Exhibit 2.6
AGREEMENT OF PURCHASE AND SALE
AND
JOINT ESCROW INSTRUCTIONS
(Residence Inn By Marriott, Nashville, Tennessee)
THIS AGREEMENT OF PURCHASE AND SALE AND JOINT ESCROW INSTRUCTIONS (this
"Agreement") is made and entered into effective for all purposes and in all
respects as of the 17th day of June, 2003 (the "Effective Date"), by and between
WBL II Real Estate Limited Partnership, a Delaware limited partnership
("Seller"), and Apple Hospitality Five, Inc., a Virginia corporation
("Purchaser"). (Seller and Purchaser are sometimes referred to herein
individually as a "Party," and collectively as the "Parties").
RECITALS
A. Seller is the owner of the hotel facility located at ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, consisting of 168 suites, and commonly known as the
Residence Inn By Marriott-Nashville/Airport (the "Hotel").
B. Seller desires to sell the Hotel and other Property (defined below) to
Purchaser, and Purchaser desires to purchase the Hotel and other Property from
Seller, on the terms and subject to the conditions set forth in this Agreement.
C. In consideration of the mutual covenants set forth in this Agreement and
other good and valuable consideration, the receipt and sufficiency of which
hereby are acknowledged, Seller and Purchaser, intending to be bound legally and
equitably, agree as follows.
ARTICLE I.
DEFINITIONS
1.1 Definitions. In addition to the terms defined above in the introduction
and Recitals to this Agreement, the following terms used in this Agreement have
the meanings set forth in this Section 1.1.
"Accounts Receivable" means all amounts which Seller is entitled to receive
from the operation of the Hotel, but which are not paid as of the Closing Date,
including, without limitation, (i) charges for the use or occupancy of any
guest, conference, meeting or banquet rooms or other facilities at the Hotel,
any restaurant, bar or banquet services, or any other goods or services provided
by or on behalf of Seller at the Hotel, but expressly excluding any credit
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card charges and checks which Seller has submitted for payment as of the Closing
Date, and (ii) rents under the Tenant Leases.
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly controls, is controlled by or is under common control
with a Person. The term "control" means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
a person, whether by the ownership of voting securities, contract or otherwise.
"Applicable Laws" means all statutes, laws, common law, rules, regulations,
ordinances, codes or other legal requirements of any Governmental Authority,
Board of Fire Underwriters and similar quasi-governmental agencies or entities
having jurisdiction over the Property, any portion or component thereof, or any
Party, and any judgment, injunction, order, directive, decree or other judicial
or regulatory requirement of any court or Governmental Authority of competent
jurisdiction affecting or relating to the Person or property in question.
"Archon" means Archon Group, LP, a Delaware limited partnership, asset
manager for Seller.
"Bookings" has the meaning set forth in Section 2.1(m) of this Agreement.
"Books and Records" has the meaning set forth in Section 2.1(l).
"Break-Up Fee" means the amount of One Hundred Thousand Dollars
($100,000.00).
"Broker" means Insignia ESG/Hotel Partners.
"Business Day" means any day other than Saturday, Sunday or any federal
legal holiday.
"Casualty" has the meaning set forth in Section 13.1.
"Closing" has the meaning set forth in Section 9.1.
"Closing Date" has the meaning set forth in Section 9.1.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any regulations, rulings and guidance issued by the Internal Revenue
Service thereunder.
"Condemnation" has the meaning set forth in Section 13.2(a).
"Confidential Information" has the meaning set forth in Section 7.1(a).
"Contracts" means, collectively, the Equipment Leases and the Operating
Agreements.
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"Deposit" has the meaning set forth in Section 3.3(a).
"Due Diligence Contingency" has the meaning set forth in Section 4.1(a).
"Due Diligence Period" has the meaning set forth in Section 4.1(a).
"Employees" means all employees of Seller or Manager, or any of their
Affiliates, who are employed full-time or part-time at the Hotel as of the
Closing.
"Environmental Claims" means any claim for reimbursement or remediation
expense, contribution, personal injury, property damage or damage made by any
Governmental Authority or other Person arising from or in connection with the
presence or release of any Hazardous Substances over, on, in or under the Real
Property, or the violation of any Environmental Laws with respect to the Hotel.
"Environmental Laws" means any Applicable Laws which regulate or control
(i) Hazardous Substances, pollution, contamination, noise, radiation, water,
soil, sediment, air or other environmental media, or (ii) an actual or potential
spill, leak, emission, discharge, release or disposal of any Hazardous
Substances or other materials, substances or waste into water, soil, sediment,
air or any other environmental media, including, without limitation, (i) the
Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C.(S)9601 et seq. ("CERCLA"), (ii) the Resource Conservation and Recovery
Act, 42 U.S.C.(S)6901 et seq. ("RCRA"), (iii) the Federal Water Pollution
Control Act, 33 U.S.C.(S)2601 et seq., (iv) the Toxic Substances Control Act, 15
U.S.C. (S)2601 et seq., (v) the Clean Water Act, 33 U.S.C.(S)1251 et seq., (vi)
the Clean Air Act, 42 U.S.C.(S)7401 et seq., (vii) the Hazardous Materials
Transportation Act, 49 U.S.C.(S)1801 et seq., and state and local Applicable Law
relating to environmental matters, as amended from time to time, and all
regulations, rules and guidance issued with respect to any or all of the
foregoing.
"Environmental Liabilities" means any liabilities or obligations of any
kind or nature imposed pursuant to any Environmental Laws, including, without
limitation, any (i) obligations to manage, control, contain, remove, remedy,
respond to, clean up or ▇▇▇▇▇ any actual or potential release of Hazardous
Substances or other pollution or contamination of any water, soil, sediment, air
or other media, whether or not located over, on, in or under the Real Property
and whether or not arising from the operations or activities with respect to the
Hotel, and (ii) liabilities or obligations with respect to the manufacture,
generation, formulation, processing, use, treatment, handling, storage,
disposal, distribution or transportation of any Hazardous Substances with
respect to the Real Property.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any rules, regulations or guidance promulgated thereunder.
"Equipment Leases" has the meaning set forth in Section 2.1(h).
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"Escrow Agent" means the Title Company, in its capacity as escrow holder
hereunder.
"Excluded Property" has the meaning set forth in Section 2.2.
"F&B" has the meaning set forth in Section 2.1(e).
"FF&E" has the meaning set forth in Section 2.1(c).
"Governmental Authority" means any federal, state or local government or
political subdivision thereof, including, without limitation, any agency or
entity exercising executive, legislative, judicial, regulatory or administrative
governmental powers or functions, in each case to the extent the same has
jurisdiction over the Person or property in question.
"Guest Ledger" means any all charges accrued to the open accounts of any
guests or customers at the Hotel as of the Closing for the use and occupancy of
any guest, conference, meeting or banquet rooms or other facilities at the
Hotel, any restaurant, bar or banquet services, or any other goods or services
provided by or on behalf of Seller at the Hotel.
"Hazardous Substances" means any hazardous or toxic substance, material or
waste, whether solid, semisolid, liquid or gaseous, including, without
limitation, asbestos, polychlorinated biphenyls, petroleum or petroleum
by-products and any other material or substances which are defined as a
"hazardous substance," "hazardous waste," "toxic waste" or "toxic substance"
under any Environmental Laws.
"Improvements" has the meaning set forth in Section 2.1(b).
"Indemnification Cap" has the meaning set forth in Section 14.3(b).
"Indemnification Claim" has the meaning set forth in Section 14.4(a).
"Indemnification Deductible" has the meaning set forth in Section 14.3(b).
"Indemnitee" has the meaning set forth in Section 14.4(a).
"Indemnitor" has the meaning set forth in Section 14.4(a).
"Inspections" has the meaning set forth in Section 4.1(b).
"Intangible Property" has the meaning set forth in Section 2.1(l).
"Knowledge" means (i) with respect to Seller, the actual knowledge, without
a duty of any independent investigation, other than inquiry of the general
manager of the Hotel and its chief engineer, of ▇▇▇▇▇ ▇▇▇▇▇▇▇, and expressly
excludes the knowledge of any other
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shareholder, trustee, partner, member, director, officer, manager, employee,
agent or representative of Seller or any of its Affiliates, and (ii) with
respect to Purchaser, (A) the actual knowledge of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, without a
duty of any independent investigation whatsoever, and expressly excludes the
knowledge of any other shareholder, trustee, partner, member, director, officer,
manager, employee, agent or representative of Purchaser or any of its
Affiliates, (B) any matter disclosed in any exhibits or schedules to this
Agreement, (C) any matter disclosed in any Seller Due Diligence Materials or any
other documents or materials provided by Seller to Purchaser prior to Closing,
and (D) any matter disclosed in the Purchaser Due Diligence Reports or by the
Inspections.
"Land" has the meaning set forth in Section 2.1(a).
"Licenses and Permits" has the meaning set forth in Section 2.1(j).
"Losses" means any liability, damage, loss, cost or expense, including,
without limitation, reasonable attorneys fees, disbursements and expenses and
court costs, incurred by the Person in question.
"Management Agreement" has the meaning set forth in Section 2.3 of this
Agreement.
"Manager" means Residence Inn By Marriott, Inc., a Delaware corporation.
"Material Casualty" has the meaning set forth in Section 13.1(a).
"Material Condemnation" has the meaning set forth in Section 13.2(a).
"Mutual Closing Conditions" has the meaning set forth in Section 8.1.
"Notice" has the meaning set forth in Section 15.1(a).
"Operating Agreements" has the meaning set forth in Section 2.1(i).
"Ordinary Course of Business" means the ordinary course of business
consistent with Seller's and Manager's past custom and practices for the
operation, maintenance and repair of the Hotel.
"Permitted Exceptions" has the meaning set forth in Section 4.2(c).
"Person" means any natural person, corporation, general or limited
partnership, limited liability company, association, joint venture, trust,
estate, Governmental Authority or other legal entity in its own or a
representative capacity.
"Personal Property" means the Property other than the Real Property.
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"Property" has the meaning set forth in Section 2.1.
"Prorations" has the meaning set forth in Section 10.1.
"Purchase Price" has the meaning set forth in Section 3.1.
"Purchaser Closing Conditions" has the meaning set forth in Section 8.2.
"Purchaser Default" has the meaning set forth in Section 12.2.
"Purchaser Due Diligence Reports " has the meaning set forth in Section
4.1(d).
"Purchaser Indemnitees" means Purchaser and its Affiliates, and each of
their respective shareholders, directors, officers, members, partners, trustees,
employees and agents, and the successors, assigns, heirs and legal
representatives of each of the foregoing.
"Purchaser's Inspectors" has the meaning set forth in Section 4.1(b).
"Residence Inn" means Residence Inn By Marriott, Inc. and its Affiliates.
"Residence Inn Proprietary Property" has the meaning set forth in Section
2.2(b).
"Real Property" has the meaning set forth in Section 2.1(b).
"Retail Merchandise" has the meaning set forth in Section 2.1(f).
"Retained Employees" has the meaning set forth in Section 7.4(a).
"Seller Closing Conditions" has the meaning set forth in Section 8.3.
"Seller Default" has the meaning set forth in Section 12.1.
"Seller Due Diligence Materials" has the meaning set forth in Section
4.1(c).
"Seller Indemnitees" means Seller, Archon, Manager, and their respective
Affiliates, and each of their respective shareholders, directors, officers,
members, partners, trustees, employees and agents, and the successors, assigns,
heirs and legal representatives of each of the foregoing.
"Seller's Possession" means in the possession or control of any officer or
employee of Seller, Manager or any of their Affiliates who has direct or
supervisory responsibility for the operation of the Hotel.
"Settlement Statement" has the meaning set forth in Section 11.1.
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"Supplies" has the meaning set forth in Section 2.1(d).
"Survey" has the meaning set forth in Section 4.2(b).
"Survey Defects" has the meaning set forth in Section 4.2(c).
"Survival Period" has the meaning set forth in Section 14.3(a).
"Taxes" means any and all federal, state, local or foreign, real property,
personal property, sales, use, room, occupancy, excise, severance, stamp,
payroll, employment, withholding, social security, unemployment, disability,
vault, ad valorem, assessments, value added or other tax, assessment, levy,
charge or fee of any kind whatsoever imposed on Seller or the Property or any
portion thereof by any Governmental Authority, including, without limitation,
any interest, penalty, or addition thereto, but expressly excluding any (i)
federal, state, local or foreign income, capital gain, gross receipts, capital
stock, franchise, profits, estate or gift tax, or (ii) transfer or similar taxes
incurred with respect to the transaction contemplated in this Agreement.
"Tenant Leases" has the meaning set forth in Section 2.1(g).
"Title Commitment" has the meaning set forth in Section 4.2(a).
"Title Company" means LandAmerica--Dallas National Division, ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇, (phone:
▇▇▇-▇▇▇-▇▇▇▇; fax: ▇▇▇-▇▇▇-▇▇▇▇ email: ▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇).
"Title Exceptions" has the meaning set forth in Section 4.2(c).
"Title Objection Letter" has the meaning set forth in Section 4.2(c).
"Title Policy" has the meaning set forth in Section 8.2(d).
"Unpermitted Exceptions" has the meaning set forth in Section 4.2(c).
"WARN Act" means the Worker's Adjustment and Retraining Notification Act of
1988, 29 U.S.C. (S) 2101, et seq., and any similar state and local Applicable
Law, as amended from time to time, and any regulations, rules and guidance
issued with respect thereto.
ARTICLE II.
DESCRIPTION OF THE PROPERTY; EXCLUDED PROPERTY
2.1 Description of the Property. Subject to the terms and conditions set
forth in this Agreement and subject to the terms and conditions of the
Management Agreement as hereinafter
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set forth, at the Closing Seller shall sell, convey, transfer, assign and
deliver to Purchaser, and Purchaser shall purchase and accept from Seller,
without warranty except as otherwise expressly stated, the property and assets
set forth in this Section 2.1, but expressly excluding the Excluded Property
(collectively, the "Property"):
(a) Land. The tract or parcel of land described in Exhibit A, together
with all any and all other rights and interests appurtenant thereto (the
"Land"), including, without limitation, (i) all easements, rights of way, rights
of ingress and egress, tenements, hereditaments, privileges, and appurtenances
in any way belonging to such Land, (ii) any land lying in the bed of any alley,
highway, street, road or avenue, open or proposed, in front of or abutting or
adjoining the Land, (iii) any strips or gores of real estate adjacent to such
Land, and (iv) the use of all alleys, easements and rights-of-way, if any,
abutting, adjacent, contiguous to or adjoining such Land;
(b) Improvements. All buildings, structures, parking areas and other
improvements (including the Hotel) located on or affixed to the Land and all
fixtures on the Land which constitute real property under Applicable Law (the
"Improvements"; the Land and the Improvements are referred to collectively as
the "Real Property");
(c) FF&E. All fixtures (other than those which constitute
Improvements), furniture, furnishings, equipment, machinery, vehicles,
appliances, computer hardware, art work and other items of tangible personal
property which are located at the Hotel and used exclusively in the operation of
the Hotel, or ordered for future use at the Hotel as of the Closing, other than
the Supplies, F&B and Retail Merchandise (the "FF&E");
(d) Supplies. All right, title and interest of Seller in and to all
china, glassware and silverware; linens, towels and uniforms; engineering,
maintenance, cleaning and housekeeping supplies; matches and ashtrays; soap and
other toiletries; stationery, menus and other printed materials; and all other
similar materials and supplies which are located at the Hotel or ordered by
Manager for future use at the Hotel as of the Closing (the "Supplies");
(e) Food and Beverage. All right, title and interest of Seller in and
to all food and beverages (alcoholic and non-alcoholic) which are located at the
Hotel (whether opened or unopened), or ordered by Manager for future use at the
Hotel as of the Closing, if any, but expressly excluding any alcoholic beverages
to the extent the sale or transfer of the same is not permitted under Applicable
Law (the "F & B");
(f) Retail Merchandise. All right, title and interest of Seller in and
to all merchandise located at the Hotel, including, without limitation, any gift
shop or newsstand maintained by Seller or Manager (if any), and held for sale to
guests and customers of the Hotel, or ordered by Manager for future sale at the
Hotel as of the Closing (the "Retail Merchandise").
