EXHIBIT 10.37
Purchase and Sale Agreement between
SpringHill SMC Corporation, as Seller, and
CNL Hospitality Partners, LP, as Purchaser,
and joined in by Marriott International, Inc.,
relating to the SpringHill Suites - Gaithersburg
PURCHASE AND SALE AGREEMENT
BY AND BETWEEN
MARRIOTT INTERNATIONAL, INC.
as MI,
and
SPRINGHILL SMC CORPORATION
as Seller,
and
CNL HOSPITALITY PARTNERS, LP
as Purchaser
---------------------------
Dated: June 30, 2000
TABLE OF CONTENTS
SECTION 1. DEFINITIONS....................................................1
1.1 "3-Pack Contract".................................................2
1.1A "Act of Bankruptcy"............................................2
1.1B "Aggregate Deposit"............................................2
1.2 "Agreement".........................................................2
1.3 "Intentionally Omitted".............................................3
1.4 "Architect".........................................................3
1.5 "`As-Built'Drawings"................................................3
1.6 "Assets"............................................................3
1.7 "Building Location Survey"..........................................3
1.8 "Business Day"......................................................3
1.10 "CHP"..............................................................3
1.11 "CHLP".............................................................3
1.12 "Closing"..........................................................3
1.13 "Closing Date".....................................................3
1.14 "Competitor".......................................................3
1.14A "Confirmation of Membership Interest Pledge Agreement\............4
1.15 Intentionally Omitted..............................................4
1.16 "Controlling Interest".............................................4
1.17 Intentionally Omitted..........................................4
1.18 Intentionally Omitted..........................................4
1.19 Intentionally Omitted..........................................4
1.20 Intentionally Omitted..........................................4
1.20A "Deposit"......................................................4
1.21 "Engineer".........................................................4
1.22 "Entity"...........................................................4
1.23 "Environmental Report".............................................4
1.24 "Excluded Assets"..................................................4
1.25 "FAS"..............................................................5
1.26 "FF&E\.............................................................5
1.27 "FF&E Schedule\....................................................5
1.28 \Intentionally Omitted\............................................5
1.29 "Franchise Agreement\..............................................5
1.30 "Guarantors\.......................................................5
1.31 "Guaranty of Landlord's Obligations\...............................5
1.32 "Immaterial Taking\................................................5
1.33 "Improvements\.....................................................5
1.34 "Intangible Property\..............................................6
1.35 "Inventories\......................................................6
1.36 "Lease\............................................................6
1.37 "Limited Rent Guaranty\............................................6
1.38 \Intentionally Omitted\............................................6
1.39 \Intentionally Omitted\............................................6
1.39A "Membership Interest Pledge\......................................6
1.40 "Mere Director\....................................................7
1.41 "MI\...............................................................7
1.42 Intentionally Omitted..............................................7
1.43 "Opening Date\.....................................................7
1.44 "Outside Substantial Completion Date"..........................7
1.45 "Owner Agreement\..................................................7
1.46 "Intentionally Omitted\............................................7
1.47 "Permitted Encumbrances\...........................................7
1.48 "Person\...........................................................8
1.49 "Plans and Specifications\.........................................8
1.50 "Property\.........................................................8
1.51 Intentionally Omitted..............................................8
1.52 "Proprietary Information\..........................................8
1.53 "Purchaser\........................................................8
1.53A"Purchase Price\...................................................8
1.54 "Real Property\....................................................8
1.55 "Reserve\..........................................................8
1.56 "Seller\...........................................................8
1.57 \Intentionally Omitted\............................................8
1.58 \Intentionally Omitted\............................................8
1.59 "Substantial Completion\...........................................8
1.60 "Surveyor\.........................................................9
1.61 "Systems Standards Manual\.........................................9
1.62 "Tenant\...........................................................9
1.63 "Title Commitments\................................................9
1.64 "Title Company\....................................................9
SECTION 2. PURCHASE-SALE; DILIGENCE.......................................9
2.1 Purchase-Sale.......................................................9
2.2 Diligence Inspections...............................................9
2.3 Title Matters......................................................10
2.4 Survey.............................................................11
2.5 Environmental Reports..............................................12
2.6 Immaterial Taking.....................................................12
2.7 Changes to Plans and Specifications..............................13
SECTION 3. PURCHASE AND SALE.............................................13
3.1 Closing............................................................13
3.2 Intentionally Omitted..............................................14
3.3 Purchase Price.....................................................14
3.4 Intentionally Omitted..............................................14
3.4A Intentionally Omitted.............................................14
