement. Seller
shall indemnify and hold the Purchaser harmless from and against any claim for
any real estate commission, brokerage fee or finder's fee made by any person,
firm or corporation, claiming by, through or under the Seller. Purchaser shall
indemnify and hold the Seller harmless from and against any claim for any real
estate commission, brokerage fee or finder's fee made BY any person, firm or
corporation, claiming by, through or
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under the Purchaser. This warranty and representation shall survive the
Closing and the parties shall indemnify each other from any liability, cost or
loss arising out of a breach of said warranty and representation, including
consequential damages.
B. The Seller shall indemnify and hold the Purchaser harmless
from and against any and all liabilities, claims, demands, costs and expenses
of any kind or nature, including but not limited to, reasonable attorney's
fees, arising out of or incurred in connection with (i) any breach of the
representations and warranties of Seller set forth in this Agreement, (ii) the
ownership, use, maintenance or operation of the Premises on or prior to the
Closing or the transfer of the Premises to the Purchaser (including the payment
of all taxes),or (iii) compliance or failure to comply with the notice
provisions relating to bulk sales laws applicable to the transfer of all or any
part of the Premises. Purchaser shall indemnify and hold Seller harmless from
and against any and all liabilities, claims, demands, costs and expenses of any
kind or nature, including reasonable attorney's fees, arising after the date of
Closing and which arise out of the ownership or operation of the Premises by
the Purchaser following the Closing. Such indemnities shall survive Closing
and delivery of the Deeds.
C. If Purchaser or Seller propose to make any claim for
indemnification under any Article or Paragraph of this Agreement (the
"Indemnitee"), the Indemnitee shall deliver to the other party (the
"Indemnitor") a certificate signed by the Indemnitee which certificate shall
(i) state that a loss has occurred and (ii) specify in reasonable detail each
individual item of loss or other claim including the amount thereof and the
date such loss was incurred. The Indemnitor shall have the right in its
discretion and at its expense to participate in and control (a) the defense or
settlement of any claim, suit, action or proceeding (including appeals) in
respect of such item (or items) by any person other than a party hereto, (b)
any and all negotiations with respect thereto, and (c) the assertion of any
claim against any insurer with respect thereto, and the Indemnitee shall not
settle any such claim, suit, action or proceeding or agree to extend any
applicable statute of limitation without the prior written approval of the
Indemnitor. The rights of participation, control and approval granted to the
Indemnitor shall be subject as a condition precedent to the Indemnitor's
acknowledging to the Indemnitee, in writing, the obligation of the Indemnitor
to indemnify the Indemnitee in respect of such third party's claim, suit,
action or proceeding giving rise to such item. Upon satisfaction of such
condition precedent, the Indemnitee shall provide the Indemnitor with all
reasonably available information, assistance and authority to enable the
Indemnitor to effect such defense or settlement and upon the Indemnitor's
payment of any amounts due in respect of such claim, suit, action or
proceeding, the Indemnitee shall, to the extent of such payment, assign or
cause to be assigned to the Indemnitor the claims of the Indemnitee, if any,
against such third parties in
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respect of which such payment is made. If the Indemnitor is not so willing to
acknowledge such obligation, the parties shall jointly consult and proceed as
to any such third party claim, suit, action or proceeding.
XII. SELLER'S REPRESENTATIONS AND WARRANTIES
The Seller represents and warrants to the Purchaser that:
A. Seller is a corporation, duly organized, and existing and in
good standing under the laws of the State of North Carolina and authorized to
do business in the State of Georgia.
B. Seller is authorized to enter into this Agreement and to
consummate the transaction contemplated hereby, and the individuals executing
this Agreement on behalf of Seller are also duly authorized to execute this
Agreement and to bind Seller to consummate such transaction. The execution and
delivery of this Agreement and the conveyance of the Premises by Seller,
pursuant to this Agreement, do not require the consent of any person, agency or
entity not a party to this Agreement. The execution of this Agreement by
Seller and the transaction contemplated herein have been duly authorized by
proper corporate action, including the board of directors of Seller.
C. There are no pending or, to the knowledge of Seller,
threatened, condemnation or similar proceedings affecting the Premises, or any
portion thereof. Seller has not received any written notice that any such
proceeding is contemplated, and no part of the Premises has been destroyed or
damaged by any casualty.