(g) Tenant Leases. All right, title and interest of Seller in and to
all leases, subleases, licenses, concessions and similar agreements (other than
the Management Agreement
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and Bookings) granting a real property interest to any other Person for the use
or occupancy of any portion of the Real Property (the "Tenant Leases"), together
with all security deposits held by Seller or Manager thereunder;
(h) Equipment Leases. All right, title and interest of Seller in and
to all leases and purchase money security agreements for any equipment,
machinery, vehicles, furniture or other personal property located at the Hotel
and used in the operation of the Hotel which are held by Seller or Manager (the
"Equipment Leases"), together with all deposits made thereunder;
(i) Operating Agreements. All right, title and interest of Seller in
and to all maintenance, service and supply contracts, credit card service
agreements, booking and reservation agreements, and all other contracts and
agreements which are held by Seller or Manager, in connection with the operation
of the Hotel, other than the Tenant Leases, Equipment Leases, Licenses and
Permits, but only to the extent applicable to the Hotel (the "Operating
Agreements"), together with all deposits made or held by Seller or Manager
thereunder, to the extent such Operating Agreements and deposits are
transferable;
(j) Licenses and Permits. All right, title and interest of Seller in
and to all licenses, permits, consents, authorizations, approvals, registrations
and certificates of any Governmental Authority held by Seller or Manager and
used in connection with the construction, ownership, occupancy or operation of
the Hotel, to the extent transferable (the "Licenses and Permits"), together
with any deposits made thereunder, to the extent such Licenses and Permits and
deposits are transferable (note: the existing "beer permit" is not
transferable);
(k) Intangible Property. All right, title and interest of Seller in
and to all of the following owned by, issued to or licensed to Seller and used
in connection with the operation of the Hotel to the extent Seller's rights and
interests therein are transferable: (i) trademarks, trade names, service marks
and other intellectual property rights; (ii) warranties and guaranties held by
Seller or Manager pursuant to any Contracts or with respect to any Improvements
or Personal Property; (iii) computer software used in connection with any
computer systems located at the Hotel; and (iv) direct dial telephone numbers
for the Hotel (the "Intangible Property");
(l) Books and Records. All right, title and interest of Seller in and
to all books and records in Seller's Possession to the extent they relate to the
Hotel, other than any appraisals, marketing plans, attorney work product or
other confidential materials that are for Seller's internal use only and that do
not contain material information about the Hotel or the operation thereof that
is not also contained in other information, materials or documents available to
Purchaser (the "Books and Records");
(m) Bookings. All right, title and interest of Seller in and to all
bookings and reservations for guest, conference, meeting and banquet rooms or
other facilities at the Hotel (the "Bookings"), together with all deposits made
with respect thereto.
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(n) Accounts Receivable. All right, title and interest of Seller in
and to all Accounts Receivable (including the Guest Ledger).
Any Property owned by any Affiliate of Seller that would be included within the
foregoing definition of "Property" hereunder if owned by Seller shall be deemed
included in the foregoing description of "Property." Purchaser acknowledges that
the Property is subject to the Management Agreement and that, pursuant to the
terms of the Management Agreement, Seller may not have a direct ownership
interest in some FF&E, Supplies, F&B, Retail Merchandise, Tenant Leases,
Equipment Leases, Operating Agreements, Licenses and Permits, Intangible
Property, Books and Records, Bookings, Accounts Receivable and other components
of the Property (other than the Real Property).
2.2 Excluded Property. Notwithstanding anything to the contrary in Section
2.1, the property, assets, rights and interests set forth in this Section 2.2
(the "Excluded Property") are excluded from the Property:
(a) Residence Inn Proprietary Property. All (i) trademarks, trade
names, service marks, symbols, logos and other intellectual property rights of
Residence Inn or any of its Affiliates, whether bearing the name "Residence Inn"
or otherwise (the "Residence Inn Proprietary Property"); (ii) signs and other
fixtures and personal property at the Hotel which bear any of the Residence Inn
Proprietary Property; (iii) Seller's, Archon's or Manager's internal employee,
operational and similar manuals, and (iv) computer hardware and software
pertaining specifically to, and all other rights and interests in, (a) any
Residence Inn, Archon or Manager centralized system, including, reservation
system, property management system and e-mail, internet and internal computer
network systems, and (b) any Residence Inn preferred guest, mileage or point
program and other marketing and advertising programs, other than Seller's
license with respect thereto, if any, under the Management Agreement.
(b) Third-Party Property. Any fixtures or personal property (including
FF&E) owned by (i) the lessor under any Equipment Leases, (ii) the supplier or
vendor under any other Contracts, (iii) the tenant under any Tenant Lease, (iv)
any Employees, or (v) any guests or customers of the Hotel.
(c) Manager's Property. Any other property owned by the Manager.
Attached hereto as Schedule 2.2(c) is an inventory, provided by Manager, listing
certain property owned by Manager.
2.3 Management Agreement. Seller and Manager are parties to that certain
Management Agreement dated as of November 12, 1999 (the "Management Agreement").
This Agreement is expressly subject to and conditioned upon all of Manager's
rights under the Management Agreement, including, without limitation, the right
of Manager to elect to either (i) consent to the sale of the Property and to the
assignment of the Management Agreement to Purchasers, or (ii) terminate the
Management Agreement. Pursuant to Section 10.02 of the Management Agreement,
Seller shall notify Manager of this Agreement and Manager shall then
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have up to thirty (30) days to make its election. Anything in this Agreement to
the contrary notwithstanding, Seller's obligation to perform under this
Agreement is expressly subject to satisfaction of the conditions set forth in
Section 8.2 of this Agreement. In this regard, Purchaser shall use commercially
reasonable, diligent efforts, and Seller shall reasonably cooperate with
Purchaser in Purchaser's efforts, to obtain the written consent of Manager to a
new management agreement to be entered into between Purchaser and Manager on
terms reasonably acceptable to Purchaser, provided, that any such new management
agreement shall be accompanied by a termination of the Management Agreement that
shall result in the satisfaction of the conditions set forth in Section 8.2.
Purchaser acknowledges that it is familiar with Manager and is not relying on
Seller for information concerning the Manager or its practices or experience in
the hospitality business. No agreement reached between Manager and Purchaser
shall be effective unless and until the Closing occurs; if the Closing does not
occur for any reason, any such agreement shall be void and of no effect
whatsoever. Any and all termination fees or charges due upon or as the result of
the early termination of the Management Agreement shall be the sole
responsibility of Purchaser and paid by Purchaser at or prior to Closing. Seller
shall not be required to undertake any liability and shall not be required to
incur any material monetary expense (including the payment of any termination
fees or charges resulting from the early termination of the Management
Agreement) in connection with the foregoing.
ARTICLE III.
PURCHASE PRICE; DEPOSIT; LIKE-KIND EXCHANGE
3.1 Purchase Price. The purchase price for the Property is Eight Million
Eight Hundred Thousand and No/100 Dollars ($8,800,000.00) (the "Purchase
Price"), which shall be adjusted at Closing for the Prorations pursuant to
Sections 10.1 and 10.2, respectively.
3.2 [Reserved]
3.3 Deposit.
(a) Posting of Deposit. Purchaser shall deposit with Escrow Agent an
initial ▇▇▇▇▇▇▇ money deposit in the amount of One Hundred Fifty Thousand
Dollars ($150,000.00) in immediately available funds (the "Deposit") within two
(2) Business Days after the execution and delivery of this Agreement by Seller
and Purchaser. The Deposit shall be held by Escrow Agent in escrow pursuant to
the terms of this Agreement and any additional escrow instructions or conditions
upon which the Parties mutually may agree. If Purchaser does not terminate this
Agreement pursuant to the Due Diligence Contingency by the end of the Due
Diligence Period, then Purchaser shall deposit with Escrow Agent, on or before
the last day of the Due Diligence Period, an additional ▇▇▇▇▇▇▇ money deposit in
the amount of One Hundred Fifty Thousand Dollars ($150,000.00) to be held by the
Escrow Agent as part of the Deposit, and thereafter the term "Deposit" shall
mean the total Three Hundred Thousand Dollars ($300,000.00), plus any interest
thereon, all of which shall be disbursed as provided in this Agreement.
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(b) Investment of Deposit. The Deposit shall be invested in the manner
directed by Purchaser with Seller's prior consent, which consent shall not be
withheld unreasonably, and all interest earned on the Deposit shall be deemed a
part thereof.
(c) Disbursement of Deposit. At Closing, Purchaser shall cause Escrow
Agent to disburse the Deposit to Seller, and Purchaser shall receive a credit
against the Purchase Price in the amount so disbursed, provided, that if this
Agreement is terminated, the Deposit shall be disbursed by Escrow Agent to
Seller or Purchaser in accordance with the terms of this Agreement.
3.4 Payment of Purchase Price. At Closing, Purchaser shall cause the Escrow
Agent to pay to Seller by wire transfer of immediately available funds an amount
equal to the Purchase Price, plus or minus any Prorations pursuant to Section
10.1, less the Deposit (which shall be delivered to or credited to Seller).
Purchaser shall cause the wire transfer of funds to be received by Escrow Agent
no later than 1:00 p.m. Central Time on the Closing Date.
ARTICLE IV.
DUE DILIGENCE; TITLE AND SURVEY
4.1 Due Diligence.
(a) Due Diligence Contingency. Purchaser shall have a period from the
date of this Agreement until 5:00 p.m. (Central Time) on the date which is two
(2) business days after the date of this Agreement (the "Due Diligence Period"),
to perform its due diligence review of the Property and all matters related
thereto which Purchaser deems advisable, including, without limitation,
engineering, environmental, financial, operational, employee and legal
compliance matters. During the Due Diligence Period, Purchaser shall also secure
its financing commitment and, subject to the terms and conditions of this
Agreement, negotiate with Manager concerning the contractual arrangement between
Purchaser and Manager post-Closing. If Purchaser, in its sole discretion, is not
satisfied with the results of its due diligence review of the Property and all
other matters related thereto, including the results of its efforts to obtain a
financing commitment or to agree upon a contractual arrangement with Manager
post-Closing, for any reason whatsoever, Purchaser shall have the right to
terminate this Agreement by providing written notice to Seller prior to the
expiration of the Due Diligence Period (the "Due Diligence Contingency"). If
Purchaser terminates this Agreement prior to the expiration of the Due Diligence
Period, Escrow Agent shall refund the entire Deposit to Purchaser, and Seller
and Purchaser shall have no further rights or obligations under this Agreement,
except those which expressly survive such termination. If Purchaser does not
terminate this Agreement pursuant to the Due Diligence Contingency prior to the
expiration of the Due Diligence Period in accordance with this Section 4.1(a),
Purchaser shall be deemed to have waived its rights to terminate this
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Agreement pursuant to the Due Diligence Contingency, in which case the entire
Deposit shall be nonrefundable to Purchaser, except as otherwise expressly
provided in this Agreement.
(b) Due Diligence Inspections. Purchaser, through its employees,
agents and representatives ("Purchaser's Inspectors"), shall have the right to
perform such examinations, tests, investigations and studies of the Property
(the "Inspections") as Purchaser reasonably deems advisable, in accordance with
this Section 4.1, and Seller shall provide reasonable access to the Property for
Purchaser's Inspectors to perform the Inspections; provided, however, that (i)
Purchaser shall provide Seller and Manager with at least twenty-four (24) hours
prior notice of each of the Inspections; (ii) Purchaser's Inspectors shall be
accompanied by an employee, agent or representative of Seller or Manager; (iii)
the Inspections shall be coordinated with Manager and conducted by Purchaser's
Inspectors between 7:00 a.m. and 7:00 p.m. (local Hotel time); (iv) Purchaser's
Inspectors shall not perform any drilling, coring or other invasive testing
without Seller's prior written consent, which consent may be withheld in
Seller's sole discretion, (v) the Inspections shall not unreasonably interfere
with the operations of the Hotel, and Purchaser's Inspectors shall comply with
Seller's requests to minimize such interference; and (vi) Purchaser's Inspectors
shall carry, and provide Seller written evidence of, commercial liability
insurance in amounts and on terms reasonably acceptable to Seller, which
insurance shall name Seller an additional insured.
(c) Seller's Due Diligence Materials. On the Effective Date of this
Agreement, to the extent not previously provided to Purchaser, Seller will
deliver to Purchaser or make available to Purchaser at Seller's or Manager's
offices the due diligence materials set forth in Schedule 4.1(c) hereto
(collectively, the "Required Due Diligence Materials"). Seller shall provide to
Purchaser promptly upon request by Purchaser such additional due diligence
materials in Seller's Possession relating to the Property which are reasonably
requested by Purchaser, other than appraisals, marketing plans, attorney work
product or other confidential materials that are for Seller's internal use only
and that do not contain material information about Hotel or the operation
thereof that is not also contained in other information, materials or documents
available to Purchaser. All due diligence documents and materials provided by
Seller to Purchaser pursuant to this Agreement are referred to collectively as
the "Seller Due Diligence Materials."
(d) Purchaser's Due Diligence Reports. Purchaser shall provide a copy
to Seller of all studies, reports, and assessments prepared by any Person for or
on behalf of Purchaser (other than any internal studies, reports and assessments
prepared by any of Purchaser's employees, attorneys or accountants) in
connection with the Inspections (the "Purchaser Due Diligence Reports"), without
representation or warranty by Purchaser as to the completeness or accuracy of
any such Report, and if requested by Seller, at Seller's cost and expense,
Purchaser shall cooperate in good faith with Seller's efforts to obtain an
original of any such Purchaser Due Diligence Reports, together with a reliance
letter from such Person in favor of Seller. This Section 4.1(d) shall survive
the termination of this Agreement and shall survive the Closing.