3.5 Seller's Option to Terminate.......................................14
3.6 Competitor.........................................................14
SECTION 4. CONDITIONS TO PURCHASER'S OBLIGATION TO CLOSE.................15
4.1 Closing Documents..................................................15
4.2 Condition of the Property..........................................17
4.3 Title Policies and Surveys.........................................17
4.4 Opinions of Counsel................................................17
4.5 FF&E Schedule......................................................18
4.6 Other..............................................................18
SECTION 5. CONDITIONS TO SELLER'S OBLIGATION TO CLOSE....................18
5.1 Purchase Price.....................................................18
5.2 Closing Documents..................................................18
5.3 Opinions of Counsel................................................19
SECTION 6. REPRESENTATIONS AND WARRANTIES OF SELLER......................19
6.1 Status and Authority of the Seller.................................19
6.2 Status and Authority of MI.........................................19
6.3 Intentionally Omitted..............................................20
6.4 Status and Authority of Tenant.....................................20
6.5 Intentionally Omitted..............................................20
6.6 Intentionally Omitted..............................................20
6.7 Intentionally Omitted..............................................20
6.8 Employees..........................................................20
6.9 Existing Agreements................................................20
6.10 Tax Returns.......................................................21
6.11 Action of the Seller..............................................21
6.12 No Violations of Agreements.......................................21
6.13 Litigation........................................................21
6.14 Not A Foreign Person..............................................22
6.15 Construction Contracts; Mechanics' Liens..........................22
6.16 Permits, Licenses.................................................22
6.17 Hazardous Substances..............................................22
6.18 Insurance.........................................................22
6.19 Condition of Property.............................................22
6.20 Financial Information.............................................23
6.21 Intentionally Omitted.............................................23
6.22 Title to FF&E.....................................................23
6.23 FF&E..............................................................23
SECTION 7. REPRESENTATIONS AND WARRANTIES OF PURCHASER...................25
7.1 Status and Authority of the Purchaser..............................25
7.2 Status and Authority of the Guarantors.............................25
7.3 Action of the Purchaser............................................26
7.4 No Violations of Agreements........................................26
7.5 Litigation.........................................................26
SECTION 8. COVENANTS OF THE SELLER.......................................26
8.1 Compliance with Laws...............................................27
8.2 Correction of Defects..............................................27
8.3 Insurance..........................................................27
8.4 Material Defects in Structural Systems.............................27
8.5 Final Payment......................................................27
SECTION 9. APPORTIONMENTS................................................28
9.1 Apportionments.....................................................28
9.2 Closing Costs......................................................28
SECTION 10. DEFAULT......................................................29
10.1 Default by the Seller.............................................29
10.2 Default by the Purchaser..........................................30
10.3 Purchaser's Deposit...............................................30
SECTION 11. MISCELLANEOUS................................................31
11.1 Agreement to Indemnify............................................31
11.2 Brokerage Commissions.............................................33
11.3 Intentionally Omitted.............................................33
11.4 Publicity.........................................................33
11.5 Notices...........................................................34
11.6 Waivers, Etc......................................................36
11.7 Assignment; Successors and Assigns................................36
11.8 Severability......................................................37
11.9 Counterparts, Etc.................................................37
11.10 Governing Law....................................................37
11.11 Performance on Business Days.....................................37
11.12 Attorneys' Fees..................................................38
11.13 Relationship.....................................................38
11.14 Section and Other Headings.......................................38
11.15 Disclosure.......................................................38
Schedule A - Intentionally Omitted
Schedule B - Guaranty
Schedule C - Lease Agreement
Schedule D - Limited Rent Guaranty
Schedule E - Form of Owner Agreement
Schedule E-1 - Permitted Encumbrances
Schedule E-2 - Plans & Specifications
Schedule F - Legal Description of the Property
Schedule G - Intentionally Omitted
Schedule H - Confirmation and Amendment of Membership
Interest Pledge Agreement
Schedule I-1 - Owner's Policy Commitment
Schedule I-2 - Leasehold Policy Commitment
Schedule J - Form of Surveyor's Certificate
Schedule J-1 - Survey
Schedule K - Outline of Structural Systems
Schedule L - Form of Architect's Certificate
Schedule L-1 - Form of Marriott's Architect Certificate
Schedule M - Form of Engineer's Certificate
Schedule M-1 - Form of Marriott's Engineer Certificate
Schedule N - Intentionally Omitted
Schedule O - SpringHill Suites Franchise Agreement
Schedule P - Intentionally Ommitted
Schedule Q - Systems Standards Manual
Schedule R - Environmental Report
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT is made as of the 30th day of June,
2000, by and between SPRINGHILL SMC CORPORATION, a Delaware corporation, as
seller, and CNL HOSPITALITY PARTNERS, LP, a Delaware limited partnership, as
purchaser, and joined in by MARRIOTT INTERNATIONAL, INC., a Delaware
corporation.
