I PONTRIBUTION AGREEMENT
T ION AGREEMENT (this "Agreement") is made
as of April /,q,1998, among South Seas Properties Company
Limited Partnership, a'n Ohio limited partnership (IISSPCII),
South Seas Resorts Company Limited Partnership, a Florida
limited partnership (IISSRCII), South Seas Resort Limited
Partnership, an Ohio limited partnership (IISSRLP'l), Marco
SSP, Ltd., a Florida limited partnership ("Marco"), and South
Seas &: Captiva Properties, L.P., a Florida limited
partnership (IISS&CPII; SSPC, SSRC, SSRLP, Marco and SS&CP
are referred to herein individually as a "Seller", and
collectively as "Sellers"), CapStar Hotel Com-oany, a
Delaware corporation ("CapStar"), and CapStar Management
Company, L.P., a Delaware limited partnership ("CapStar
Management"; CapStar and CapStar Management are referred to
herein individually as a "Purchaser", and collectively as the
"Purchasers").
RECITALS:
A., SSPC owns, among other things, the hotel,
resort and golf and tennis club properties listed below
(individually, an IISSPC Owned Property" and, collectively,
the IISSPC Owned Properties"):
1. Best Western Sanibel Island Beach Resort, Sanibel
Island, Florida ("Best Western Sanibel,');
2. Song of the Sea, Sanibel Islaiid, Florida ("Song of the
Sea"); and
3. The Dunes Golf & Tennis Club, Sanibel Island, Florida
("Dunes Club,');
B. SSRLP owns the resort commonly known as South
Seas Plantation Resort & Yacht Harbour, Captiva Island,
Florida ("South Seas Plantation");
C. Marco owns the resort hotel commonly known as the
Radisson Suite Beach Resort on Marco Island, Marco Island,
Florida ('!Marco Radisson,l);
D. SS&CP is in the real estate brokerage business
(the "Brokerage Business");
E. Sellers are engaged (directly or indirectly)
in, among other things, the following related businesses: (i)
operating and managing the SSPC Owned Properties, South Seas
Plantation and Marco Radisson (individually, a "Property"
and, collectively, the "Properties"), (ii) managing the
short-term rental and leasing of individual condominium units
and private residences at South Seas Plantation, and (iii)
the Brokerage Business (collectively, the "Business,,);
F. Each Seller desires to contribute to CaDStar
Management all of the right, title and interest in and to the
assets, properties and rights (contractual or otherwise) and
business of such Seller with respect to the Business, on the
terms and conditions set forth herein.
G. Concurrently with the execution of this
Agreement, SSPC, SSRC and Safety Harbor Management Company,
Ltd., a Florida limited partnership ("SHMCII), and Purchasers
have entered into a separate Asset Purchase Agreement (the
"Other Agreement") providing for the sale of certain assets
of SSPC, SSRC and SHMC to Purchasers.
H. CapStar and American General Hospitality
Corporation ("AGTII) have signed a definitive agreement
pursuant to which, among other things: (i) CapStar will merge
into AGT (the "Merger"), (ii) AGT will change its name to
MeriStar Hospitality Corporation ("MeriStar Hospitality"),
(iii) an operating partnership to be named MeriStar
Hospitality Operating Partnership, L.P. will become the
MeriStar Hospitality operating partnership in connection with
the Merger ("MeriStar Hospitality Operating Partnership"),
(iv) CapStar will spin off its hotel operations and
management business to its current shareholders as a new C-
corporation to be named MeriStar Hotels & Resorts,
Inc(i'MeriStar Hotels") and (v) a new operating partnership
to be named MeriStar Hotels & Resorts Operating Partnership,
L.P. will be formed t'I'MeriStar Hotels Operating
Partnership").
NOW, THEREFORE, in consideration of the mutual
covenants contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are
hereby acknowledged, each Seller and each Purchaser agrees as
follows:
ARTICLE I
DEFINITIONS; DESCRIPTION OF CONTRIBUTED ASSETS;
EXCLUDED PROPERTY
Section 1.1 Definitions. Capitalized words not
otherwise defined in this Agreement have the meanings set
forth in Exhibit A.
Section 1.2 Contributed Assets. Upon the terms and
subject to the conditions set forth in this Agreement, at the
Closing, each Seller shall contribute to CapStar Management
all right, title and interest of that Seller in and to the
Contributed Assets, but expressly excluding the Excluded
Assets.
Section 1.3 Excluded Assets. There shall be
excluded from the assets, properties, rights (contractual and
otherwise) and business to'be contributed to CapStar
Management pursuant to Section 1.2 the assets, properties,
rights (contractual and otherwise) and business set forth on
Schedule 1.3 (the "Excluded Assets").
Section 1.4 Non-Assi ent of Certain Property.
Notwithstanding anything to the contrary in this Agreement,
to the extent that the assignment hereunder of any of the
Contributed Assets shall require the consent of any other
party (or in the event that any of the same shall be non-
assignable), neither this Agreement nor any action taken
pursuant to its provisions shall constitute an assignment or
an agreement to assign if such assignment or attempted
assignment would constitute a breach thereof or result in the
loss or diminution in the value of such Contributed Asset;
provided, however, that in each such case, Sellers shall use
commercially reasonable efforts to obtain the consent of such
other party to an assignment thereof to CapStar Management.
ARTICLE II
ASSUMPTION OF CERTAIN LIABILITIES; LIABILITIES NOT ASSUMED
Section 2.1 Assum-ption of Certain Liabilities.
CapStar Management shall assume and be responsible for the
timely satisfaction or performance, as the case may be, of
the following: (i) all Liabilities with respect to the
Properties and the Contributed Assets (including, without
limitation, the Contracts, the Indenture and the Leases)
arising or a--cruing on or after the Closing Date; (ii) any
Liabilities described herein to the extent CapStar or CapStar
Management has received a credit against the Contribution
Consideration therefor; and (iii) the Assume@. Debt
(collectively, the "Assumed Liabilities").
Section 2.2 Liabilities Not Assumed. Except for
the Assumed Liabilities, neither CapStar nor CapStar
Management shall by execution and performance of this
Agreement assume or otherwise be responsible for any
Liabilities of Sellers or with respect to the Contributed
Assets (the "Excluded Liabilities").
ARTICLE III
CONTRIBUTION CONSIDERATION; PAYMENT OF CONTRIBUTION
CONSIDERATION; EARNEST MONEY DEPOSIT
Section 3.1 Contribution Consideration. In
consideration for the Contributed Assets, Purchasers shall
pay to Sellers, in the manner set forth in Section 3.2 below,
One Hundred Fifty-Three Million Dollars ($153,000,000), plus
or minus the adjustments and prorations called for in Article
XII and elsewhere in this Agreement (the "Contribution
Consideration").
Section 3.2 Payment of Contribution Consideration.
(a) on the terms and subject to the conditions of
this Agreement, on the Closing Date, Purchasers shall: (i)
assume the Assumed Liabilities, and (ii) issue to SSPC a
number of Partnership Units (the "Unit Portion") equal to the
quotient obtained by dividing Thirty Million Dollars
($30,000,000) (the "Dollar Amount") by the Collar Price;
provided, however, that if
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the Closing Date Price is less than $27.17, the number of
Partnership UniL-s to be issued shall be determined by
multiplying the quotient obtained by dividing the Dollar
Amount by $30.56 by a fraction the numerator of which is
$27.17 and the denominator of which is the Closing Date
Price; and, provided, further that if the Closing Date Price
is greater than $40.75, the number of Partnership Units to be
issued shall be determined by multiplying the quotient
obtained by dividing the Dollar Amount by $37.36 by a
fraction the numerator of which is $40-75 and the denominator
of which is the Closing Date Price. If the Closing Date
Price is less than $27.17, CapStar shall have the option of
paying the difference between the "Collar Amount" and the
"Floor Amount" in immediately available funds at the Time of
Closing, in which event the number of Partnership Units to be
issued shall be determined by dividing the Dollar Amount by
the Collar Amount. For purposes of the preceding sentence,
the "Collar Amount" shall mean the amount determined by
multiplying the quotient obtained by dividing the Dollar
Amount by $30.56 by $27.17, and the "Floor Amount" shall mean
the amount determined by multiplying the quotient obtained by
dividing the Dollar Amount by $30.56 by the Closing Date
Price.
(b) If at the Time of Closing the sum of the
Assumed Debt and the net adjustments and prorations called
for in Article XII and elsewhere in this Agreement
(collectively, the "Variable Portion") is greater than One
Hundred Twenty-Three Million Dollars ($123,000,000), then at
the Time of Closing SSPC shall pay to CapStar in immediately
available funds the amount by which the Variable Portion
exceeds One Hundred Twenty-Three Million Dollars
($123,000,000). If at the Time of Closing the Variable
Portion is less than One Hundred Twenty-Three Million Dollars
($123,000,000), then at the Time of Closing CapStar shall pay
to SSPC in immediately available 'Lunds the amounl- by which
the Variable PorL--ion is less than One Hundred Twenty-Three
Million Dollars ($123,000,000).
Section 3.3 Effect of Mercrer Transaction on
Contribution Consideration. If between the date hereof and
the Time of Closing the Merger is consummated, then in lieu
of delivering Partnership Units in CapSL--ar Management in
satisfaction of the Unit Portion of the Contribution
Consideration, CapStar shall deliver to SSPC or shall cause
to be delivered to SSPC one Partnership Unit in each of
MeriStar Hotel Operating Partnership and MeriStar Hospitality
Operating PartnershiD for each Partnership Unit in CaDStar
Management that SSPC otherwise would have been entitled to
under this Agreement. .Sellers and Purchasers acknowledge and
agree that the consummation of the Merger shall not be a
condition to their respective obligations under this
Agreement.
Section 3.4 Earnest Money Deposit. Upon execution
of this Agreement CapStar shall deposit the sum of One
Million Dollars ($1,000,000) (the "Initial Deposit") in an
escrow account
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established with First American Title Insurance Company,
Washington, D.C. (the "Escrow Agent"). Upon expiration of
the Due Diligence Period, if CapStar and CapStar Management
decide to proceed with the transaction contemplated hereby,
CapStar shall deposit the additional sum of Fourteen Million
Dollars ($14,000,000), Five Million Dollars ($5,000,000) of
which may be in the form of an irrevocable letter of credit
complying with the requirements of Section 3.5 below (the
"Additional Deposit"; the Additional Deposit and the Initial-
Deposit are hereafter collectively referred to as the
"Earnest Money Deposit"). The Initial Deposit and the
Additional Deposit shall be invested in an interest-bearing
account reasonably acceptable to both parties. If there is a
conflict between the provisions of this Agreement and the
terms of any applicable escrow agreement, the provisions of
this Agreement shall govern. If this transaction is
consummated, the Earnest Money Deposit (together with any
interest earned thereon) shall be returned to CapStar. if
Purchasers terminate this Agreement prior to the expiration
of the Due Diligence Period, the Earnest Money Deposit
(together with any interest earned thereon) shall be returned
to CapStar. If after expiration of the Due Diligence Period
this transaction is not consummated, the Earnest Money
Deposit (together with any interest earned thereon) shall be:
(i) returned to capSL--ar if the reason this transaction is
not consummated is because (A) CapStar and CapStar Management
have elected to terminate this Agreement pursuant to Article
X, (B) CapStar and CapStar Management have elected to
terminate this Agreement pursuant to Section 11.7, or (C) the
failure of one or more of the conditions precedent set forth
in Sections 7.1 or 7.2 of this Agreement to be satisfied at
or prior to the time required by this Agreement, or (ii) paid
to Sellers, as liquidated damages under Section 11.10 hereof,
if this transaction is not consummated by reason of the
default of Car,Star or CapSt--ar Management hereunder.
Section 3.5 Letter of Credit. In lieu of funding
the entire Additional Deposit in immediately available funds,
CapStar may deliver to the Escrow Agent an irrevocable and
unconditional letter of credit in the amount of up to Five
Million Dollars ($5,000,000), expiring no sooner than thirty
(30) days following the scheduled Closing Date, naming the
Escrow Agent as beneficiary thereunder, issued by a bank that
is a member of the New York Clearing House Association, and
otherwise in form and substance reasonably acceptable to SSPC
(the "Letter of Credit"). The cost of the Letter of Credit
shall be paid by CapStar. The Letter of Credit shall be held
by the Escrow Agent to secure CapStar's and CapStar
Management's obligations under this Agreement. If the
Closing is unlikely to occur on the scheduled Closing Date
and if CapStar fails to extend the Letter of Credit at least
fifteen (15) days prior to its expiration to a date upon
which the Closing is likely to occur, then the Escrow Agent
may draw the proceeds of the Letter of Credit and hold the
proceeds thereof as security for the performance of CapStar's
and CapStar Management's obligation to complete the
transaction contemplated
hereby. As provided in the Letter of Credit, it may be drawn
upon by the Escrow Agent if SSPC has terminated this
Agreement due to the default of CapStar or CapStar Management
hereunder. All funds drawn on the Letter of Credit shall
comprise earnest money and shall be paid over to SSPC at the
same time any remaining Earnest Money Deposit is paid over to
SSPC under Section 3.4. The Letter of Credit shall be
returned to CapStar (i) upon SSPC's receipt of the
Contribution Consideration andother sums to be paid under
this Agreement, or (ii) at the same time the Earnest Money
Deposit is paid over to CapStar under Section 3.4. In
addition to the other instances in this Section 3.5 under
which the Letter of Credit may be drawn upon, the Letter of
Credit may be drawn upon and the proceeds thereof paid to
SSPC at such time as SSPC is required under Section 8.4(e) to
purchase Notes tendered as part of the Tender Offer.
Section 3.6 Tax-Free Contribution. The parties
agree that the transfer of Contributed Assets to CapStar
Management as contemplated by this Agreement shall be treated
for federal income tax purposes as a contribution of the
Contributed Assets to CapStar Management in exchange for a
partnership interest in CapStar Management that is intended
to qualify as a tax-free contribution under the Code.
ARTICLE IV
DUE DILIGENCE PERIOD; BOARD OF DIRECTOR APPROVAL
Section 4.1 Due Diligence Period.
(a) CapStar and CapStar Managemen
(a) CapStar and CapStar Management shal until
5:00 p.m., Eastern Standard Time, on April Y01998 ( "Due
Diligence Period"), to determine whether in@aeir sole and
absolute discretion they will proceed with this transaction. If
CapStar fails to notify SSPC in writing prior to the expiration of the
Due Diligence Period that CapStar has elected not to proceed with this
transaction, CapStar and CapStar Management shall be deemed to have
irrevocably elected to proceed with this transaction.
(b) subject to the remaining provisions of this
Section 4.1, during the Due Diligence Period, Sellers shall
give CapStar and CapStar Management access to the
Contributed Assets. Sellers shall furnish to CapStar and
CapStar Management as promptly as reasonably practicable
during the Due Diligence
Period all additional materials, documents and
information
concerning the Contributed Assets as CapStar or CapStar
.Management may reasonably request, to the extent the same
exist
and are in the possession or control of Sellers or the
Seller
Entities. CapStar and CapStar Management agree that no
Seller
shall have to undertake any tests, studies or
investigations in
discharging its obligations under this Section 4.1(b).
(c) CapStar and CapStar Management shall have the
right, at their cost and expense, to perform or cause to be
performed, any structural, engineering and environmental
tests, studies and investigations deemed necessary by CapStar
or CapStar Management; provided, however, that such tests,
studies and investigations undertaken by CapStar or CapStar
Management or their respective employees, agents or
representatives (collectively, the "CapStar Representatives")
shall be conducted only: (i) upon not less than forty-eight
(48) hours' prior notice to SSPC; (ii) during normal business
hours of SSPC; and (iii) with SSPC's prior written approval
(which approval shall not be unreasonably withheld). All of
CapStar's and CapStar Management's activities under this
Section 4.1 shall be coordinated through Richard E. Krichbaum
or his designee. CapStar and CapStar Management shall
conduct their activities under this Section 4.1 in a manner
so as not to unreasonably interfere or otherwise unreasonably
disrupt the Business, operation of the Properties or the
Employees or guests of Sellers. Notwithstanding any other
provision of this Section 4.1 to the contrary, neither
CapStar nor CapStar Management shall perform any drilling,
boring or similar invasive testing without Richard E.
Krichbaum's prior written consent. Neither CapStar nor
CapStar Management shall, without the prior written consent
of Richard E. Krichbaum, (i) disclose the nature or purpose
of their activities to anyone other than CapStar
Representatives and Robert M. Taylor, Richard E. Krichbaum,
Timothy R. Bogott or Judy Emens, or (ii) disrupt Sellers'
Employees or guests.- CapStar and CapStar Management agree to
jointly and severally indemnify and hold harmless Sellers,
their respective employees and partners from and against any
and all losses, damages, claims, costs and expenses
(including legal fees- and expenses) to the extent caused by
CapStar, CapStar Management or the CapStar Representatives
arising from any inspection activities undertaken under this
Section 4.1. CapStar and CapStar Management, at their own
cost and expense, shall restore any damage to the Property
caused by any of the tests, studies or investigations made by
CapStar, CapStar Management or the CapStar Representatives.
Any information obtained by CapStar, CapStar Management or
the CapStar Representatives under this Section 4.1 shall be
subject to the confidentiality provisions of Section 8.3(a)
of this Agreement. The indemnification obligations and other
obligations of CapStar and CapStar Management in this Section
4.1 shall survive termination of this Agreement and the
Closing.
(d) Sellers and CapStar have caused the Title
Compdny to furnish to CapStar and CapStar Management the
title insurance commitments listed on Schedule 4.1(d) issued
by the Title Company covering each parcel of Real Property,
binding the Title Company to issue ALTA Form B-1970 Owner's
Policies of Title Insurance, in favor of CapStar Management,
together with copies of all documents identified in such
title insurance commitments as exceptions to title (the
"Title Commitments"). Sellers have delivered or made
available to CapStar and CapStar Management
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copies of the existing land surveys listed on Schedule 4.1(d)
with respect to each parcel of Real Property (the "Existing
Surveys"). CapStar shall,have until 5:00 p.m., Eastern
Standard Time, on April 9, 1998, to notify SSPC and the Title
Company of any restrictions, reservations, limitations,
easements, conditions, defects or encumbrances (together
herein called "Title Defects") disclosed in the Title
Commitments which are objectionable to CapStar. If CapStar
so notifies SSPC of any Title Defects, SSPC shall have until
5:00 p.m., Eastern Standard Time, on April 13, 1998 (the
"Reply Period") in which to cure or remove or commit to cure
or remove such Title Defects. Upon expiration of the Reply
Period, the Title Company shall notify SSPC and CapStar as to
whether or not it is then in a position to insure over the
Title Defects or issue its policies of title insurance
(collectively, the "Title Policies") without showing as
exceptions the Title Defects. If the Title Company shall
notify the parties that it will issue the Title Policies,
this transaction shall be consummated in accordance with the
terms and provisions of this Agreement. If the Title Company
shall notify the parties that it will not issue the Title
Policies with the Title Defects removed or insured over, this
Agreement shall, at CapStar's option, thereupon be
terminated, void and of no further force and effect, the
Escrow Agent shall thereupon return to CapStar the funds and
documents previously paid or deposited by it, including, but
not limited to, the Earnest Money Deposit, and the parties
shall be fully released and discharged from any liability or
obligation hereunder. The items set forth in the Title
Commitments to which CapStar does not object or to which
CapStar has objected prior to expiration of the Due Diligence
Period but which the Title Company has agreed in writing to
remove or insure over are hereafter referred to as "Permitted
Title Exceptions." Permitted Title Exceptions shall also
include any purchase money security interests granted in
connection with the purchase of any of the personal property
that is the subject of the Equipment Leases being assumed by
CapStar Management hereunder. Notwithstanding anything to
the contrary contained in this Agreement, with the exception
of the Assumed Debt, the Permitted Title Exceptions and any
items for which CapStar or CapStar Management has received a
credit against the Contribution Consideration under Section
12.1 hereof, Sellers shall cause all monetary liens or
encumbrances affecting the Properties and disclosed in the
Title Commitments (or incurred after the effective time of
the Title Commitments) to be removed on or prior to Closing.
ARTICLE V
SELLERS' REPRESENTATIONS AND WARRANTIES
To induce CapStar and CapStar Management to enter
into this Agreement and to consummate the transaction
contemplated hereby, each Seller hereby makes the following
representations and warranties with respect to itself and the
Contributed Assets in which such Seller has an ownership
interest (directly or
indirectly) , upon which each Seller acknowledges and agrees
that
CapStar and CapStar Management are entitled to rely:
Section 5.1 Organization and Power of Sellers.
Each Seller is duly formed or organized (as the case may be),
validly existing and in good standing or full force and
effect in the jurisdiction of its formation or organization,
and is qualified to do business in all jurisdictions in which
such qualification is necessary (except where such failure to
qualify would not result in a Material Adverse Effect), and
has all requisite corporate or partnership (as the case may
be) power and authority to own, lease and operate its
proverty and to carry on its business as now being conducted.
Section 5.2 Authority and Binding Obligation.
Each Seller has full corporate or partnership (as the case
may be) power and authority to execute and deliver this
Agreement and all documents now or hereafter to be executed
and delivered by such Seller pursuant to this Agreement and
to perform all obligations arising under this Agreement and
under such other documents. The execution, delivery and
performance of this Agreement by each Seller has been duly
and validly authorized by all necessary corporate or
partnership (as the case may be) ac+@-ion on the part of such
Seller, and this Agreement has been duly executed and
delivered by such Seller. This Agreement and such other
documents, when executed and delivered, will each constitute
the legal, valid and binding obligations of each Seller,
enforceable against each Seller in accordance with their
respective terms.
Section 5.3 Consents and Approvals; No Conflicts.
With respect to each Seller: (i) there is no legal impediment
to such Seller's donsummation of the transaction contemplated
by this Ag--eement; and (ii) no f iling with, and no permit,
authorization, consent or approval of, any Governmental
Authority is necessary for the consummation by such Seller of
the transaction contemplated by this Agreement. Neither the
execution and delivery of this Agreement by such Seller, nor
the consummation by such Seller of the transaction
contemplated hereby, nor compliance by such Seller with any
of the provisions hereof will: (i) result in a violation of
any provision of such Seller's organizational or governing
documents in which such Seller owns an interest; (ii) violate
any Applicable Law to which such Seller is subject; or (iii)
result in a violation or breach of, or constitute a default
under, any Material Contract.