(e) Release and Indemnification. Purchaser, at its cost and expense,
shall repair any damage to the Property or any other property owned by a Person
other than Purchaser
Page 13
to the extent arising from or in connection with the Inspections, and restore
the Property or thirty-party property to the same condition as existed prior to
such Inspections. Purchaser hereby releases the Seller Indemnitees for any
Losses incurred by any of the Purchaser Indemnitees arising from or in
connection with the Inspections, except for Seller's gross negligence or
intentional misconduct. Purchaser shall defend, indemnify and hold harmless the
Seller Indemnitees from and against any Losses, resulting from injury (or death)
to persons or property, incurred by any Seller Indemnitees to the extent arising
from or in connection with the Inspections. This Section 4.1(d) shall survive
the termination of this Agreement and shall survive the Closing.
(f) Termination By Seller. If any Purchaser Due Diligence Report
relating to environmental matters discloses an Environmental Claim or
Environmental Liability not disclosed in Seller's Due Diligence Materials, the
cost of remediation of which, or reasonably estimated liability associated
therewith, exceeds Fifty Thousand Dollars ($50,000.00), and if Purchaser does
not terminate this Agreement pursuant to the Due Diligence Contingency, Seller,
by written notice to Purchaser given with ten (10) Business Days of Seller's
receipt of Purchaser's Due Diligence Reports, may terminate this Agreement,
whereupon (1) Seller shall pay to Purchaser the sum of Fifty Thousand Dollars
($50,000.00), as Purchaser's sole and exclusive remedy for such termination (2)
Escrow Agent shall refund the entire Deposit to Purchaser and (3) the Parties
shall have no further rights against or obligations to the other under this
Agreement except those which expressly survive such termination.
This Section 4.1 shall survive the termination of this Agreement and the
Closing.
4.2 Title and Survey.
(a) Title Commitment. As soon as reasonably possible after the
Effective Date of this Agreement, Purchaser shall cause the Title Company to
issue and deliver to each Party a current commitment for owner's policy of title
insurance, dated no earlier than the Effective Date of this Agreement, in the
amount of the Purchase Price (the "Title Commitment"), along with legible copies
of all Schedule B-II exceptions referenced therein and the vesting deed into
Seller ("Exception Documents").
(b) Survey. Seller shall deliver to Purchaser its existing survey as
part of the Seller Due Diligence Materials (the "Survey"). Purchaser may elect
to have the Survey updated or re-certified. If Purchaser does elect to obtain an
updated or re-certified Survey, Purchaser shall contact the surveyor directly
and arrange for same, with the costs of said new or re-certified Survey to be
paid by Purchaser. Purchaser shall promptly provide a copy of the revised Survey
to Seller and the Title Company.
(c) Condition of Title; Identification of Unpermitted Exceptions.
Title to the Land and Improvements on the Closing Date shall be in the
condition, and subject to certain exceptions shown in the Title Commitment
("Title Exceptions"), provided that Seller shall cure any Unpermitted Exceptions
that it is required to cure pursuant to Section 4.2(d) below. If (i) the
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Title Commitment discloses any Title Exceptions not acceptable to Purchaser, or
(ii) the Survey discloses any encroachments by improvements on adjoining
properties onto or over the Land, any encroachments of the Improvements onto or
over adjoining properties, setback lines or easements (to the extent in
violation thereof) or other survey defects (the "Survey Defects") not acceptable
to Purchaser, Purchaser shall provide written notice to Seller of Purchaser's
objections to the Title Exceptions and the Survey Defects (the "Title Objection
Letter") promptly after determining that such matters are not acceptable, but in
no event later than June 20, 2003 (the "Title Objection Period"). The Title
Exceptions and Survey Defects set forth in any Title Objection Letter delivered
within the Title Objection Period, or title matters arising of record following
the effective date of the Title Commitment and not caused by Purchaser or its
agents or otherwise permitted under this Agreement, are referred to collectively
herein as the "Unpermitted Exceptions." All (i) Title Exceptions disclosed in
the Title Commitment and all matters disclosed on the Survey, in each case if
not Unpermitted Exceptions either cured prior to the expiration of the Due
Diligence Period or required to be cured by Seller pursuant to Section 4.2(d),
(ii) all Tenant Leases listed on Schedule 5.1(j) attached hereto, (iii) all
liens and encumbrances created by Purchaser, (iv) the lien of all real estate
taxes and assessments not yet due and payable, and (v) the Management Agreement
(or a new management agreement between Manager and Purchaser) are referred to
collectively herein as the "Permitted Exceptions." If Purchaser does not provide
a Title Objection Letter to Seller prior to the expiration of the Title
Objection Period, Purchaser shall be deemed to have waived all objections to any
Title Exceptions and all Survey Defects, in which case all such Title Exceptions
and Survey Defects, including any Unpermitted Exceptions not required to be
cured by Seller pursuant to Section 4.2(d), shall be deemed Permitted
Exceptions; provided that mechanic's liens not caused by Purchaser or its agents
and the liens of mortgages, deeds of trust or other security interests for any
financing incurred by Seller which is not assumed by Purchaser under this
Agreement shall be Unpermitted Exceptions whether or not Purchaser objects
thereto.
(d) Removal of Unpermitted Exceptions. Seller shall have no obligation
to cure any Unpermitted Exceptions, except for (i) mechanic's liens of up to,
but not more than, Twenty-Five Thousand Dollars ($25,000.00) and any mortgages,
deeds of trust or other security interests for any financing incurred by Seller
which is not assumed by Purchaser under this Agreement, (ii) Taxes on Real
Property or personal property which would be delinquent if unpaid as of Closing
(except if to be paid by Manager under the Management Agreement), and (iii)
Title Exceptions that may be removed by the execution and delivery of a
customary affidavit of Seller in favor of the Title Company, in a form
reasonably acceptable to Seller and not imposing additional liability on Seller.
Anything herein to the contrary notwithstanding, Seller shall have no obligation
to cure any mechanic's lien of more than $10,000.00. Seller may cure any
Unpermitted Exceptions by removing such Unpermitted Exception from title or
causing the Title Company to waive or commit to insure over such Unpermitted
Exception at any time prior to Closing. If Seller (i) elects not to cure any
Unpermitted Exception(s) (other than the Unpermitted Exceptions Seller is
required to cure under this Section 4.2(d)) or (ii) determines, in its sole but
commercially reasonably discretion, that it will not be able to cure any
Unpermitted Exception(s) prior to Closing, Seller shall provide written notice
to Purchaser of any such uncured Unpermitted Exception(s) (the "Failure to Cure
Notice") within ten (10) days following
Page 15
Seller's receipt of Purchaser's Title Objection Letter (or, solely with respect
to any Title Exceptions first arising of record after the effective date of the
Title Commitment, prior to Closing), in which case Purchaser shall have the
option, to be exercised by delivery of written notice to Seller within five (5)
Business Days after delivery of the Failure to Cure Notice, to (i) terminate
this Agreement, in which case Escrow Agent shall promptly refund the entire
Deposit to Purchaser, and Seller and Purchaser shall have no further rights or
obligations under this Agreement, except those which expressly survive such
termination, or (ii) proceed to Closing under this Agreement and accept title to
the Real Property, subject to such uncured Unpermitted Exception(s) (which shall
thereafter be deemed to be Permitted Exceptions), without any credit against the
Purchase Price for any such uncured Unpermitted Exception(s). If Purchaser does
not terminate this Agreement under clause (i) of the preceding sentence within
such five (5) Business Day period, Purchaser shall be deemed to have elected the
option in clause (ii) of the preceding sentence.
(e) Other Title Company. If the Title Company does not agree to
remove, waive or insure over any Unpermitted Exception(s), but another
nationally recognized title insurance company is willing to issue the Title
Policy without such Unpermitted Exception(s), then Seller shall have the right
to obtain, and Purchaser shall accept, a Title Policy from such other title
insurance company which otherwise shall satisfy the requirements of Section
8.2(d) (in which case the term "Title Company" shall be deemed to refer to such
other title insurance company, and term "Escrow Agent" shall be deemed to refer
to the escrow agent of such other title insurance company for all purposes of
this Agreement).
(f) Extension of Closing Date. If Seller is unable to cure any
Unpermitted Exceptions it is required to or otherwise elects to cure prior to
Closing, Seller shall have the right, but without obligation, to postpone the
Closing and extend the Closing Date for up to thirty (30) days by providing
written notice to Purchaser no later than five (5) days prior to the originally
scheduled Closing Date.
4.3 Access to Financial Information. For a period of twelve (12) months
after Closing, Purchaser shall have reasonable access, at Purchaser's cost and
on terms and at times reasonably established by Seller, to all financial and
other information in Seller's possession or control relating to the Hotel to the
extent necessary to assist Purchaser's representatives to prepare audited
financial statements in conformity with Regulation S-X of the Securities and
Exchange Commission (the "SEC") and to assist them to prepare a registration
statement amendment, report or disclosure statement for filing with the SEC on
behalf of Purchaser, provided that Seller shall not be required to make
available any appraisals, marketing plans, attorney work product or other
confidential materials that are for Seller's internal use only and that do not
contain material information about the Hotel or the operation thereof that is
not also contained in other information, materials or documents available to
Purchaser. Seller also shall provide to Purchaser's representative a signed
representation letter, based on the actual knowledge of Seller representative
and otherwise in form and substance reasonably acceptable to Seller, to assist
Purchaser's independent public accountant in rendering an opinion on the
Page 16
financial statements related to the Hotel. This Section 4.3 shall survive the
termination of this Agreement and the Closing.
ARTICLE V.
SELLER'S REPRESENTATIONS AND WARRANTIES
5.1 Representations and Warranties. To induce Purchaser to enter into this
Agreement and to consummate the transaction contemplated herein, Seller hereby
makes the representations and warranties set forth in this Section 5.1, subject
to the limitations set forth in Sections 5.2, 5.3 and 5.4.
(a) Organization and Power. Seller is duly formed or organized,
validly existing, in good standing in the jurisdiction of its formation or
organization, and is qualified to do business in the jurisdiction in which the
Hotel is located, and has all requisite power and authority to own and operate
the Hotel as currently owned and operated.
(b) Authority and Binding Obligation. (i) Seller has full power and
authority to execute and deliver this Agreement and all documents now or
hereafter to be executed and delivered by Seller under this Agreement, and to
perform all obligations arising under this Agreement and such other documents,
(ii) the execution by the undersigned on behalf of Seller, and the delivery and
performance of this Agreement by Seller has been duly and validly authorized by
all necessary action on the part of Seller, and (iii) this Agreement and such
other documents now or hereafter to be executed and delivered by Seller under
this Agreement, when executed and delivered, will each constitute the legal,
valid and binding obligations of Seller enforceable against Seller in accordance
with their respective terms, subject to the application of equitable principles
and the effect of Applicable Laws affecting the rights of creditors generally,
and except to the extent Purchaser itself is in default hereunder. No consent of
any Affiliate of Seller is required.
(c) Consents and Approvals; No Conflicts. Neither the execution and
delivery of this Agreement by Seller, nor the consummation by Seller of the
transaction contemplated under this Agreement, nor compliance by Seller with any
of the terms of this Agreement will: (i) violate any provision of Seller's
organizational or governing documents; (ii) violate any Applicable Laws to which
Seller or the Hotel is subject; or (iii) result in a violation or breach of, or
constitute a default under any of the Contracts, except to the extent such
violation, breach or default would not have a material adverse effect on the
ownership or operation of the Hotel, or (D) result in the creation or imposition
of any lien or encumbrance on the Property or any portion thereof.
(d) Litigation. Except as set forth in Schedule 5.1(d), Seller has not
(i) been served with any court filing in any litigation with respect to the
Hotel in which Seller is named a party, or (ii) received written notice of any
charge or complaint from any Governmental Authority or other Person, or filing
of any administrative, arbitration or similar adjudicatory
Page 17
proceeding, with respect to the Hotel which has not been settled or dismissed,
and Seller has not any received written notice threatening any such action.
(e) Employees. To Seller's Knowledge, (i) all Employees who work at
the Hotel are employed by Manager, (ii) there is no union organizing attempt,
strike, work stoppage or slow down, or any other labor dispute concerning
representation of the Employees pending at the Property, and no such action is
currently threatened or has taken place within the last three (3) years, and
(iii) Seller is not a party to any collective bargaining agreement or
relationship with any labor union which affects the Property.
(f) Management Agreement. Except for the Management Agreement, Seller
is not a party to any management, franchise, license, concession or other
agreement for the management or operation of the Hotel.
(g) Finders and Brokers. Except for the Broker, Seller has not dealt
with any Person who has acted, directly or indirectly, as a broker, finder,
financial adviser or in any other capacity for or on behalf of Seller in
connection with the transaction contemplated by this Agreement in a manner which
would entitle such Person to any fee or commission in connection with this
Agreement or the transaction contemplated in this Agreement.
(h) Foreign Person. Seller is not a "foreign partnership" for purposes
of the withholding provisions of Section 1445 of the Code.
(i) No Condemnation. To Seller's Knowledge, there are no existing or
pending condemnation proceedings or deeds in lieu of condemnation affecting the
Property, nor have any such condemnation proceedings been threatened in writing.
(j) Tenant Leases; Contracts. Schedule 5.1(j) sets forth a true,
correct and complete list of the Tenant Leases, if any, and no tenant has
notified Seller in writing of its intent to terminate its lease prior to
expiration of the term of such lease, and no written notice of any default under
the Tenant Leases has been given or received by Seller. With respect to the
Contracts, Schedule 5.1(j) sets forth a true, correct and complete list of the
Equipment Leases and Operating Agreements and, to Seller's Knowledge, no party
to the Contracts is in breach or default thereunder. The copies of the Tenant
Leases and Contracts delivered to Purchaser are true, correct and complete in
all material respects. As of Closing Seller shall not have amended, modified,
renewed or extended any of the Tenant Leases, Equipment Leases or Operating
Agreements or entered into any new contractual relationships with any party to
provide services or goods to the Hotel after the date of this Agreement without
complying with the requirements of Section 7.2.
(k) Possession. Seller has not granted to any third party any license,
lease, or other right relating to the use or possession of the Property or any
part thereof, except guests of the Hotel, tenants under the Tenant Leases,
parties under Operating Agreements, and Manager under the Management Agreement.
Page 18
(l) Purchase Rights. There are no purchase contracts, options or other
agreements of any kind, whereby any person or entity other than Purchaser will
have acquired or will have any right to acquire title to all or any portion of
the Property.
(m) Municipal Assessment; Violation Notices. To Seller's Knowledge, as
of the Effective Date (i) there are no outstanding unpaid municipal assessment
notices against the Property, (ii) all municipal improvements with respect to
which the Property can be assessed have been paid in full, (iii) it has not
received any written notice from any Governmental Authority concerning the
existence of any presently uncorrected violation of any ordinance, public
regulation or statute with respect to the Property.
(n) Bankruptcy. Seller is not insolvent within the meaning of Title 11
of the United States Code, as amended (the "Bankruptcy Code"). Seller has not
filed or taken any action to file a voluntary petition, case or proceeding under
any section or chapter of the Bankruptcy Code, or under any similar law or
statute of the United States or any state thereof, relating to bankruptcy,
insolvency, reorganization, winding up or composition or adjustment of its
debts; and no such petition, case or proceeding has been filed against it which
has not been dismissed, vacated or stayed on appeal; and it has not been
adjudicated as a bankrupt or insolvent or consented to, nor filed an answer
admitting or failing reasonably to contest an allegation of bankruptcy or
insolvency. Seller has not sought, or consented to or acquiesced in, the
appointment of any receiver, trustee, liquidator or other custodian of it or a
material part of its assets.