W I T N E S S E T H :
WHEREAS, Purchaser (this and other capitalized terms used and not
otherwise defined herein having the meanings ascribed to such terms in Section
1), MI, TownePlace Management Corporation ("TPS") and Residence Inn by Marriott,
Inc. ("RIBM"), are parties to that certain Purchase and Sale Agreement (the
"Three-Pack Contract") dated November 24, 1999, for the purchase and sale of
those certain three (3) properties located respectively in Mira Mesa,
California, Newark, California and Merrifield, Virginia and more particularly
described in the Three-Pack Contract.
WHEREAS, in connection with the execution of the Three-Pack Contract,
MI, Seller and Purchaser entered into that certain Side-Letter Regarding the
Gaithersburg Property ("Side-Letter") dated November 24, 1999, pursuant to which
MI and Seller agreed to sell to Purchaser and Purchaser agreed to purchase from
Seller and MI, the Property.
WHEREAS, this Agreement is made pursuant to, and in complete
satisfaction of, MIs', Sellers' and Purchasers' obligations under the
Side-Letter;
WHEREAS, the Seller is the owner of the Property; and
WHEREAS, Purchaser desires to purchase the Property and thereby acquire
all of the Seller's right, title and interest in and to the Property upon the
terms and conditions hereinafter set forth; and
WHEREAS, the Seller desires to sell to the Purchaser the Property and
thereby convey all right, title and interest in the Property, upon the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the mutual receipt and
legal sufficiency of which are hereby acknowledged, the Seller and the Purchaser
hereby agree as follows:
SECTION 1. DEFINITIONS.
Capitalized terms used in this Agreement and not defined elsewhere
herein shall have the meanings set forth below, in the Section of this Agreement
referred to below, or in such other document or agreement referred to below:
1.1 "3-Pack Contract" shall mean that certain Purchase and Sale
Agreement dated November 24, 1999, by and among MI, TownePlace Management
Corporation and Residence Inn by Marriott, Inc., as Seller, and CHLP, as
Purchaser, as the same may be amended from time to time.
1.1A "Act of Bankruptcy" shall mean if a party hereto or any general
partner thereof or Tenant shall (a) apply for or consent to the appointment of,
or the taking of possession by, a receiver, custodian, trustee or liquidator of
itself or all of or a substantial part of its property; (b) admit in writing its
inability to pay its debts as they become due; (c) make a general assignment for
the benefit of its creditors; (d) file a voluntary petition or commence a
voluntary case or proceeding under the Federal Bankruptcy Code (as now or
hereafter in effect); (e) be adjudicated a bankrupt or insolvent; (f) file a
petition seeking to take advantage of any other law relating to bankruptcy,
insolvency, reorganization, winding-up or composition or adjustment of debts;
(g) fail to controvert in a timely and appropriate manner, or acquiesce in
writing to, any petition filed against it in an involuntary case or proceeding
under the Federal Bankruptcy Code (as now or hereafter in effect); or (h) take
any corporate or partnership action for the purpose of effecting any of the
foregoing; or if the proceeding or case shall be commenced, without the
application or consent of a party hereto or any general partner thereof or
Tenant, in any court of competent jurisdiction seeking (1) the liquidation,
reorganization, dissolution or winding-up, or the composition or readjustment of
debts, of such party or general partner or Tenant; (2) the appointment of a
receiver, custodian, trustee or liquidator for such party or general partner or
Tenant or all or any substantial part of its assets; or (3) other similar relief
under any law relating to bankruptcy, insolvency, reorganization, winding-up or
composition or adjustment of debts, and such proceeding or case shall continue
undismissed; or an order (including an order for relief entered in an
involuntary case under the Federal Bankruptcy Code, as now or hereinafter in
effect), judgment or decree approving or ordering any of the foregoing shall be
entered and continue unstated and in effect, for a period of sixty (60)
consecutive days.
1.1B "Aggregate Deposit" shall have the meaning given such term in
Section 10.3.
1.2 "Agreement" shall mean this Purchase and Sale Agreement, together
with Schedules A through R hereto, as it and they may be amended from time to
time as herein provided.
1.3 Intentionally Omitted.
1.4 "Architect" shall mean ▇▇▇▇▇▇ & ▇▇▇▇▇▇ Architects, having an
address of ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇.
1.5 "'As-Built' Drawings" shall mean the final "as-built" plans and
specifications for the Improvements which are to be furnished by the Seller to
Purchaser pursuant to Section 4.1 of this Agreement.
1.6 "Assets" shall mean all of the FF&E and the Intangible Property
collectively, now owned or hereafter (but prior to the Closing Date) acquired by
Seller in connection with or relating to the Property other than any Excluded
Assets.