Section 5.4 Title to Contributed Assets.
(a) Schedule 1.2(a) sets forth a true, correct
and complete legal description of each parcel of the Land and
the correct and complete address of each Property. SSPC
(with respect to Best.Western Sanibel, Song of the Sea, and
Dunes Club), SSRLP (with respect to South Seas Plantation),
and Marco (with respect to Marco Radisson) own fee simple
title to such
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Real Property, which in each case shall be free and clear of
all mortgages, pledges, liens, security interests,
encumbrances and restrictions of any nature whatsoever as of
the Closing Date, subject only to the Permitted Title
Exceptions.
(b) Each Seller has good title to the Personal
Property used by it in connection with its business, which in
each case shall be free and clear of all mortgages, pledges,
liens, security interests, encumbrances and restrictions of
any nature whatsoever as of the Closing Date, subject only to
the Permitted Title Exceptions.
(c) Except for the pledge of the DG&CC Stock
granted in connection with the Credit LyonnaiS Debt, SSPC
owns the DG&CC Stock free and clear of all liens, security
interests, encumbrances and restrictions of any nature
whatsoever. The sole asset held by DG&CC is the liquor
license issued i-n connection with the operation of the
Dunes. To Sellers, Knowledge, DG&CC has no Liabilities.
Section 5.5 Absence of Changes. Since December 31,
1997, there has not been any material adverse change in the
business, assets, properties, liabilities, revenues or
financial condition of any Seller or the Properties, except
for changes due to the seasonal nature of the Business.
Section 5.6 Financial Statements and Reports; Absence
of Undisclosed Liabilities.
(a) Schedule 5.6 sets forth: (i) the audited and
unaudited consolidated financial statements of SSPC, (ii) the
unconsolidated unaudited financial statements of SSPC, Marco
SSP, Ltd. and South Seas Resort Limited Partnership, and
(iii) certain other financial reports that have been
furnished previously to Purchasers by Sellers (the "Financial
Statements"). The Financial Statements are true and correct
in all material respects, have been prepared from and are in
accordance with the books and records cf each Seller in
substantial conformity with GAAP applied on a consistent
basis throughout the periods involved, and fairly present in
all material resnects the financial condition of each Seller
as of the dat@s stated and the results of operations for the
periods then ended (subject, in the case of unaudited interim
consolidated financial statements, to normal year-end
adjustments). SSPC has filed all required forms, reports and
documents with the Securities and Exchange Commission
required to be filed by it pursuant to the Securities
Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder, all of which have
complied in all material respects with the applicable
requirements of the Securities Exchange Act of 1934, as
amended, and such rules and regulations (hereinafter
collectively referred to as the IISSPC Reports"). None of
the SSPC Reports, at the time filed, contained any untrue
statement of a material fact or omitted to
1 0
state a materi-al fact required to be stated therein or
necessary in order to make the statements therein, in light
of the circumstances under which they were made, not
misleading. The financial statements of SSPC included in the
SSPC Reports complied as to form in all material respects
with applicable accounting requirements and the published
rules and regulations of the Securities and Exchange
Commission a-Qplied on a consistent basis (except as
otherwise noted in such financial statements) and present
fairly in all materi-al respects the financial position,
results of operations, cash flows and changes in financial
position of SSPC and its consolidated subsidiaries as of the
dates stated or the periods indicated, subject, in the case
of unaudited interim consolidated financial statements, to
normal year-end adjustments. Purchaser acknowledges that
under the terms of the lease between SHMC, an affiliate of
SSPC, the annual lease payment is $1,200,000 and that a
portion of the lease payment will be credited against the
option to purchase contained in the lease if the option is
exercised. Because SHMC expects to exercise the option, SSPC
has capitalized a portion of the annual lease payment and
SSPC's Financial Statements reflect lease expense of
approximately $135,000 for the calendar year 1997.
(b) To Sellers, Knowledge, no Seller has any
Liabilities which are required to be disclosed on a balance
sheet under GAAP, other than (i) the Liabilities shown in the
Financial Statements, (ii) Liabilities disclosed in any of
the Schedules attached hereto, and (ii) Liabilities which
have arisen since December 31, 1997 in the ordinary course of
business (none of which relate to any breach of contract,
tort, or violation of .kpplicable Law).
SecL--ion 5.7 Com-pliance with A-ot)licable Law.
Except as disclosed in Schedule 5.7, to Sellers' Knowledge,
no Seller is in violation of any Applicable Law.
Section 5.8 Liticration. Except as disclosed in
Schedule 5.8, there is no action, suit or proceeding pending
or, to Sellers, Knowledge, threatened against any Seller or
the Properties in any cour-L or before any Governmental
Authority which: (i) seeks to enjoin or prohibit, or
otherwise questions the validity or enforceability of this
Agreement or any action taken or to be taken by Sellers in
connection with this Agreement, or (ii) if adversely
determined would have a Material Adverse Effect.
Section 5.9 Insurance. Schedule 5.9 sets 'Lorth a
true, correct and complete lisl-- and description of each
insurance policy maintained by any Seller with respect to the
Properties (the "Insurance Policies"). To Sellers'
Knowledge, all of the Insurance Policies are valid and in
full force and effect.
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Section 5.10 Labor and Em-ployment Matters. To
Sellers' Knowledge, each Seller has complied in all respects
with all Applicable Laws relating to employment matters.
There are no collective bargaining or other labor agreements
to which any Seller is bound with respect to employees of any
Seller.
Section 5.11 Taxes. All Taxes imposed upon any
Seller with respect to the Business or the Contributed Assets
which are due and payable by the applicable Seller have been
paid in full and are current. No Seller has received any
written notice that any such Taxes are overdue or have not
been paid. To Sellers, Knowledge, each Seller has duly filed
all federal, state and local tax returns and tax reports
required to be filed by it under Applicable Law, all such
returns and reports are true and correct in all material
respects and all Taxes and other charges arising under such
returns and reports have been fully paid or will be timely
paid.
Section 5.12 Enviro=ental Matters. Schedule 5.12
sets forth a true, correct and complete list of all
environmental assessments, reports and studies with respect
to the Land prepared within the last three (3) years by or on
behalf of, or otherwise in the possession or control of, any
Seller and Sellers have delivered or made available to
CapStar a copy of each such assessment, report and study.
Except as disclosed in Schedule 5.12, there are no pending
Environmental Claims, and to Sellers, Knowledge, no
Environmental Claims are threatened.
Section 5.13 ERISA. (a) The only "employee pension
benefit plans", as defined in Section 3 of ERISA, maintained
by S-ellers are those disclosed in Schedule 5.13 (the
"Pension Plans"), and the only "employee welfare benefit
plans", as defined in Section 3 of ERISA, maintained by any
Seller are those disclosed in Schedule 5.13 (the "Welfare
Plans"; the Pension Plans and the Welfare Plans are hereafter
collectively referred to as the "Plans") .
(b) Except as disclosed in Schedule 5.13, a
favorable determination letter has been issued by the
Internal Revenue Service wil--h respect to L--he tax-
qualified status under Section 401(a) of the Code for each
Pension Plan. Since the date of the most recent
determination letter, each Pension Plan has been timely
amended to comply with all Applicable Laws with respect to
such Pension Plan, and a request for a new determination
letter has been filed with the Internal Revenue Service
within the time required to preserve the rights of the
sponsor of such Pension Plan to adopt such amendments to such
Pension Plan as may be required by the Internal Revenue
Service in order to secure a favorable determination letter
with respect to such Pension Plan's continued L--ax-qualified
status.
(c) No Seller has incurred any material liability to
the Internal Revenue Service, the U.S. Department of Labor,
the
12
Pension Benefi-t Guaranty Corporation or any participant or
former participant with respect to the Plans, other than
routine claims for benefits.
- - (d) Except as disclosed in Schedule 5.13: (i) the
Plans have been maintained, operated and administered in all
material respects in accordance with their respective terms
and the provisions of ERISA and the Code, and (ii) there are
no accumulated funding deficiencies (as defined in Section
302 of ERISA and 412 of the Code) with respect to any Plan.
Section 5.14 ' Permits. Except as disclosed in '
Schedule 5.14, to Sellers' Knowledge, each Seller holds all
Permits required in conducting its business and operating its
properties, each of which to Sellers' Knowledge is valid and
in full force and effect and no provision or condition of
which has been breached or violated.
Section 5.15 Leases. Schedule 1.2(i) and Schedule
1.2(i) set forth a true, correct and complete list of the
Tenant Leases and Seller Leases, respectively, and Sellers
have delivered or made available to CapStar a true, correct
and complete copy of the Tenant Leases and Seller Leases, and
true, correct and complete sample forms of the Condominium
Lease Agreements. No Seller has received any written notice
of any default under any of the Leases, and to Sellers'
Knowledge, no event has occurred or circumstance exists
which, with notice or the passage of time, would result in a
default thereunder. Schedule 5.15 sets forth a true, correct
and complete list of the Condominium Lease Agreements as of
March 31, 1998, including the units covered by such
Condominium Lease Agreements, the dates such Condominium
Lease Agreements were entered into and the names of t--he
other parties thereto.
Section 5.16 Contracts. Schedule 5.16 sets forth a
true, correct and complete list of all Equipment Leases
(indicating therein which Equipment Leases constitute Capital
Leases) and all Material Contracts in e'Lfect as of the date
hereof, and Sellers have delivered or made available to
CapStar a true, correct and complete copy of the Equipment
Leases, Material Contracts, Franchise Agreements, Management
Agreements and Memberships. No Seller has received any
written notice of any default under any of the Contracts, and
to Selle--s' Knowledge, no event has occurred or circumstance
exists which, with notice or the passage of time, would
result in a default thereunder. Schedule 5.16 sets forth a
true, correct and complete list of all Contracts and Leases
that require aggregate remaining payments in excess of Two
Hundred Thousand Dollars ($200,000) and that require by their
express terms the consent of the other party thereto in
connection with the assignment thereof to CapStar Management
as contemplated by this Agreement. Each Purchaser
acknowledges that only the consents listed as deliveries
under
13
Section 9.2 shall constitute a condition to each Purchaser's
obligations hereunder.
Section 5.17 ' Indenture. To SSPC's knowledge, the
Indenture is valid and in full force and effect and
enforceable in accordance with its terms. To SSPC's
knowledge, none of the parties under the Indenture is in
default thereunder. No notice has been received by SSPC
claiming any default by SSPC or indicating the desire or
intention of any other party thereto to amend, modify,
rescind or terminate the Indenture.
Section 5.18 Foreicrn Person. No Seller is a
"foreign person" for purposes of the withholding provisions
of Sections 1445 and 7701 of the Code.
Section 5.19 ' Finders and Investment Brokers.
Except for NationsBanc Montgomery Securities LLC, no broker,
finder or financial adviser has acted directly or indirectly
as such for Sellers in connection with the transaction
contemplated by this Agreement, or is entitled to any fee or
commission in connection with this Agreement or the
transaction contemplated hereby.
Section 5.20 Credit Lvonnais Debt. Pursuant to
the terms of the Amended and Restated Loan Agreement, dated
as of September 26, 1996, as amended, among Credit Lyonnais
New York Branch ("CLNYBII) , Barnett Bank, N.A., FINOVA
Capital Corporation, CLNYB as administrative agent and
collateral agent, SSPC, SSRC, Marco, SSRLP and Safety Harbor
Management Company, Ltd. (the "Credit Lyonnais Loan
Agreement"), the Credit Lyonnais Debt may be prepaid, in
full, without premium or penalty (other than prepayment
costs) , at the end oE- any applicable interest period upon
not less than three (3) business days' prior written notice.
Section 5.21 Trademarks. Schedule 5.21 sets forth
a true, correct and complete list of each registered
trademark, tradename, symbol and logo used by Sellers in
connection with the Business (the "Proprietary Rights").
Sellers are the sole and exclusive owners of all right, title
and interest in and to all Proprietary Rights. The
Proprietary Rights do not infringe upon any trademark,
tradename, symbol or logo of any third party and, to,the best
of Sellers, Knowledge, none of the Proprietary Rights are
being infringed upon by any person, firm, corporation or
other legal entity.
Section 5.22 Additional Documents. SSPC has
delivered or will, prior to the Time of Closing, deliver to
CapStar all .documents and information in SSPC's possession
relating to the property underlying the Option Agreement.
CAPSTAR AND CAPSTAR MMAGEMENT ACKNOWLEDGE AND
AGREE THAT, SUBJECT TO THE PROVISIONS OF THIS AGREEMENT,
CAPSTAR MANAGEMENT IS TAKING THE CONTRIBUTED ASSETS AND THE
PROPERTIES ON AN AS-IS, WHERE-IS BASIS WITH ALL FAULTS AND
THAT, EXCEPT AS
14
EXPRESSLY SET FORTH IN THIS ARTICLE V, NO SELLER MAKES ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, OR ARISING BY
OPERATION OF LAW OR OTHERWISE, INCLUDING, BUT IN NO WAY
LIMITED TO, ANY WARRANTY OF CONDITION, MERCHANTABILITY, OR
FITNESS FOR A PARTICULAR PURPOSE AS TO THE CONTRIBUTED ASSETS
AND THE PROPERTIES. CAPSTAR AND CAPSTAR MANAGEMENT REPRESENT
THAT THEY ARE ENGAGED IN THE BUSINESS OF HOTEL AND RESORT
PROPERTIES INVESTMENT, OWNERSHIP AND OPERATION AND AS OF THE
CLOSING DATE, THEY HAVE BEEN GIVEN FULL AND COMPLETE ACCESS
TO THE CONTRIBUTED ASSETS AND THE PROPERTIES FOR ALL
INSPECTIONS AND REVIEWS THAT THEY RAVE DESIRED TO CONDUCT IN
PERSON AND THROUGH THEIR RESPECTIVE AGENTS, EMPLOYEES OR
REPRESENTATIVES, AND THEY WILL BE FAMILIAR WITH THE
CONTRIBUTED ASSETS AND THE PROPERTIES AND WILL RAVE MADE SUCH
INDEPENDENT INVESTIGATIONS AS THEY DEEM NECESSARY OR
APPROPRIATE CONCERNING THE CONTRIBUTED ASSETS AND THE
PROPERTIES.
Each of L-he representations and warranties
contained in this Article V and its various subparagraphs are
intended for the benefit of CapStar and CapStar Management
and may be waived in whole or in part by CapStar and CapStar
Management, but only by an instrument in writing signed by
CapStar and CapStar Management. All rights and remedies
arisi-ng in connection with the untruth or inaccuracy of any
such representations and warranties shall survive the Closing
of the transaction contemplated hereby for the period set
forth in Section 11.1 hereof unless CapStar or CapStar
Management has Knowledge prior to Closing of the untruth or
inaccuracy of any representation or warranty and CapStar and
CapStar Management nevertheless elect to close this
transaction.
ARTICLE VI
CAPSTAR'S AND CAPSTAR MANAGEMENT'S REPRESENTATIONS AND
WARRANTIES
To induce Sellers to enter into this Acrreement
and to consummate the transaction contemplated hereby,
@apstar and CapStar Management hereby jointly and severally
make the following representations and warranties, upon which
CapStar and CapStar Management acknowledge and agree that
Sellers are entitled to rely:
Section 6.1 Oraanization and Power. Each
Purchaser is duly formed or organized (as the case may be),
validly existing and in good standing or full J'-orce and
effect in the jurisdiction of its formation or organization
and is qualified to do business in all jurisdictions in which
such qualification is necessary (except where such failure to
qualify would not result in a Material Adverse Effect) and
has all requisite corporate or partnership (as the case may
be) power and authority to own, lease and operate its
property and to carry on its business as now being conducted.
If the Merger is consummated prior to consummation of this
transaction, MeriStar Hotel Operating Partnership, MeriStar
HospiL--ality operating Partnership, MeriStar
is
Hotels and MeriStar HosDitality (collectively, the "Merger
Entiti-es") will each be duly formed or organized (as the
case may be), validly existing and in good standing or full
force and effect in the jurisdiction of its formation or
organization and will be qualified to do business in all
jurisdictions in which such qualification is necessary
(except where the failure to so qualify will not result in a
Material Adverse Effect) and will have all requisite
corporate or partnership (as the case may be) power and
authority to own, lease and operate its property and to carry
on its business as presently contemplated to be conducted.
Section 6.2 Authority and Binding Obligation. Each
Purchaser has full corporate or partnership (as the case may
be) power and authority to execute and deliver this Agreement
and all documents now or hereafter to be executed and
delivered by such Purchaser pursuant to this Agreement and to
perform all obligations arising under this Agreement and
under such other documents. The execution, delivery and
performance of this Agreement by each Purchaser has been duly
and validly authorized by all necessary corporate or
partnership (as the case may be) action on the part of such
Purchaser and this Agreement has been duly executed and
delivered by such Purchaser. This Agreement and such other
documents, when executed and delivered, will each constitute
the legal, valid and binding obligations of each Purchaser,
enforceable against each Purchaser in accordance with their
respective terms. If the Merger is consummated prior to
consummation of this transaction, each Merger Entity will
have full corporate or partnership (as the case may be) power
and authority to perform all obligations arising under this
Agreement and all other documents to he executed and
delivered pursuant to this Agreement and this Agreement and
such other documents, when executed and delivered, will each
constitute the legal, valid and binding obligations of each
Merger Entity, enforceable against each Merger Entity in
accordance with their respective terms.
Section 6.3 Consents and A-pprovals; No Conflicts.
Except as disclosed in Schedule 6.3: (i) there is no legal
impediment to consummation by either Purchaser of the
transaction contemplated by this Agreement, and (ii) no
filing with, and no pe=it, authorization, consent or approval
of, any Governmental Authority or other third party is
necessary for the consummation by either Purchaser o-Lc the
transaction contemplated by this Agreement. Neither the
execution and delivery of this Agreement by each Purchaser,
nor the consummation by each Purchaser of the transaction
contemplated hereby, nor compliance by each Purchaser with
any of the provisions hereof will: (i) result in a violation
of any provision of the organizational or governing documents
of such Purchaser; (ii) violate any Applicable Law to which
such Purchaser is subject; or (iii) result in a violation or
breach of or constitute a default under any contract,
agreement, note, bond, mortgage, indenture, license, lease,
franchise, permit or other instrument or obligation to which
such Purchaser is a party or by whi-ch any of such
Purchaser's properties are bound. If the
16
Merger is consummated prior to consummation of this
transaction, (i) there will be no legal impediment to any
Merger Entity's consummation of the transaction contemplated
by this Agreement, and (ii) no filing with, and no pe=it,
authorization, consent or approval of, any Governmental
Authority or other third party will be necessary for the
consummation by any Merger Entity of the transaction
contemplated by this Agreement. If the Merger is consummated
prior to consummation of this transaction, neither the
consummation by each Merger Entity of the transaction
contemplated hereby, nor compliance by each Merger Entity
with any of the provisions hereof will: (i) result in a
violation of any provision of the organizational or governing
documents of such Merger Entity; (ii) viola-te any Applicable
Law to which such Merger Entity will be subject; or (iii)
result in a violation or breach of or constitute a defaull-
under any contract, agreement, note, bond, mortgage,
indenturei license, lease, franchise, permit or other
instrument or obligation to which such Merger Entity will be
a party or by which any of such Merger Entity's properties
will be bound.
Section 6.4 Litigation- There is no claim,
litigation, proceeding or investigation pending, or to either
Purchaser's Kr-owledge, threatened, which seeks to enjoin or
prohibit, or otherwise questions the validity or
enforceability of this Agreement or any action taken or to be
taken by either Purchaser in connection with this Agreement.
Section 6.5 Finders and Investment Brokers. All
negotiations relating to this Agreement and the transaction
contemplated by this Agreement have been carried on without
the involvement of any person or entity acting on behalf of
either Purchaser in such a manner as to give rise to any
valid claim against any Seller 'Lor any broker's fee,
finder's fee or similar compensation.
Section 6.6 Financial Statements and Reports.
CapStar has filed all required fo=s, reports and documents
with the Securities and Exchange Commission required to be
filed by it pursuant to the Securities Act of 1933, as
amended, and the Securities Exchange Act o@L 1934, as
amended, and the rules and regulations promulgated
thereunder, all of which have complied in all material
respects with the applicable requirements of the Securities
Act of 1933, as amended, and the Securities Exchange Act of
1934, as amended, respectively, and such rules and
regulations (hereinafter collectively referred to as the
"Purchaser Reports"). None of the Purchaser Reports, at the
time filed, contained any untrue statement of a material fact
or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein,
in light of the circumstances under which they were made, not
misleading. The financial statements of CapStar included in
the Purchaser Reports complied as to form in all material
respects with applicable accounting requirements and the
published rules and
17
regulations of the Securities and Exchange Commission applied
on a consistent basi-s (except as otherwise noted in such
financial statements) and present fairly in all material
respects the financial position, results of operations, cash
flows and changes in financial position of CapStar and its
consolidated subsidiaries as of the dates stated or the
periods indicated, subject, in the case of unaudited interim
consolidated financial statements, to normal year-end
adjustments. If the Merger is consummated prior to this
transaction, each Merger Entity that will be subject to
Securities and Exchange Commission reporting requirements
will file all required forms, reports and documents with the
Securities and Exchange Commission required to be filed by it
pursuant to the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder, all of which will
comply in all material respects with the applicable
requirements of the Securities Act of 1933, as amended, and
the Securities Exchange Act of 1934, as amended,
respectively, and such rules and regulations (hereinafter
collectively referred to as the "Merger Entity Reports").
None of the Merger Entity Reports, at the time filed, will
contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary in order to make the statements L--herein, in light
of the circumstances under which they are made, not
misleading. The financial statements of the Merger Entities
included in the Merger Entity Reports will comply as to form
in all material respects with applicable accounting
requirements and the published rules and regulations of the
Securities and Exchange Commission applied on a consistent
basis (except as otherwise noted in such financial
statements) and will present fairly in all material respects
the financial position, results of operations, cash flows and
changes in financial position of the Merger Entity filing the
same and its consolidated subsidiaries as of the dates stated
or the periods indicated, subject, in the case of unaudited
interim consolidated financial statements, to normal year-end
adjustments.