D. As of the Date of this Agreement, Seller has not completed the
construction of the Improvements and opened the Hotel for business. It shall
be the responsibility of Seller to complete such construction and obtain all
permits and approvals necessary for the operation of the Hotel prior to
Closing. To the best of Seller's knowledge, the maintenance, operation, use or
occupancy of the Premises as a hotel does not and will not violate any
building, health, zoning, environmental, fire or similar law, ordinance,
regulation or restrictive covenant. To the best of Seller's knowledge, the
Premises do not and will not violate any federal, state, county, or municipal
laws, ordinances, orders, regulations or requirements nor has Seller received
any notice of such a violation.
E. There are no options to purchase, rights of first refusal or
other similar agreements with respect to the Premises which give anyone the
right to purchase the Premises or any part thereof. There are no contracts or
agreements which affect or cover
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the Premises, except for the Contracts, Permits and Leases. There are no
unpaid bills or claims in connection with the construction repair or
replacement of the Premises. There are no agreements allowing for any
reduction, concession or abatement of room rates.
F. Certificates of Occupancy for all buildings and other
improvements will be duly issued, and the buildings and improvements legally
occupied as a hotel prior to Closing. The Real Property is zoned properly for
the use thereof as a hotel.
G. Except as set forth in the Title Commitment, the Seller owns
and has good and marketable title to all of its assets and properties free and
clear of any security interest, mortgage, pledge, lien, conditional sale or
other encumbrance or charge, except the deeds to secure debt to be assumed by
Purchaser as set forth in Article II, Paragraph A. All of the Premises owned
or leased by Seller is, and at the time of Closing will be, in good condition
and in good working order. The Premises to be purchased is all of the property
of every kind and nature necessary for the operation of the Seller's business
in the ordinary course.
H. To the best of Seller's knowledge, the Premises are in
compliance with and have not violated any statute, law, ordinance, rule,
regulation, order and directive (including, without limitation, all labor and
environmental control and antipollution laws, ordinances, rules, regulations or
directives) of any and all Governmental Agencies pertaining to the use or
occupancy of the Premises.
The Seller has not received any notice of and the Seller and the Premises have
not been charged with, are not under investigation or threatened investigation
for failure to comply with and are in compliance with, any and all statutes,
laws, ordinances, rules, regulations, orders and directives of any and all
Governmental Agency or Agencies pertaining to the use, generation, dumping,
releasing, burying or disposing of or emitting of any particles, materials,
substances, or emissions that are now or have heretofore been determined by any
and all Governmental Agency or Agencies to be of a hazardous, toxic, pollutive,
or ecologically or environmentally damaging nature, including but not limited
to asbestos ("Hazardous Materials"). Seller has not previously disposed of any
Hazardous Materials at the Premises.
For purposes of this Agreement, the term "Hazardous Materials" shall include,
but not be limited to, those materials or substances now or heretofore defined
as "hazardous substances," "hazardous materials," "hazardous waste," "toxic
substances," or other similar designations under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C., Section 9601, et seq., the Resource Conservation and Recovery Act, 42
U.S.C., Section 6901, et seq., the Hazardous Materials Transportation Act, 49
U.S.C.,
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Section 1801, et seq. and other laws, whether or not of a similar nature,
applicable to the Premises and adopted by, enacted in or applicable to the
respective States in which the Premises are located.
For purposes of this Agreement, the term "Governmental Agency or Agencies"
means, whether of the United States of America, of any state or territory
thereof or of any foreign jurisdiction, any government, political subdivision,
court, agency, or other entity, body, organization or group exercising any
executive, legislative, judicial, regulatory or administrative function of
government.
To the best of Seller's knowledge, the Real Property has never appeared on any
federal or state registry of active or inactive hazardous waste disposal sites.
Seller has never received any notice of claim from a Governmental Agency
concerning the alleged release or threatened release of Hazardous Materials at
the Real Property. To the best of Seller's knowledge, no hazardous waste sites
exist within a one mile radius of the Real Property.
I. Seller has no knowledge of and has received no notice of any
causes of action, actions, or proceedings of whatever type or description which
have been instituted or threatened or are pending relating to the Premises or
any interest therein.