1.7 "Building Location Survey" shall have the meaning given such term
in Section 2.4.
1.8 "Business Day" shall mean any day other than a Saturday, Sunday or
any other day on which banking institutions in the State of Maryland are
authorized by law or executive action to close.
1.9 Intentionally Omitted.
1.10 "CHP" shall mean CNL Hospitality Properties, Inc., a Maryland
corporation.
1.11 "CHLP" shall mean CNL Hospitality Partners, LP, a Delaware limited
partnership.
1.12 "Closing" shall have the meaning given such term in Section 3.1.
1.13 "Closing Date" shall have the meaning given such term in Section
3.1.
1.14 "Competitor" shall mean a Person that owns or has an equity
interest in a hotel brand, tradename, system or chain (a "Brand") which is
comprised of at least ten (10) hotels; provided that such Person shall not be
deemed a Competitor if it holds its interest in a Brand merely as (i) a
franchisee or (ii) a mere passive investor that has no control or influence over
the business decisions of the Brand at issue, such as a mere limited partner in
a partnership, a mere shareholder in a corporation or a mere payee of royalties
based on a prior sale transaction. A mere passive investor that is represented
by a Mere Director on the board of directors of a Competitor shall not be deemed
to have control or influence over the business decisions of that Competitor.
1.14A "Confirmation and Amendment of Membership Interest Pledge
Agreement" shall mean the Confirmation and Amendment of Membership Interest
Pledge Agreement substantially in the form attached hereto as Schedule H and to
be entered into by Residence Inn by Marriott Inc. and Purchaser at Closing.
1.15 Intentionally Omitted
1.16 "Controlling Interest" shall mean (a) as to a corporation, the
right to exercise, directly or indirectly, more than fifty percent (50%) of the
voting rights attributable to the shares of the Entity (through ownership of
such shares or by contract), and (b) as to an Entity not a corporation, the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of the Entity.
1.17 Intentionally Omitted.
1.18 Intentionally Omitted.
1.19 Intentionally Omitted.
1.20 Intentionally Omitted.
1.20A "Deposit" shall have the meaning given such term in Section 10.3.
1.21 "Engineer" shall mean ▇▇▇▇▇▇▇ and Associates, Inc., having an
address of ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
1.22 "Entity" shall mean any corporation, general or limited
partnership, limited liability company, partnership, stock company or
association, joint venture, association, company, trust, bank, trust company,
land trust, business trust, cooperative, any government or agency or political
subdivision thereof or any other entity.
1.23 "Environmental Report" shall have the meaning given such term in
Section 2.5.
1.24 "Excluded Assets" shall mean (i) any right, title or interest in
any name containing any of the names "Marriott," "SpringHill Suites" and other
marks used, or that may in the future be used, by MI or its affiliates,
including the Seller (and Seller and MI shall have the right to remove any such
name or ▇▇▇▇ appearing on any signage or other property pursuant to the terms of
the Franchise Agreement for the Property), (ii) all property owned by the Seller
or any of its affiliates, not normally located at the Property and used, but not
exclusively, in connection with the operation of the Property, (iii) all items,
tangible or intangible, consisting of Proprietary Information, (iv) computer
software, (v) FAS, (vi) any Inventories located at the Property, (vii) working
capital, including without limitation, cash, bank accounts and accounts
receivable owned or held by Seller or any of its affiliates, (viii) all books,
ledger sheets, files and records, (ix) all contracts pertaining to the operation
of the Property, and (x) any software, manuals, brochures or directives used by
the Seller or any of its affiliates, in the operation of the Property that will
be issued by the franchisor to the Tenant, as franchisee, under the Franchise
Agreements.
1.25 "FAS" shall have the meaning given such term in the Lease.
1.26 "FF&E" shall mean all appliances, machinery, devices, fixtures,
appurtenances, equipment (including without limitation the telephone switches
and voice mail relating to the Property), furniture, furnishings and articles of
tangible personal property of every kind and nature whatsoever owned by the
Seller or any of its affiliates, and located in or at, or used in connection
with the ownership, operation or maintenance of the Property, other than motor
vehicles.
1.27 "FF&E Schedule" shall have the meaning given such term in Section
4.5.
1.28 Intentionally Omitted.
1.29 "Franchise Agreement" shall mean the Franchise Agreement to be
entered into at or prior to the Closing between MI, as franchisor, and Tenant,
as franchisee, substantially in the form attached hereto at Schedule O.
1.30 "Guarantor" shall mean CHP and CHLP, jointly and severally.
1.31 "Guaranty of Landlord's Obligations" shall mean the Guaranty in
the form of Schedule B hereto to be entered into by Guarantor for the benefit of
Tenant, in respect of the Lease for the Property and guarantying the landlord's
obligations under the Lease.