Section 6.7 Stock Issuance. The CapStar Common
Stock to be issued in exchange for the Partnership Units has
been duly authorized for issuance and, when issued and
delivered by CapStar will be validly issued, fully paid and
nonassessable and listed (cr approved for listing upon notice
of issuance) on The New York Stock Exchange. The CavStar
Common Stock to be issued in ex.change for the Partnership
Units will not be issued in violation of any preemptive or
similar rights. CapStar will comply with all ADplicable Laws
and all rules and regulations of the United States Securities
and Exchange Commission and state securities administrators
in connection with the offer, issuance and delivery of the
CapStar Common Stock to be issued in exchange for the
Partnership Units. If the Merger is consummated prior to
consummation of this transaction, the MeriStar Hotels Common
Stock to be issued in exchange for the MeriStar Hotels
Partnership Units will have been duly authorized for issuance
18
and, when issued and delivered by MeriStar Hotels will be
validly issued, fully paid and nonassessable and listed (or
approved for listing upon notice of issuance) on a national
stock exchange or interdealer quotation system and the
MeriStar Hospitality Common Stock to be issued in exchange
for the MeriStar Hospitality Partnership Units will have been
duly authorized for issuance and, when issued and delivered
by MeriStar Hospitality will be validly issued, fully paid
and nonassessable and listed (or approved for listing upon
notice of issuance) on a national stock exchange or
interdealer quotation system. If the Merger transaction is
consummated prior to the consummation of this transaction,
the MeriStar Hotels Common Stock and the MeriStar Hospitality
Common Stock to be issued in exchange for the MeriStar Hotels
Partnership Units and the MeriStar Hospitality Partnership
Units, respectively, will not be issued in violation of any
preemptive or similar rights. If the Merger transaction is
consummated prior to the consummation of this transaction,
MeriStar Hotels and MeriStar Hospitality will each comply
with all Applicable Laws and all rules and regulations of the
United States Securities and Exchange Commission and state
securities administrators in connection with the offer,
issuance and delivery of the MeriStar Hotels Common Stock and
the MeriStar Hospitality Common Stock to be issued in
exchange for the MeriStar Hotels Partnership Units and the
MeriStar Hospitality Partnership Units, respectively.
Section 6.8 Book Ca-pital Account. The initial
book cavital account of SSPC (and the account of each SSPC
partner receiving Partnership Units) to be reflected on
CapStar Management's books and records shall be the face
amount of the Partnership Units, with each CapStar Management
Partnership Unit having a value equal to the Collar Price of
the CapStar Common Stock. If the Merger is consummated prior
to consummation of this transaction, the initial book capital
account of SSPC to be reflected on MeriStar Hotel Operating
Partnership's books and records and MeriStar Hospitality
Operating Partnership's books and records shall be the face
amount of the MeriStar Hotel Partnership Units and MeriStar
Hospitality Partnership Units, respectively.
Section 6.9 Partnership Unit Issuance. The
Partnership Units to be issued pursuant to this Agreement
have been duly authorized for issuance and the general
partner of CapStar Management has full power and authority
under the CapStar Management PartnershiD Agreement to issue
and deliver the Partnership Units required to be delivered
hereunder. When issued and delivered by CapStar Management,
the Partnership Units required to be delivered hereunder will
be validly issued and fully paid and SSPC shall not be under
any obligation to contribute additional capital to CapStar
Management. CapStar Management will comply with all
Applicable Laws and all rules and regulations of the United
States Securities and Exchange Commission and state
securities administrators in connection with
19
the offer, issuance and delivery of the Partnership UniL-s
required to be-.delivered hereunder. Upon the issuance of
the Partnership Units as con templated by t-his Agreement,
SSPC will be a limited partner-in CapStar Manage@nt, shall
have the rights of a limited partner holding the Partnership
Units as set forth in the CapStar Management Partnership
Agreement, and shall not be subject to any liabilities of
CapStar Management, except to the extent of the capital
contributed to CapStar Management by Sellers. A true,
correct and complete copy of the CapStar Management
Partnership Agreement, together with all amendments thereto
is attached hereto as Schedule 6.9. If the Merger is
consummated prior to consummation of this transaction, the
MeriStar Hotel Partnership Units and the MeriStar Hospitality
Partnership Units to be issued pursuant to this Agreement
will be duly authorized for issuance and the general partner
of MeriStar Hotels and the general partner of MeriStar
Hospitality will each have full power and authority to issue
and deliver the Mer-iStar Hotel Partnership Units and the
MeriStar Hospitality Partnership Units, respectively. When
issued and delivered by MeriStar Hotel Operating Partnership
and MeriStar Hospitality Operating Partnership, the MeriStar
Hotel Partnership Units and the MeriStar Hospitality
Partnership Units, respectively, will be validly issued and
fully paid and SSPC shall not be under any obligation to
contribute additional capital to MeriStar Hotel Operating
Partnership or MeriStar Hospitality Operating Partnership.
MeriStar Hotel Operating Partnership and MeriStar Hospitality
Operating Partnership will comply with all Applicable Laws
and all rules and regulations of the United States Securities
and Exchange Commission and state securities administrators
in connection with the offer, issuance and delivery of the
MeriStar Hotel Partnership Units and the MeriStar Hospitality
Partnership Units, respectively. Upon the issuance of the
MeriStar Hotel ParL--nership Units and the MeriStar
Hospitality Partnership Units as contemplated by this
Agreement, SSPC will be a limited partner in MeriSt--ar Hotel
Operating Partnership and MeriStar Hospitality Operating
Partnership, respectively, and shall not he subject to any
liabilities of MeriStar Hotel Operating Partnership or
MeriStar Hospitality Operating Partnership, except to the
extent of the capital contributed to MeriStar Hotel Operating
Partnership and MeriStar Hospitality Operating Partnership,
respectively.
Each of the representations and warranties
contained in this Article VI and its various subparagraphs is
intended for the benefit of Sellers and may be waived in
whole or in part by Sellers, but only by an instrument in
writing signed by Sellers. All rights and remedies arising
in connection with the untruth or inaccuracy of any such
representations and warranties shall survive the Closing of
the transaction contemplated hereby for the period set forth
in Section 11.1 hereof, unless Sellers have Knowledge prior
to Closing of the untruth or inaccuracy of any representation
or warranty, and Sellers nevertheless elect to close this
transaction.
2 0
ARTICLE VII
CONDITIONS PRECEDENT
Section 7.1 Conditions Precedent to the
Obligations of Both Purchasers and Sellers. The respective
obligations of Purchasers and Sellers hereunder are subject
to the satisfaction at or prior to the Closing Date (with
respect to subsections (a) and (c)), and the Initial Tender
Expiration Date, as the same may be-extended under Section
8.4 (with respect to subsection (b)), of the following
conditions precedent:
(a) Adverse Proceedings. No preliminary or
permanent injunction or other order, decree or ruling issued
by a court of competent jurisdiction or by a Governmental
Authority nor any statute, rule, regulation or executive
order promulgated or enacted by any Governmental Authority
shall be in effect which would: (i) make the consummation of
the transaction contemplated hereby illegal, or (ii)
otherwise prevent consummation of the transaction
contemplated hereby.
(b) Consent of Noteholders; Tender Offer. No
later than the Initial Tender Expiration Date (as the same
may be extended by the First and Second Extension Periods
under Section 8.4 hereof), the holders of at least 66 2/3-.
of the outstanding Notes shall have approved the transfer of
management functions from SSRC to Ca-oStar Management as
required under.Section 8.1(b) of the Indenture and the
amendments to the Indenture set forth in Exhibit B through
any combination of: (i) consents received from Noteholders in
connection with the Consent Solicitation made as part of the
Tender Offer, and (ii) Notes tendered as part of the Tender
Offer (the Noteholders of which shall be required to consent
to the items described above i-n this Section 7.1(b)).
(c) Consu=ation of Transaction Contemplated b
the
Other Aareement. The transaction contemplated by the other
Agreement shall have been consummated or shall be consummated
simultaneously with the consummation of the transaction
contemplated hereby.
Section 7.2 Additional Conditions As to
Purchasers' Oblicrations. Each Purchaser's obligations
hereunder are also subject to the satisfaction on or prior to
the Closing Date (or such earlier date as may be specifically
indicated below) of the
following conditions precedent:
- -
(a) Sellers' Deliveries. Sellers shall have
delivered to or for the benefit of Purchasers, on or before
the Closing Date, all of the documents required of Sellers
pursuant to Section 9.2.
(b) - ReDresentations and Warranties. All of the
representations and warranties made in Article V of thi-s
Agreement shall be true and correct in all material respects
when
21
made (without taking into account any qualification as to
Knowledge) and, unless such representation or warranty is
made as of a specific date, at and as of the Closing Date as
if made at and as of such time (without taking into account
any qualification as to Knowledge), and Sellers shall have
executed and delivered to Purchasers a certificate to the
foregoing effect.
(c) Covenants and Obligations. Sellers shall have
performed in all material respects all of their covenants and
other obligations under this Agreement, and Sellers shall
have executed and delivered to Purchasers a certificate to -
Lhe foregoing effect.
(d) Title Policies. The Title Company shall be
ready, willing and able to issue the Title Policies insuring
in CapStar Management fee simple title to each parcel of Real
Property with gap coverage from Sellers through the date of
recording, subject only to the Permitted Title Exceptions.
(e) Licruor Licenses. (i) CapStar Management or
its designee shall have obtained valid liquor licenses for
all Properties either (A) through the transfer of existing
licenses (if permissible under Applicable Law) or (B) through
the issuance of new licenses, or (ii) Sellers and CapStar
Management or its designee shall have entered into an interim
arrangement allowing CapStar Management or its designee to
sell liquor at the Properties until licenses are obtained by
CapStar Management or its designee.
(f) Material Adverse Change. From the date of
expiration of the Due Diligence Period, there shall not have
occurred any material adverse change in the condition of the
Contributed Assets or the operation of the Properties, except
for changes due to the seasonal nature of the Business and
except for any matter that may arise a'Lter the expiration of
the Due Diligence Period under Article X of this Agreement.
results o'L its due diligence review relating to zoning
Marco Radisson. The condition set forth in this Section
7.2(g lapse at 8:00 a.m., Eastern Standard Time, on April 13,
1998. apstar does not notify SSPC in writing prior to 8:00
a.m., Eas tandard Time, on April 13, 1998,_ that it is not
satisfie wit results of its due diligence review relating to
zoning issues he Marco Radisson, CapStarr shall be deemed to
have waived this tion and elected to proceed to Closing
without any abatement reduction in the Contribution
Consideration. If CapStar not SSPC prior to 8:00 a.m.,
Eastern Standard Time, on April 13, that it is not satisfied
with the results of its due dilig nce relating to zoning
issues at the Marco Radission, S eliminate the Marco Radisson
from the Contributed A
22
the Contribution Consideration shall be reduced by the
amount @
it C) an elect to proceed with this
Each of the conditions set forth in this Section
7.2 is intended for the benefit of Purchasers; provided,
however, that if Purchasers consummate the transaction
contemplated by this Agreement without the benefit of one or
more of the 'Loregoing conditions having been satisfied,
Purchasers shall be deemed to have waived any such condition
or conditions.
Section 7.3 As to Sellers' obligations. Each
Seller's obligations hereunder are subject to the
satisfaction on or prior to the Closing Date of the following
conditions precedent:
(a) Purchasers' Deliveries. Purchasers shall have
delivered to or for the benefit of Sellers, on or before the
Closing Date, all of the documents required of Purchasers
pursuant to Section 9.3.
(b) Representations and Warranties. All of
representations and warranties made in Article VI of this
Agreement shall be true and correct in all material respects
when made (without taking into account any qualification as
to Knowledge) and, unless such representation or warranty is
made as of a specific date, at and as of the Closing Date as
if made at and as of such time (without taking into account
any qualification as to Knowledge), and Purchasers shall have
executed and delivered to Sellers a certificate to the
foregoing effect.
(c) Covenants and Oblicrations. Purchasers shall
have performed in all material respects all of their
covenants and other obligations under this AgreemenL-, and
Purchasers shall have executed and delivered to Sellers a
certificate to the foregoing effect.
(d) Receipt of Contribution Consideration.
Sellers shall have received the Contribution Consideration,
as adjusted pursuant to Article XII, and all other sums
required to be paid by Purchasers hereunder.
(e) Legal Opinion. SSPC shall have received the
opinion of Diamond, DeCampo & Ash, counsel to Purchasers, in
form and substance reasonably satisfactory to SSPC.
Each of the conditions set forth in this Section
7.3 is intended for the benefit of Sellers; provided,
however, that if Sellers consummate the transaction
contemplated by this Agreement without the benefit of one or
more of the foregoing conditions having been satisfied,
Sellers shall be deemed to have waived any such condition or
conditions.
23
ARTICLE VTII
COVZNANTS
SeCLiOrl 8.1 Mutu2Ll Cqvenants- Pur=hasers and SelJ.ers
iii"tually covenant as -@Oollowm:
(a)
SL =an t q. Pur,-:1-iagere and Sellex-t3 sell
keep Confidential
and rot disclose to ariy o-- e.-it4@ty the
terms, mcnditiona
ar.d provisions o@- tl-.is AcT=eement; provided, 'I-iowevor,
%"-ha--: Purchasers a-d Scllers s@all make a jo.@,-ir-
publ.ic rialatj,ng t-0 "lie transaction co.-it la,-.ed hereby
at 7.,Ov a.m., @aste--n standard 'rime, on Ap--il 1998, (i-")
eac@party may at any time after execution hereof di-gclos--
'"he terrne, conditions
- -his Agzeement as required under
Applicable
and provia:Lcns of L-
- - Law
(i.n--I.ud,ing, wlrhour- limitation, SFC: Laws), (ii,.) each
par--y may at any time afte-- exec,4tion hereca@ disclose the
terms. conditioiig
and provisions of this Agree-,nent i,n wit@i Llie
Tezidel-
Ofter and Consent Sol.icitation, and (iv) eaqh party may a-@
a.,iy L@-iiie a.CLex- execution hereof discloic the termi;,
conclill-lions and provisions of this Agreement to pexsonia
on a "need -a know" basis, auch as ',--heir re5pectj.ve
off.'Lcars, dirL-ctoz-s, emp'-cyeee, attorneys,
acctDuiitanLs, engineers, surveyox7s, consulta,-itEi,
lexide@-,s, 4nvestoro, 'pozential lessees and @anke-s
and
@uch other third parties whose a5s4-stance io required in
Confection with ,--he consummal"-ioa of this transaction. ,
(b) Additional Agreeme@e. SUbjeCt to the ' terms
an6 conditions provided in this Ac
each ?Lzrchaser
azid each seller agrees -@o une their commercially reasonable
e-@forl-@s I-_o
- -take, Q-- cause to be taken, all actions a:id to do, or
cau5e '-Io be
dono, all th4rlgB - ,IeCappary, prope-- or adv,'-Bable to
consummate and
make effective as promptly as practicable the tranaaction
contemplated by this Agreement and to cooperate with ai-le
aiioi:kip-.iti connection w;-th the foregoing, including
using its commercially reasonable efforts to obta4-n all
necescary consents, approvals and aia-@horizations as are
required %--o be obtained from third parties or u.-ider
Applicable Law, to defend a3.1 I.awq@iits or Other 3.ec;al.
@)-oceeditigs challezigirig tliiw Agreemer4t or t;he
consumiiiatiq,-i rf the transaction contemplated he--eby, to
cause to be noted or rescinded any in-un=tion or restrairing
order or ot'.,ier crder adversely affec--i.,ig the ability of
the parties to conauminate the transaction conteniiolated 1-
iereby, and tc) @ffec-t all
necessary registrations a@d filings.
5ection 8.2 cgvengil@o of giellex-m. Sellere hereby
co-ie,-iant wil--h P-u--chasers as follows;
(a) gc?@@@u@r q of Busiirimam; Xaintenance Of
ProPtirtv.
. kV. _.
Fz:om the dat:e. hf----r,eof the Closi:lg DaLe, Smller@ shall
operate the Business and maintain azid opeT4te each Property
in the Ord4-nary Course of Bu--iness. Withoul-- limiting the
gen@ral4-ty of the foregning- (i) -,no wall. exc)iancze,
assign,
24
ARTICLE VIII
COVENANTS
Section 8.1 Mutual Covenants. Purchasers and
Sellers mutually covenant as follows:
(a) Covenants Against Disclosure; Public
Announcements. Purchasers and Sellers shall keep confidential
and not disclose to any person or entity the terms,
conditions and provisions of this Agreement; provided,
however, that: (i) Purchasers and Sellers shall make-a joint
public announcement relating to the transaction contemplated
hereby at -I:ov a.m., Eastern Standard Time, on April '15,
1998, (ii) each party may at any time after execution hereof
disclose the terms, conditions
and provisions of this Agreement as required under Applicable
Law (including, without limitation, SEC Laws), (iii-) each
party may at any time after execution hereof disclose the
terms, conditions and provisions of this Agreement in
connection with the Tender Offer and Consent Solicitation,
and (iv) each party may at any time after execution hereof
disclose the terms, conditions and provisions of this
Agreement to persons on a "need to know" basis, such as their
respective officers, directors, employees, attorneys,
accountants, engineers, surveyors, consultants, lenders,
partners, investors, potential lessees and bankers and such
other third parties whose assistance is required in
connection with the consummation of this transaction. -
(b) Additional Aareements. Subject to the terms
and conditions provided in this Agreement, each Purchaser and
each Seller agrees to use their commercially reasonable
efforts to take, or cause to be taken, all actions and to do,
or cause to be done, all things necessary, proper or
advisable to consummate and make effective as promptly as
practicable the transaction contemplated by this Agreement
and to cooperate with one another in connection with the
foregoing, including using its commercially reasonable
efforts to obtain all necessary consents, approvals and
authorizations as are required to be obtained from third
parties or under Applicable Law, to defend all lawsuits or
other legal proceedings challenging this Agreement or the
consummation of the transaction contemplated hereby, to cause
to be lifted or rescinded any injunction or restraining order
or other order adversely affecting the ability of the parties
to consummate the transaction contemplated hereby, and to
effect all necessary registrations and filings.
Section 8.2 Covenants of Sellers. Sellers hereby
covenant with Purchasers as follows:
(a) Continuance of Business; Maintenance of
Property. From the date hereof until the Closing Date,
Sellers shall operate the Business and maintain and operate
each Property in the Ordinary Course of Business. Without
limiting the generality of the foregoing: (i) no Seller will
sell, exchange, assign,
24
ARTICLE VIII
COVENANTS
Section 8.1 Mutual Covenants. Purchasers and Selle
mutually covenant as follows:
(a) Covenants Against Disclosure; Public
Announcements. Purchasers and Sellers shall keep confide
Announcements. Purchasers and Sellers shall keep confi ial
and not disclose to any person or entity the terms, con ons
and provisions of this Agreement; provided, however,-t@' : (i),,
Purchasers and Sellers shall make a joint public anno@cementj relating
to the transaction contemplated hereby at !;,/* a.m., Eastern Standard
Time, on April 14-, 1998, (ii) eacly Qarty may at any time after
execution hereof disclose the and provisions of this Agreement as
required (including, without limitation, SEC Laws), at any time after
execution hereof disclose and provisions of this Agreement in conne
offer and Consent Solicitation, and (iv) time after execution hereof
disclose the provisions oi'- this Agreement to persons basis, such as
their respective office 51/1 directors, employees,
attorneys, accountants, engineers, sur eyors, consultants,
conditions
plicable Law
party may
conditions
he Tender
party may at any
s, conditions and
"need to know"
lenders, vartners, investors, pot such other third parties whose as
connection with the consummation
lessees and bankers and ce is required in s transaction.
(b) Additional Agre ts. Subject to the terms and
conditions provided in this A@/ement, each Purchaser and each
Seller agrees to use their c@iercially reasonable efforts to
take, or cause to be taken,/@l actions and to do, or cause to
be done, all things necessa roper or advisable to consummate
and make effective as prompt practicable the transaction
contemplated by this A
ent and to cooperate with one another
in connection with the egoing, including using if--=
commercially reasonaby fforts to obtain all necessary
consents,
If , .
approvals and autl
third parties or i
tions as are required to be
obtained from
- -plicable Law, to defend
all lawsuits or
I
other legal p gs challenging this Agreement or the
consummation ransaction contemplated hereby, to
cause
be lifted or d any injunction or restraining order
or
other order
consummate
to
other orde rsely affecting the ability of the parties
to
consummate ransaction contemplated hereby, and to
effect all
necessary rations and filings.
ection 8.2 Covenants of Sellers. Sellers hereby
covena th Purchasers as follows:
(a) Continuance of Business; Maintenance of Property.
he date hereof until the Closing Date, Sellers shall e the
Business and maintain and operate each Property in dinary
Course of Business. Without limiting the generality
foregoing: (i) no Seller will sell, exchange, assign,
24
transfer, convey, lease or otherwise dispose of all or any
part of the Contributed Assets or any interest therein except
for Fixtures and Tangible Personal Property, Consumables and
Supply Inventories which are sold or consumed in the Ordinary
Course of Business; (ii) each Seller will keep all Contracts,
Leases and Permits to which it is a party in full force and
effect, will pay all charges when due under such agreements
(unless being contested in good faith) and will perform all
of its obligations under such agreements in the Ordinary
Course o'L Business; (iii) no Seller will enter into any
material contracts, licenses, easements or other agreements
relating to the Contributed Assets which wi-11 obligate
either Purchaser or be a charge or lien against the
Contributed Assets, except those that will be discharged on
or before the Closing Date, those entered into in the
Ordinary Course of Business which are necessary to continue
the operations of the Properties in the Ordinary Course of
Business or those which are terminable without penalty on
sixty (60) days, notice; (iv) each Seller will cause its
respective Property to be operated and maintained in the
manner in which it is being operated and maintained as of the
date of this Agreement, which undertaking includes, but is
not limited to, maintaining Fixtures and Tangible Personal
Property, Consumables and Suvply Inventories in those
quantities and at those levels present as of the date of this
Agreement (subject to normal adjustments to take into account
the seasonal nature of the Business) and entering into
bookings in the ordinary Course of Business; (v) SSPC will
promptly notify CapStar of any matter arising prior to the
Closing which could reasonably be expected to have a Material
Adverse Effect (including, without limitation the
commencement of any litigation or proceeding or any notice of
a violation of Applicable Laws issued by any governmental or
quasi-governmental authority; (vi) SSPC will promptly notify
CapS-Lar of any actual or proposed change in the assessed
value of the Properties or any portion of the Properties
(including any tentative or preliminary assessment) and of
the institution or proposed institution of any proceeding
(whether formal, informal, judicial or administrative)
relating to any such change or proposed change; and (vii) no
Seller will take any action with respect to the contesting or
resolution of the taxable assessed value of the Land and
Improvements without the prior written consent of CapStar,
which consent shall not be unreasonably withheld.