(o) Licenses and Permits. As of the Effective Date Seller has not
received any written notice from any Governmental Authority, nor otherwise has
Knowledge, (A) of any violation, default, intended or threatened non-renewal,
suspension or revocation of any Licenses and Permits necessary for the present
use and occupancy of the Improvements, or (B) that it lacks any Licenses and
Permits necessary for the present use and occupancy of the Improvements.
(p) Title to FF&E. Other than FF&E subject to the Equipment Leases or
owned by Manager, and subject in all respects to the Management Agreement,
Seller has good and marketable title to the FF&E used in connection with the
operation of the Property, in each case free and clear of all liens, claims and
encumbrances, subject only to the related Permitted Encumbrances.
(q) Environmental. To Seller's knowledge, as of the Effective Date
Seller has not received from any Governmental Authority written notice of any
violation of Environmental Laws applicable to the Property, and Seller has no
actual knowledge of any material violation of any Environmental Laws applicable
to the Property, that has not been corrected, except as may be reflected by the
Seller Due Diligence Materials or otherwise disclosed in writing to Purchaser,
and except as may be set forth in any environmental report obtained by
Purchaser.
(r) Operations. As of Closing Seller shall not have (x) sold or
assigned, or entered into any agreement to sell or assign, or create or permit
to exist any lien or encumbrance (other than a Permitted Encumbrance) on, the
Hotel or any portion thereof after the date of this
Page 19
Agreement, (y) allowed any Licenses and Permits currently in existence with
respect to the operation, use, occupancy or maintenance of the Hotel to expire,
be canceled or otherwise terminated, after the date of this Agreement, nor (z)
canceled any existing Bookings for the use of Hotel facilities or Bookings
obtained by Seller after the date of this Agreement, without complying with the
requirements of Section 7.2.
5.2 LIMITATION ON SELLER'S REPRESENTATIONS AND WARRANTIES. PURCHASER
ACKNOWLEDGES AND AGREES THAT, EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS
AGREEMENT OR ANY CLOSING DOCUMENT, (I) THE PURCHASE OF THE PROPERTY SHALL BE ON
AN "AS IS," "WHERE IS," "WITH ALL FAULTS BASIS," SUBJECT TO REASONABLE WEAR AND
TEAR FROM THE DATE OF THIS AGREEMENT UNTIL CLOSING, AND (II) NEITHER SELLER,
ARCHON, MANAGER OR ANY OF THEIR AFFILIATES, NOR ANY OF THEIR RESPECTIVE
DIRECTORS, OFFICERS, MANAGERS, EMPLOYEES, AGENTS OR REPRESENTATIVES, NOR ANY
PERSON PURPORTING TO REPRESENT ANY OF THE FOREGOING, HAVE MADE ANY
REPRESENTATION, WARRANTY, GUARANTY, PROMISE, PROJECTION OR PREDICTION WHATSOEVER
WITH RESPECT TO THE HOTEL OR ANY ASPECT THEREOF OR THE PROPERTY OR ANY PORTION
THEREOF, WRITTEN OR ORAL, EXPRESS OR IMPLIED, ARISING BY OPERATION OF LAW OR
OTHERWISE, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE, OR ANY REPRESENTATION OR WARRANTY AS TO (A)
THE CONDITION, QUANTITY, QUALITY, USE, OCCUPANCY OR OPERATION OF THE PROPERTY OR
ANY PORTION THEREOF, (B) THE PAST, PRESENT OR FUTURE REVENUES OR EXPENSES WITH
RESPECT TO THE HOTEL, (C) THE COMPLIANCE OF THE PROPERTY OR ANY PORTION THEREOF
OR THE OPERATION OF THE HOTEL WITH ANY ZONING REQUIREMENTS, BUILDING CODES OR
OTHER APPLICABLE LAW, (D) THE ACCURACY OF ANY SELLER DUE DILIGENCE MATERIALS,
ENVIRONMENTAL REPORTS OR OTHER INFORMATION SET FORTH IN THE SELLER DUE DILIGENCE
MATERIALS PROVIDED TO PURCHASER, OR (E) MANAGER OR THE MANAGEMENT AGREEMENT.
PURCHASER ACKNOWLEDGES AND AGREES THAT PURCHASER IS NOT RELYING ON ANY STATEMENT
MADE OR INFORMATION PROVIDED TO PURCHASER BY SELLER, ARCHON, MANAGER OR ANY OF
THEIR AFFILIATES, OR ANY OF THEIR RESPECTIVE DIRECTORS, MANAGERS, OFFICERS,
EMPLOYEES, AGENTS OR REPRESENTATIVES, OR ANY PERSON PURPORTING TO REPRESENT ANY
OF THE FOREGOING, EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES EXPRESSLY MADE
BY SELLER IN THIS AGREEMENT. IN NO EVENT SHALL SELLER'S LIABILITY FOR A BREACH
OF A REPRESENTATION OR WARRANTY UNDER THIS AGREEMENT EXCEED THE INDEMNIFICATION
CAP.
5.3 Amendment to Schedules. All schedules that may be attached to this
Agreement or delivered to Purchaser as part of the Seller's Due Diligence
Materials set forth information only as of the date of each. Such information
may change from time-to-time prior to the Closing Date pursuant to Seller's
operation of the Hotel in the Ordinary Course of Business. Seller shall
Page 20
have the right to amend and supplement any schedules to this Agreement from time
to time to the extent Seller did not have Knowledge as of the date of this
Agreement of the matter being disclosed in such amendment or supplement by
providing a written copy of such amendment or supplement to Purchaser not later
than five (5) Business Days prior to Closing; provided, however, that any
amendment or supplement to the Schedules to this Agreement made after the
expiration of the Due Diligence Period shall have no effect for the purposes of
determining whether the Purchaser Closing Conditions have been satisfied, but
shall have effect only for the purposes of limiting the defense and
indemnification obligations of Seller for the inaccuracy or untruth of the
representation or warranty qualified by such amendment or supplement.
5.4 Effect of Purchaser's Knowledge. If Purchaser has Knowledge prior to
Closing of a breach of any representation or warranty made by Seller in this
Agreement and Purchaser nevertheless elects to close this transaction, such
representation or warranty by Seller with respect to such matter shall be deemed
not to have been breached to the extent of Purchaser's Knowledge.
ARTICLE VI.
PURCHASER'S REPRESENTATIONS AND WARRANTIES
6.1 Representations and Warranties. To induce Seller to enter into this
Agreement and to consummate the transaction contemplated hereby, Purchaser
hereby makes the representations and warranties in this Section 6.1, subject to
the limitation in Section 6.2.
(a) Organization and Power. Purchaser is duly organized, validly
existing and in good standing under the laws of the State of Virginia, and has
all requisite power and authority to own, lease and operate its properties and
to carry on its business as now being conducted.
(b) Authority and Binding Obligation. (i) Purchaser has full power and
authority to execute and deliver this Agreement and all documents now or
hereafter to be executed and delivered by Purchaser under this Agreement, and to
perform all obligations arising under this Agreement and such other documents,
(ii) the execution by the undersigned on behalf of Purchaser, and the delivery
and performance of this Agreement by Purchaser has been duly and validly
authorized by all necessary partnership action on the part of Purchaser, and
(iii) this Agreement and such other documents now or hereafter to be executed
and delivered by Purchaser under this Agreement, when executed and delivered,
will each constitute the legal, valid and binding obligations of Purchaser
enforceable against Purchaser in accordance with its terms, subject to the
application of equitable principles and Applicable Laws affecting the rights of
creditors generally, and except to the extent Seller itself is in default
hereunder.
(c) Consents and Approvals; No Conflicts. (i) No filing with, and no
permit, authorization, consent or approval of, any Governmental Authority or
other Person is necessary for the consummation by Purchaser of its obligations
under this Agreement, and (ii) neither the
Page 21
execution and delivery of this Agreement by Purchaser, nor the consummation by
Purchaser of the transaction contemplated under this Agreement, nor compliance
by Purchaser with any of the terms of this Agreement will: (A) violate any
provision of the organizational or governing documents of Purchaser; (B) violate
any Applicable Law to which Purchaser is subject; or (C) result in a violation
or breach of or constitute a default under any contract, agreement or other
instrument or obligation to which Purchaser is a party or is bound or to which
any of Purchaser's properties are subject.
(d) Finders and Investment Brokers. Except for Broker, Purchaser has
not dealt with any Person who has acted, directly or indirectly, as a broker,
finder or in such other capacity for or on behalf of Purchaser in connection
with the transaction contemplated by this Agreement in any manner which would
entitle such Person to any fee or commission in connection with this Agreement
or the transaction contemplated in this Agreement.
(e) ERISA. Purchaser is not an employee benefit plan under ERISA, and
is not acquiring the Property with the assets of an employee benefit plan.
6.2 Effect of Seller's Knowledge. If Seller has Knowledge prior to Closing
of a breach of any representation or warranty made by Purchaser in this
Agreement and Seller nevertheless elects to close this transaction, such
representation or warranty by Purchaser with respect to such matter shall be
deemed to have not been breached to the extent of Seller's Knowledge.
ARTICLE VII.
COVENANTS
7.1 Confidentiality.
(a) Disclosure of Confidential Information; Public Announcements.
Seller and Purchaser shall keep confidential and not make any public
announcement or disclose to any Person the existence or any terms of this
Agreement, any information disclosed by the Inspections or in the Seller Due
Diligence Materials or Purchaser Due Diligence Reports, and any other documents,
materials, data or other information with respect to the Hotel which is not
generally known to the public (the "Confidential Information"); provided,
however, that Seller and Purchaser shall be permitted to (i) disclose any
Confidential Information to the extent required by court order or under
Applicable Law, (ii) make a public announcement regarding the transaction
contemplated in this Agreement after the expiration of the Due Diligence Period,
provided that any such public announcement shall not contain the Purchaser Price
and Seller and Purchaser shall otherwise approve the form and substance thereof
(such approval not to be unreasonably withheld, conditioned or delayed), and
(iii) disclose any Confidential Information to any Person on a "need-to-know"
basis, such as their respective directors, officers, partners, members,
employees, attorneys, accountants, engineers, surveyors, consultants, lenders,
investors, managers, franchisors and such other Persons whose assistance is
required to
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consummate the transactions contemplated in this Agreement; provided, however,
that Seller or Purchaser (as the case may be) shall (a) advise such Person of
the confidential nature of such Confidential Information, and (b) use
commercially reasonable, diligent efforts to cause such Person to maintain the
confidentiality of such information; and provided, further, that except for the
obligations of Seller and Purchaser to use such commercially reasonable efforts,
neither Seller nor Purchaser shall be liable for any breach of confidentiality
by such Person. If this Agreement is terminated, Purchaser promptly shall return
all Seller Due Diligence Materials to Seller, and if requested by Seller,
Purchaser shall provide a copy of any environmental reports obtained by or for
Purchaser (but in that event, Seller shall reimburse Purchaser for one-half of
the actual, out-of-pocket cost incurred by Purchaser for the report(s)). This
Section 7.1(a) shall survive the termination of this Agreement.
(b) Communication with Employees. Purchaser shall not, through its
employees, agents, representatives or any other Person, directly or indirectly,
initiate or pursue any communication with any Employees or any Person
representing any Employees involving any matter with respect to the Hotel, the
Employees or this Agreement, other than Manager, without Seller's prior written
consent, which consent shall not be unreasonably withheld or delayed, unless
such communication is arranged by Seller.
7.2 Operation of the Hotel Prior to Closing. From the date of this
Agreement until the Closing or earlier termination of this Agreement, Seller
shall continue to use reasonable efforts to enforce the Management Agreement and
cause Manager to operate the Hotel in the Ordinary Course of Business,
including, without limitation, (i) maintaining all existing insurance coverages
(or adequate replacements thereof), (ii) maintaining inventories of Supplies,
F&B and Retail Merchandise in the Ordinary Course of Business, and (iii)
performing maintenance and repairs for the Hotel in the Ordinary Course of
Business. Prior to the expiration of the Due Diligence Period, Seller shall not
amend, modify, renew or extend any of the Tenant Leases, Equipment Leases or
Operating Agreements or enter into any new contractual relationships with any
party to provide services or goods to the Hotel without advising Purchaser of
same at least two (2) business days prior to the expiration of the Due Diligence
Period (but Purchaser shall not have a right of consent). After the expiration
of the Due Diligence Period, Seller shall not amend, modify, renew or extend any
of the Tenant Leases, Equipment Leases or Operating Agreements or enter into any
new contractual relationships with any party to provide services or goods to the
Hotel without Purchaser's prior written consent, which consent shall not be
unreasonably withheld or delayed. Except in the Ordinary Course of Business,
Seller shall not (x) sell or assign, or enter into any agreement to sell or
assign, or create or permit to exist any lien or encumbrance (other than a
Permitted Encumbrance) on, the Hotel or any portion thereof, (y) allow any
Licenses and Permits currently in existence with respect to the operation, use,
occupancy or maintenance of the Hotel to expire, be canceled or otherwise
terminated, nor (z) cancel any existing Bookings for the use of Hotel facilities
or Bookings obtained by Seller after the date of this Agreement.
7.3 Licenses and Permits. Purchaser acknowledges that most if not all
Licenses and Permits necessary for the operation of the Hotel and held in the
name of Manager. To the extent
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required, Purchaser shall be responsible for obtaining the transfer of all
Licenses and Permits (to the extent transferable) or the issuance of new
licenses and permits. Purchaser, at its cost and expense, shall submit all
necessary applications and other materials to the appropriate Governmental
Authority and take such other actions to effect the transfer of Licenses and
Permits or issuance of new licenses and permits, as of the Closing Date, and
Seller shall use commercially reasonable, diligent efforts (at no cost or
expense to Seller other than any de minimis cost or expense, or any cost or
expense which Purchaser agrees in writing to reimburse) to cooperate with
Purchaser to cause the Licenses and Permits to be transferred or new licenses
and permits to be issued to Purchaser. Notwithstanding anything to the contrary
in this Section 7.3, Purchaser shall not post any notices at the Hotel prior to
the expiration of the Due Diligence Period. This Section 7.3 shall survive
Closing.
7.4 Employee Matters. Purchaser acknowledges that all Employees of the
Hotel are employed by Manager. Purchaser shall be responsible for complying
with, and for requiring Manager to comply with, the WARN Act relating to
Employees of the Hotel in connection with the sale of the Hotel hereunder.
Purchaser shall defend, indemnify and hold harmless Seller and the Seller
Indemnitees from and against any Losses incurred by Seller or any Seller
Indemnitees relating to any noncompliance with the WARN Act in connection with
the transaction contemplated by this Agreement. This Section 7.4 shall survive
Closing.