1.32 "Immaterial Taking" shall have the meaning given such term in
Section 2.6.
1.33 "Improvements" shall mean all buildings, fixtures, walls, fences,
landscaping and other structures and improvements situated on, affixed or
appurtenant to the Real Property, including, but not limited to, all pavement,
access ways, curb cuts, parking, kitchen and support facilities, meeting and
conference rooms, swimming pool facilities, recreational amenities, office
facilities, drainage system and facilities, air ventilation and filtering
systems and facilities and utility facilities and connections for sanitary
sewer, potable water, irrigation, electricity, telephone, cable television and
natural gas, if applicable, to the extent the same form a part of the Property
and all appurtenances thereto acquired by Purchaser in connection with
Purchaser's acquisition of the Property pursuant to the terms of this Agreement.
1.34 "Intangible Property" shall mean all transferable or assignable
(a) governmental permits, including licenses and authorizations, required for
the construction, ownership and operation of the Improvements, including without
limitation certificates of occupancy, building permits, signage permits, liquor
licenses, site use approvals, zoning certificates, environmental and land use
permits and any and all necessary approvals from state or local authorities
(hereinafter defined as "Permits") and other approvals granted by any public
body or by any private party pursuant to a recorded instrument relating to the
Property and (b) certificates, licenses, warranties and guarantees held by the
Seller, other than (x) the Excluded Assets and (y) such permits, operating
permits, certificates, licenses and approvals which are to be held by, or
transferred to, the Tenant in order to permit the Tenant to operate the Property
properly in accordance with the terms of the Lease.
1.35 "Inventories" shall have the meaning given such term in the Lease.
1.36 "Lease" shall mean the Lease Agreement in the form of Schedule C
attached hereto to be entered into by Tenant and the Purchaser, subject to such
changes as may be reasonably requested by either party and approved by
Purchaser, MI and Tenant, as the case may be, which approval shall not be
unreasonably withheld, conditioned or delayed and as shall be required to
conform the Lease to, and ensure the enforceability of the Lease under, the
applicable laws of the state in which such Property is located.
1.37 "Limited Rent Guaranty" shall mean the Limited Rent Guaranty in
the form of Schedule D hereto to be entered into by MI in respect of the Lease.
1.38 Intentionally Omitted.
1.39 Intentionally Omitted.
1.39A "Membership Interest Pledge" shall mean that certain Membership
Interest Pledge Agreement dated December 10, 1999 by and between Residence Inn
By Marriott, Inc., as pledgor and CNL Hospitality Partners, LP, as pledgee, as
the same may be amended from time to time, securing the performance of Tenant's
obligations under the Lease and the Other Leases (as defined in the Lease).
1.40 "Mere Director" shall mean a Person who holds the office of
director of a corporation and who, as such director, has the right to vote not
more than twelve and one-half percent (12.5%) of the total voting rights on the
board of directors of such corporation, and who represents or acts on behalf of
a mere passive investor which neither (i) owns more than three percent (3%) of
the total voting rights attributable to all shares or ownership interests of a
Competitor, nor (ii) otherwise has the power to direct or cause the direction of
the management or policies of a Competitor.
1.41 "MI" shall mean Marriott International, Inc., a Delaware
corporation, its successor or successors by merger or operation of law, and
assignee or assignees to whom it has transferred all or substantially all of its
hotel and related lodging assets and/or businesses and which assumes in writing
Marriott International, Inc.'s obligations under this Agreement.
1.42 Intentionally Omitted.
1.43 "Opening Date" shall mean the date as of which all Improvements
located at the Property, including, without limitation, all guest rooms and/or
suites, shall be open for business to the public as a SpringHill Suites hotel.
1.44 "Outside Substantial Completion Date" shall mean June 30, 2001,
subject to extension of such date on account of force majeure.
1.45 "Owner Agreement" shall mean the Owner Agreement in substantially
the form of Schedule E hereto to be entered into by MI, Tenant and CHLP in
respect of the Lease.
1.46 "Intentionally Omitted".
1.47 "Permitted Encumbrances" shall mean, with respect to any Property:
(a) any and all matters affecting title to the Property as shown on Schedule E-1
hereto; (b) liens for taxes, assessments and governmental charges with respect
to such Property not yet due and payable or due and payable but not yet
delinquent; (c) applicable zoning regulations and ordinances and other
governmental laws, ordinances and regulations; (d) such other nonmonetary
encumbrances which were granted by the Seller in order to facilitate, in
Seller's reasonable discretion, the construction and operation of the
Improvements; (e) any utility, drainage or other easements which are customary
in connection with (or which reasonably serve) the Improvements; (f) the Lease;
and (g) such other nonmonetary encumbrances with respect to the Property which
are not objected to by the Purchaser in accordance with Sections 2.3 and 2.4.