(b) Licruor Licenses. Sellers shall use all
reasonable efforts to cause to be transferred to CapStar
Management or its designee, all liquor licenses and alcoholic
beverages licenses currently in use in connection with the
Business and operation of the Properties. To that end,
Sellers and Purchasers shall 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- If pe=itted under Applicable Law, the
parties shall execute and file all necessary applications and
papers with the appropriate liquor and alcoholic
25
beverage authorities prior to the Closing, to the end that
the issuance of new licenses 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 applications and other
documents required by the liquor authorities in order to
effect the issuance of new licenses at the earliest date
possible consistent with Applicable Law in order that all
liquor licenses may be issued to CapStar Management or its
designee at the earliest possible time. If under Applicable
Law the new licenses cannot be issued until after the Closing
of the transaction contemplated herein, then Sellers covenant
and agree that they will use reasonable efforts to enable
CapStar Management to keep the bars and lounges and liquor
facilities at the Improvements open between the Closing Date
and the time when the new liquor licenses actually become
effective, by exercising management and supervision of such
facilities under the existing licenses under a management
agreement to be executed between Sellers and CapStar
Management (or its designee) in a form reasonably agreed to
between Sellers and CapStar Management, until.such time as
new liquor licenses can be issued (but in no event longer
than six (6) months from the Closing Date); provided,
however, that CapStar shall indemnify and hold Sellers
harmless from any liabilities, damages, claims, costs or
expenses (including reasonable attorneys' fees) encountered
in connection with such operations during said period of time
and CapStar Management shall maintain commercial general
liability insurance (including dram shop liability) in the
amount of Ten Million Dollars ($10,.000,000) in favor of
Sellers. The provisions o'L this Section 8.2(b) shall
survive the Closing.
(c) EmDloyee Matters. The employment of the Employees
shall be terminated by SSRC at the Time of Closing.
(d) Prolect Capital Ex-penditures. In connection
with any Project Capital Expenditure undertaken by any Seller
after the date of execution of this Agreement, each Seller
agrees as follows: (i) to submit plans and specifications
therefor to CapStar for its review and approval (which
approval shall not be unreasonably withheld or delayed); (ii)
to complete such projects in accordance with the plans and
specifications therefor; (iii) to complete such projects in a
good and workmanlike manner, in timely fashion and using good
materials; and (iv) to complete such projects in accordance
with all Applicable Laws. At the Time of Closing, Sellers
shall deliver to Purchasers a report detailing each Project
Ca3Dital Expenditure undertaken by Sellers, the work
completed in connection wi-th each Project Capital
Expenditure, the amount spent (or committed to be spent) in
connection with each Project Capital Expenditure and the
work, if any, needed to be completed in connection with each
Project Capital Expenditure.
2 6
(e) Accredited Investors. SSPC will distribute
Partnership Units issued in connection with this transaction
only to SSPC partners that have certified to SSPC and to the
Purchasers that they are at the Time of Closing accredited
investors (as that term is defined in Regulation D
promulgated under the Securities Act of 1933, as amended),
and sign and deliver to the Purchasers a certificate
containing the same information as in the certificate
delivered by SSPC at the Time of Closing.
(f) Credit Lvonnais Debt. At the request of
CapStar, SSPC will deliver written notice of prepayment to
Credi-t Lyonnais New York Branch as required under the te=s
of the Credit Lyonnais Loan Agreement.
Section 8.3 CovenanL-s of Purchasers. Purchasers
hereby covenant with Sellers as follows:
(a) Confidential Info=ation. Neither Purchaser
nor any of their respective agents or representatives shall
use for their own benefit (except in connection with this
transaction and as required by SEC Laws) and shall hold in
strict confidence and not disclose any data and@information
relating to th-e financial statements, conditions and
operations of Sellers that is confidential in nature and not
generally known to the public (the "Confidential
Info=ation"). If the transaction contemplated by this
Agreement is not consummated for any reason, each Purchaser
shall return to Sellers within five (5) business days of the
termination of this Agreement for any reason all data,
information and any other written material obtained by such
Purchaser or its agents and representatives from Sellers in
connection with this transaction and any copies, summaries or
extracts thereof, and except as noted herein, shall refrain
from disclosing any of the Confidential Information to any
third party or using any of the Confidential Info=ation for
its own benefit or that of any other person or entity. This
Section 8.3(a) shall survive termination of this Agreement.
(b) Sellers' Executive Management Emplo-yees.
CapStar
shall aL-- the Time of Closing assume all of the rights
and
obligations of SSRC under the terms of the Management
Transition
Agreements (which Terms shall not be modified or amended
after the date of execution of this Agreement without
CapStar's prior written consent) between the Executive
Management Employees and SSRC (the "Management Transition
Agreements"), copies of which have been delivered to CapStar.
(c) Employee Matters. Except with respect to the
Sellers' Executive Management Employees, which shall be
governed by the provisions of Section 8.3(b), on the Closing
Date, CapStar shall: (i) offer initial employment to all of
Sellers, Management Level Employees; provided, that CaDStar
may at any time -Drior to June 1, 1998, designate in writing
to SSPC up to ten (10)
27
Management Level Employees that CapStar shall not be required
to offer employment; and (ii) offer initial employment to
such other EmiDloyees as CapStar so desires; provided,
however, that CapStar shall offer employment to a sufficient
number of such other .Employees to prevent Sellers from
incurring liability under the Worker Adjustment and
Retraining Notification Act, 29 U.S.C. 2101 et sea (the
"WARN Act"), and CapStar shall indemnify and hold harmless
Sellers from and against any claims, penalties, damages,
losses, liabilities and expenses incurred by Sellers under
the WARN Act. 'The Executive Management Employees, the
Management Level Employees and the other Employees who accept
such offers of employment by CapStar are referred to herein
as the "Transferred Employees". Subject to the penultimate
sentence of this Section 8.3(c), the parties acknowledge that
all Transferred Employees (other than the Executive
Management Employees) shall be subject to such terms and
conditions of employment as CapStar may set or establish,
including, but not limited to, such matters as wages, hours
and working conditions. The Transferred Employees shall
receive credit from CapStar for years of service (time
worked) with Sellers for all purposes (including, without
limitation, compensation, vacation, severance, options,
bonuses and all pension or welfare plans of CapStar).
Notwithstanding any provision of this Section 8.3(c) to the
contrary, CapStar agrees that for the one year period
commencing on the Closing Date all Management Level Employees
whose employment is terminated by CapStar without cause shall
be paid one week of severance pay for each year of credited
service such Employee has with Sellers and CapStar or any
affiliate of CapStar. The provisions of this Section 8.3(c)
shall survive the Closing.
(d) Maintenance of Oualified Debt. For a period
of five (5) years following the Closing (the "Maintenance
Period"), CapStar Management will prevent the realization of
gain by any SSPC partner as a result of the negative capital
account balances of SSPC's limited partners through a
combination of the following: (i) maintaining an appropriate
level of SSPC,s existing qualified nonrecourse debt; (ii)
replacing SSPC,s existing qualified nonrecourse debt with
crualified nonrecourse debt; and (iii) providing to each SSPC
partner that holds Partnership Units the o portunity to
guarantee or otherwise
. p
provide credit support for CapStar Management's indebtedness.
Purchasers agree that the sum of clauses (i) and (ii) above
shall be no less than the portion of the Assumed Debt
represented by the Non-Tendered Notes at all times during the
Maintenance Period and the sum of clauses (i), (ii) and (iii)
shall at all times during the Maintenance Period be no less
than $75,000,000. Upon expiration of the Maintenance Period,
CapStar Management will provide each SSPC partner that holds
Part@-nership Units the opportunity to continue to guarantee
or otherwise provide credit support for CapStar Management's
indebtedness in an amount that will prevent realization of
gain by that SSPC partner as a result of the negative capital
account balance of that SSPC partner.
2 8
The covenants set forth in this Section 8.3(d) shall
terminate at such time as the last remaining SSPC partner
exchanges his Partnership Units for shares of CaiDStar Common
Stock.
(e) Sale of Properties. For a period of five (5)
years following the Closing Date (the IISSP Sale Maintenance
Period"), CapStar Management shall not have the authority,
without the prior written consent of SSPC, to sell, transfer
or otherwise convey South Seas Plantation or any interest
therein, except in each such case in an exchange qualifying
under Section 1031 of the Code (or in any other transaction
the effect of which is to continue tax deferral to SSPC's
limited partners) and in which no negative tax consequences
are triggered for SSPC (or its partners) or except if CapStar
Management compensates SSPC (or its partners) for any adverse
tax consequences resulting from such sale or transfer. Upon
expiration of L-he SSP Sale Maintenance Period, CapStar
Management shall have the authority, without the prior
written consent of SSPC, to sell, transfer or otherwise
convey South Seas Plantation or any interest therein so long
as CapStar Management compensates SSPC (or its partners) for
any adverse tax consequences resulting from such sale or
transfer. For purposes of determining any adverse tax
consequences under this Section 8.3(e), the parties shall use
the maximum federal income tax rate and a discount rate per
annum equal to the LIBOR Rate over a period equal to the
longer of: (i) five (5) years, and (ii) the difference
between ten (10) years and the number of whole calendar years
during which CapStar Management owned South Seas Plantation
or any Section 1031 exchange proverty. The covenants set
forth in this Section 8.3(e) shall terminate at such time as
the last remaining SSPC partner exchanges his Partnership
Units for shares of CapStar Common Stock. CapStar Management
shall have no obligation under this Section 8.3(e) to
compensate the heirs, legal representatives, or estate of any
SSPC partner.
(f) Unit Rehab Loan. Upon expiration of the Due
Diligence Period, CapStar agrees to make a loan to SSPC in an
original principal amount of up to Two Mi-llion Five Hundred
Thousand Dollars ($2,500,000) to be used by SSPC to rehab
third party owned condominium units at South Seas Plantation
(the "Unit Rehab Loan"). CapStar shall receive a credit in
the amount of the Unit Rehab Loan against CapStar's
obligation to fund the Additional Deposit. CapStar shall not
receive any credit against the Contribution Consideration
with respect to the Unit Rehab Loan. CapSL-ar's obligation
to make the Unit Rehab Loan is conditioned upon: (A) CapStar
and SSPC mutually agreeing on a draw schedule for the Unit
Rehab Loan, (B) SSPC's delivery to CapStar of reasonably
acceptable plans and specifications for the work to be
undertaken with the proceeds of the Unit Rehab Loan, and (C)
the delivery by SSPC to CapStar of signed modifications to
the Condominium Lease Agreements of those unit owners whose
units are being rehabbed with the proceeds of the Unit Rehab
Loan, which modifications shall be in form and substance
2 9
reasonably satisfactory to SSPC and CaDStar. Interest on the
Unit Rehab Loan shall accrue at a per annum rate equal to
LIBOR plus 200 basis points. If the Closing occurs, the
outstanding principal balance of the Unit Rehab Loan shall be
forgiven and accrued but unpaid interest shall be added to
the Unit Portion of the Contribution Consideration and paid
by CapStar Management to SSPC at Closing. If the Closing
does not occur by reason of CapStar's default hereunder, the
Unit Rehab Loan shall be treated as if it were Earnest Money
Deposit for all purposes of this Agreement and SSPC shall
have no further obligation for its repayment. If the Closing
does not occur for reasons other than CapStar's default
hereunder, the Unit Rehab Loan shall convert to a term loan
with a maturity of July 1, 2000 and the entire outstanding
principal balance and all accrued but unpaid interest shall
be due and payable on July 1, 2000; provided, however, that
SSPC may voluntarily prepay the entire outstanding principal
balance and all accrued but un-Qaid interest (without payment
of any premium or penalty) at any time prior thereto, and
SSPC shall pay to CapStar a monthly asset management fee of
Twenty-Five Thousand Dollars ($2S,000) until the entire
outstanding principal balance and all accrued but unpaid
interest shall have been repaid by SSPC. If the Unit Rehab
Loan is converted to a term loan as contemplated by the
immediately preceding sentence, SSPC shall execute and
deliver to CapStar a promissory note evidencing the
indebtedness and setting forth the terms of the term loan.
The parties agree that the asset management fee shall be
reduced proratably if SSPC does not borrow the entire amount
available under the Unit Rehab Loan. SSPC covenants that all
money disbursed under the Unit Rehab Loan shall be used
solely for or in connection with the rehab of third party
owned condominium units at South Seas Plantation and no money
under the Unit Rehab Loan shall be diverted, used or borrowed
for any other use. SSPC agrees That each disbursement under
the Unit Rehab Loan will be made by SSPC as the work
progresses to enable SSPC to make progress payments on
account of work or materials previously done or furnished.
Any portion of the Unit Rehab Loan that has been drawn but
that has not been disbursed (or committed for disbursement
'Lor work or materials previously done or furnished) as of
the Time of Closing shall be paid over to CapStar at the Time
of C'Losing. CapStar's obligation to fund the Unit Rehab
Loan shall survive any termination of thi-s Agreement.
(g) CapStar Manaaement Partnership Agreement.
From the date of execution of this Agreement until the Time
of Closing, no class or series of Partnership Units or
preferred units shall be established and units thereof issued
for less than the fair market value of such units.
(h) Prolect Capital Expenditures. CapStar
acknowledges that it has received Sellers' proposed list of
Project Capital Expenditures in connection with its due
diligence efforts. Promptly after execution of this
Agreement (but in any event within 20 days after execution of
this Agreement), CapStar
3 0
shall evaluate all proposed Project Capital Expenditures of
Sellers' to determine a final scope and schedule for the
Project Capital Expenditures. If Sellers undertake any
Project Capital Expenditures that have been approved by
CapStar ("Approved Project Capital Expenditures"), the ConL-
ribution Consideration shall be increased, as contemplated by
Section 12.4 hereof, by the amount spent by Sellers on the
Approved Project CaDital Expenditures. If CapStar does not
approve a Project Capital Expenditure, Sellers shall be under
no obligation to undertake such Project Capital Expenditure.
If CapStar fails to undertake its evaluation of the Project
Capital Expenditures as required under this Section 8.3(h)
and deliver to SSPC its determination of the final scope and
schedule for the Project Capital Expenditures within the time
period seL-- forth in this Section 8.3(h), Ca-oStar shall be
deemed to have approved all the Project Capital Expendi-tures
submitted to CapStar. Notwithstanding anything to the
contrary contained in this Section 8.3(h), CapStar hereby
approves the South Seas Plantation condominium unit
refurbishment project in the amount of $2,150,000.
(i) Exchange Rights. Upon issuance of the
Partnership Units to SSPC (or the SSPC partners) in
connection with this transaction, each SSPC partner shall be
granted the following quarterly exchange rights (the
"Exchange Rights") with respect to the PartnershiD Units
issued to such SSPC partner, which Exchange Rights shall be
evidenced an Exchange Rights Agreement in form and substance
- --easonably acceptable to SSPC and CapStar (the ItExchange
Rights Agreement"):
(i) Each partner shall have the right,
commencing
on the date of the ten month anniversary of the Closing
Date (the
"Lock-Up Period"), to require CapStar Management to
exchange,
subject to the limitations in clause (ii) below, all or a
portion of the Partnership Units held by such partner for the
Cash Amount. CapStar shall have the right to satisfy an
Exchange Right directly by issuing to the SSPC partner a
number of shares of CapStar Common Stock that are covered at
the time of issuance by an effective registration statement
under the Securities Act of 1933, as amended, equal to the
CapStar Shares Amount. For purposes of the preceding
sentence, each share of CapStar Common Stock shall have a
value determined in accordance with the definition of Value
contained in this Agreement. value shall be determined as of
the Valuation Date notwithstanding that an SSPC partner may
be unable to exercise Exchange Rights in any given calendar
quarter under clause (ii) below. Subject to clause (ii) o-Lc
this Section 8.3(i), if CapStar Management elects to satisfy
an Exchange Right with the Cash Amount, the Cash Amount shall
be paid no later than thirty (30) days following the end of
the quarterly period in which CapStar Management received
notice of exchange. If CapStar elects to satisfy an Exchange
Right by issuing the CapStar Shares Amount, the CaDStar
Common Stock to be issued in connection therewith shall be
issued no later than sixty (60) days following the end of the
quarterly period in
3 1
which CapStar Management received notice of exchange. No
later than ten (10) days following the end of each c-
ruarterly period in which Exchange Rights have been
exercised, CapStar shall notify, in writing, each SSPC
partner exercising Exchange Rights in any given quarterly
period whether CapStar will satisfy the Exchange Right by
paying the Cash Amount or issuing CapStar Common Stock equal
to the CapStar Shares Amount. Upon expiration of the LockUp
Period, there shall be established an "Exchange Right Fiscal
Year", which shall commence on the first day of the first
month immediately succeeding the expiration of the Lock-Up
Period and which shall end on the first anniversary of such
date. Each three-month period during any Exchange Right
Fiscal Year shall constitute the quarterly periods referred
to in this Section 8.3(i)-
(ii) Notwithstanding clause (i) above, no
partner shall be entitled to exchange his Partnership Units:
(A) until the aggregate value of all Partnership Units to be
exchanged in any one quarterly period equals or exceeds
$100,000 (the "Minimum Exchange Value"), or (B) at any time
after the aggregate value of all ParL--nership Units
exchanged in any-one Exchange Right Fiscal Year exceeds
Eighteen Million Dollars ($18,000,000) (the "Maximum Annual
Exchange Value"). All Partnership Units put for exchange
shall be exchanged on a first-in, first-out basis according
to the date the notice of exchange is received by CapStar
Management. If Partnership Units are put for exchange in any
quarterly period in which the Minimum Exchange Value has not
been met, such Partnership Units will be deemed to have been
put for exchange in each succeeding quarterly period until
the Minimum Exchange Value has been met. Likewise, if
Partnership Units are put for exchange in any Exchange Right
Fiscal Year in which the Maximum Exchange Value has been
exceeded, such Partnership Units shall be deemed to have been
put for exchange in the next succeeding Exchange Right Fiscal
Year. The parties agree that at such time as the Closing
Date Price is determined under this Agreement, the Minimum
Exchange Value and the Maximum Exchange Value will be
expressed as a number of Partnership Units, which shall be
determined by dividing the Minimum Exchange Value by the
Closing Date Price and by dividing the Maximum Exchange Value
by the Closing Date Price, respectively. Commencing
immediately upon expiration of the Lock-Up Period, CapStar
shall be entitled during the term of the Exchange Rights
Agreement to "blackout" one of the quarterly Exchange Right
periods of the SSPC partners for each Exchange Right Fiscal
Year during the term of the Exchange Rights Agreement if
CapStar determines, in the good faith exercise of the
business judgment of its Board of Directors, that such
Exchange Rights could materially interfere with any bona fide
financing, acquisition, corporate reorganization or any other
corporate development involving CapStar. Written notice of
any such "blackout" shall be given to each SSPC partner at
least thirty (30) days prior to the end of the calendar
quarter in which such "blackout" is to occur. The foregoing
restrictions and limitations shall represent the only
32
restrictions and limitations imposed upon the SSPC partners
with
respect to the Exchange Rights.
(iii) CapStar and CapStar Management shall
take whatever action is necessary, including, without
limitation, amending the CapStar Management Partnership
Agreement, to provide each SSPC partner receiving Partnership
Units in connection with this transaction with the foregoing
Exchange Rights.
(j) Credit Lvo=ais Debt and Capital Leases. At
the Time of Closing, CapStar shall assume the obligations of
Sellers under the Assumed Debt and either: (i) payoff and
satisfy in full the Assumed Debt, or (ii) refinance the
Assumed Debt, or (iii) obtain the consent of the holders of
the Assumed Debt to the assumption of the Assumed Debt by
Purchasers.
(k) Utility Easement. Purchasers agree to grant
to South Seas Utility Company (IISSUCII) and its successors
and assigns a non-exclusive construction and maintenance
easement when and if requested by SSUC (the "Utility
Easement-,). The Utility Easement will be approximately
fifty (50) feet in width (twenty-five (25) feet on either
side of the centerline of the main South Seas Plantation
Drive) from Captiva Drive to the maintenance area and the
maintenance roadway leading from the main drive to the 12.5
acre sewer plant site owned by SSUC and will be utilized by
SSUC for the purpose of installing waste water collection or
effluent transmission lines to connect the plant into a
larger system serving portions of Captiva Island outside of
South Seas Plantation. Purchasers, obligations under this
Section 8.3(k) shall be conditioned upon: (i) Purchasers
receiving adequate assurances that any installation will not
have a material adverse impact on South Seas Plantation and
will not negatively impact the level of business at South
Seas Plantation, and (ii) SSUC and Purchasers executing and
delivering each to the other an easement in form and
substance reasonably satisfactory to Purchasers and SSUC, and
(iii) SSUC paying for all costs incurred in connection with
the Utility Easement, including, without limitation, the
costs of any alterations to South Seas Plantation needed to
accommodate installation of the Utility Easement. The
provisions of this Section 8.3(k) shall survive the Closing.
Section 8.4 Covenants RelatincT to SSPC's
$43,500,000 10% Subordinated Notes. The parties agree that
the Contributed Assets shall be contributed subject to the
Notes and that Purchasers shall receive a credit against the
Contribution .Consideration, in both cases as described in
this Section 8.4. Because Purchasers desire to retire some
portion or all of the Notes after Closing, SSPC agrees as an
accommodation to Purchasers to take the following actions:
(a) Tender Offer; Depositar-V. Promptly upon
expiration of the Due Diligence Period, SSPC, at its sole
cost
3 3
and expense, shall take all acl-ion, make all necessary
registrations and filings and prepare all materials (the
"Tender Offer Materials") required in connection with making
a tender offer (the "Tender Of-Lcer") to the Noteholders
pursuant to which SSPC shall offer to purchase each Note at a
purchase price equal to the sum of the outstanding principal
balance of such Note, plus all accrued but unpaid interest on
such Note, plus the Premium. SSPC shall deliver the Tender
Of@Ler Materials to CapStar for its review and comment prior
to filing the Tender Offer Materials with the Securities and
Exchange Commission or delivering the Tender Offer Materials
to the Noteholders. In order to be considered validly
tendered, each Noteholder desiring to tender his or her Notes
shall be required to consent to the transaction contemplated
by this Agreement and amendments to the Indenture set forth
in ' Exhibit B. All No-Les tendered as part of the Tender
Offer shall be held by SunTrust Bank, Central Florida, N.A.,
as depositary (the "Depositary"), until all conditions to the
Tender Offer have been satisfied or waived. If the
conditions to the Tender Offer have not been satisfied or
waived as of the Initial Tender Expiration Date, as the same
may be extended under clauses (e) or (f) below, Notes
tendered to the Depositary shall be returned by the
Depositary to the Noteholders.