7.5 Bookings. Purchaser shall honor all Bookings for any period on or after
the Closing Date. This Section 7.5 shall survive Closing.
7.6 Tax Contests.
(a) Taxable Period Terminating Prior to Closing Date. Seller shall
retain the right to commence, continue and settle any proceeding to contest any
Taxes for any taxable period which terminates prior to the Closing Date, and
shall be entitled to any refunds or abatements of Taxes awarded in such
proceedings.
(b) Taxable Period Including the Closing Date. Seller shall have the
right to commence, continue and settle any proceeding to contest any Taxes for
any taxable period which includes the Closing Date. Notwithstanding the
foregoing, if Purchaser desires to contest any Taxes for such taxable period and
Seller has not commenced any proceeding to contest any such Taxes for such
taxable period, Purchaser shall provide written notice requesting that Seller
contest such Taxes. If Seller desires to contest such Taxes, Seller shall
provide written notice to Purchaser within ten (10) days after receipt of
Purchaser's request confirming that Seller will contest such Taxes, in which
case Seller shall proceed to contest such Taxes, and Purchaser shall not have
the right to contest such Taxes. If Seller fails to provide such written notice
confirming that Seller will contest such Taxes within such ten (10) day period,
Purchaser shall have the right to contest such Taxes. Any refunds or abatements
awarded in such proceedings shall be used first to reimburse the Party
contesting such Taxes for the reasonable costs and expenses incurred by such
Party in contesting such Taxes, and the remainder of such refunds or abatements
shall be
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prorated between Seller and Purchaser as of the Closing, and the Party receiving
such refunds or abatements promptly shall pay such prorated amount due to the
other Party.
(c) Taxable Period Commencing On or After Closing Date. Purchaser
shall have the right to commence, continue and settle any proceedings to contest
Taxes for any taxable period which commences on or after the Closing Date, and
shall be entitled to any refunds or abatements of Taxes awarded in such
proceedings.
(d) Cooperation. Seller and Purchaser shall use commercially
reasonable, diligent efforts to cooperate with the Party contesting the Taxes
(at no cost or expense to the Party not contesting the Taxes other than any de
minimis cost or expense or any cost or expense which the requesting Party agrees
in writing to reimburse) and to execute and deliver any documents and
instruments reasonably requested by the Party contesting the Taxes in
furtherance of the contest of such Taxes.
(e) Survival. The provisions of this Section 7.6 shall survive
Closing.
7.7 Access to Information. After Closing, Purchaser shall provide
reasonable access to the officers, employees, agents and representatives of
Seller and/or any Seller Indemnitees to (i) Purchaser's books and records for
the Hotel for any purpose deemed necessary or advisable by Seller, including,
without limitation, to facilitate the preparation of any documents required to
be filed by Seller under Applicable Law or the resolution of any audit,
litigation or other proceeding, claim or charge made by any Person or insurance
claim involving Seller or any of its Affiliates; and (ii) the employees of
Purchaser or Manager whose assistance or testimony is deemed necessary or
advisable by Seller to assist Seller in evaluating or defending any audit,
litigation or other proceeding, claim or charge made by any Person (other than
Purchaser and its Affiliates) or insurance claim involving any Seller
Indemnitees; provided, however, that (A) Seller or such Seller Indemnitees shall
provide reasonable prior notice to Purchaser; (B) Purchaser shall not be
required to provide such access during non-business hours; (C) Purchaser shall
have the right to have its representative(s) accompany the officer, employees,
agents or representatives of Seller or such Seller Indemnitees in providing
access to its books and records, the Property or the employees of Purchaser (or
Purchaser's manager) as provided in this Section 7.7. Purchaser, at its cost and
expense, shall retain all books and records with respect to the Hotel for a
period of seven (7) years after the Closing. This Section 7.7 shall survive
Closing.
7.8 Further Assurances. Seller and Purchaser shall use commercially
reasonable, diligent 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 be done by
such Party pursuant to the terms of this Agreement (i) prior to Closing to
consummate the transaction contemplated in this Agreement, including, without
limitation, (A) obtaining all necessary consents, approvals and authorizations
required to be obtained from any Governmental Authority or other Person under
this Agreement or Applicable Law, and (B) effecting all registrations and
filings required under this Agreement or Applicable Law, and (ii) after the
Closing to further effect the transaction contemplated in this
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Agreement; provided, however, neither party shall be required to incur any
material cost, expense or liability not otherwise required under this Agreement.
This Section 7.8 shall survive Closing.
ARTICLE VIII.
CONDITIONS PRECEDENT
8.1 Conditions Precedent to Purchaser's Obligations. Purchaser's
obligations to close the transaction contemplated under this Agreement also are
subject to the satisfaction at or prior to Closing of the following conditions
precedent (the "Purchaser Closing Conditions"):
(a) Seller's Deliveries. Seller shall have delivered to Purchaser or
deposited with Escrow Agent all of the closing documents and other items set
forth in Section 9.3.
(b) Representations and Warranties. Each of Seller's representations
and warranties made in this Agreement (as the same may be updated pursuant to
Section 5.3 prior to the expiration of the Due Diligence Period) shall be true
and correct in all material respects as of the Closing (unless such
representation or warranty is made expressly as of another date).
(c) Covenants and Obligations. Seller shall have performed in all
material respects all of its covenants and obligations under this Agreement.
(d) Title Policy. The Title Company shall be irrevocably committed to
issue to Purchaser an ALTA owner's policy of title insurance insuring good and
marketable, fee simple absolute title to the Land and Improvements in Purchaser
in the amount of the Purchase Price, subject only to the Permitted Exceptions,
and, to the extent applicable and available in the state in which the Land is
located and paid for by Purchaser, extended coverage and comprehensive, access,
single tax parcel and contiguity endorsements (the "Title Policy").
(e) Management Agreement. As contemplated in Section 2.3, Manager
shall have provided its written consent, in form and substance reasonably
acceptable to Purchaser, to the assignment of the Management Agreement from
Seller to Purchaser and assumption of the Management Agreement by Purchaser, or
the termination of the Management Agreement.
The Purchaser Closing Conditions are for the benefit of Purchaser. If any
of the Purchaser Closing Conditions are not satisfied as of Closing, except as
expressly provided in Section 8.3, Purchaser shall have the right, at its sole
option, to either (i) terminate this Agreement by written notice to Seller, in
which case this Agreement shall terminate and the parties hereto shall have no
further obligations hereunder, except those that expressly survive the
termination hereof, or (ii) waive in writing any of the Purchaser Closing
Conditions at or prior to Closing, in which case the Closing shall occur as if
said waived conditions were satisfied.
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8.2 Conditions Precedent to Seller's Obligations. Seller's obligations to
close the transactions contemplated under this Agreement are subject to the
satisfaction at or prior to Closing of the following conditions precedent (the
"Seller Closing Conditions"):
(a) Receipt of the Purchase Price. Purchaser shall have paid the
Purchase Price pursuant to Section 3.4, and Escrow Agent shall have disbursed
the Deposit to Seller.
(b) Purchaser's Deliveries. Purchaser shall have delivered to Seller
or deposited with Escrow Agent all of the closing documents and other items set
forth in Section 9.4.
(c) Representations and Warranties. Each of the representations and
warranties of Purchaser made in this Agreement shall be true and correct in all
material respects as of the Closing (unless such representation or warranty is
made expressly as of another date).
(d) Covenants and Obligations. Purchaser shall have performed in all
material respects all of its covenants and obligations under this Agreement.
(e) Assignment and Assumption or Termination of Management Agreement;
Release of Seller. As contemplated in Section 2.3, Manager shall have (1)
provided its written consent, in form and substance reasonably acceptable to
Seller, to the assignment of the Management Agreement from Seller to Purchaser
and assumption of the Management Agreement by Purchaser, or the termination of
the Management Agreement, and (2) executed and delivered to Seller a full and
unconditional release (except as provided below) of Seller from any and all
obligations under the Management Agreement from and after the Closing Date,
which release shall be on terms reasonably acceptable to Seller; provided,
however, if required by Manager, there may be an exception to the full and
unconditional release of Seller for any liability that is unknown as of Closing
but that might arise after Closing as a result of an act or event occurring on
the Property during Seller's period of ownership of the Property and for which
Seller could otherwise have liability. Additionally, Seller shall not be
required to undertake any liability and shall not be required to incur any
material monetary expense (including the payment of any termination fees or
charges resulting from the early termination of the Management Agreement) in
connection with the assignment and assumption.
(f) Reconciliation. Seller and Manager shall have reached mutual
written agreement whereby (i) Manager reconciles, in a manner acceptable to
Seller, amounts owed by or to Seller under the Management Agreement as of the
Closing Date as if the applicable accounting period under the Management
Agreement ended on the Closing Date, and (ii) Seller shall have received from
Manager (or simultaneously with the Closing receives from Manager) a final cash
distribution of any operating profit or other amounts due Seller under the
Management Agreement as of the Closing based on such mutually acceptable
reconciliation.
The Seller Closing Conditions are for the benefit of Seller. If any of the
Seller Closing Conditions are not satisfied as of Closing, except as expressly
provided in Section 8.3, Seller
Page 27
shall have the right, at its sole option, to either (i) terminate this Agreement
by written notice to Purchaser, in which case this Agreement shall terminate and
the parties hereto shall have no further obligations hereunder, except those
that expressly survive the termination hereof, or (ii) waive in writing any of
the Seller Closing Conditions at or prior to Closing, in which case the Closing
shall occur as if said waived conditions were satisfied.
8.3 Frustration of Closing Conditions. Seller and Purchaser may not rely on
the failure of the Seller Closing Conditions or Purchaser Closing Conditions,
respectively, if such failure was caused by such Party's failure to act in good
faith or to use its commercially reasonable, diligent efforts to cause the
Closing to occur, subject to the provisions of this Agreement.
ARTICLE IX.
CLOSING
9.1 Closing Date. The closing of the transaction contemplated under this
Agreement (the "Closing") shall occur on June 20, 2003, or such other date as
agreed to in writing between Seller and Purchaser (the date on which the Closing
occurs is referred to herein as the "Closing Date"), at the offices of Escrow
Agent or such other place as is agreed to in writing by Seller and Purchaser.
9.2 Consummation of Closing. Upon satisfaction or completion of all closing
conditions and deliveries set forth in this Agreement, the parties shall direct
Escrow Agent to immediately record and deliver the closing documents to the
appropriate parties and make disbursements according to the closing statements
executed by Seller and Purchaser.
9.3 Seller's Deliveries. At Closing, Seller shall deliver or cause to be
deposited with Escrow Agent all of the (i) documents, each of which shall have
been duly executed by Seller and acknowledged (if required), and (ii) other
items, set forth in this Section 9.3, as follows:
(a) A special warranty deed (warranting title only against any party
claiming by, through or under Seller, and not otherwise) in a form acceptable
for recordation under the law of the state where the Property is located and
acceptable to the Title Company, and reasonably acceptable to Seller and
Purchaser, conveying the Real Property to Purchaser, subject only to the
Permitted Exceptions;
(b) A ▇▇▇▇ of Sale, Assignment and Assumption in the form of Exhibit
B, transferring to Purchaser, with special warranty but subject to the Permitted
Exceptions, including the Management Agreement, the FF&E, Supplies, F&B, Retail
Merchandise, Books and Records, Accounts Receivable, Tenant Leases, Equipment
Leases, Operating Agreements, Licenses and Permits, Intangible Property and
Bookings, with the assumption by Purchaser of the liabilities and obligations
under the Bookings, Contracts, Tenant Leases, Licenses and Permits from and
after the Closing Date (and with Seller's indemnity of Purchaser with respect to
the
Page 28
period prior to Closing and Purchaser's indemnity of Seller with respect to the
period from and after Closing);
(c) Such agreements, affidavits or other documents as reasonably may
be reasonably required by the Title Company from the Seller to issue the Title
Policy;
(d) Any required real estate transfer tax declaration or similar
documents required in connection with any tax imposed by any Governmental
Authority in connection with the transaction contemplated hereunder;
(e) A FIRPTA affidavit in the form set forth in the regulations under
Section 1445 of the Code;
(f) The Settlement Statement prepared pursuant to Section 11.1;
(g) Evidence of the formation, organization, existence, good standing,
qualification to do business and authority of Seller and of the authority of the
persons executing documents on behalf of Seller, in form and substance
reasonably acceptable to Purchaser or the Title Company;
(h) Such other documents and instruments as may be reasonably required
by Purchaser, Escrow Agent or the Title Company, or by law, in order to
consummate or better effectuate the transaction contemplated in this Agreement;
and
(i) An assignment and assumption, or termination, of Management
Agreement in form and substance reasonably acceptable to Seller and Purchaser,
providing for the assumption by Purchaser of the liabilities and obligations
thereunder from and after the Closing Date, or the termination thereof in
connection with the execution of a new management agreement between Manager and
Purchaser, in either case satisfying the conditions of Section 8.2(e).
9.4 Purchaser's Deliveries. At Closing, Purchaser shall cause to be
deposited with Escrow Agent all of the (i) documents, each of which shall have
been duly executed by Purchaser and acknowledged (if required), and (ii) other
items, set forth in this Section 9.4, as follows:
(a) The Purchase Price to be paid by Purchaser pursuant to Section
3.4;
(b) A letter of direction to Escrow Agent directing Escrow Agent to
disburse the Deposit to Seller;
(c) The ▇▇▇▇ of Sale, Assignment and Assumption, the Assignment and
Assumption of Management Agreement, and any other documents and instruments to
be delivered by Seller under Section 9.3 which require execution by Purchaser;
Page 29
(d) Evidence of the formation, organization, existence, good standing,
qualification to do business and authority of Purchaser and of the authority of
the persons executing documents on behalf of Purchaser, in form and substance
reasonably acceptable to Seller;
(e) Such other documents and instruments as reasonably may be
requested by Seller, or Escrow Agent or the Title Company, or required by law,
in order to consummate or better effectuate the transaction contemplated in this
Agreement;
(f) A letter from Purchaser or its counsel addressed to Seller in the
form of Schedule 9.4(e) confirming that Purchaser is not acquiring the Property
with the assets of an employee benefit plan as defined in ERISA; and
(g) As applicable, the assignment and assumption of Management
Agreement in form and substance reasonably acceptable to Seller and Purchaser,
providing for the assumption by Purchaser of the liabilities and obligations
thereunder from and after the Closing Date, or the new management agreement
between Manager and Purchaser, in either case satisfying the conditions of
Section 8.2(e).
9.5 Possession. Seller shall deliver the Property and possession of the
Property to Purchaser as of the Closing, subject to the Management Agreement and
other Permitted Exceptions.
ARTICLE X.