1.48 "Person" shall mean any individual or Entity, and the heirs,
executors, administrators, legal representatives, successors and assigns of such
Person where the context so admits.
1.49 "Plans and Specifications" shall mean those certain plans and
specifications which have been approved by Purchaser and which are identified on
Schedule E-2.
1.50 "Property" shall mean the Real Property, Improvements and the
Assets.
1.51 Intentionally Omitted.
1.52 "Proprietary Information" shall have the meaning given such term
in the Lease.
1.53 "Purchaser" shall mean CHLP and its permitted successors and
assigns.
1.53A "Purchase Price" shall mean Fifteen Million Two Hundred Fourteen
Thousand Six Hundred Dollars ($15,214,600).
1.54 "Real Property" shall mean the real property described in Schedule
F to this Agreement, together with all easements, rights of way, privileges,
licenses and appurtenances which the Seller may now own or hereafter acquire
with respect thereto, less any portion or portions thereof taken by way of an
Immaterial Taking.
1.55 "Reserve" shall have the meaning given such term in the Lease.
1.56 "Seller" shall mean SpringHill SMC Corporation, a Delaware
corporation.
1.57 Intentionally Omitted.
1.58 Intentionally Omitted.
1.59 "Substantial Completion" shall mean substantial completion of the
Improvements, including, without limitation, substantial completion of a
SpringHill Suites hotel in conformance, in all material respects, with the Plans
and Specifications therefor (other than so-called "punch-list" items as do not
individually or in the aggregate substantially impair the use of the Property
for its intended use).
1.60 "Surveyor" shall mean ▇▇▇▇▇▇▇ and Associates, Inc., having an
address at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
1.61 "Systems Standards Manual" shall mean the Systems Standards Manual
(or successor thereto) attached hereto at Schedule Q, setting forth the
standards and requirements for the construction, renovation and operation of a
SpringHill Suites hotel.
1.62 "Tenant" shall mean RST4 Tenant LLC, a Delaware limited liability
company, wholly-owned, directly or indirectly, by Residence Inn By Marriott,
Inc.
1.63 "Title Commitments" shall have the meaning given such term in
Section 2.3.
1.64 "Title Company" shall mean First American Title Insurance Company
or such other title insurance company as shall have been approved by the
Purchaser and the Seller.
SECTION 2. PURCHASE-SALE; DILIGENCE.
2.1 Purchase-Sale. In consideration of the mutual covenants herein
contained, the Purchaser hereby agrees to purchase from the Seller and the
Seller hereby agrees to sell to the Purchaser, the Property for the Purchase
Price, subject to and in accordance with the terms and conditions of this
Agreement.
2.2 Diligence Inspections. Purchaser has approved (or is deemed to have
approved for purposes of this Agreement) the Property in its "as is, where is"
condition as of the date hereof. In respect to the Improvements to be developed
on the Property by the Seller, the Seller shall permit the Purchaser and its
representatives to inspect the Improvements at appropriate stages of completion
at such reasonable times as the Purchaser or its representatives may request by
reasonable prior notice to the Seller. During any such inspection, the Purchaser
and its representatives shall minimize any resulting interference with ongoing
construction at the Property or the operation of the Property as a hotel. To the
extent that, in connection with such investigations, the Purchaser, its agents,
representatives or contractors, damages or disturbs any of the Property, the
Purchaser shall return the same to substantially the same condition which
existed immediately prior to such damage or disturbance. The Purchaser shall
indemnify, defend and hold harmless the Seller from and against any and all
expense, loss or damage (including, without limitation, reasonable attorneys'
fees) which the Seller may incur as a result of any act or omission of the
Purchaser or its representatives, agents or contractors in connection with any
such inspections, other than any expense, loss or damage arising from any act or
omission of the Seller. The foregoing indemnification agreement shall survive
the termination of this Agreement and the Closing hereunder.
2.3 Title Matters. Purchaser has approved (or is hereby deemed to have
approved) the state of title to the Property and all exceptions thereto
reflected in the written commitments for the issuance of (a) an Owner's Title
Insurance Policy for the Property naming Purchaser as the insured, a copy of
which commitment is attached hereto as Schedule I-1 (the "Owner's Policy
Commitment"), and (b) a Leasehold Owner's Title Insurance Policy for the
Property naming Tenant as the insured, a copy of which commitment is attached
hereto as Schedule I-2 (the "Leasehold Policy Commitment") (the Owner's Policy
Commitment and Leasehold Policy Commitment herein, collectively, the "Title
Commitments"). Purchaser has approved the Owner's Policy Commitment and the form
of policy provided for therein. MI has approved the Leasehold Policy Commitment
and the form of the leasehold policy provided for therein on behalf of the
Tenant.