(b) Consent Solicitation. The Tender Offer shall
include a solicitation of consent of the Noteholders (the
"Consent Solicitation") so that Noteholders shall have the
option to consent to: (i) the transfer of management
functions to CapStar (or its designee), and (i-i) an
amendment to the Indenture as set forth in Exhibit B, without
having to tender their Notes. SSPC shall be under no
obligation to pay for any consents (other than payment of the
Premium for Notes validly tendered). SSPC reserves the right
to seek the consent of the Noteholders through the Tender
Offer and Consent Solicitation to eliminate the rights of the
Noteholders to exchange Notes under Section 10.11 of the
Indenture and to amend the Indenture to provide that the
Notes may be redeemed on or after September 1, 1998, without
the payment of any redemption premium.
(c) Minimum Tender/Consent Recruirements. The-
Tender Offer shall be conditioned upon the closing of the
transaction contemplated by this Agreement and the receipt of
consent of holders of no less than 66 2/30-. of the
outstanding Notes (the "Minimum Consent Requirement") through
any combination of: (A) consents received from Noteholders in
connection with the Consent SoliciL-ation, and (B) Notes
tendered as part of the Tender Offer.
(d) Commencement of Tender Offer and Consent
Solicitation. All initial filings required under SEC Laws in
connection with the Tender Offer and Consent Solicitation
shall be made no later than April 27, 1998. SSPC shall use
commercially reasonable efforts to commence the Tender Offer
and Consent Solicitation no later than May 15, 1998, and,
thereafter,
34
shall use commercially reasonable efforts to complete the
Tender Offer on the terms and subject to the conditions set
forth herein and in the Tender Offer Materials. The Tender
Offer shall initially expire no later than July 1, 1998 (the
"Initial Tender Expiration Date").
(e) First Extension of Tender Offer and Consent
Solicitation. If the Minimum Consent Requirement has not been
satisfied on or prior to the Initial Tender Expiration Date,
SSPC shall extend the Tender Offer and Consent Solicitation
until August 14, 1998 (the "First Extension Period"), and
such extension shall automatically extend the Closing Date
under Section 9.1 hereof. During the First Extension Period,
all Notes previously tendered and not accepted for payment
will remain subject to the Tender offer and Consent
Solicitation. Subject to the terms and conditions of the
Tender Offer and the Consent Solicitation, all Notes
previously tendered and not accepted for payment: (i) may be
accepted for payment by SSPC (or its designee), in its sole
and absolute discretion, at any time during the First
Extension Period, and (ii) shall be accepted for payment by
SSPC (or its designee) at such time during the First
Extension Period as (A) more than fifty percent (50?s) of the
outstanding principal amount of the Notes have been validly
tendered and (B) CapStar shall have demanded, in writing,
that SSPC accept Notes for payment (each, a "Bond Purchase").
If SSPC is required to make a Bond Purchase under clause (ii)
above, SSPC shall be entitled to use the Earnest Money
Deposit, and the Escrow Agent is hereby instructed to
disburse the Earnest Money Deposit to SSPC, for the purpose
of accepting for payment and paying any Notes validly
tendered as part of the Tender Offer. Any Notes purchased
using the proceeds of the Earnest Money Deposit shall be the
property of CapStar. If the Minimum Consent Requirement has
not been satisfied prior to expiration of the Second
Extension Period (as defined in clause (f) below), either
party may at any time therea@Lter terminate this Agreement.
(f) Second Extension of Tender Offer and Consent
Solicitation. if the Minimum Consent Requirement has not been
satisfied on or before expiration of the First Extension
Period, SSPC shall extend the Tender Offer and Consent
Solicitation until September 28, 1998 (the "Second Extension
Period"), and such extension shall automatically extend the
Closing Date under Section 9.1 hereof. The Contribution
Consideration shall be reduced on a dollar-for-dollar basis,
up to a maximum of Two Million Two Hundred Twenty-Five
Thousand Dollars ($2,225,000) for each dollar spent by
CapStar or CapStar Management on or after August 14, 1998, in
respect of the following items (to the extent the same are
bona fide expenses of CapStar or CapStar Management relating
to the Tender Offer and Consent Solicitation): (i) legal
fees; (ii) accounting fees; (iii) investment banking fees;
(iv) investment advisory fees; (v) soliciting agent fees;
(vi) information agent fees; (vii) incentive fees or
commissions paid to brokers involved in the
3 5
Tender Of'Ler; (viii) Notes purchased by CapStar; (ix) travel
expenses; (x) filing fees; (xi) printing costs and expenses;
(xii) mailing costs and expenses; (xiii) solicitation costs
and expenses; and (xiv) such other fees or expenses that SSPC
approves in writing. During the Second Extension Period, all
Notes previously tendered and not accepted for payment will
remain subject to the Tender Offer and Consent Solicitation
and, subject to the terms and conditions of the Tender Offer
and the Consent Solicitation, may be accepted for payment by
SSPC (or its designee).
(g) Adjustment to Contribution Consideration. If
the Minimum Consent Requirement is satisfied, CapStar shall
pay the outstanding principal balance of, accrued interest on
and the Premium relating to all Notes that are validly
tendered and accepted by SSPC for payment (collectively, the
"Tender Payment"). The Tender Payment shall constitute
Assumed Debt for purposes of this Agreement. With respect to
all Notes that have not been tendered and remain outstanding
upon expiration of the Tender Offer (collectively, "Non-
Tendered Notes"), CapStar shall assume the obligations of
SSPC thereunder and receive a credit against the Contribution
Consideration in an aggregate amount equal to the sum of the
presenl- value (using a discount rate equal to the London
Interbank Offering Rate on the date of expiration of the
Tender Offer plus 200 basis points (the "LIBOR Rate")) of:
(A) the Redemption Price (as defined in Section 11.1 of the
Indenture) for Notes redeemed on or after April 15, 2000, but
before Aoril 15, 2001, of all Non-Tendered Notes, plus (E)
the difference between (1) interest payable under the
Indenture on Non-Tendered Notes for the period commencing on
the date of expiration of the Tender Offer and ending on
April 15, 2000, and (2) interest payable on Non-Tendered
Notes for the period commencing on the date of expiration of
the Tender Offer and ending on April 15, 2000 assuming an
interest rate, per annum, equal to the LIBOR Rate.
(h) Escrow De-posit. At the Time of Closing,
there shall be withheld from the Contribution Consideration
and placed into an escrow account with NationsEank (the
"Tender offer Escrow Account"), pursuant to an escrow
agreement in form and substance reasonably satisfactory to
SSPC and CapS(--ar, an amount (the "Tender O-ffer Escrow
Amount") dete=ined in accordance with the following:
(i) if 66 2/30-. or more of the Notes are
tendered, an amount equal to the present value (using a
discount rate equal to the LIBOR Ra-Le) of the difference
between: (A) the interest payable on Non-Tendered Notes for
the period commencing on the date of expiration of the Tender
Offer and ending on April 15, 2000 assuming an interest rate,
per annum, equal to the LIBOR Rate, and (B) the interest
payable on Non-Tendered Notes for the period commencing on
the date of expiration of the Tender Offer and ending on
April 15, 2000 assuming an interest rate, per
3 6
annum, equal to 4.75.'6 (the "Comparable Convertible Rate").
The Comparable Convertible Rate will be recalculated at the
Time of Closing using the same methodology used to determine
the Comparable Convertible Rate on the date hereof; and
if less than 66 2/30i of the Notes are
tendered, an amount equal to the present value (using a
discount rate equal to the LIBOR Rate) of the difference
between: (A) the interest payable on Non-Tendered Notes for
the period commencing on the date of expiration of the Tender
Offer and ending on April 15, 2000 assuming an interest rate,
per annum, equal to the yield to maturity at the time of
computation of 5.500-. United States Treasury securities due
April 15, 2000, plus 50 basis points, and (3) the interest
payable on Non-Tendered Notes for the period commencing on
the date of expiration of the Tender Offer and ending on
April 15, 2000 assuming an interest rate, per annum, equal to
the Comparable Convertible Rate.
Release of Escrow Dep6sit. The Tender Offer
Escrow Amount shall be held in the Tender Offer Escrow
Account until May 15, 2000 (the "Escrow Expiration Date").
CapStar shall be entitled to a portion of the Tender Offer
Escrow Amount equal to the product obtained by multiplying t-
- -he aggregate outstanding principal balance of Non-Tendered
Notes by a fraction, the numerator of which shall be the
aggregate outstanding principal amount of Notes the holders
of which have elected to exchange their Notes under the
Indenture and the denominator of which shall be the aggregate
outstanding principal amount of NonTendered Notes. Any
portion of the Tender Offer Escrow Account remaining after
the distribution to CapStar in accordance with the preceding
sentence shall be disbursed to SSPC. All interest earned on
the Tender Offer Escrow Amount shall be paid to SSPC.
(j) Coopera@i6n by purchasers. Purchasers shall
cooperate with SSPC in connection with SSPC,s obligations
under this Section 8.4, including, without limitation, by
providing information to SSPC relating to CapStar and CapStar
Management for inclusion in the Tender Offer and Consent
Solicitation materials to be delivered to the Noteholders and
by voting any Notes purchased by CapStar in favor of the
transaction contemplated hereby.
ARTICLE IX
CLOSING
Section 9.1 Closincr. Unless otherwise mutually
agreed to by SSPC and CapStar and subject to Section 8.4, the
Closing shall occur on July 1, 1998 (provided that all
conditions precedent to the parties obligations hereunder
have been satisfied or waived (other than conditions with
respect to actions the respective parties will take at the
Closing) and if not so satisfied or waived, the Closirig
shall be automatically extended from time to time until the
first subsequent business
37
day on whi-ch all such conditions are so satisfied or waived,
subject, however to Section 11.9 hereof) (the "Closing
Date"); provided, however, that CapStar shall have the right
to accelerate or extend the Closing Date for a period of
fifteen (15) days, by providing written notice thereof to
SSPC, in order to accommodate the Closing of the Merger.
Notwithstanding the foregoing, in no event shall the Closing
occur lal--er than fifteen (15) days following consummation
of the Merger (provided that all conditions precedent to the
parties obligations hereunder have been satisfied or waived
(other than conditions with respect to actions the respective
parties will take at the Closing) as of such date and if not
so satisfied or waived, the Closing shall be automatically
extended from time to time until the first subsequent
business day on which all such conditions are so satisfied or
waived, subject, however to Section 11.9 hereof). As more
particularly described below, at the Closing the parties will
meet: (i) to execute all of the documents required to be
delivered in connection with the transaction contemplated
hereby (the "Closing Documents',); (ii) issue the Partnership
Units; and (iii) take all other action required by this
Agreement to be taken in order to consummate the transaction
contemplated by this Agreement (the "Closing"). The Closing
shall take place at the Corporate Offices, or at any other
place to which SSPC and CapStar may mutually agree prior to
the Closing Date. The point in time at which the Closing
shall have been consummated is referred to herein as the
"Time of Closing.,,
Section 9.2 Sellers' Deliveries. At the Closing,
each Seller (as indicated below) shall deliver to CapStar
Management all of the following instruments, each of which
shall have been duly executed and, where applicable,
acknowledged and/or sworn on behalf of such Seller and,
except as otherwise noted, shall be dated as of the Closing
Date:
(a) The certificates required by Section 7.2(b)
and
(c) hereof.
(b) Appropriate resolutions of the shareholders
or board of directors (for corporate Sellers), and the
general parl--ner (for partnership Sellers) authorizing this
transaction, together with all other necessary approvals and
consents of Sellers and such documentary and other evidence
as may be reasonably required by CapStar Management
authorizing and evidencing the authorization of (i) the
execution on behalf of Sellers of this Agreement and the
authority of the person or persons who are executing the
Closing Documents to be executed .and delivered by Sellers
prior to, at or otherwise in connection with the Closing, and
(ii) the performance by Sellers of their obligations
hereunder and under the Closing Documents.
(c) All Deeds and Conveyance Documents necessary to
transfer title to the Contributed Assets to CapStar
Management as
3 8
contemolated by the te=s of this Agreement and as reasonably
requested by CapStar Management.
(d) A consent from the landlord under each of the
Seller Leases, in form and substance reasonably satisfactory
to CapStar, if required by the terms of the Seller Leases.
(e) A consent from the franchiser or licensor
under each of the Franchise Agreements, in fo= and substance
reasonably satisfactory to CapStar, if required by the terms
of the Franchise Agreements.
(f) A Te=ination of Management Agreement in form and
substance reasonably satisfactory to CapStar.
(g) Such agreements, affidavits or other
documents as may be reasonably required by the Title Company
to issue the Title Policies.
(h) A FIRPTA affidavit in the form set forth in the
regulations under Section 1445 of the Code.
(i) All current real estat--e and personal property tax
bills in Sellers, possession.
(j) Stock certificates representing the DG&CC
Stock, duly executed in blank for transfer, or accompanied by
appropriate stock powers duly executed in blank for transfer.
(k) All originals (or copies if originals are not
available) of the Books and Records, Customer and Marketing
Information, Permits, Property Reports, and all other
documents and records relating to the Business or any
Property in the possession or control of Sellers, which shall
be deemed to be delivered upon delivery of possession of the
Properti-es, the Corporate Office and Vacation Planning
Center.
(1) A counterpart signature page to the Opti-on
Agreement.
(m) A counterpart signature page to the Exchange
Rights Agreement.
(n) A payoff letter from each lessor under each
Capital Lease indicating all amounts due and owing in order
to fully discharge and payoff as of the Time of Closing such
Capital Lease and, to the extent CapStar desires to payoff
the Credit Lyonnais Debt at the Time of Closing, a payoff
letter from Credit Lyonnais New York Branch in respect of the
Credit Lyonnais Debt indicating all amounts due and owing in
order to fully discharge and payoff as of the Time of Closing
the Credit Lyonnais Debt.
3 9
(o) An accredited investor certificate, in form and
substance reasonably satisfactory to CapStar, from SSPC.
(p) Such other and further documents and
instruments as may be reasonably requested by CapStar or its
counsel in order to better effectuate the purposes of this
Agreement.
Section 9.3 Purchasers' Deliveries. At the
Closing, Purchasers shall deliver to Sellers the Contribution
Consideration (by wire transfer of immediately available
funds to an account designated by Sellers in the case of the
Cash Portion) and all other sums required to be paid by
Purchasers hereunder, and all of the following instruments,
each of whi-ch shall have been duly executed and, where
applicable, acknowledged and/or sworn on behalf of
Purchasers, and, except as otherwise noted, shall be dated as
of the Closing Date:
(a) Any supplemental Indentures required under the
Indenture.
(b) The certificates required by Section 7.3(b) and
(c) -
(c) Appropriate of CapStar and the general such
documentary and other by Sellers authorizing and the
execution on behalf of authority of the person or
resolutions of the Boards of Directors partner of CapStar
Management, and evidence as may he reasonably required
evidencing the authorization of (i) Purchasers of this
Agreement and the persons who are executing the various
documents to be executed and delivered by Purchasers prior
to, at or otherwise in connection with the Closing, and (ii)
the Derformance by Purchasers of their obligations hereunder
and under such documents.
(d) A counterpart of each of the agreements to be
delivered by Sellers under Section 9.2 which require
execution by either Purchaser.
(e).A counterpart signature page to the Exchange
Rights Agreement and the CapStar Management Partnership
Agreement.
(f) The legal opinion referred to in Section 7.3(e).
(g) An Assignment and Assumption Agreement, in
form and substance reasonably satisfactory to SSPC and
CapStar, pursuant to which SSRC shall assign to CapStar all
of its right, title and interest in and to the Management
Transition Agreements and CapStar shall assume the
obligations of SSRC under the Management Transition
Agreements.
40 .
(h) Such other and further documents and
instruments as may be reasonably requested by Sellers or
their counsel in order to better effectuate the purposes oi'-
this Agreement.
Section 9.4 Possession. Sellers shall deliver
possession of the Contributed Assets at the Closing.
ARTICLE X
CONDEMNATION; DAMAGE OR DESTRUCTION
Section 10.1 Conde=ation- In the event of any
actual or threatened taking, pursuant to the power of eminent
domain, of all or any portion of the Real Property, or any
proposed sale in lieu thereof, SSPC shall give written notice
thereof to CapStar promptly after SSPC receives notice
thereof. If: (i) all or more than ten percent (10'-.), by
value, of South Seas Plantation, Best Western Sanibel, Song
of the Sea, the Dunes Club and Marco Radisson, taken as a
whole, is, or is to be, so condemned or
sold, or (ii) all or more than ten percent (lo-.), by
value, of
South Seas Plantation is, or is to be, so condemned or
sold, or
(iii) all or more than twenty percent (20'-.), by value, of
Best
Western Sanibel, Song of the Sea, the Dunes Club or Marco
Radisson, taken individually, is, or is to be, so condemned
or sold, Purchasers shall have the right to terminate this
Agreement. If Purchasers elect not to terminate this
Agreement, all proceeds, awards and other payments arising
out of such condemnation or sale (actual or threatened) shall
be paid or assigned, as applicable, to Purchasers at Closi-
ng. If Purchasers elect to terminate this Agreement by givi-
ng Sellers written notice thereof prior to the Closing, the
Earnest Money Deposit shall be promptly returned to CapStar
and all rights and obligations of Sellers and Purchasers
hereunder (except those rights and obligations set forth
herein which expressly survive a termination of this
Agreement) shall te=inate immediately.
Section 10.2 Da3nacTe or Destruction.
(a) If, after expiration of the Due Diligence
Period but prior to Closing, there shall occur any uninsured
damage or destruction L-o the Property in excess o-Lc: (i)
ten percent (10'i), by value, of South Seas Plantation, Best
Western Sanibel, Song of the Sea, the Dunes Club and Marco
Radisson, taken as a whole,
(ii) ten percent (10--.), by value, o@L South Seas
Plantation, or
(iii) twenty percent (20'-.), by value, of Best Western
Sanibel,-
Song of the Sea, the Dunes Club or Marco Radisson, taken
individually, or that would require longer than three hundred
sixty-five C365) days to repair, Purchasers shall have the
option, in their sole judgment and discretion, (i) to
terminate this Agreement, or (ii) to proceed with Closing
without any adjustment in the Contribution Consideration, in
which event, at Closing, Sellers shall transfer and assign to
Purchasers all Sellers, right, title and interest in and to
all proceeds from all insurance policies owned by Sellers wi-
th respect to the
41
Contributed Assets for such damage or destruction, provided
that any existing mortgagees having approval or similar
rights relating to application of insurance proceeds have
agreed that the insurance proceeds may be transferred and
assigned to Purchasers. If Purchasers elect to proceed with
Closing, and, as of the Closing Date, the existing mortgagees
have not agreed that the insurance proceeds may be
transferred and assigned to Purchasers, then, in such event,
the insurance proceeds shall be transferred and assigned by
Sellers to Purchasers as soon as practicable after Closing.
If Purchasers shall elect to terminate this Agreement,
Purchasers shall give written notice thereo'L to Sellers on
or before the earlier to occur of (A) ten (10) days after
Purchasers shall have received written notice of such damage
or destruction, or (E) the Closing DaL--e. If Purchasers do
not give such notice within such time, Purchasers shall be
conclusively deemed to have elect--d to proceed with Closing,
and shall not have any further right to terminate this
Agreement as a result of such damage or destruction. Upon
any termination of this Agreement under this Section 10.2(a),
the Escrow Agent shall return to Purchasers the Earnest Money
Deposit and all rights and obligations of Sellers and
Purchasers hereunder (except those rights and obligations set
forl--h herein whi-ch expressly survive a te=ination of this
Agreement) shall terminate immediately.
(b) If, prior to Closing, there shall occur any
damage or destruction to the Property that would require less
than: (i) ten percent (100-o), by value, of South Seas
Plantation, Best Western Sanibel, Song of the Sea, the Dunes
Club and Marco Radisson, taken as a whole, (ii) ten percent
(lo@), by value, of South Seas Plantation, or (iii) twenty
percent (20'-.), by value, of Best Western Sanibel, Song of
the Sea, the Dunes Club or Marco Radisson, taken
individually, and take not longer than three hundred sixty-
five (365) days to repair, Purchasers shall not have the
option to terminate this Agreement, but Closing shall proceed
pursuant to Section 10.2(a)(ii) unless Sellers, insurance
company has in good faith denied coverage and SSPC is
unwilling to pay for the cost (or estimated cost) to repair
or restore the damaged Property through a reduction in the
Contribution ConsideraL-ion. If Sellers, insurance company
denies coverage and SSPC is unwilling to pay for the cost (or
estimated cost) to repair or restore the damaged Property
through a reduction in the Contribution Consideration,
Purchasers may elect to terminate thi-s Agreement by giving
Sellers written notice thereof prior to the Closing, the
Earnest Money Deposit shall be promptly returned to CapStar
and all rights and obligations of Sellers and Purchasers
hereunder (except those rights and obligations set forth
herein which expressly survive a termination of this
Agreement) shall terminate immediately. Purchasers
acknowledges that Sellers make no reuresentation or warranty
as to the amount of any insurance policy proceeds, if any,
that will be available to Purchasers in the event of a
Closing pursuant to Section 10.2(a)(ii) or this Section
10.2(b). If Sellers' insurance
42
comvany denies coverage and SSPC pays for the cost or
estimated cos@ to repair or restore the damaged Property
through a reduction in the Contribution Consideration, SSPC
shall be entitled to collect and receive any insurance
proceeds ultimately determined to be due and owing by
Sellers, insurance company in respect of such damage.
Section 10.3 Inability to Deliver South Seas
Plantation. Subject to the provisions of Section 10.1 and
Section 10.2 hereof, if Sellers are unable to deliver title
to South Seas Plantation to CapStar Management as required by
the te=s of this Agreement, then either Sellers or Purchasers
shall have the right to terminate this Agreement. Upon any
termination of this Agreement under this Section 10.3, the
Escrow Agent shall return to Purchasers,the Earnest Money
Deposit and all rights and obligations of Sellers and
Purchasers hereunder (except those rights and obligations set
forth herein which expressly survive a termination of this
Agreement) shall terminate immediately.