J. To the best of Seller's knowledge and belief, no
representation or warranty made by the Seller, nor in any statement or document
furnished or to be furnished to the Purchaser hereunder, or in connection with
the transaction contemplated hereby, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary to make the statements contained therein not misleading.
Purchaser, in Purchaser's sole and absolute discretion, may
waive any condition to close or breach of any representation or warranty
provided for herein or any Title or Survey Defect, and in such event, this
transaction shall be consummated as if such condition, representation, warranty
or defect was satisfied. All of the representations and warranties contained
in this Agreement shall survive the Closing. The representations and
warranties set forth above shall be true, correct and accurate on the date
hereof and as of the date of Closing.
XIV. COVENANTS
A. Upon completion of the construction of the Hotel and the
opening thereof for business, the Seller (i) shall commence and continue normal
and prudent maintenance and management of the Premises, (ii) shall commence and
maintain supplies and payroll at an appropriate level, and (iii) shall operate
the Hotel in the ordinary course of business.
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B. All taxes levied against the Premises which were or shall be
due and payable prior to the Closing have been or shall be paid in full by the
Seller on or prior to the Closing.
C. All Contracts and Leases shall be current and not in default
as of the Closing. Seller shall not enter into new Contracts or Leases except
in the ordinary course of business, and provided that any such new Contract or
Lease shall either provide that it may be cancelled on not more than 30 days
notice by Seller at no penalty or cost or, Purchaser shall consent to such
Contract or Lease in writing.
D. Seller shall maintain fire and casualty insurance on the
Premises up to and including the Closing in amounts reasonably satisfactory to
Purchaser.
XV. SECURITIES MATTERS. Purchaser and Seller acknowledge, agree,
represent and warrant each to the other, that the Units to be issued pursuant
to this Agreement will be received and accepted as follows:
A. Each of such persons to whom the Units will be transferred (a) if
an individual, either (i) has an individual net worth, or a joint net
worth with his/her spouse, at the time of purchase in excess of
$1,000,000.00; or (ii) has an individual gross income (jointly with
his/her spouse) in excess of $200,000.00 for the two most recent years
and reasonably expects an income in the current year in excess of
$300,000.00, or (b) if a corporation, partnership or trust, is
otherwise an "accredited investor" as that term is defined in
Regulation D promulgated by the Securities and Exchange Commission;
and Seller shall have written corroboration of such matters as to each
party who will receive Units as a result of the transaction provided
for herein, as of the time they receive Units;
B. The Units are being acquired subject to the terms and conditions
described in the Partnership Agreement of Purchaser, a copy of which
has been obtained by or otherwise provided to such persons;
C. Except in connection with a redemption of the Units, the Units are
being and shall be received and held by such persons for their own
account for investment purposes only, and not with a view to any
offering or distribution thereof, and such persons have no present
intention of selling or otherwise disposing of the Units;
D. The Units have been obtained by such persons without the service
of any broker, dealer, investment banker or finder, and there is no
obligation to pay a commission,
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fee, bonus or remuneration of any type to any broker, dealer,
investment banker, or finder;
E. Such persons have been given access to all registration
statements, proxy materials, financial statements and filings with the
Securities and Exchange Commission relating to the shares of Winston
Hotels, Inc. and the business of the Purchaser, and such materials are
understood by Seller and such persons without the benefit of an
investment adviser, lawyer, accountant or other professional;
F. Such persons have been afforded the opportunity to ask questions
of and receive answers from Winston Hotels, Inc., the Purchaser and
their representatives concerning matters relating to the
capitalization, management, financial condition, operations and
prospects, financial and otherwise, of the Purchaser and Winston
Hotels, Inc., and no verbal information has been furnished to such
persons in connection with this transaction which is in any way
inconsistent with or at variance from the written information so
provided;
G. The Units are not registered under the Securities Act of 1933, as
amended, and the owners thereof may be required to bear the economic
risk of ownership of the Units for an indefinite period of time; and,
consequently, the Units cannot be sold unless the offer and sale
thereof is subsequently registered under the Securities Act of 1933
and the "blue sky" law of each state in which any of the Units are
offered for sale, unless an exemption from registration is available;
H. Purchaser will distribute or transfer the Units only to persons
who make the same representations and warranties as are set forth in
this Article XV; and,
I. Seller understands that the Units have not been and will not be
registered under state or federal securities laws. Seller shall be
entitled to convert the Units into an equal number of shares of common
stock, par value $.01 per share, in Purchaser's general partner,
Winston Hotels, Inc., a North Carolina corporation ("Shares"), at a
conversion price based on the then current trading price of the common
stock of Winston Hotels, Inc. at the time of such conversion or cash
as set forth in the partnership agreement of Purchaser. Seller
further understands that neither the Units nor Shares may be sold or
transferred except according to the terms of this Agreement, the
partnership agreement of Purchaser and pursuant to an effective
registration statement under the Securities Act of 1933, as amended,
or pursuant to an exemption from
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registration. Notwithstanding the foregoing, Seller hereby requests
and Purchaser hereby agrees, that it shall cause the registration of
Shares issuable hereunder upon redemption of Units on at least sixty
(60) days notice. Purchaser shall use its best efforts to file and
obtain the necessary regulatory approvals for a registration statement
under which Seller can sell the Shares. Seller shall cooperate with
Purchaser, at no expense to Seller, with respect to obtaining the
necessary regulatory approvals for a registration, all of which shall
be at the expense of Purchaser.