In the event that Seller decides to encumber the Property with an
additional document, instrument or other matter, Seller shall give Purchaser
notice thereof together with a copy of the document, instrument or other matter
to be placed of record against the Property ("Additional Exception"). Within
five (5) Business Days after receipt of a notice of any Additional Exception
with respect to the Property, the Purchaser shall give the Seller notice of its
approval or disapproval thereof. Purchaser shall not withhold its approval of
any such Additional Exception which would be a Permitted Encumbrance specified
in clauses (a) through (g), inclusive, of Section 1.47, and shall not
unreasonably withhold, delay or condition its approval of any other Additional
Exception. If Purchaser fails to respond within said five (5) Business Day
period, Purchaser shall be deemed to have approved such Additional Exception. If
Purchaser unreasonably disapproves of any Additional Exception, Seller shall be
excused from performing any term or condition (or any portion or aspect of a
term or condition) of this Agreement which Seller is unable or unwilling to
perform as a result of its inability to enter into and/or record such Additional
Exception.
In the event that an encumbrance is placed on the Property (other than
a monetary encumbrance, which Seller shall pay, provided such encumbrance does
not exceed $250,000) as a result of judicial action taken by a local, state, or
Federal governmental entity with respect to violation of any state or Federal
environmental laws not caused by, authorized or acquiesced to by Seller, the
Purchaser's sole remedy shall be (A) to terminate this Agreement, in which event
this Agreement shall terminate and be of no further force or effect and Seller
shall reimburse to Purchaser the Purchaser's expenses incurred in respect of the
Property, not to exceed $30,000 (and direct Escrow Agent to refund to Purchaser
the Deposit) or (B) to consummate the transactions contemplated hereby,
notwithstanding such encumbrance, without any abatement or reduction in the
Purchase Price on account thereof.
2.4 Survey. Purchaser has approved the survey ("Existing Survey") for
the Property and all matters shown thereon, which survey is identified on
Schedule J-1 attached hereto. Prior to the Closing, Seller shall have a survey
prepared by the Surveyor so as to locate all Improvements thereon ("Building
Location Survey") and to be certified as of a date no earlier than thirty (30)
days prior to the Closing Date. Seller shall use commercially reasonable efforts
to have the Surveyor's Certificate conform to the form of certificate contained
in Schedule J hereto and to ensure that the Building Location Survey meets the
survey requirements set forth in such Schedule J. A copy of the Building
Location Survey shall be furnished by Seller to Purchaser when received by
Seller.
Within fifteen (15) Business Days after receipt of the Building
Location Survey, the Purchaser shall give the Seller notice of any matters shown
thereon (other than the Permitted Encumbrances and any matters shown on the
Existing Survey) which adversely affect the Property in any material respect,
for which Purchaser is unable to obtain affirmative insurance at no cost, and as
to which the Purchaser reasonably objects. If, for any reason, the Seller is
unable or unwilling to take such actions as may be required to remedy the
objectionable matters or pay for the cost to obtain affirmative insurance over
the objectionable matter, the Seller shall give the Purchaser prompt notice
thereof; it being understood and agreed that the failure of the Seller to give
such notice within fifteen (15) Business Days after Seller's receipt of the
Purchaser's notice of objection shall be deemed an election by the Seller not to
remedy such matters. If the Seller shall be unable or unwilling to remove (or
pay the cost of insuring over same) any survey defect to which the Purchaser has
reasonably objected, the Purchaser may elect (A) to terminate this Agreement, in
which event this Agreement shall terminate and be of no further force or effect
and Seller shall reimburse to Purchaser the Purchaser's expenses incurred in
respect of the Property, not to exceed $30,000 (and direct Escrow Agent to
refund to Purchaser the Deposit) or (B) to consummate the transactions
contemplated hereby, notwithstanding such defect, without any abatement or
reduction in the Purchase Price on account thereof. The Purchaser shall make any
such election by written notice to the Seller given on or prior to the fifth
(5th) Business Day after the earlier of (x) Purchaser's receipt of the Seller's
notice of its inability or unwillingness to cure (or pay the cost of insuring
over) such defect and (y) the expiration of the 15-Business Day period within
which Seller is required to respond to Purchaser's notice of objection, time
being of the essence with respect to the giving of such notice. Failure of the
Purchaser to give such notice within the time prescribed in the preceding
sentence shall be deemed an election by the Purchaser to proceed in accordance
with clause (B) above.