Section 10.4 'Inability to Deliver any Pro-perty
Other
than South Seas Plantation. SubjecL-- to the provisions of
Section 10.1 and Section 10.2 hereof, if: (i) Sellers are
unable to deliver to CapStar Management title to any Property
(other than South Seas Plantation, which shall be governed by
the provisions of Section 10.3) as required by the terms of
this Agreement, or (ii) any of the representations and
warranties of Sellers set forth in Article V hereof shall at
the Time of Closing be untrue in any material respect with
respect to a particular Property, or (iii) Sellers are unable
to deliver any Pror)erty (other than South Seas Plantation)
by reason of any condemnation, damage or destruction with
respect to a particular Property that would allow Purchasers
to terminate this Agreement under Sections 10.1 or 10.2, then
Purchasers shall be entitled to eliminate from this Agreement
the Property or Properties so affected and the Contribution
Consideration shall be adjusted by deducting the amount or
amounts shown in Exhibit C for the Property or Properties to
be eliminated. If the Con(-ribution Consideration declines
below $135,000,000 as a result of the elimination of
Properties other than the Marco Radisson or below
$120,000,000 as a result of the elimination o'L the Marco
Radisson and any other Property, Sellers may terminate this
Agreement by written notice to Purchasers delivered at any
time after the elimination of the Property or Properties
which results in the Contribution Consideration declining
below such amount. Notwithstanding Sections 8.3(b) and
8.3(c), if a Property is eliminated pursuant to this Section
10.4, CapStar's obligations under Sections 8.3(b) and 8.3(c)
and Sellers, obligations under Section 8.2(c) shall cease and
terminate with respect to the Employees of Sellers relating
to the Property eliminated under this Section 10.4.
43
ARTICLE XI
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION;
TERMINATION RIGHTS
Section 11.1 Survival of Representations and
Warranties. The representations and warranties of Sellers and
Purchasers shall survive the Closing for a period of one (1)
year commencing on the Closing Date (the "Indemnity
ExT)iration Date"). To the extent any Indemnitee is seeking
indemnification, the Indemnitee shall be entitled to
indemnity only for those matters as to which the Indemnitee
has given written notice thereof to the other party prior to
the expiration of the one (1) year period commencing on the
Closing Date.
Section 11.2 Inde=ification b-y Purchasers.
Purchasers hereby jointly and severally indemnify and hold
Sellers, their partners, their respective Affiliates and the
officers, directors, employees, agents, advisers and
representatives of each of the foregoing (individually, a
"Seller Indemnitee", and collectively, the "Seller
Indemnitees") harmless from and againsl-- any and all claims,
costs, penalties, damages, losses, liabilities and expenses
(including reasonable attorneys' fees) (individually, an
"Indemnification Loss", and collectively, the
"Indemnification Losses") that may aL-- any time be incurred
by any Seller Indemnitee, whether before or after Closing, as
a result of: (i-) any inaccuracy or breach by Purchasers of
any of their representations, warranties, covenants or
obligations set forth herein, (ii) the non-payment or non-
performance of any Assumed Liabilities, (iii) the conduct of
the Business after the Closing Date, (iv) any untrue
statement of a material fact relating to Purchasers in the
Tender Offer Materials and provided by Purchasers in writing
to SSPC specifically for inclusion therein (the "Purchaser
Information") or any omission by Purchasers to state a
material fact relating to Purchasers in the Tender offer
Materials necessary in order to make the statements made by
Purchasers in the Tender Offer Materials, in light of the
circumstances under which they were made, not misleading, and
(v) any action taken by Purchasers or omitted to he taken by
Purchasers in connection with the Tender Offer.
Section 11.3 Indemnification b)r Sellers. Sellers
hereby jointly and severally indemnify and hold Purchasers,
their partners, their respective Affiliates and the officers,
directors, employees, agents, advisers and representatives of
each such person (individually, a "Purchaser Indemnitee",
andcollectively, the "Purchaser Indemnitees") harmless from
and against any and all claims, costs, penalties, damages,
losses, liabilities and expenses (including reasonable
attorneys, fees) (individually, an "Indemnification Loss",
and collectively, the "Indemnitication Losses") that may at
any time be incurred by any Purchaser Indemnitee, whether
before or after Closing, as a result of: (i) any inaccuracy
or breach by Sellers of any of the representations,
warranties, covenants or obligations set forth
44
herein (except for any breach or inaccuracy of any
representation cr warranty as to which either Purchaser had
Knowledge prior to the Closing and nevertheless elected to
consummate the Closing), (ii) Sellers, failure to timely
discharge or satisfy any Excluded Liabilities, (iii) any
untrue statement of a material fact (other than Purchaser
Information) in the Tender O'Lfer Materials or any omission
to state a material fact in the Tender Offer Materials
necessary in order to make the statements made in the Tender
Offer Materials, in light of the circumstances under which
they were made, not misleading, and (iv) any action taken by
Sellers or omitted to be taken by Sellers in connection with
the Tender Offer. Sellers, obligations under this Section
11.3 with respect to indemnity under clause (i) hereof shall
terminate on the one year anniversary of the Closing Date, on
the second year anniversary of the Closing Date with respect
to indemnity under clause (ii) hereof and upon expiration of
the applicable statute of limitations period with respect to
indemnity under clauses
(iii) and (iv) hereof.
Section 11.4 Limitations on Inde=ification.
(a) Notwithstanding anything in Section 11.3
hereof to the contrary, to the extent indemnification is
sought by any Purchaser Indemnitee under clause (i) of
Section 11.3 hereof or under clause (i) of Section 11.3 of
the Other Agreement, Sellers shall be required to provide
indemnification only to the extent the aggregate amount of
all Indemnification Losses under clause
(i) of Section 11.3 of this Agreement and clause (i) of
Section
11.3 of the Other Agreement exceed Seven Hundred Fifty
Thousand
Dollars ($750,000) and not for any amounts up thereto (the
"Indemnity Deductible"). Indemnification under clause (ii)
of
Section 11.3 hereof shall not be subject to the Indemnity
Deductible.
(b) Notwithstanding anything in Section 11.3
hereof to the contrary, the maximum amount payable for
indemnification under clause (i) of Section 11.3 hereof and
under clause (i) of Section 11.3 of the Other Agreement shall
not in the aggregate exceed Seven Million Five Hundred
Thousand Dollars ($7,500,000) and the maximum amount payable
by Sellers for all claims for indemnification under Section
11.3 hereof and under Section 11.3 of the Other Agreement
shall not in the aagregate exceed Ten Million Dollars
($10,000,000).
(c) The amount of any Indemnification Loss for
which indemnification is ldrovided under this Article XI
shall be net of any tax benefits or insurance proceeds
actually realized by the indemnified party as a result
thereof.
Section 11.5 Indemnification Procedure. In the
case of any claim asserted by a third party against a party
entitled to indemnification under this Agreement (the
"Indemnified Party"), notice shall be given by the
Indemnified Party to the
45
party required to provide indemnification (the "Indemnifying
Party") promptly after such Indemnified Party has actual
knowledge of any claim as to which indemnification may be
sought, and the Indemnified Party shall permit the
Indemnifying Party (at the expense of the Indemnifying Party)
to assume the defense of any claim or any litigation
resulting therefrom@ provided, that (i) the counsel for the
Indemnifying Party who shall conduct the defense of the claim
or litigation shall be reasonably satisfactory to the
Indemnified Party, (ii) the Indemnified Party may participate
in the defense at the Indemnified Party's expense, and (iii)
the failure by any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party o'L
its indemnification obliaation under this Agreement, except
to the extent that such om@ission results in a failure of
actual notice to the Indemnifying Party and such Indemnifying
Party is materially damaged as a result of such failure to
give notice.
Section 11.6 Exclusive Remedy. Subject to Section
11.7 and Section 11.10 below, the indemnification provisions
of this Article Xi shall be the sole and exclusive remedy of
the Seller Indemnitees and the Purchaser Indemnitees with
respect to any claim for monetary relief based upon or
arising ouL-- of this Agreement.
Section 11.7 Termination by Purchasers. If Sellers
default in any material respect in the performance of any of
their obligations hereunder and if Sellers fail to cure that
default within ten (10) business days after notice thereof
from Purchasers (or such other time period as may be
explicitly provided for herein), Purchasers, shall have the
right to exercise any a-nd all legal and equitable remedies
which Purchasers may have against Sellers, including, without
limitation, the right to require that Sellers specifically
perform their respective obligations under this Agreement.
Section 11.8 Te=ination by Sellers. If Purchasers
default in any material respect in the performance of any of
their obligations hereunder and if Purchasers fails to cure
that dei'-ault within ten (10) business days after notice
thereof from Sellers (or such other time period as may be
explicitly provided for herein), Sellers may either: (i)
te=inate this Agreement in which event the Earnest Money
Deposit (together with any interest earned thereon) shall be
retained by Sellers and all other rights and obligations of
Sellers and Purchasers hereunder (except those rights and
obligations set forth herein which expressly survive a
termination of this Agreement) shall terminate immediately,
or
(ii) proceed to Closing.
Section 11.9 Te=ination by Either Sellers or
Purchasers. If the Closing shall not have occurred before
November 1, 1998, any party hereto may elect to terminate
this
Agreement, in which event (i) the Earnest Money De-oosit
(together
46
with any interest earned thereon) shall promptly be returned
to CaDSta . r, and (ii) all other rights and obligations of
Sellers and Purchase--s hereunder (except those rights and
obligations set forth herein which expressly survive a
termination of this Agreement) shall terminate immediately.
In connection with any such te=ination, each party shall pay
its own costs and expenses incurred in connection with the
transaction contemplated hereby.
Section 11.10 Licruidated Damacres. SELLERS AND
PURCRASERS AGREE THAT, IN THE EVENT OF TERMINATION OF THIS
AGREEMENT AS CONTEMPLATED BY SECTION 11.8 HEREOF OR UNDER THE
CIRCUMSTANCES DESCRIBED IN SECTION 3.4 HEREOF, THE DAMAGES
THAT SELLERS WOULD SUSTAIN AS A RESULT THEREOF WOULD BE
DIFFICULT IF NOT IMPOSSIBLE TO ASCERTAIN. THEREFORE, SELLERS
AND PURCHASERS AGREE TRAT SELLERS SHALL RETAIN THE EARNEST
MONEY DEPOSIT AS FULL AND COMPLETE LIQUIDATED DAMAGES AND AS
SELLERS' SOLE REMEDY.
ARTICLE XII
PRORATIONS; TRANSACTION COSTS AND A.DJUSTMENTS
Section 12.1 Prorations. The following matters and
items pertaining to the Business and each Property shall be
apportioned between Sellers, on the one hand, and Purchasers,
on the other hand or, where applicable, credited in total to
Sellers or Purchasers, as of midnight on the day preceding
the Closing Date (the "Cutoff Time"). Net credits i-n favor
of Purchasers shall be deducted from the Contribution
Consideration and net credits in favor of Sellers shall be
added to the Contribution Consideration. Unless otherwise
indicated below, Purchasers shall receive a credit for any of
the following items to the extent the same are accrued but
unpaid as of the Cutoff Time (whether or not due, owing or
delinquent as of the Cutoff Time), and Sellers shall receive
a credit to the extent any of the following items shall have
been paid prior to the Closing Date to the extent the payment
thereof relates to any period of time after the Cutoff Time:
(a) All Taxes (other than federal, state, local
and foreign income, capital stock, windfall profits and
franchise L--axes) shall be prorated as of the Cutoff Time
between Purchasers and Sellers. Sellers shall be charged
with such Taxes accrued or payable as of the Cutoff Time,
which shall be credited to Purchasers as a reduction of the
Contribution Consideration. If the amount of any such item
is not ascertainable on the Closing Date, the credit therefor
shall be based on the most recent available bill and adjusted
as necessary post-closing, as contemplated in Section 12.3.
(b) Any amounts prepaid, accrued or payable under
the Indenture shall be prorated as of the Cutoff Time between
Purchasers and Sellers. All amounts accrued or payable under
the Indenture with reference to periods prior to the Closing
Date shall be credited to Purchasers as a reduction of L-he
47
Contribution Consideration. All amounts paid under the
Indenture with reference to periods after the Closing Date
shall be added to the Contribution Consideration.
(c) Any amounts prepaid, accrued or due and
payable under the Contracts (including any deposits payable
thereunder, but excluding any Contracts for utilities which
proration is addressed separately in Section 12.1(i)) shall
be prorated as of the Cutoff Time between Purchasers and
Sellers. All amounts accrued or payable under the Contracts
with reference to periods prior to the Closing Date shall be
credited to Purchasers as a reduction of the Contribution
Consideration. All amounts paid under the Contracts with
reference to periods after the Closing Date shall be added to
the Contribution Consideration.
Notwithstanding the foregoing, Sellers shall pay off at or
prior to Closing all Equipment Leases which are treated as
capital leases (as opposed to operating leases) under GAAP,
including, without limitation, the Equipment Leases with
respect to the computer, telephone and reservations systems
and equipment used at the Vacation Planning Center.
(d) Any amounts prepaid, accrued or due and
payable under the Leases (including any deposits payable
thereunder) shall be prorated as of the Cutoff Time between
Purchasers and Sellers. All amounts accrued or payable under
the Leases with reference to periods prior to the Closing
Date shall be credited to Purchasers as a reduction of the
Contribution Consideration. All amounts paid under the
Leases with reference to periods after the Closing Date shall
he added to the Contribution Consideration.
(e) Any Compensation for the following specific
items:
direct salaries and wages; (ii) incentive compensation;
(iii) employer's contributions under the Federal Insurance
Contribution Act, unemployment compensation and other
employment taxes; (iv) accrued vacation pay with respect to
the Transferred Employees (A) which are due and payable at
Closing, or (B) with respect to which the right to receive
such Compensation first arises or accrues prior to Closing
(without regard to when such Compensation is paid or becomes
due and payable) shall be prorated as of the Cutoff Time
between Purchasers and Sellers. All Compensation with
reference to periods prior to the Closing Date shall be
credited to Purchasers as a reduction of the Contribution
Consideration.
(f) All fees and charges paid for transferable
Permits the current period for which Permit includes the
Closing Date shall be prorated as of the Cutoff Time between
Purchasers and Sellers. All amounts accrued or payable under
such Permits with reference to periods prior to the Closing
Date shall be credited to Purchasers as a reduction of the
Contribution Consideration. All amounts paid under such
Permits with reference to periods
4 8
after the Closing Date shall be added to the Contribution
Consideration.
(g) The Contribution Consideration shall be
reduced by the amount of all accounts for current guests at
the Properties including items charged to such accounts by
guests reflected on the ledger of each Property as of the
Cutoff Time in an amount equal to fifty percent (500-o) of
all of such room charges for such night, plus all other guest
ledger charges for such night.
(h) Purchasers shall receive a credit as a
reduction in the Contribution Consideration for all prepaid
deposits for Reservations scheduled for accommodations or
events on or after the Closing Date.
(i) All utility services, including, without
limitation, telephone and telex contracts and contracts for
the supply of heat, steam, electric power, gas, water, sewer
and lighting, shall be prorated as of the Cutoff Time between
Purchasers and Sellers by the Escrow Agent. Where possible,
cutoff readings will be secured for all utilities as of the
Cutoff Time. To the extent they are not available, the cost
of such utilities shall be apportioned between the parties by
estimating such cost on the basis of the latest actual (not
estimated) bill for such service. All such amounts which are
payable or estimated to have accrued for such utility
services with reference to periods prior to the Closing Date
shall be credited to Purchasers as a reduction of the
Contribution Consideration. All amounts paid for such
utility services with reference to periods after the Closing
Date shall be added to the Contribution Consideration.
Sellers shall receive a credit for all deposits, if any, made
by Sellers as security under any such public service
contracts if the same are transferable and provided such
deposits remain on deposit for the benefit of Purchasers.
(i) vending machine, laundry machine, pay
telephone and other coin-operated equipment monies will be
removed by Sellers as of the Cutoff Time for the benefit of
Sellers (subject to the payment by Sellers of any amounts
owed third parties in connection with such vending machines,
laundry machines, pay telephones and other coin-operated
equipment).
(k) The Contribution Consideration shall be
increased in an amount equal to the amount of all Accounts
Receivable generated from the Business prior to the Cutoff
Time which as of .the Cut-O'Lf Time have been unpaid for not
more than ninety (90) days (the "Transferred Accounts
Receivable"), and Purchasers shall be entitled to collect and
retain all such Accounts Receivables as they are received.
If Purchasers are unable to collect the Transferred Accounts
Receivable within ninety (90) days following the Closing
Date, Sellers shall repurchase at the face value thereof
those Transferred Accounts Receivable that
4 9
Purchasers are unable to collect. No adjustment shall be
made for any Accounts Receivable generated from the Business
prior to the Cut-Off Time which as of the Cut-Off Time shall
have been unpaid for ninety (90) days or more, and Sellers
shall be entitled to collect and retain all such @ccounts
Receivable. Sellers shall deliver to Purchasers on the
Closing Date a true, correct and complete schedule listing
all of the Transferred Accounts Receivable.
(1) The Contribution Consideration shall be
increased by the amount paid by Sellers for the items of
Consumables and SuDDly Inventory shown on the Financial
Statements as follows to the extent such items have not been
expensed prior to the Cutoff
Time: (i) unopened liquor and wine inventory; (ii) golf pro
shop;
(iii) retail (gifts, groceries, etc); (iv) marina -
gas/oil; (v)
Ships store; (vi) general store; (vii) Shades of Captiva;
(viii) Reflections; (ix) gift shop; (x) pizza parlor; (xi)
Uncle Bob,s Ice Cream Shop; (xii) Bayside Outrigger; (xiii)
Warehouse Storage; (xiv) Bayside Marina - Grocery; (xv)
tennis pro shop; (xvi) maintenance supplies; (xvii) food
service supplies; (xviii) office and vending equipment; (xix)
computer equipment (which shall be limited to Sellers' on-
hand supply of computer replacement parts ana replacement
equipment); (xx) gas station; and (xx-L) items customarily
included in the "miscellaneous" category. Notwithstanding
this Section 12.1(1), CapStar shall have the right to advise
SSPC no later than thirty (30) days prior to the Closing Date
that CapStar elects not to purchase certain beverage
inventory (in which case no proration for such excluded
inventory shall be made hereunder). If CapSL--ar so notifies
SSPC, the beverage inventory that CapStar elects not to
purchase shall not be transferred to CapStar.
(m) The Contribution Consideration shall be
decreased by the outstanding accounts payable and accrued
expenses of Sellers as of the Cutoff Time to the extent that
such accounts payable and accrued expenses have not otherwise
been deducted from the Contribution Consideration pursuant to
this Section 12.1.
(n) All prepaid expenses (including, without
limitation, property, casualty, workers, compensa-ion or
health
L-
insurance premiums) which are required for operation of the
Properties and which have not otherwise been prorated
pursuant to this Article XII and which relate to a period of
more than one year shall be prorated as of the Cutoff Time
between Purchasers and Sellers.
Section 12.2 Settlement Statement and Closing Date
Calculation.
(a) Sellers and Purchasers, through their
respective accountants or representatives, together shall
make such examinations and inventories of Sellers as may be
necessary to
5 0
make the adjustments and prorations and allocations of
Contribution Consideration among the Contributed Assets under
this Article XII or under any other provisions of this
Agreement Sellers and Purchasers jointly shall prepare no
later than the Closing Date a settlement statement (the
"Settlement Statement") that is based upon (i) the last
available month-end balance sheet and income statement of
Sellers (such month-end statements are generally prepared by
Sellers within twenty days following the prior month-end),
and (ii) the examinations and inventories described in the
preceding sentence. The Settlement Statement shall contain
Sellers' and Purchasers' best estimate of the amounts of the
items requiring the prora-Lions and adjustments in this
Agreement and shall segregate such items on a Property by
Property basis to the extent applicable. The amounts set
forth on the Settlement Statement shall be the basis upon
which the prorations and adjustments vrovided for herein
shall be made at the Closing. Subject to Sections 12.2(b)
and (c), the Settlement Statement shall be binding and
conclusive on all parties hereto to the extent of the items
covered by the Settlement Statement.
(b) In the event that, at any time within nine
(9) months after the Closing Date, either party discovers any
items (other than the items set forth in Sections 12.1(k),
(1) and (m)) which should have been included in the
Settlement Statement but were omitted therefrom, such items
shall be adjusted in the same manner as if their existence
had been known at the time of the preparation of the
Settlement Stat--ement.
(c) With respect to the items set forth in
Sections 12.1(k), (1) and (m), within one hundred twenty
(120) days after the Closing Date, Sellers shall prepare a
calculation of such items as of the Closing Date (the
"Clcsing Date Calculation") and sha ' 11 segregate such items
therein on a Property by Property basis to the extent
applicable. The Closing Date calculation shall also set
forth any adjustments to the prorations and adjustments set
forth in the Settlement Statement. If Purchasers have any
objections to the Closing Date Calculation, Purchasers shall
deliver a detailed statement describing its objections to
Sellers within thirty (30) days a-fter receiving the Closing
DaL--e Calculati-on. Purchasers and Sellers shall use
reasonable efforts to resolve any such objections themselves.
If Sellers and Purchasers do not obtain a final resolution
within thirty (30) days after Sellers have received the
statement of objections,
Sellers and Purchasers shall select an accounting firm
mutually acceptable to them to resolve any remaining
objections. If
Purchasers and Sellers are unable to agree on the choice of
an accounting fi=, they will select a nationally-recognized
accounting firm by lot (after excluding their respective
regular outside accounting firms) . The determination of any
accounting firm so selected will be set forth in writing and
will be conclusive and binding upon Purchasers and Sellers.
U-pon resolution of all objections to the Closing Date
Calculation, Sellers promptly shall revise the Closing Date
Calculation to
51
reflect such resolution of objections. Purchasers or
Sellers, as the case may be, shall promptly pay the other
party the amount of any additional adjustment required under
such revised Closing Date Calculation (or as required under
the initial Closing Date Calculation if Purchasers do not
notify Sellers bf any objections within the applicable
thirty-day period). Purchasers and Sellers shall split the
costs and expenses of the accounting firm referenced above.