PRORATIONS; ACCOUNTS RECEIVABLE; TRANSACTION COSTS
10.1 Prorations; Accounts Receivable. At Closing, effective as of 12:01
A.M. on the Closing Date, all items of revenue and expense shall be prorated
between the parties such that (i) Seller shall be responsible for all expenses
and shall be entitled to a credit for all revenue attributable to the period
prior to the Closing Date, and (ii) Purchaser shall be responsible for all
expenses and shall be entitled to a credit for all revenue attributable to the
period from and after the Closing Date. Without limiting the generality of the
foregoing, (i) Purchaser shall be entitled to all revenue with respect to the
Guest Ledger for guests staying in the Hotel on the Closing Date, for that night
only, and Purchaser shall receive a credit for advance payments under Bookings
agreements for rooms, facilities and services of the Hotel; (ii) Seller shall
receive a credit for 100% of all other Accounts Receivable on the Closing Date,
but shall only be entitled to actual amounts collected by Manager from such
Accounts Receivable within ninety (90) days following the Closing Date, and
Seller and Purchaser shall re-prorate such Accounts Receivable and pay any
deficiency in the original proration to the other Party within one hundred
twenty (120) days following the Closing Date, (iii) Seller shall receive a
credit for all prepaid expenses, and Seller shall be entitled to receive any
rebates or refunds attributable to taxes paid by Seller prior to the Closing;
(iv) Purchaser shall be entitled to receive all amounts in all reserves
maintained by Manager for replacement of FF&E or capital improvements under the
Page 30
Management Agreement, without additional payment to Seller; and (v) Purchaser
shall receive a credit for all accrued payroll, overtime, pension contributions
and other amounts due to Employees and unpaid at Closing, together with all
accrued (earned or unearned) vacation pay, severance pay and bonuses, overtime,
sick and personal days unused at Closing. Any other items of income and expense
shall be adjusted and prorated between Seller and Purchaser as of Closing in
accordance with industry custom. The re-proration obligation under this Section
10.1 shall survive Closing.
10.2 Taxes. All Taxes on Real Property and on personal property, shall be
prorated as of the Closing. If the amount of any such Taxes is not ascertainable
on the Closing Date, the proration for such Taxes shall be based on the most
recent available tax ▇▇▇▇ or bills, provided, that after the Closing, Seller and
Purchaser shall re-prorate such Taxes and pay any deficiency in the original
proration to the other Party promptly upon receipt of the actual ▇▇▇▇ for the
relevant taxable period. The re-proration obligation under this Section 10.2
shall survive Closing.
10.3 Transaction Costs.
(a) Seller's Transaction Costs. In addition to the other costs and
expenses to be paid by Seller as set forth elsewhere in this Agreement, Seller
shall pay for the following costs in connection with this transaction: (i) the
fees and expenses of its own attorneys, accountants and other professionals;
(ii) the fees and expenses of removing any Unpermitted Exceptions as provided in
and subject to Section 4.2(d); (iii) the commission due to Broker; (iv) any
transfer tax and recording charges payable in connection with the conveyance of
the Real Property; and (v) one-half of the fees and expenses for the Escrow
Agent.
(b) Purchaser's Transaction Costs. In addition to the other costs and
expenses to be paid by Purchaser as set forth elsewhere in this Agreement,
Purchaser shall pay for the following costs in connection with this transaction:
(i) the fees and expenses of its own attorneys, accountants and other
professionals; (ii) the fees and expenses incurred by Purchaser for Purchaser's
Inspectors or otherwise in connection with the Inspections; (iii) the fees,
costs and expenses for the Title Commitment and the Title Policy; (iv) the fees
and expenses for additional and/or extended title coverage, including any
endorsements requested by Purchaser; (v) any mortgage tax, title insurance fees
and expenses for any loan title insurance policies, recording charges or other
amounts payable in connection with any financing obtained by Purchaser; (vi) the
cost of any update to the Survey or any new or revised survey; (vii) one-half of
the fees and expenses for the Escrow Agent, and (viii) any assignment or
termination fees payable to Manager in connection with the transactions
contemplated by this Agreement;.
(c) Other Transaction Costs. All other fees, costs and expenses not
expressly addressed in this Section 10.3 or elsewhere in this Agreement shall be
allocated between Seller and Purchaser in accordance with local custom for
similar transactions. The provisions of this Section 10.3 shall survive Closing.
ARTICLE XI.
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TRANSITION PROCEDURES
11.1 Settlement Statement. On the day prior to Closing, Seller and
Purchaser, through their respective employees, agents or representatives,
jointly shall make such examinations, audits and inventories of the Hotel as may
be necessary to make the adjustments and prorations to the Purchase Price as set
forth in Section 10.1 and 10.2 or any other provisions of this Agreement. Based
upon such examinations, audits and inventories, Seller and Purchaser jointly,
working with the Escrow Agent, shall prepare prior to Closing a settlement
statement (the "Settlement Statement"), which shall set forth Seller's and
Purchaser's best estimate of the amounts of the items to be adjusted and
prorated under this Agreement. The Settlement Statement shall be approved and
executed by Seller and Purchaser, and shall be binding and conclusive on Seller
and Purchaser with respect to the items set forth in the Settlement Statement
provided, that if at any time within six (6) months after the Closing Date
either Seller or Purchaser discovers any items which should have been included
in the Settlement Statement but were omitted therefrom or items which were
incorrectly adjusted or prorated therein, such items shall be adjusted and
prorated in the same manner as if their existence or such error had been known
at the time of the preparation of the Settlement Statement, and the Party in
whose favor such original error or omission was made shall refund such
difference to the other Party promptly after the original error or omission is
discovered. The provisions of this Section 11.1 shall survive Closing.
ARTICLE XII.
DEFAULT; FAILURE OF CLOSING CONDITIONS
12.1 Seller's Default. If at any time prior to Closing, Seller is in
material breach or default of any of its representations, warranties, covenants
or obligations under this Agreement, which breach or default is not caused by a
Purchaser Default (each, a "Seller Default"), and Seller has not cured such
Seller Default within ten (10) days after Seller's receipt of written notice of
such Seller Default from Purchaser, then Purchaser, as its sole and mutually
exclusive remedies for such Seller Default, may elect either to (i) terminate
this Agreement, in which case Escrow Agent shall refund the entire Deposit to
Purchaser, Seller shall pay to Purchaser the Break-Up Fee within ten (10)
Business Days after such termination, and Seller and Purchaser shall have no
further rights or obligations under this Agreement, except those which expressly
survive such termination; or (ii) proceed to Closing without any reduction in or
setoff against the Purchase Price (in which case Purchaser shall be deemed to
have waived the Seller Default. Seller's obligation to pay the Break-Up Fee
shall survive the termination of this Agreement.
SELLER AND PURCHASER AGREE THAT IF THIS AGREEMENT IS TERMINATED PURSUANT TO
THIS SECTION 12.1, THE DAMAGES THAT PURCHASER WOULD SUSTAIN AS A RESULT OF SUCH
TERMINATION WOULD BE DIFFICULT IF NOT IMPOSSIBLE TO ASCERTAIN. ACCORDINGLY,
AFTER NEGOTIATION, SELLER AND PURCHASER AGREE THAT PURCHASER SHALL
Page 32
RETAIN THE DEPOSIT AND SELLER SHALL PAY THE BREAK-UP FEE TO PURCHASER AS FULL
AND COMPLETE LIQUIDATED DAMAGES AND AS PURCHASER'S SOLE AND EXCLUSIVE REMEDY FOR
SUCH TERMINATION; PROVIDED, HOWEVER, THAT THE PARTIES SHALL RETAIN ALL RIGHTS
AND REMEDIES UNDER THIS AGREEMENT WITH RESPECT TO THOSE OBLIGATIONS WHICH
EXPRESSLY SURVIVE SUCH TERMINATION.
12.2 Purchaser's Default. If (i) Purchaser has not deposited the Deposit
(including the initial Deposit and the additional Deposit) within the time
periods provided in Section 3.3(a), (ii) at any time prior to Closing, Purchaser
is in material breach or default of its representations, warranties, covenants
or obligations under this Agreement, which breach or default is not caused by a
Seller Default, or (iii) at Closing, Purchaser has not satisfied any one or more
Seller Closing Conditions to be satisfied by Purchaser at or prior to Closing
(each, a "Purchaser Default"), and Purchaser has not cured such Purchaser
Default within ten (10) days after Purchaser's receipt of written notice of such
Purchaser Default from Seller, then Seller, as its sole and exclusive remedy,
may elect to terminate this Agreement by providing written notice to Purchaser,
in which case Purchaser shall cause Escrow Agent to disburse the Deposit to
Seller within two (2) Business Days after such termination, and Seller and
Purchaser shall have no further rights or obligations under this Agreement,
except those which expressly survive such termination. Purchaser's obligation to
post the Deposit with and to cause Escrow Agent to disburse the Deposit to
Seller shall survive such termination.
SELLER AND PURCHASER AGREE THAT IF THIS AGREEMENT IS TERMINATED PURSUANT TO
THIS SECTION 12.2, THE DAMAGES THAT SELLER WOULD SUSTAIN AS A RESULT OF SUCH
TERMINATION WOULD BE DIFFICULT IF NOT IMPOSSIBLE TO ASCERTAIN. ACCORDINGLY,
SELLER AND PURCHASER AGREE AFTER NEGOTIATION THAT SELLER SHALL RETAIN THE
▇▇▇▇▇▇▇ MONEY AS FULL AND COMPLETE LIQUIDATED DAMAGES AND AS SELLER'S SOLE AND
EXCLUSIVE REMEDY FOR SUCH TERMINATION; PROVIDED, HOWEVER, THAT THE PARTIES SHALL
RETAIN ALL RIGHTS AND REMEDIES UNDER THIS AGREEMENT WITH RESPECT TO THOSE
OBLIGATIONS WHICH EXPRESSLY SURVIVE SUCH TERMINATION.
ARTICLE XIII.
CASUALTY; CONDEMNATION
13.1 Casualty. If prior to Closing the Property is damaged by fire or other
casualty (a "Casualty"), Seller shall estimate the cost to repair and the time
required to complete repairs and will provide Purchaser written notice of
Seller's estimation (the "Casualty Notice") as soon as reasonably possible after
the occurrence of the casualty.
(a) Material Casualty. In the event of any Material Casualty to or
destruction of the Property or any portion thereof prior to Closing, either
Seller or Purchaser may, at its option,
Page 33
terminate this Agreement by delivering written notice to the other on or before
the expiration of thirty (30) days after the date Seller delivers the Casualty
Notice to Purchaser (and if necessary, the Closing Date shall be extended to
give the parties the full thirty-day period to make such election and to obtain
insurance settlement agreements with Seller's insurers). Upon any such
termination, the Deposit shall be returned to Purchaser and the parties hereto
shall have no further rights or obligations hereunder, other than those that by
their terms survive the termination of this Agreement. If neither Seller nor
Purchaser so terminates this Agreement within said thirty (30) day period, then
the parties shall proceed under this Agreement and close on schedule (subject to
extension of Closing as provided above), and as of Closing Seller shall assign
to Purchaser, without representation or warranty by or recourse against Seller,
and subject to the Management Agreement, all of Seller's rights in and to any
resulting insurance proceeds (including any rent loss insurance applicable to
any period on and after the Closing Date) due Seller as a result of such damage
or destruction and Purchaser shall assume full responsibility for all needed
repairs, and Purchaser shall receive a credit at Closing for any deductible
amount under such insurance policies. For the purposes of this Agreement,
"Material Casualty" means damage which, in Seller's reasonable estimation,
exceeds $250,000.00 to repair or which, in Seller's reasonable estimation, will
take longer than ninety (90) days to repair.
(b) Non-Material Casualty. In the event of any (i) Casualty which is
not a Material Casualty, or (ii) Material Casualty which is caused by Purchaser
or Purchaser's Inspectors, or their respective employees or agents, then neither
Purchaser nor Seller shall have the right to terminate this Agreement, and
Seller shall, at its option, either (i) repair the damage before the Closing in
a manner reasonably satisfactory to Purchaser, or (ii) credit Purchaser at
Closing for the reasonable cost to complete the repair (in which case Seller
shall retain all insurance proceeds and Purchaser shall assume full
responsibility for all needed repairs).
13.2 Condemnation.
(a) Material Condemnation. If the event of any actual or threatened
condemnation or taking pursuant to the power of eminent domain of all or any
portion of the Real Property, or any proposed sale in lieu thereof (a
"Condemnation"), Seller shall give written notice of such Condemnation to
Purchaser promptly after Seller receives notice of such Condemnation. If the
Condemnation would (i) result in the loss of more than five percent (5%) of the
Land or Improvements, (ii) result in any material reduction or restriction in
access to the Land or Improvements, or (iii) have a materially adverse effect on
the operation of the Hotel as operated prior to such Condemnation (a "Material
Condemnation"), then Purchaser shall have the right, in its sole discretion, to
(A) terminate this Agreement, in which case Escrow Agent shall refund the entire
Deposit to Purchaser, and Seller and Purchaser shall have no further rights or
obligations under this Agreement, except those which expressly survive such
termination, or (B) proceed to Closing, without terminating this Agreement, in
which case Seller shall assign to Purchaser all of Seller's right, title and
interest in all proceeds and awards from such Condemnation. Purchaser shall make
an election under this Section 13.2(a) by giving written notice to Seller within
ten (10) days after Seller's delivery to Purchaser of written notice of such
Condemnation. If Purchaser fails to make an election under Section 13.2(a)
within such time
Page 34
period, Purchaser shall be conclusively deemed to have elected to terminate this
Agreement pursuant to clause (B) of Section 13.2(a). If the Closing Date is
scheduled to occur within Purchaser's ten (10) day election period, the Closing
Date shall be extended until the tenth (10th) day after the expiration of such
ten (10) day election period.
(b) Non-Material Condemnation. In the event of any Condemnation of any
Real Property other than a Material Condemnation, Purchaser shall not have the
right to terminate this Agreement, but shall proceed to Closing, in which case
Seller shall assign to Purchaser all of Seller's right, title and interest in
all proceeds and awards from such Condemnation.
ARTICLE XIV.
INDEMNIFICATION
14.1 Indemnification by Seller. Subject to the limitations set forth in
Sections 5.2, 5.3, 5.4, 14.3, 14.4, and 14.5, Seller shall defend, indemnify and
hold harmless Purchaser Indemnitees from and against any Losses incurred by any
Purchaser Indemnitees (a) after the Closing to the extent as a result of (1) any
inaccuracy or untruth of any representations or warranties made by Seller in
this Agreement, and (2) the breach by Seller of any of its covenants or
obligations under this Agreement which expressly survive the Closing, or (b)
after the termination of this Agreement, based on the breach by Seller of any of
its covenants or obligations under this Agreement which expressly survive such
termination.
14.2 Indemnification by Purchaser. Subject to the limitations set forth in
Section 6.2 and 14.3, 14.4 and 14.5, Purchaser shall defend, indemnify and hold
harmless the Seller Indemnitees from and against any Losses incurred by any
Seller Indemnitees (a) after the Closing to the extent as a result of (1) any
inaccuracy or breach of any representations or warranties made by Purchaser in
this Agreement, or (2) the breach by Purchaser of any of its covenants or
obligations under this Agreement which expressly survive the Closing, or (b)
after the termination of this Agreement based on the breach by Purchaser of any
of its covenants or obligations under this Agreement which expressly survive
such termination.