XVI. BINDING EFFECT; MISCELLANEOUS
A. This Agreement shall be binding upon and shall inure to the
parties hereto, their respective heirs, successors, legal representatives and
assigns. This Agreement sets forth the entire Agreement between the parties
hereto and no other prior written or oral statement or agreement or
understanding shall be recognized or enforced. All modifications or amendments
shall be in writing and signed by the parties. This Agreement is to be
construed according to the laws of the State of North Carolina. This Agreement
may be executed in two or more counterparts all of which shall constitute one
and the same instrument. The singular shall include the plural and vice versa.
B. The Purchaser may assign this Agreement to a corporation,
partnership or other entity.
C. Notwithstanding anything contained in this Agreement to the
contrary, it is expressly understood and agreed as follows: (i) the
shareholders of Seller shall have no personal liability whatsoever as a result
of this Agreement and any of the covenants, representations, warranties or
agreements contained herein; and, (ii) regardless of the prorations, deductions
or other adjustments provided for herein, the consideration to the Seller as a
result of this Agreement and the transaction contemplated herein shall be the
assumption of the indebtednesses set forth in Article II, Paragraph A and the
issuance to Seller of limited partnership units in Purchaser having an
aggregate value of One Million Two Hundred Thirty Thousand and N0/100 Dollars
($1,230,000.00).
D. As used herein, "the Date of this Agreement" shall mean the date
noted below as the date upon which this Agreement was executed by the latter of
Purchaser or Seller.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
Purchaser:
WINN Limited Partnership,
a North Carolina limited partnership
By: Winston Hotels, Inc.,
a North Carolina corporation,
General Partner
(Corporate Seal) By:___________________________
_______ President
Attest:
_________________
______Secretary
Date signed by Purchaser:
________________________
Seller:
WJS Associates - Perimeter II, Inc.,
a North Carolina corporation
(Corporate Seal) By:___________________________________
____________President
Attest:
_______________________
______Secretary
Date signed by Seller:
_______________________
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STATE OF __________________
COUNTY OF _________________
I, a Notary Public of the County and State aforesaid, certify that
__________________________, personally came before me this day and acknowledged
that _he is ___________________ Secretary of Winston Hotels, Inc., a North
Carolina corporation, General Partner of WINN Limited Partnership, a North
Carolina limited partnership, and that by authority duly given and as the act
of the corporation, as such General Partner, the foregoing instrument was
signed in its name by its ______ President, sealed with its corporate seal and
attested by ___________________ as its ________ Secretary.
Witness my hand and seal, this the _____ day of _____________, 199__.
My commission expires:_____ _____________________________
Notary Public
(SEAL)
STATE OF _______________
COUNTY OF ______________
I, a Notary Public of the County and State aforesaid, certify that
_________________________________ personally came before me this day and
acknowledged that _he is __________ Secretary of WJS Associates - Perimeter II,
Inc., a North Carolina corporation, and that by authority duly given and as the
act of the corporation, the foregoing instrument was signed in its name by its
President, sealed with its corporate seal and attested by ___ as its _____
Secretary.
Witness my hand and seal, this the ____ day of _____________, 199__.
My commission expires:_____ ______________________________
Notary Public
(SEAL)
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