Sellers shall make the work papers and back-up materials used
in preparing the Closing Date Calculation available to
Purchasers and its accountants and other representatives at
reasonable times and upon reasonable notice at any time
during (i) the preparation by Sellers of the Closing Date
Calculation, (ii) the review by Purchasers of the Closing
Date Calculation, and (iii) the resolution by Purchasers and
Sellers of any objections thereto.
Section 12.3 Transaction Costs.
(a) Sellers shall pay for the following costs
associated with this transaction: (i) the fees and expenses
of NationsBanc Montgomery Securities, (ii) the fees and
expenses of its accountants and attorneys, and (iii) the
costs and expenses of any mortgage or other releases
associated with the pay off and release of existing mortgages
and other non-permitted encumbrances.
(b) Purchasers shall pay for the following costs
associated with this transaction: (i) the fees and expenses
of its investment bankers or advisers; (ii) the fees and
expenses of .its accountants and attorneys; (iii) appraisal
fees and charges, (iv) the fees, charges and expenses
incurred in connection with any third party reports obtained
by either Purchaser (including, without l-LmiL-ation,
environmental, structural engineering and marketing reports),
(v) application and/or transfer fees relating to the
Franchise Agreements or any other franchise affiliations
Purchasers desire to obtain, and (vi) fees and expenses
relating to the transfer of all liquor licenses for the
Properties.
(c) Sellers and Purchaser shall split equally the
following costs associated with this transaction: (i)
recording fees and charges, (ii) the fees and expenses of the
Escrow Agent, (iii) the costs of updates to the Existing
Surveys or obtaining new surveys, (iv) transfer taxes, (v)
documentary stamp taxes, (vi) sales and use taxes incurred by
reason of the transfer of the Contributed Assets as
contemplated by this Agreement, (vii) mortgage documentary or
stamo taxes incurred in connection with the assumption of the
Assumea Debt by Purchasers, and (viii) costs and charges
relating to all Title Commitments and Title Policies
(including, without limitation, any costs and charges of
Guardi:an Title of Lee County). All other costs and expenses
not expressly addressed in this Section 12.3 shall be
allocated between the parties in accordance with local custom
for similar transactions.
52
(d) If SSPC is able to provide CapStar with
engineering, building condition, environmental or appraisal
reports that are satisfactory to CapStar and for which
CapStar can obtain reliance letters, then if CapStar elects
to use such reports CapStar will pay to SSPC the fees CapStar
normally would pay for such reports under its national
contracts.
Notwithstanding the foregoing sentence, CapStar shall have no
obligation to use and pay for reports that SSPC may be able
to provide to CapStar.
Section 12.4 Further Increases to Contribution
Consideration. The Contribution Consideration shall be
increased by the amounts of the following items and such
items shall be transferred to CapStar Management at Closing
and, if appropriate, shall be deemed to be included in the
Contributed Assets.
(a) all deposits for liquor licenses, utility
deposits and beverage deposits with respect to the liquor
licenses, utilities and beverage services at the Properties;
(b) the prepaid usage deposit for the use of effluent
water at the golf course at the Dunes Club; and
(c) the amount by which Sellers' Actual Base
Capital Expenditures as of the Closing Date exceed Sellers'
Prorated Base Budgeted Capital Expenditures plus the amount
spent by any Seller in respect of any Approved Project
Capital Expenditure. The 1998 annual budgeted base capital
expenditures for the purposes of the calculation required by
this Section 12.4(c) and as previously submitted to CapStar
is $4,151,000.
Section 12.5 Further Reduction to Contribution
Consideration. The Con,--ribution Consideration shall be
decreased by: (i) the amount by which Seller's Prorated Base
Budgeted Capital Expendi-tures exceed Seller's Actual Base
Capital Expenditures as of the Closing Date, and (ii) all
amounts due and owing in order to fully discharge and payoff
as of the Time of Closing the Capital Leases as set forth in
the payoff letters required to be delivered under Section
9.2(n) hereof.
53
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.1 Completeness, Modification. This
Agreement, the Exhibits and Schedules hereto and the
documents required to be delivered hereby constitute the
entire agreement between Sellers and Purchasers with respect
to the transaction contemplated hereby and supersede all
prior discussions, understandings, agreements and
negotiations between the parties hereto. This Agreement may
be modified only by a written instrument duly executed by
Sellers and Purchasers. Each reference in this Agreement to
an Exhibit or Schedule shall mean an Exhibit or Schedule
attached to this Agreement and incorporated into this
Agreement by such reference.
Section 13.2 Assiq=ent. Except in connection wi-th
the Merger, neither any Seller nor any Purchaser shall assign
its rights, duties or obligations hereunder without the prior
written consent of the others.
Section 13.3 Successors and Assigns; No Third
Party Beneficiary. This Agreement shall bind and inure to the
benefit of the parties hereto and their respective successors
and permitted assigns and shall not inure to the benefit o'L,
and shall not be enforceable by, any third party. If the
Merger is consummated prior to consummation of this
transaction, this Agreement shall be binding upon each
successor entity to CapStar and CapStar Management and all
obligations of CapStar hereunder shall thereafter be
obligations of MeriStar Hospitality and MeriStar Hotels and
all obligations of CapStar Management shall thereafter be
obligations of MeriStar Hotel Operating Partnership and
MeriStar Hospitality Operating Partnership as if such parties
were signato--ies hereto.
Section 13.4 ' Governincr Law. This Agreement and
all documents referred to herein shall be governed by and
construed and interpreted in accordance with the laws of the
State of Florida.
Section 13.5 Counterparts. To facilitate
execution, this Agreement may be executed in as many
counterparts as may be required. It shall not be necessary
that the signatures on behalf of the parties hereto appear on
each counterpart hereof. All counterparts hereof shall
collectively constitute a single agreement.
Section 13.6 ' Severability. If any term, covenant
or condition of this Agreement, or the application thereof to
any person or circumstance, shall to any extent be invalid or
unenforceable, the remainder of this Agreement, or the
application of such term, covenant or condition to other
persons or circumstances shall not be affected thereby, and
each te=,
54
covenant or condition o'L this Agreement shall be valid and
enforceable to the fullest extent permitted by law.
Section 13.7 Notices. All notices, requests,
demands and other communications hereunder shall be in
writing and shall be delivered by hand, transmitted by
facsimile transmission, sent prepaid by Federal Express (or a
comparable overnight delivery service) or sent by the United
States mail, certified, postage prepaid, return receipt
requested, at the addresses and with such copies as
designated below. Any notice, request, demand or other
communication delivered or sent in the manner aforesaid shall
be deemed given or made (as the case may be) when actually
delivered to the intended recipient.
If to Sellers: South Seas Properties Company
Limited Partnership
12800 University Drive, Suite 350
Fort Myers, Florida 33907
Attn: Richard E. Krichbaum
Telecopy: (941) 481-6667
With a copy to: B aker & Hostetler LLP 1900 East Ninth
Street, Suite 3200 Cleveland, Ohio
44114-3485
Attn: Albert T., Adams, Esq.
Telecopy: (216) 696-0740
If to Purchasers: CapStar Hotel Company
1010 Wisconsin Avenue, N.W.
Washington, D.C. 20007
- -Attn: John Plunket
Telecopy: (202) 295-2230
With a copy to: DeCampo, Diamond & Ash
805 Third Avenue
New York, New York 10022
Attn: William H. Diamond, Esq.
Telecopy: (212) 758-1728
or to such other address as the intended recipient may have
specified in a notice to the other party. Any party hereto
may change its address or designate different or other
persons or entities to receive copies by notifying the other
party in a manner described in this Section 13.7.
Section 13.8 Rules of Construction. The following
rules shall apply to the construction and interpretation of
this Agreement:
(a) Singular words shall connote the plural
number as well as the singular and vice versa, and the
masculine shall include the feminine and the neuter.
55
(b) All references herein to particular articles,
sections, subsections, clauses or exhibits are references to
articles, sections, subsections, clauses or exhibits of this
Agreement.
(c) The headings contained herein are solely for
convenience of reference and shall not constitute a part of
this Agreement nor shall they affect its meaning,
construction or effect.
(d) Each party hereto and its counsel have
reviewed and revised (or requested revisions of) this
Agreement and have participated in the preparation of this
Agreement, and therefore any usual rules of construction
requiring that ambiguities are to be resolved against a
particular party shall not be applicable in the construction
and interpretation of this Agreemen-L or any exhibits hereto.
Section 13.9 Sup-olements to Schedules. Any party
may at any time, or from time to time after the date hereof,
but not later than five (5) days prior to the Closing Date,
supplement or amend the Schedules required by this Agreement.
No supplement or amendment to such Schedules shall have any
effect for the pu@uose of determining -Lhe satisfaction of
the conditions to the obligation of the other parties under
Article VII hereof, but any matter disclosed in an amended or
supplemental Schedule pursuant to this Section 13.9 shall not
form the basis for any claim for indemnification pursuant to
this Agreement if the transaction contemplated by this
Agreement is consummated.
Section 13.10 Radon Gas. Radon is a naturally
occurring radioactive gas that, when it has accumulated in a
building in sufficient quantities, may present health risks
to persons who are exposed to it over time. Levels of radon
tha,-exceed federal and state guidelines have been found in
buildings in Florida. Additional information regarding radon
and radon testing may be obtained from your county public
health unit.
5 6
IN WITNESS WHEREOF, Sellers and Purchasers have
caused this Agreement to be executed in their names by their
respective duly authorized representatives.
Sellers:
SOUTH SEAS PROPERTIES COMPANY LIMITED
PARTNERSHIP, an Ohio limited partnership
By: T&T Resorts, L.C., a Florida
limited liability company, general
partner
By:
t M. Taylor, Chai an and
R@beft-
Manager
SOUTH SEAS RESORTS COMPANY LIMITED PARTNERSHIP, a Florida
limited partnership
By: S. S. Reso
Florida
general -
By:
Management, L.C.
anagement, L.C., a ,
ed liability company,
er
Robe'rt M( Taylor, Cha an and
Manager I
SOUTH SEAS RESORT LIMITED PARTNERSHIP,
an Ohio limited partnership
By: SAN-CAP
limited
By:
57
I L.C., a Florida
ty company
Robert
Manager
Taylor, Chai an and
MARCO SSP, LTD., a Florida limited
partnership
By: Marco SSP. InC., a Florida
c:ox7pora
By: I
Its -.
SOUTH SEAS & CAFTIVA IZOPE
S, L.
By t
Resorts Realt
corporate
Inc. , a
ene-@ ar
B
I Z/ / - @/ @
Purchasers:
CAPSTA,R NOTEL COMPANY
13Y zi ,-@ic-,
. Name: 14]J,, /@ @@
Title: si@, I/.,,
Title: si@, z
CAPSTAR MANAGEMENT COMPANY, L.P.
By: CapStar Hotel Company, a Delaware
corpo
ation, general partner
r,
By I -//
74/
/,Z
Name -
Title -.
!5 8
'@ LIl-
LIST OF EXHIBITS AND SCHEDULES
TO
CONTRIBUTION AGREEMENT
Schedules to Contribution Agreement:
Schedule 1.2(a)
Schedule 1.2(1)
Schedule 1.2(j)
Schedule 1.2(1)
Schedule 1.3
Schedule 4.1(d)
Schedule 5.6
Schedule 5.7
Schedule 5.8
Schedule 5.9
Schedule 5.12
Schedule 5.13
Schedule 5.14
Schedule 5-15
Schedule 5.16
Schedule 5.21
Schedule 6.3
Schedule 6.9
Exhibits
Exhibit A
Exhibit B
Exhibit C
Exhibit D
Legal Description of Land and Addresses of
Properties
Tenant Leases
Seller Leases
Management Agreements
Excluded Assets
Title Commitments and Surveys
Financial Statements
Compliance with Applicable Laws
Litigation
Insurance
Environmental Matters
Pension and Welfare Plans
Permits
List of Condominium Lease Agreements
Equipment Leases and Material Contracts
Proprietary Rights
Purchaser's Conflicts
Capstar Management Partne--ship Agreement
to Contribution Agreement:
Definitions
Proposed Amendments to Indenture
Elimination Price Reductions
Form of Option Agreement Relating to
Tradewinds
5 9
EXHIBIT A
The following terms when used in this Agreement shall have
the
indicated meanings:
"Accounts Receivable" has the meaning set forth in
clause (t) of the definition of Contributed Assets.
"Actual Base CaDital Expenditures" means the
amount of base capital expenditures undertaken by Sellers for
the period commencing January 1, 1998 and ending on the
Closing Date.
"Additional Deposit" has the meaning set forth in
Section 3.4 of this Agreement.
"Affiliate" has the meaning set forth in Section 12b-2
of the Securities Exchange Act of 1934, as amended.
"AGTII has the meaning set forth in Recital H to this
Agreement.
"A-o-olicable Law,, means all laws, statutes,
rules, regulations, ordinances and codes of any Governmental
Authori-L-y and any Board of Fire Underwriters and similar
agencies, and any judgment, injunction, order, decree or
other judicial. requirement affecting or in any way relating
to the Business and the operation of the Properties,
including, without limitation, Environmental Health and
Safety Laws and SEC Laws.
"Assumed Debt" means the Credit Lyonnais Debt, the
Subordinated Debt and all amounts due and owing in order to
fully discharge and payoff as of the Time of Closing the
Capital Leases.
"Assumed Liabilities" has the meaning set forth in
Section 2.1 of this Agreement.
"Base CaDital Projects" means those normal,
recurring projects of a capital nature that are reflected in
Sellers' 1998 budget.
"Best Western Sanibel,, has the meaning set forth in
Recital A.1 to this Agreement.
"Bond Purchase,, has the meaning set forth in Section
8.4(e) of this A7greement.
"Books and Records" has the meaning set forth in
clause
(r) of the definition of Contributed Assets.
"Brokerage Business" has the meaning set forth in
Recital D to this Agreement.
60
"Business" has the meaning set forth in Recital E to
this Agreement.
"CaDital Leases" means all Leases the obligations
of which are required to be classified and accounted for
under GAAP as capital lease obligations on a balance sheet.
"CaDStar" has the meaning set forth in the first
paragraph of this Agreement.
"CauStar Common Stock" means the common stock, $.Ol par
value, of CapStar.
"CazStar Manaaement" has the meaning set forth in the
first paragraph of this Agreement-
"CaDStar Management Partnershin Agreement" means
the Amended and Restated Agreement of Limited Partnership of
CapStar Management, as the same has been amended.
"CapStar Representatives" has the meaning set forth in
Section 4.1(c) of this Agreement.
"CaDStar Shares Amount" means a whole number of
shares of CapStar Common Stock equal to the prbduct of the
number of Partnership Units offered for exchange, multiplied
by the Conversion Factor,(rounded down to the nearest whole
number in the event such product is not a whole number);
provided that if CapStar at any time issued to all holders of
CapStar Common Stock rights, options, warrants or convertible
or exchangeable securities entitling the shareholders to
subscribe for or purchase shares of CapStar Common Stock, or
any other securities or property, wh4Lch rights have not
expired pursuant to their terms, then the CapStar Shares
Amount thereafter shall also include such rights that a
holder of than number of shares of CapStar Common Stock would
be entitled to receive.
"Cash Amount" means an amount of cash per
Partnership Unit equal to the Value on the Valuation Date o@L
the CapStar Shares Amount.
"Closing" has the meaning set forth in Section 9.1 of
this Agreement.
"Closing Date" has the meaning set forth in Section 9.1
of this Agreement.
"Closing Date Calculation" has the meaning set forth in
Section 12.2(c) of this Agreement.
"Closing Date Price" means: (i) if the Closing
occurs prior to the consummation of the Merger, the average
of the last reported sales price (regular way) of CapStar's
Common Stock on
61
The New York Stock Exchange for the seven consecutive day
trading period commencing ten business days and ending three
business days prior to the Closing Date, and (ii) if the
Closing occurs after the consummation of the Merger, the sum
of the averages of the last reported sales prices (regular
way) of the common stock of MeriStar Hospitality and MeriStar
Hotels on The New York Stock Exchange for the seven
consecutive day trading period commencing ten business days
and ending three business days prior to the Closing Date.
"Closi:gq Documents" has the meaning set forth in
Section 9.1 of this Agreement.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Collar Amount" has the meaning set forth in Section
3.2(a) of this Agreement.
"Collar Price" means whichever of the following
applies:
(a) lio-. of the Execution Date Price, if the Closing
Date Price is greater than 1100-. of the Execution Date
Price; or
(b) 90'-. of the Execution Date Price, if the Closing
Date Price is less than 90*@ of the Execution Date Price; or
(c) the Closing Date Price, if the Closing Date
Price is greater than or equal to 90% but less than or equal
to ilooi of the Execution Date Price.
"ComDarable Convertible RaL-ell has the meaning
set for-h
t
- -
in Section 8.4(h) of this Agreement.
"Com,oensation" means the direct salaries and
wages- paid to or accrued for the benefit of the Employees,
including incentive compensation, together with all fringe
benefits payable to, or accrued for the benefit of, any
executive or other employee, including employer's
contributions under the Federal Insurance Contribution Act,
unemployment compensation, or other employment taxes, pension
fund contributions, workers, compensation, group life and
accident and health insurance premiums, profit sharing,
retirement, disability, maternity leave, and other similar
benefits, accrued vacation pay, accrued sick pay, and all
other contributions to, and amounts paid or accrued under,
pension and other employee health and benefit plans, programs
or policies, including, without limitation, as of any date,
the right to receive any of the foregoing notwithstanding
that such right entitles such Employee to receive payment at
a time after the date in question.
62
"Condominium Lease Aareements" has the meaning set
forth in clause (f) of the definition of Contributed Assets.
"Confidential Information" has the meaning set forth in
Section 8.3(a) of this Agreement.
"Consent Solicitation" has the meaning set forth in
Section 8.4(b) of this Agreement.
"Consumables" has the meaning set forth in clause (d)
of the definition of Contributed Assets.
"Contracts" means, collectively, the Operating
Agreements, Equipment Leases, Franchise Agreements,
Management Agreements and Memberships.
"Contributed Assets" means the following:
(a) The land described on Schedule 1.2(a), along
with all appurtenant rights, easements, rights-of-way and
privileges relating thereto and landscaping located thereon
(the "Land");
(b) All buildings, structures and improvements
on or
affixed to the Land, including fixtures constituting real
property under Applicable Law (the "Improvements"; the
Land and
the Improvements are referred to herein collectively as the
"Real
Property");
(c) All fixtures, furniture, furnishings,
fittings, equipment, machinery, appliances, vehicles,
computer hardware, art work and other articles of tangible
personal property (together with all warranties and
guaranties with respect thereto to L--he extenl--
transferable), which are used or usable or have been ordered
for future use in connection with the Business or operation
of the Properties, other than the Consumables and Supply
Inventories (the "Fixtures and Tangible Personal Property")
and other than the Fixtures and Tangible Personal Property
that is being sold to Purchasers under the Other Agreement;
(d) All food and beverages (alcoholic and
nonalcoholic) that are held for sale, whether opened or
unopened, which are used or held in reserve or ordered for
future use in connection with the Business or operation of
the Properties at normal operating levels, and including all
resupplies and replacements in the Ordinary Course of
Business prior to the Closing Date (the "Consumables"), other
than the Consumables being sold to Purchasers under the Other
Agreement;
(e) All china, glassware, silverware; linens;
uniforms; engineering, maintenance, cleaning and housekeeping
supplies; matches and ashtrays; soap and other toiletries;
stationery, menus and other printed materials; and all other
63
materials and supplies, whether in use or held in reserve or
ordered for future use in connection with the Business or
operation of the Properties at normal operating levels, and
including all resupplies, substitutions and replacements in
the Ordinary Course of Business prior to the Closing Date
(the "Supply Inventories"), other than the Supply Inventories
being sold to Purchasers under the Other Agreement;
(f) All guaranteed lease agreements, rental
agreements and other similar agreements between any Seller
and owners of individual condominium units or private
residences for the shortterm rental of such units or
residences by such Seller to third parties on behalf of such
owners at South Seas Plantation, the Sundial Beach & Tennis
Resort and the Sanibel Inn (the "Condominium Lease
Agreements,,);
(g) All memberships and membership agreements for
access to or the use of any of the facilities at the Dunes
Club, South Seas Plantation or any other Property (the
"Memberships,,);
(h) All bookings and reservations for (i) guest
rooms and conference, convention and banquet rooms or other
facilities at the Properties, and (ii) the condominium units
or private residences under Condominium Lease Agreements (the
"Reservations");
,(i) The leases, subleases and similar agreements
(including all amendments, modifications and supplements
thereto and guaranties, extensions and renewals thereof)
listed on Schedule 1.2(i) for the use or occupancy by third
parties of any portion of the Real Property (other than the
Reservations)(the "Tenant Leases");
(j) The leases, subleases and similar agreements
(including all amendments, modifications and supplements
thereto and guaranties, extensions and renewals thereof)
listed on Schedule 1.2(i) for the.use or occupancy by Sellers
of real property (the "Seller Leases,,);
(k) The Franchise Agreements;
(1) The management agreements listed on Schedule
1.2(l) (the "Management Agreements");
(m) All service and maintenance contracts, credit
card service agreements, booking and reservation agreements,
brokerage and commission agreements, and all other contracts
and agreements (including all amendments, modifications and
supplements thereto and extensions and renewals thereof, and
all warranties and guaratties thereunder to the extent
transferable) which are held by any Seller in connection with
the Business or operation of the Properties, other than the
Condominium Lease Agreements,
Memberships, Seller Leases, Tenant Leases, Franchise
Agreements,
64
Management Agreements and Equipment Leases (the "Operating
Agreements");
(n) All leases and purchase money security
agreements for any Fixtures and Tangible Personal Property
(including all amendments, modifications and supplements
thereto and extension and renewals thereof, and all
warranties and guaranties thereunder to the extent
transferable) which are held by any Seller in connection with
the Business or operation of the -Properties, other than the
Condominium Lease Agreements, Memberships, Seller Leases,
TenanL- Leases, Franchise Agreements, Management Agreements
and Operating Agreements (the "Equipment Leases");
(o) All licenses,-permits, consents,
authorizations, approvals and certificates of any
Governmental Authority used in connection with the Business
or operation of the Properties (to the extent the same are
transferable) (the "Permits");
(p) All of the following owned by, issued to or
licensed to any Seller and used in connection with the
Business or operation of the Properties (to the extent the
same are transferable): (i) trademarks, L--rade names
(including, without limitation, the names of the Properties
set forth in the recitals to this Agreement), service marks,
trade dress, symbols and logos, together with all goodwill
associated therewith, and all registrations, applications,
renewals, adaptations, derivations and combinations thereof;
(ii) copyrights and copyrightable works and all registration,
applications and renewals therefor; (iii) trade secrets and
confidential information (including, without limitation,
ideas, drawings, specifications, designs, plans, proposals,
financial and accounting data, business and marketing plans);
(iv) computer software; (v) all other intellectual property
rights; and (vi) all copies and tangible embodiments of the
foregoing (in whatever form or medium) (the "Intellectual
Property");
(q) All guest lists, cusl--omer files, group
files, sales records, sales literature and brochures and
other written marketing materials, and all telephone numbers
used in the Business or operation of the Properties, and all
goodwill associated with the Properties (the "Customer and
Marketing Information");
(r) All books and records, ledgers,
correspondence-and other files and documents maintained by or
on behalf of Sellers in connection with the Business or
operation of the Properties, and with respect to Sellers'
Entities (as the case may be) (the "Books and Records");
(s) All blueprints, plans and specifications,
engineering and environmental reports and studies relating to
the
65
Real Property, to the extent the same exist and are
trans'Lerable,
(the "Property Reports");
(t) Subject to Section 12.1(k) hereof, all trade
accounts receivable, notes receivable and other receivables
(the "Accounts Receivable"), and all claims, deposits,
refunds, causes of action, rights of reconvey, rights of
setoff, rights of recoupment and investments, and prepaid
expenses in connection with the Business or operation of the
Properties; and
(u) All cash in house banks at the Properties;
(v) All of the capital stock of DG&CC (the 'IDG&:CC
Stock") ;
(w) SSPC's interest in the Lee County Electric
Cooperative Equity Account.