14.3 Limitations on Indemnification Obligations.
(a) Survival of Representations and Warranties. The representations
and warranties of Seller under this Agreement shall survive the Closing for a
period commencing on the Closing Date and expiring at 5:00 p.m. (Eastern Time)
on the date which is one (1) year after the Closing Date (the "Survival
Period"). To the extent any Indemnitee is seeking the defense of, or
indemnification for, a breach of any representations or warranties, the
Indemnitee shall be entitled to indemnification only for those matters as to
which the Indemnitee has given written notice to the Indemnitor prior to the
expiration of the Survival Period.
Page 35
(b) Indemnification Cap. Notwithstanding anything to the contrary in
this Agreement, Seller shall be not be required to provide defense or
indemnification to the Purchaser Indemnitees pursuant to any indemnification
obligation under this Agreement arising from the breach of Seller's
representations and warranties under this Agreement to the extent that the
aggregate amount of all Losses incurred by the Purchaser Indemnitees for which
Purchaser otherwise would be entitled to indemnification does not exceed Ten
Thousand Dollars ($10,000.00) (the "Indemnification Deductible"). If such Losses
exceed the Indemnification Deductible, then all such losses shall be subject to
indemnification, provided that in no event shall Seller's indemnification
obligations with respect to, or liability for, the breach of Seller's
representations and warranties under this Agreement exceed One Hundred Fifty
Thousand Dollars ($150,000) in the aggregate (the "Indemnification Cap").
(c) Effect of Taxes and Insurance. The amount of any Losses for which
defense or indemnification is provided to any Indemnitee under this Article XIV
shall be net of any tax benefits realized or insurance proceeds received by such
Indemnitee in connection with the Indemnification Claim.
14.4 Indemnification Procedure.
(a) Notice of Indemnification Claim. In the case of any
indemnification sought by any of the Seller Indemnitees or Purchaser Indemnitees
(as the case may be) (each, an "Indemnitee"), or any claim asserted by a third
party which if adversely determined would entitle any Indemnitee to
indemnification or defense under this Agreement (each, an "Indemnification
Claim"), the Indemnitee shall provide written notice to the Party required to
provide indemnification or defense for such Indemnification Claim under this
Agreement (the "Indemnitor") promptly after such Indemnitee has actual knowledge
of any facts or circumstances or third-party claim as to which such
Indemnification Claim may be sought, describing in reasonable detail the facts
and circumstances or third-party claim giving rise to such Indemnification
Claim.
(b) Defense and Resolution of Indemnification Claim. If the
Indemnification Claim does not involve a third-party claim and is disputed by
the Indemnitor, the dispute shall be resolved by litigation or other means as
the Parties otherwise may agree. If the Indemnification Claim involves a
third-party claim, the Indemnitor shall have the right (but shall not be
obligated) to assume the defense of such claim or any litigation resulting
therefrom, at its cost and expense, and shall use good faith efforts consistent
with prudent business judgment to defend such third-party claim in an effective
and cost-efficient manner, provided that (i) the counsel for the Indemnitor who
shall conduct the defense of the third-party claim or litigation shall be
reasonably satisfactory to the Indemnitee (unless selected by Indemnitor's
insurance company), (ii) the Indemnitee, at its cost and expense, may
participate in, but shall not control, the defense of such third-party claim,
(iii) the failure by any Indemnitee to give notice as provided herein shall not
relieve the Indemnitor of its indemnification obligation under this Agreement,
except to the extent that such failure to provide notice increases the amount of
the indemnification obligation of Indemnitor or otherwise prejudices the
Indemnitor's ability to defend against such
Page 36
third-party claim, and (iv) the Indemnitor shall not enter into any settlement
or other agreement which requires any performance by the Indemnitee, other than
the payment of money which shall be paid by the Indemnitor. The Indemnitee shall
not enter into any settlement agreement with respect to the Indemnification
Claim without the Indemnitor's prior written consent, which consent shall not be
withheld or delayed unreasonably. If the Indemnitor elects not to assume the
defense of such third-party claim, the Indemnitee shall retain the defense of
such third-party claim and shall use good faith efforts consistent with prudent
business judgment to defend such third-party claim in an effective and
cost-efficient manner.
14.5 Exclusive Remedy. Except for the provisions of Articles XII and XIII,
the indemnification provisions of this Article XIV shall be the sole and
exclusive remedy of any Indemnitee with respect to any claim for Losses arising
from or in connection with this Agreement.
14.6 Release of Seller for Environmental Liabilities. Except for a breach
of Seller's representations and warranties under Section 5.1, Purchaser does
hereby forever release and discharge the Seller Indemnitees from any and all
Environmental Claims and Environmental Liabilities, whether now known or unknown
to Purchaser. The foregoing release shall not prevent Purchaser from asserting
that Seller is the proper defendant or party with respect to a suit, claim, or
demand made by any unrelated third-party against Purchaser which arises from any
act or event occurring or arising on the Real Property during the period of
Seller's ownership (except to the extent Purchaser is responsible for same in
accordance with Section 4.1(e) of this Agreement).
ARTICLE XV.
MISCELLANEOUS PROVISIONS
15.1 Notices.
(a) Method of Delivery. All notices, requests, demands and other
communications (each, a "Notice") required to be provided to the other Party
pursuant to this Agreement shall be in writing and shall be delivered (i) by
messenger or in person, (ii) by certified U.S. mail, with postage prepaid and
return receipt requested, with a copy also sent by regular first class mail,
(iii) by overnight courier service, or (iv) by facsimile transmittal, with a
verification copy sent on the same day by any of the methods set forth in
clauses (i), (ii) and (iii), to the other Party to this Agreement at the
following address or facsimile number (or to such other address or facsimile
number as Seller or Purchaser may designate from time to time pursuant to
Section 15.1(c)):
Page 37
If to Seller:
c/o Archon Group, L.P.
▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
E-mail: ▇▇▇▇▇▇▇.▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
With a copy (which shall not constitute Notice to Seller) 7to:
▇▇▇▇▇▇ and ▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: C. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
E-mail: ▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
If to Purchaser:
Apple Hospitality Five, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
E-mail: ▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇
With a copy to:
Jenkens & ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
E-mail: ▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
(b) Receipt of Notices. All Notices sent by Seller or Purchaser (or
their respective counsel pursuant to Section 15.1(d)) under this Agreement shall
be deemed to have been received by the Party to whom such Notice is sent upon
(i) delivery to the address or facsimile number of the recipient Party, provided
that such delivery is made prior to 5:00 p.m.
Page 38
(local time for the recipient Party) on a Business Day, otherwise the following
Business Day, or (ii) the attempted delivery of such Notice if (A) such
recipient Party refuses delivery of such Notice, or (B) such recipient Party is
no longer at such address or facsimile number, and such recipient Party failed
to provide the sending Party with its current address or facsimile number
pursuant to Section 15.1(c).
(c) Change of Address. Seller and Purchaser and their respective
counsel shall have the right to change their respective address and/or facsimile
number for the purposes of this Section 15.1 by providing a Notice of such
change in address and/or facsimile as required under this Section 15.1(c).
(d) Delivery by Party's Counsel. Seller and Purchaser agree that the
attorney for such Party shall have the authority to deliver Notices on such
Party's behalf to the other Party hereto. This Section 15.1 shall survive the
termination of this Agreement or Closing.
15.2 Time is of the Essence. Time is of the essence of this Agreement;
provided, however, that notwithstanding anything to the contrary in this
Agreement, if the time period for the performance of any covenant or obligation,
satisfaction of any condition or delivery of any notice or item required under
this Agreement shall expire on a day other than a Business Day, such time period
shall be extended automatically to the next Business Day.
15.3 Assignment. Purchaser shall not assign this Agreement or any interest
therein to any Person, without the prior written consent of Seller, which
consent may be withheld in Seller's sole discretion. Notwithstanding the
foregoing, Purchaser shall have the right to designate any Affiliate as its
nominee to receive title to the Property, or assign all of its right, title and
interest in this Agreement to any Affiliate or any Person with whom Purchaser
will enter into a joint venture to purchase, develop and operate the Hotel (so
long as Purchaser owns a majority interest in any such joint venture); provided,
however, that (i) no assignment shall be made to any Person owned or controlled
by or constituting an employee benefit plan under ERISA, (ii) Purchaser shall
not be released from any of its liabilities and obligations under this Agreement
by reason of such designation or assignment; and (ii) such designation or
assignment shall not be effective until Purchaser has provided Seller with a
fully executed copy of such designation or assignment and assumption instrument,
in form and substance reasonably satisfactory to Seller. Seller shall not assign
this Agreement or any interest therein to any Person, without the prior written
consent of Purchaser, which consent may be withheld in Purchaser's sole
discretion.
15.4 Successors and Assigns; Third Party Beneficiaries. This Agreement
shall be binding upon and inure to the benefit of Seller and Purchaser, and
their respective successors and permitted assigns pursuant to Section 15.3.
Except for any Indemnitee to the extent such Indemnitee is expressly granted
certain rights of defense and indemnification in this Agreement and for any
successors and permitted assignee pursuant to Section 15.3, this Agreement shall
not confer any rights or remedies upon any third party.
Page 39
15.5 Prevailing Party. If any litigation or other court action, arbitration
or similar adjudicatory proceeding is sought, taken, instituted or brought by
Seller or Purchaser to enforce its rights under this Agreement, all fees, costs
and expenses, including, without limitation, reasonable attorneys fees and court
costs, of the prevailing Party in such action, suit or proceeding shall be borne
by the Party against whose interest the judgment or decision is rendered. This
Section 15.5 shall survive the termination of this Agreement and the Closing.
15.6 No Recordation. Neither this Agreement, nor any memorandum or other
notice of this Agreement, shall be recorded without Seller's prior written
consent, which consent may be withheld in Seller's discretion.
15.7 Rules of Construction. The following rules shall apply to the
construction and interpretation of this Agreement:
(a) Singular words shall connote the plural as well as the singular,
and plural words shall connote the singular as well as the plural, and the
masculine shall include the feminine and the neuter.
(b) All references in this Agreement to particular articles, sections,
subsections or clauses (whether in upper or lower case) are references to
articles, sections, subsections or clauses of this Agreement. All references in
this Agreement to particular exhibits or schedules (whether in upper or lower
case) are references to the exhibits and schedules attached to this Agreement,
unless otherwise expressly stated or clearly apparent from the context of such
reference
(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 negotiation
and preparation of this Agreement, and therefore any 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 Agreement or
any exhibits hereto.
(e) The terms "hereby," "hereof," "hereto," "herein," "hereunder" and
any similar terms shall refer to this Agreement, and not solely to the provision
in which such term is used.
(f) The terms "include," "including" and similar terms shall be
construed as if followed by the phrase "without limitation."
15.8 Governing Law; Severability. This Agreement shall be governed by the
laws of the state in which the Real Property is located. If any term or
provision of this Agreement is held
Page 40
to be or rendered invalid or unenforceable at any time in any jurisdiction, such
term or provision shall not affect the validity or enforceability of any other
terms or provisions of this Agreement, or the validity or enforceability of such
affected terms or provisions at any other time or in any other jurisdiction.
15.9 Recitals, Exhibits and Schedules. The recitals to this Agreement, and
all exhibits and schedules (as amended and supplemented from time to time
pursuant to Section 5.3) referred to in this Agreement are incorporated herein
by such reference and made a part of this Agreement.
15.10 Exculpation. Purchaser acknowledges and agrees that all persons
dealing with Archon Group, L.P. and any of its Affiliates shall look solely to
such respective entity's equity in the Property for the enforcement of any
claims against such entity and the partners, members, directors, officers,
employees, agents and security holders of such entities assume and shall have no
personal liability for the liabilities and obligations entered into by such
entity, and their respective individual assets shall not be subject to the
claims of any Person relating to such liabilities and obligations.
15.11 Entire Agreement; Amendments to Agreement. This Agreement sets forth
the entire understanding and agreement of the Parties hereto, and shall
supersede the Letter of Intent and any other agreements and understandings
(written or oral) between Seller and Purchaser on or prior to the date of this
Agreement with respect to the transaction contemplated in this Agreement. No
amendment or modification to any terms of this Agreement(other than amendments
and supplements to the schedules made by Seller pursuant to Section 5.3), or
cancellation of this Agreement, shall be valid unless in writing and executed
and delivered by Seller and Purchaser.
15.12 Facsimile; Counterparts. Seller and Purchaser may deliver executed
signature pages to this Agreement and the closing documents by facsimile
transmission to the other Party, which facsimile copy shall be deemed to be an
original executed signature page; provided, however, that such Party shall
deliver an original signature page to the other Party promptly thereafter. This
Agreement and the closing documents may be executed in any number of
counterparts, each of which shall be deemed an original and all of which
counterparts together shall constitute one agreement with the same effect as if
the Parties had signed the same signature page.
[Remainder of page intentionally left blank;
Signatures on following pages]
Page 41
IN WITNESS WHEREOF, Seller and Purchaser have caused this Agreement to be
executed in their names by their respective duly authorized officers or
representatives.
SELLER:
WBL II REAL ESTATE LIMITED
PARTNERSHIP, a Delaware limited
partnership
By: WBL II Gen-Par, L.L.C., a Delaware
limited liability company, general
partner
By: /s/ S. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
Name: /s/ S. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
Title: Assistant Vice President
------------------------------
PURCHASER:
APPLE HOSPITALITY FIVE, INC.,
a
--------------------------------------
By: /s/ J. ▇▇▇▇▇▇ ▇▇▇▇
-------------------------------------
Name: J. ▇▇▇▇▇▇ ▇▇▇▇
-----------------------------------
Title: Senior Vice President
----------------------------------
Received and Accepted by Escrow Agent:
LANDAMERICA
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------
Title: VP/Sr. Commercial Counsel
--------------------------------
Date: 6/20, 2003.
----
Page 42
LIST OF EXHIBITS
Exhibit A Legal Description of Land
Exhibit B ▇▇▇▇ of Sale, Assignment and Assumption
Page 1
LIST OF SCHEDULES
Schedule 2.2(c) Manager's Property
Schedule 4.1(c) Seller Due Diligence Materials
Schedule 5.1(e) Pending or Threatened Litigation and Other Adversary
Proceedings
Schedule 5.1(j) List of Tenant Leases and Equipment Leases and Operating
Agreements
Schedule 9.4(e) ERISA Letter
Page 2
Exhibit A
LEGAL DESCRIPTION
[ omitted ]
Page 3
Exhibit B
▇▇▇▇ OF SALE, ASSIGNMENT AND ASSUMPTION
(name of property)
THIS ▇▇▇▇ OF SALE, ASSIGNMENT AND ASSUMPTION is made as of the day of
-----
, , by and between REAL ESTATE LIMITED
------------------ ------ --------------
PARTNERSHIP, a Delaware limited partnership ("Assignor"), and
, a ("Assignee").
------------------------- -------------------------
W I T N E S S E T H:
WHEREAS, pursuant to that certain Agreement of Purchase and Sale dated
by and between Assignor and Assignee (the "Purchase Agreement"),
---------
concurrently herewith Assignor has conveyed to Assignee that certain land and
improvements located in the County of , State of , as more
---------- ------------
particularly described in Exhibit A attached hereto and made a part hereof
("Real Property").