"Contribution Consideration" has the meaning set forth
in Section 3.1 of this Agreement.
"Conversion Factor" means 1.0, provided that if
CapStar (i) declares or pays a dividend on its outstanding
shares of CapStar Common Stock in shares of CapStar Common
Stock or makes a distribution to all holders of its
outstanding CapStar Common Stock in shares of CapStar Common
Stock; or (ii) combines its outstanding shares of CapStar
Common Stock into a smaller number of shares of CapStar
Common Stock, the Conversion Factor shall be adjusted by
multiplying the Conversion Factor by a fraction, the
numerator of which shall be the number of shares of CapStar
Common Stock issued and outstanding on the record date for
such dividend, distribution, subdivision or combination
(assuming for such purposes that such dividend, distribution,
subdivision or combination has occurred as of such time), and
the denominator of which shall be the actual number of shares
of CapStar Common Stock (determined without the above
assumption) issued and outstanding on the record date for
such dividend, distribution, subdivision or combination. Any
adjustment to the Conversion Factor shall become effective
immediately after the effective date of such event
retroactive to the record date, if any, for such event.
"CorDorate Offices" means the offices of Sellers
located at 12800 University Drive, Suites 350 and 420, Fort
Myers, Florida.
"Credit LVonnais Loan Agreement" has the meaning set
forth in section 5.20 of this Agreement.
"Credit Lyonnais Debt" means the outstanding
principal amount, all accrued but unpaid interest, all
prepayment costs and any other fees and charges imposed by
Credit Lyonnais New York Branch (or the other lenders under
the Credit Lyonnais Loan
66
Agreement) as of the Time of Closing due and owing to Credit
Lyonnais New York Branch, Barnett Bank, N.A. and FINOVA
Capital Corporation under the Amended and Restated Loan
Agreement, dated as of September 26, 1996, as amended.
"Customer and Marketing Information" has the meaning
set forth in clause (q) of the definition of Contributed
Assets.
"Cutoff Time" has the meaning set forth in Section 12.1
of this Agreement.
"Deeds and ConveVance Documents" mean the
following documents necessary to convey and assign to CapStar
Management all of Sellers' right, title and interest in and
to the Property:
(a) wi-th respect to the transf er of the Real Property
under this Agreement, a special warranty deed in form
and substance reasonably satisfactory to SSPC and
CapStar, subject only to the Permitted Title Exceptions;
(b) with respect to the transfer of the Personal Property
(other than the Personal Property covered under clauses
(d) , (e) and (f) of this definition) under this
Agreement, a Bill of Sale in form and substance
reasonably satisfactory to SSPC and CapStar;
(c) with respect to the assignment of the Tenant Leases,
Seller Leases and Condominium Lease Agreements under
this Agreement, an Assignment and Assumption of Leases
in form and substance reasonably satis-Lcack--ory to
SSPC and CapStar;
(d) with respect to the assignment of the Operating
Agreements, Equipment Leases, Franchise Agreements,
Management Agreements, Memberships and Permits under
this Agreement, an Assignment and Assumption of
Operating Agreements in form and substance reasonably
satisfactory to SSPC and CapStar;
(e) with respect to L--he transfer of any Intellectual
Property, Reservations and other intangible
Personal Property under thi-s Agreement, an -
Assignment and Assumption Agreement in form and
substance reasonably satisfactory to SSPC and CapStar.
'IDG&CC" means The Dunes Golf & Country Club, Inc., a
Florida corporation.
67
'IDG&CC Stock" has the meaning set forth in clause (v)
of the definition of Contributed Assets.
"Dollar Amount" has the meaning set forth in Section
3.2(a) of this Agreement.
"Due Diligence Period" has the meaning set forth in
Section 4.1 of this Agreement.
"Dunes Club" has the meaning set forth in Recital A.3
to this Agreement.
"Earnest Money De-oosit" has the meaning set 'Lorth in
Section 3.4 of this Agreement.
"EmDlovees" means all employees of SSRC and SSPC
employed exclusively in connection with the Business.
"Environmental Claims" means any claim for
reimbursement or remediation expense, contribution, personal
injury, property damage or damage to natural resources made
in writing by or on behalf of any third party including,
without limitation, any Governmental Authority, relating to
or arising out of the release of any Hazardous Substances or
the violation of any Environmental, Health and Safety Laws.
"Environmental, Health and Safetv Laws" means any
federal, state, or local statute, law, rule, regulation,
ordinance and code of any Governmental Authority, and any
judgment, injunction, order, decree or other judicial
requirement which regulates or controls (i) pollution,
contamination, or the condition of groundwater, surface
water, soil, sediment, air or L-he workplace or (ii) a spill,
leak, emission, discharge, release or disposal into
groundwater, surface water, soil, sediment, air or the
workplace, including without limitation the federal
Comprehensive, Environmental Response, Compensation, and
Liability Act ("CERCLAII), 42 U.S.C. 9601 et secr., as
amended; the federal Resource Conservation and Recovery Act
("RCPAll), 42 U.S.C. 6901 et seg., as amended; the
Hazardous Materials Transportation Act (11 HMTAII), 49 U.S.C.
1801 et sea., as amended; the Toxic Substances Control Act
("TSCAII), 15 U.S.C. 2601 et sea., as amended; the Clean
Air Act ("CAAII), 42 U.S.C. 7401 et sea., as amended; the
Clean Water Act ("CWAII), 33 U.S.C. 1251 et seg., as
amended; the Safe Drinking Water Act (IISDWAII), 42 U.S.C.
300f et sea., as amended; the Emergency Planning and
Community Right to Know Act ("EPCPAll), 42 U.S.C. 11001 et
seg., as amended; the Federal, Insecticide, Fungicide and
Rodenticide Act ("FIFRAII), 7 U.S.C. 136 et ' sea., as
amended; the Occupational Safety and Health Act ("OSHA"), 29
U.S.C. 651 et ' sea., as amended; the National
Environmental Policy Act ("NEPAII), 42 U.S.C.
4321 et sea.,
as amended; any similar state or local statutes or
ordinances, and the regulations promulgated thereunder.
68
I., "Ecruioment Leases" has the meaning set forth in
clause
(n) of the definition of Contributed Assets.
"ERISAII means the EmiDloyee Retirement Income
Security Act of 1974, as amended, and the regulations,
interpretations and exemptions promulgated thereunder.
"Escrow Agent" has the meaning set forth in Section 3.4
of this Agreement.
"Escrow E@iration Date" has the meaning set forth in
Section 8.4(i) of this Agreement.
"Excluded Assets" has the meaning set forth in
Section
1.3 of this Agreement.
"Excluded Liabilities" has the meaning set forth in
Section 2.2 of this Agreement.
"Execution Date Price" means $33.96.
"Executive ManacTement Employees" means the
following individuals: Robert M. Taylor, Timothy R. Bogott,
Richard E. Krichbaum, Brian P. Garavuso, Ralph G. Suda,
Salvatore S. Dickinson, Fred L. Hawkins, Brett P. Smith, John
B. Naylor and Earl Raven.
"Existing Surveys" has the meaning set forth in Section
4.1(d) of this Agreement.
"Financial Statements" has the meaning set forth in
Section 5.6 of this Agreement.
"First Extension Period" has the meaning set forth in
Section 8.4(e) of this Agreement.
"Fixtures and Tancrible Personal. Property" has
the meaning set forth in clause (c) of the definition of
Contributed Assets.
"Floor Amount" has the meaning set forth in Section
3.2(a) of this Agreement.
"Franchise Aareements" means the [franchise and license
agreements for the Marco Radisson and Best Western Sanibel.
"GAAP" means generally accepted accounting principles,
consistently applied.
"Governmental Authority" means any nation or
government, any state or other political subdivision thereof
or any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to
69
government, in each case to the extent the same has
jurisdiction
over the person or property in question.
"Hazardous Substances" means any toxic substance,
hazardous substance, hazardous waste, hazardous material,
solid waste, residual waste, infectious waste, contaminant,
pollutant, or constituent thereof, whether solid, semisolid,
liquid or gaseous, which are regulated, li-sted or controlled
by Environmental, Health and Safety Laws.
"ImDrovements" has the meaning set forth in clause (b)
of the definition of Contributed Assets.
"Indemnification Loss" or "Indemnification Losses"
have the meaning set forth in Sections 11.2 and 11.3 of this
Agreement.
"Indemnified Party" has the meaning set forth in
Section 11.5 of this Agreement.
"Indemnif-ving Part-y" has the meaning set forth in
Section 11.5 of this Agreement.
"Indemniteell means either a Seller IndeTnnitee or a
Purchaser Indemnitee, as the case may be.
"Indemnity ExDiration Date" has the meaning set forth
in Section 11.1 of this Agreement.
"Indenture" means the TrusL- Indenture, dated
March 28, 1996, between Sellers and SunTrust Bank, Central
Florida, National Association, relating to Sellers' 100-.
Subordinated Notes due April 15, 2003, in the original
principal amount of $43,500,000.
"Initial Deuosit" has the meaning set forth in
Section
3.4 of.this Agreement.
"Initial Tender ExDiration Date,' has the meaning set
forth in Section 8.4(d) of L--his Agreement.
"Insurance Policies" has the meaning set forth in
Section 5.9 of this Agreement.
"Intellectual Prooertv" has the meaning set for-Lh
inclause (p) of the definition of Contributed Assets.
"Knowledcrell means, (i) with respect to any
Seller, the
I
current actual knowledge of Robert M. Taylor, Timothy R.
Dogott, Richard E. Krichbaum or Judy Emens (after due inquiry
of the general managers of the Properties) and shall not be
construed to refer to the knowledge of any other trustee,
partner, officer, director, agent, employee or representative
of any Seller, or any
7 0
Affiliate of any Seller; and (ii) with respect to either
Purchaser, the current actual knowledge of John Plunket,
William Reynolds, Troy Furbay, Robin Kirk, John Emery and
David McCaslin and shall not be construed to refer to the
knowledge of any other trustee, partner, officer, director,
agent, employee or representative of either Purchaser or any
Affiliate of either Purchaser, or any matter disclosed by
Sellers to Purchasers in writing pursuant to Article V or
Article VI hereof.
"Land" has the meaning set forth in clause (a) of the
definition of Contributed Assets.
"Leases" means, collectively, the Condominium Lease
Agreements, Seller Leases and Tenant Leases.
"Letter of Credit" has the meaning set forth in
Section
3.5 of this Agreement.
"Liabilities" means any liability, obligation,
loss in value, damage, cost or expense of any nature
whatsoever, whether now known or unknown, asserted or
unasserted, accrued or unaccrued, liquidated or unliquidated,
due or to become due, including, without limitation, any
liability with respect to taxes of any kind whatsoever that
relate to any of the Contributed Assets or the Business.
"Manacrement Aqreements" has the meaning set forth in
clause (1) of the definition bf Contributed Assets.
"Management Level Emolovees" means all salaried
Employees of SSPC and SSRC having an annual salary of $25,000
or more.
"Manaaement Transition Acrreements" has the meaning set
forth in Section 8.3(b) of this Agreement.
"Marco" has the meaning set forth in the first
paragraph of this Agreement.
"Marco Radisson" has the meaning set forth in Recital C
to this Agreement.
"Material Adverse Effect" means, with respect to
Sellers, a material adverse effect on the business, assets,
properties or liabilities of Sellers taken as a whole, and
with respect to Purchasers, a material adverse effect on the
business, assets, properties or liabilities of Purchasers
taken as a whole.
"Material Contract" means any Operating Agreements
and Equipment Leases requiring aggregate remaining payments
in excess of Fifty Thousand Dollars ($50,000).
71
"Membershi-ps" has the meaning set forth in clause (g)
OIL the definition of Contributed Assets.
"Noteholders" means the holders of the Notes issued
under the Indenture.
"Mercrer" has the meaning set forth in Recital H of this
Agreement.
"Meraer Entities" has the meaning set forth in
Section
6.1 of this Agreement.
"MeriStar Hosnitality" has the meaning Se-L forth in
Recital H of this Agreement.
"MeriStar HosDitality OPeratincT Partnershin" has the
meaning set forth in Recital H of this Agreement.
"MeriStar Hotels" has the meaning set forth in Recital
H of this Agreement.
"MeriStar Hotels Operating Partnershin" has the meaning
set forth in Recital H of this Agreement.
"Minimum Consent Reauirement" has the meaning set forth
in Section 8.4(c) of this Agreement.
"Non-Tendered Notes" has the meaning set forth in
Section 8.4(g) of this Agreement.
"Notes" means the notes issued under the Indenture.
"Overating Aareements" has the meaning set forth in
clause (m) of the definition of Contributed Assets.
"Option Agreement" means the agreement attached hereto
as Exhibit D
"Ordinarv Course of Business" means with respect
to the Business and each Property the ordinary course of
business consistent with past custom and practices for the
Business and such Property.
"Other AcTreement" has the meaning set forth in Recital
G of this Agreement.
"PartnershiD Units" means: (i) if the Closing
occurs prior to consummation of the Merger, a fractional,
undivided share of the ownership interests in CapStar
Management, and (ii) if the Closing occurs after consummation
of the Merger, a fractional, undivided share of the ownership
interests in MeriStar Hospitality Operating Partnership and
MeriStar Hotels Operating Partnership, and in each case
includes any and all
72
benefits to which the holder of such an interest may be
entitled as provided in the applicable partnership agreement
of each such partnership.
"Pension Plans" has the meaning set forth in Section
5.13(a) of this Agreement.
"Pe=its" has the meaning set forth in clause (o) of
the definition of Contributed Assets.
"Permitted Title Exce-otions" has the meaning set forth
in Section 4.1(d) of this Agreement.
"Personal ProDertV" means, collectively, all of the
Contributed Assets other than the R@al Property.
"Plans" has the meaning set forth in Section 5.13(a) of
this Agreement.
"Premium" means a spread to call of fifty (50)
basis points over the yield to maturity of the 5.500-. coupon
U.S. Treasury notes due April 15, 2000.
r
r
i
n
g
,
"Project Ca-pital Ex-oenditures" means all non-
recu '
extraordinary, special project capil--al expenditures (other
than any work undertaken with the proceeds of the Unit Rehab
Loa.n) incurred by Sellers in excess of Sellers' Base Capital
Projects.
"Pro,oertv" and "Properties" have the meaning set forth
in Recital E to this Agreement.
"Pro,oertv Reoorts" has the meaning set forth in
clause
(s) of the definition of Contributed Assets.
"ProDrietary Ricrhts" has the meaning set forth in
Section 5.21 of this Agreement.
"Prorated Base Budaeted CaDital Ex-oenditures"
means $4,151,000 multiplied by the number of full months from
January 1, 1998 to, but not including, the month of Closi-ng.
."Purchaser" and "Purchasers" have the meanings set
forth in the first paragraph of this Agreement.
"Purchaser Renorts" has the meaning set, forth in
Section 6.6 of this Agreement.
"Purchaser Indemniteell and "Purchaser Indemnitees" have
the meaning set forth in Section 11.3 of this Agreement.
"Purchaser Information" has the meaning set forth in
Section 11.2 of this Agreement.
73
"Real Property" has the meaning set forth in clause (b)
o@' the defi i@tio'n of Contributed Assets.
"Reply Period" has the meaning set forth in Section
4.1(d) of this Agreement.
"Reservations" has the meaning set forth in clause (h)
of the definition of Contributed Assets.
"SEC Laws" means The Securities Act of 1933, as
amended, The Securities Exchange Act of 1934, as amended, and
all other federal and state laws applicable to securities.
"Second Extension Period" has the meaning set forth in
Section 8.4(f) of this Agreement.
"Seller" and "Sellers" have the meanings set forth in
the first paragraph of this Agreement.
"Seller Leases" has the meaning set forth in clause (j)
of the definition of Contributed Assets.
"Seller Indemniteell and "Seller Indemnitees" have the
meaning set forth in Section 11.2 of this Agreement.
"Settlement Statement" has the meaning set forth in
Section 12.2 of this Agreement.
"SHMC" has the meaning set forth in Recital G of this
Agreement.
"Song of the Sea" has the meaning set forth in Recital
A.2 to this Agreement.
"South Seas Plantation" has the meaning set forth in
Recital B to this Agreement.
IISS&:CPII has the meaning set forth in the first
paragraph ol' this Agreement.
IISSPCII has the meaning set forth in the first paragraph
of this Agreement.
IISSPC Owned Pro-oertv" and IISSPC Owned Prooerties" ha-ve
the meaning set forth in Recital A to this Agreement.
IISSPC Reoorts" has the meaning set forth in Section 5.6
of this Agreement.
IISSRC" has the meaning set forth in the first paragraph
of this Agreement.
74
IISSRLP" has the meaning set forth in the first
paragraph of this Agreement.
"Subordinated Debt" means the outstanding
principal balance and all accrued but unpaid interest as of
the Time of Closing due and owing to the Noteholders under
the Notes and the Indenture.
"SuDDly Inventories" has the meaning set forth in
clause (e) of the definition o@L Contributed Assets.
"Taxes" means any federal, state, local or foreign
income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, windfall profits,
environmental, customs duties, capital stock, franchise,
profits, withholding,. social security, unemployment,
disability, real property, personal property, sales, use,
room, occupancy, beach renourishment, vault, transfer,
registration, ad valorem, betterment assessments, value
added, alternative or add-on minimum, estimated or other tax,
charges or fees of any kind whatsoever, including any
interest, penalty, or addition thereto, whether disputed or
not, and including any obligation to indemnify or otherwise
assume or succeed to such tax I-iability of any other person.
"Tenant Leases" has the meaning set forth in clause (i)
of the definition of Contributed Assets.
"Tender Offer'l,has the meaning set forth in Section
8.4(a) of this Agreement.
"Tender Offer Escrow Account" has the meaning set forth
in Section 8.4(h) o'L this Agreement.
"Tender Offer Materials" has the meaning set forth in
Section 8.4(a) of this Agreement.
"Tender Payment" has the meaning set forth in Section
8.4(g) of this Agreement.
"Time of Closincr" has the meaning set forth in
Section
9.1 of this Agreement.
"Title Commitments" has the meaning set forth in
Section 4.1(d) of this Agreement.
"Title Companvll means First American Title Insurance
Company, Washington, D.C.
"Title Policies" has the meaning set forth in Section
4.1(d) of this Agreement.
75
"Transferred Emulo-yees" has the meaning set forth in
Section 8.3(c) of this Agreement.
"Unit 'Portion" has the meaning set forth in Section
3.2(a) of this Agreement.
"Valuation Date" means the date of receipt by
CapStar of a notice of exchange or, if such date is not a
business day, the first business day thereafter.
"Value" means, with respect to shares of CapStar
Common Stock (or if the Merger is consummated, shares of the
applicable Merger Entity), the average daily market price for
the ten (10) consecutive trading days immediately preceding
the Valuation Date. The market- price for each such trading
day shall be: (i) if the CapStar Common Stock is listed or
admitted to trading on any securities exchange or the NASDAQ-
National Market System, the closing price, regular way, on
such day, or if no such sale takes place on such day, the
average of the closing bid and asked prices on such day; (ii)
if the CapStar Common Stock is not listed or admitted to
trading on any securities exchange or the NASDAQ-National
Market System, the last reported sale price on such day or,
if no sale takes place on such day, the average of the
closing bid and asked prices on such day, as reported by a
reliable quotation source designated by CapStar; or (iii) if
the CapStar Common Stock is not listed or admitted to trading
on any securities exchange or the NASDAQ-National Market
System and no such last reported sale price or closing bid
and asked prices are available, the average of the reported
high bid and low asked prices on such day, as reported by a
reliable quotation source designated by CapStar, or if there
shall be no bid and asked prices on such day, the average of
the high bid and low asked prices, as so reported, on the
most recent day (not more than ten (10) days prior to the
date in question) for which prices have been so reported;
provided that if there are no bid and asked prices reported
during the ten (10) days prior to the date in question, the
Value of the CapStar Common Stock shall be determined by
CapStar acting in good faith on the basis of such quotations
and other information as it considers, in its reasonable
judgment, appropriate. In the event L--he CapStar Shares
Amount includes rights that a holder of CapStar Common Stock
would be entitled to receive, and CapStar acting in good
faith dete=ines that the value of such rights is not
reflected in the value of the CapStar Common Stock determined
as aforesaid, then the Value of such rights shall be
determined by CapStar acting in good faith on the basis of
such quotations and other information as it considers, in its
reasonable judgment, appropriate.
"Variable Portion" has the meaning set forth in Section
3.2(b) of this Agreement.
76
"Welfare Plans" has the meaning set forth in Section
5.13(a) of this Agreement.
RAS1372:23630:97003:RAS-13I.AGT
ras 04/07/98
77