WHEREAS, in connection with the conveyance of the Real Property, pursuant
to the Purchase Agreement Assignor is obligated to transfer its right, title and
interest in and to certain personal property to Assignee, and Assignee is
obligated to assume certain obligations in connection therewith.
WHEREAS, Assignor and Residence Inn By Marriott, Inc., a Delaware
corporation ("Manager") are parties to that certain Management Agreement dated
as of November 12, 1999 concerning the Real Property (the "Management
Agreement"), which Management Agreement has been [terminated by Assignor and
Manager concurrently herewith and in lieu thereof Assignee and Manager have
entered into a new management agreement] OR [assigned to and assumed by Assignee
concurrently herewith].
WHEREAS, Assignor's right, title and interest in and to the personal
property described in this ▇▇▇▇ of Sale, Assignment and Assumption
(collectively, the "Personal Property") is subject to the Management Agreement
and, pursuant to the terms of the Management Agreement, Assignor may not have a
direct ownership interest in some of the Personal Property described herein, but
whatever right, title and interest Assignor has will be transferred to Assignee
pursuant hereto.
NOW, THEREFORE, for good and valuable consideration, receipt and
sufficiency of which are hereby acknowledged, Assignor and Assignee hereby agree
as follows:
1. Capitalized Terms. All capitalized terms used herein and not otherwise
defined herein shall have the meaning given in the Purchase Agreement.
2. Personal Property. Assignor hereby sells, transfers, assigns and conveys
to Assignee, subject to Manager's rights under the Management Agreement and
excluding the Excluded Property described below, the following Personal
Property:
(a) FF&E. All fixtures (other than those which constitute
Improvements), furniture, furnishings, equipment, machinery, vehicles,
appliances, computer hardware, art work and other items of tangible
personal property which are located at the Hotel and used exclusively in
the
Page 4
operation of the Hotel, or ordered for future use at the Hotel as of the
Closing, other than the Supplies, F&B and Retail Merchandise (the "FF&E");
(b) Supplies. All right, title and interest of Assignor in and to all
china, glassware and silverware; linens, towels and uniforms; engineering,
maintenance, cleaning and housekeeping supplies; matches and ashtrays; soap
and other toiletries; stationery, menus and other printed materials; and
all other similar materials and supplies which are located at the Hotel or
ordered by Manager for future use at the Hotel as of the Closing (the
"Supplies");
(c) Food and Beverage. All right, title and interest of Assignor in
and to all food and beverages (alcoholic and non-alcoholic) which are
located at the Hotel (whether opened or unopened), or ordered by Manager
for future use at the Hotel as of the Closing, if any, but expressly
excluding any alcoholic beverages to the extent the sale or transfer of the
same is not permitted under Applicable Law (the "F & B");
(d) Retail Merchandise. All right, title and interest of Assignor in
and to all merchandise located at the Hotel, including, without limitation,
any gift shop or newsstand maintained by Seller or Manager (if any), and
held for sale to guests and customers of the Hotel, or ordered by Manager
for future sale at the Hotel as of the Closing (the "Retail Merchandise").
(e) Tenant Leases. All right, title and interest of Assignor in and to
all leases, subleases, licenses, concessions and similar agreements (other
than the Management Agreement and Bookings) granting a real property
interest to any other Person for the use or occupancy of any portion of the
Real Property (the "Tenant Leases"), together with all security deposits
held by Seller or Manager thereunder;
(f) Equipment Leases. All right, title and interest of Assignor in and
to all leases and purchase money security agreements for any equipment,
machinery, vehicles, furniture or other personal property located at the
Hotel and used in the operation of the Hotel which are held by Seller or
Manager (the "Equipment Leases"), together with all deposits made
thereunder;
(g) Operating Agreements. All right, title and interest of Assignor in
and to all maintenance, service and supply contracts, credit card service
agreements, booking and reservation agreements, and all other contracts and
agreements which are held by Seller or Manager, in connection with the
operation of the Hotel, other than the Tenant Leases, Equipment Leases,
Licenses and Permits, but only to the extent applicable to the Hotel (the
"Operating Agreements"), together with all deposits made or held by Seller
or Manager thereunder, to the extent such Operating Agreements and deposits
are transferable;
(h) Licenses and Permits. All right, title and interest of Assignor in
and to all licenses, permits, consents, authorizations, approvals,
registrations and certificates of any Governmental Authority held by Seller
or Manager and used in connection with the construction, ownership,
occupancy or operation of the Hotel, to the extent transferable (the
"Licenses and Permits"), together with any deposits made thereunder, to the
extent such Licenses and Permits and deposits are transferable;
(i) Intangible Property. All right, title and interest of Assignor in
and to all of the following owned by, issued to or licensed to Seller and
used in connection with the operation of
Page 5
the Hotel to the extent Seller's rights and interests therein are
transferable: (i) trademarks, trade names, service marks and other
intellectual property rights; (ii) warranties and guaranties held by Seller
or Manager pursuant to any Contracts or with respect to any Improvements or
Personal Property; (iii) computer software used in connection with any
computer systems located at the Hotel; and (iv) direct dial telephone
numbers for the Hotel (the "Intangible Property");
(j) Books and Records. All right, title and interest of Assignor in
and to all books and records in Seller's Possession to the extent they
relate to the Hotel, other than any appraisals, marketing plans, attorney
work product or other confidential materials that are for Seller's internal
use only and that do not contain material information about the Hotel or
the operation thereof that is not also contained in other information,
materials or documents available to Purchaser (the "Books and Records");
(k) Bookings. All right, title and interest of Assignor in and to all
bookings and reservations for guest, conference, meeting and banquet rooms
or other facilities at the Hotel (the "Bookings"), together with all
deposits made with respect thereto.
(l) Accounts Receivable. All right, title and interest of Assignor in
and to all Accounts Receivable (including the Guest Ledger), subject to
proration as provided in the Purchase Agreement.
Any Property owned by any Affiliate of Seller that would be included within the
foregoing definition of "Property" hereunder if owned by Seller shall be deemed
included in the foregoing description of "Property."
3. Excluded Property. Notwithstanding anything to the contrary in this ▇▇▇▇
of Sale, Assignment and Assumption, the follow property, assets, rights and
interests (the "Excluded Property") are excluded from the Personal Property:
(a) Residence Inn Proprietary Property. All (i) trademarks, trade
names, service marks, symbols, logos and other intellectual property rights
of Residence Inn or any of its Affiliates, whether bearing the name
"Residence Inn" or otherwise (the "Residence Inn Proprietary Property");
(ii) signs and other fixtures and personal property at the Hotel which bear
any of the Residence Inn Proprietary Property; (iii) Seller's, Archon's or
Manager's internal employee, operational and similar manuals, and (iv)
computer hardware and software pertaining specifically to, and all other
rights and interests in, (a) any Residence Inn, Archon or Manager
centralized system, including, reservation system, property management
system and e-mail, internet and internal computer network systems, and (b)
any Residence Inn preferred guest, mileage or point program and other
marketing and advertising programs, other than Seller's license with
respect thereto, if any, under the Management Agreement.
(b) Third-Party Property. Any fixtures or personal property owned by
(i) the lessor under any Equipment Leases, (ii) the supplier or vendor
under any other Contracts, (iii) the tenant under any Tenant Lease, (iv)
any Employees, or (v) any guests or customers of the Hotel.
(c) Manager's Property. Any other property owned by the Manager, as
disclosed to Purchaser in the Purchase Agreement.
Page 6
4. Assignor hereby agrees to Warrant and forever defend all and singular
the Personal Property unto Assignee, its successors and assigns, against every
person whomsoever lawfully claiming, or claim the same, or any part thereof, by,
through or under Assignor or its Affiliates but not otherwise, subject, however,
to the Permitted Exceptions described in the Purchase Agreement, including,
without limitation, to Manager's rights under the Management Agreement.
5. The Personal Property transferred hereunder is transferred by Assignor
and accepted by Assignee AS IS, WHERE IS, AND WITHOUT ANY WARRANTIES OF
WHATSOEVER NATURE, EXPRESS OR IMPLIED, EXCEPT AS EXPRESSLY SET FORTH IN THE
PURCHASE AGREEMENT OR HEREIN, IT BEING THE INTENTION OF ASSIGNOR AND ASSIGNEE
EXPRESSLY TO NEGATE AND EXCLUDE ALL OTHER WARRANTIES, INCLUDING, WITHOUT
LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR ANY
PARTICULAR PURPOSE, WARRANTIES CREATED BY ANY AFFIRMATION OF FACT OR PROMISE OR
BY ANY DESCRIPTION OF THE PROPERTY CONVEYED HEREUNDER, OR BY ANY SAMPLE OR MODEL
THEREOF, AND ALL OTHER WARRANTIES WHATSOEVER CONTAINED IN OR CREATED BY THE
TENNESSEE UNIFORM COMMERCIAL CODE.
6. Assignee hereby accepts the assignment of the Personal Property and
agrees to assume and discharge, in accordance with the terms thereof, all of the
obligations thereunder attributable to the period from and after the date
hereof.
7. Assignee agrees to indemnify, defend and hold harmless Assignor from any
cost, liability, obligation, damage or expense (including attorneys' fees)
arising out of or relating to Assignee's failure to perform any obligations
under any of the Personal Property attributable to the period from or after the
date hereof.
8. Assignor agrees to indemnify, defend and hold harmless Assignee from any
cost, liability, obligation, damage or expense (including attorneys' fees)
arising out of or relating to Assignor's failure to perform any obligations of
Assignor under any of the Personal Property attributable to the period prior to
the date hereof.
9. This ▇▇▇▇ of Sale, Assignment and Assumption may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument.
Page 7
IN WITNESS WHEREOF, the parties hereto have executed this ▇▇▇▇ of
Sale, Assignment and Assumption as of the date first above written.
ASSIGNOR:
REAL ESTATE LIMITED PARTNERSHIP,
--------
a Delaware limited partnership
By: Gen-Par, Inc.,
--------
a Delaware corporation,
its general partner
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
ASSIGNEE:
,
---------------------------------------
a
-------------------------
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
[INSERT APPROPRIATE ACKNOWLEDGMENTS FOR THE STATE]
Exhibit A Real Property (attached)
Page 8
Schedule 2.2(c)
Manager's Property
None
Schedule 4.1(c)
Required Due Diligence Materials
Aged Accounts Receivable Report
Certificate of Occupancy
Copy of Van lease
Current Operating Budget
Occupancy Report
Existing survey
Existing Title and back up documents
Fixed Asset Register for 2001-2003 YTD
Floor Plans
Insurance Claims for the last five (5) years and Insurance Certificates
Last 12 months utility bills
Licenses and Permits currently in place (have applied for all new permits for
2003):
Swimming pool - 2 permits - both expired 3/31/03
On Sale Beer Permit - 1 permit - Issued 1/13/00, no expiration date noted
on permit
Food Service Establishment - 1 permit - expires 6/30/03
Hotel/Motel Permit - 1 permit - expires 6/30/03
Certificate of Registration Sales & Use - 1 permit - Issued 6/21/99, no
exp. noted on permit
Metropolitan Health Department Nashville and Davidson Co. - Swimming Pool
Permit
Marketing Materials
Phase I Environmental Site Assessment Update dated November 18, 1998
Phase I Environmental Site Assessment Update dated November 1994
Previous 2 year end Operating Statements
Service/Maintenance Contracts:
AccuWeather
ADT
BFI
Commercial Landscaping
Ecolab Pest
OnCommand
Arch Wireless
Key TV
Terminex
Xeta
Vernal Air - Ozone Machine Lease for Smoking Rooms
Nashville Office Machines - Maintenance Lease on Copier
GE - Copier Lease
Pitney ▇▇▇▇▇ - Postage Meter Lease
Alamo Leasing - Van Lease
Site Plans and Survey
Tangible Personal Property List
Taxes for 2000, 2001, 2002
Telecommunication contracts/License Agreements
Nextira - ▇▇▇▇▇▇▇▇ Communications Solutions, LLC
YTD Operating Statement for 2003
Zoning and Site Requirements Summary dated May 14, 1999
Technical Service Agreement dated December 1999
Schedule 5.1(d)
Pending or Threatened Litigation and Other Adversary Proceedings
None
Schedule 5.1(j)
List of Tenant Leases and Equipment Leases and Operating Agreements
TENANT LEASES
None
OPERATING AGREEMENTS
Name Type of Service Term Annual Amount Cancellation Company
---- --------------- ---- ------------- ------------ -------
$
AccuWeather Local weather forecast 8/98-NA 402.00 60-day written notice Metric Partners
$
ADT Security Security equipment 1/16/96-NA MTM 985.00 30-day written notice Residence Inn
$
BFI Trash removal 3/3/99-3/3/02 MTM 6,348.00 NA Residence Inn
$
ABM Landscaping 6/4/01-6/4/02 MTM 17,640.00 30-day written notice Residence Inn
$
Ecolab Pest elimination 5/13/98-5/13/99 MTM 2,520.00 30-day written notice Residence Inn
$
Nashville Office Copy maintenance 12/14/02-12/14/03 1,368.36 NA Residence Inn
$
Arch Wireless Pagers 2/25/03-2/25/04 111.36 NA Residence Inn
Key TV Nashville visitor channel 11/13/00-11/13/03 NA 90-day written notice Residence Inn
Terminix Termite guarantee 7/1/02-6/30/03 NA NA Residence Inn
$
Xeta Alarm system 12/17/97-NA 10,740.00 30-day written notice Residence Inn
On Command Cable/Movies/Music Ongoing NA 30-day written notice Residence Inn
EQUIPMENT LEASES
$
GE Copy equipment lease 12/14/00-12/14/03 3,588.00 Non-cancelable Residence Inn
$
PBCC Postage meter 10/20/00-2/22/05 1,376.00 Non-cancelable Residence Inn
$
Vernal Air Ozone air normalizer 5/1/98-monthly 4,140.00 30-day written notice Residence Inn
$
Alamo Van lease 4/03-4/07 6,240.00 Non-cancelable Residence Inn
LEASES
None
Schedule 9.4(e)
ERISA Letter
,
--------------------------- --------
Real Estate Limited Partnership
-------
-------------------------------------------------------
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Re: Acquisition of [Property] in [City, State]
Ladies and Gentlemen:
The undersigned represents to you that [Purchaser], or any affiliates
thereof, or any firm, person or entity providing financing for the purchase of
the entire interest of Real Estate Limited Partnership in the
--------
above-described property (the "Property") are not using the assets of an
employee benefit plan as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") and covered under Title I,
Part 4 of the ERISA or Section 4975 of the Internal Revenue Code of 1986, as
amended, in the performance or discharge of its obligations under that certain
Agreement of Purchase and Sale dated , , with respect
------------------ --------
to the Property by and between Real Estate Limited Partnership, as
--------
Seller, and the undersigned, as Purchaser, including the acquisition of the
Property.
Very truly yours,
,
-----------------------------------
a
-----------------------
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------