2.5 Environmental Reports. Purchaser has approved and accepts the
environmental condition of the Property as existing on the date hereof and as
reflected in that certain Phase I environmental report in respect of the
Property identified in Schedule R hereto ("Environmental Report"). At the
written election of Purchaser, made no later than twenty (20) days prior to the
Closing Date, the Seller and Purchaser shall order an update of the
Environmental Report (the "Updated Environmental Report").
Within five (5) Business Days after receipt of an Updated Environmental
Report, the Purchaser shall give the Seller notice of any matters therein as to
which the Purchaser reasonably objects. If, for any reason, the Seller is unable
or unwilling to take such actions as may be required to cause such matters to be
remedied to the reasonable satisfaction of the Purchaser, the Seller shall give
the Purchaser notice thereof; it being understood and agreed that the failure of
the Seller to give such notice within five (5) Business Days after receipt of
the Purchaser's notice of objection shall be deemed an election by the Seller
not to remedy such matters. If the Seller shall be unwilling or unable to remedy
any matters to which the Purchaser has reasonably objected, the Purchaser may
elect (A) to terminate this Agreement, in which event, this Agreement shall be
of no further force and effect and Seller shall reimburse to Purchaser the
Purchaser's expenses incurred in respect of the Property, not to exceed $30,000
(and direct Escrow Agent to refund to Purchaser the Deposit) or (B) to
consummate the acquisition of the Property, notwithstanding such defect, without
any abatement or reduction in the Purchase Price on account thereof. The
Purchaser shall make any such election by written notice to the Seller given on
or prior to the fifth (5th) Business Day after the earlier of (x) Purchaser's
receipt of Seller's notice of its inability or unwillingness to cure such defect
and (y) the expiration of the 5-Business Day period within which Seller was to
have responded to Purchaser's notice of objection. Failure of the Purchaser to
give such notice within the time prescribed by the preceding sentence shall be
deemed an election by the Purchaser to proceed in accordance with clause (B)
above.
2.6 Immaterial Taking. If prior to the Closing, the Property is the
subject of a condemnation which does not, in Seller's reasonable opinion, affect
any material part of the Improvements and does not materially adversely affect
access to the Improvements or compliance with applicable zoning or building
requirements, including parking (an "Immaterial Taking"), Seller will provide
written notice of such Immaterial Taking to Purchaser and this Agreement will
remain in full force and effect in respect of the purchase and sale of the
Property, but with an abatement of the Purchase Price equal to the amount of the
award paid to Seller on account of such taking, less the amount of Seller's
costs and expenses, including reasonable attorneys' fees and expenses, in
establishing and collecting such award.
2.7 Changes to Plans and Specifications. Purchaser shall have the
following rights in respect of changes to the Plans and Specifications for the
Improvements to be constructed on the Property:
(a) In respect to the Property, Seller will not enter into a change
order to the general contract for the construction of the Improvements (the
"General Contract") without first receiving Purchaser's approval (such approval
not to be unreasonably withheld, conditioned or delayed) where such change order
would (i) effect a material change in the structural system of the Improvements
other than as described in the Outline of Structural Systems attached hereto as
Schedule K, or (ii) effect a change which would decrease the cost of the
Improvements by Fifty Thousand Dollars ($50,000.00) or more and result in a
reduction of a standard provided for in the Systems Standards Manual.
(b) Seller shall provide to Purchaser a copy of any change order to the
General Contract which effects a change in the amount of One Hundred Thousand
Dollars ($100,000.00) or more. Such copies will be for informational purposes
only; Purchaser will not have the right to approve or disapprove changes in the
Plans and Specifications except to the extent provided for in Section 2.7(a)
above.
(c) In the event that Seller materially deviates from the Plans and
Specifications (and such deviation (x) resulted in a material change in the
structural system of the Improvements other than as described in the Outline of
Structural Systems attached hereto as Schedule K, or (y) resulted in a change
which decreased the cost of the Improvements by Fifty Thousand ($50,000.00) or
more and resulted in a reduction of a standard or standards provided for in the
Systems Standards Manual), Seller may, but is not obligated, to remedy such
deviations. If Seller elects not to remedy the deviations, Purchaser's sole
remedy shall be either (i) to terminate this Agreement, in which event this
Agreement shall terminate and be of no further force or effect and Seller shall
reimburse to Purchaser the Purchaser's expenses incurred in respect of the
Property, not to exceed $30,000 (and direct Escrow Agent to refund to Purchaser
the Deposit), or (ii) to proceed to close in accordance with this Agreement
without any abatement in the Purchase Price.
SECTION 3. PURCHASE AND SALE.
3.1 Closing. (a) The purchase and sale of the Property shall be
consummated at a closing (the "Closing") in escrow with the Title Company at the
offices of Lowndes, Drosdick, Doster, ▇▇▇▇▇▇ & ▇▇▇▇, P.A., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, or at such other location as the Seller and the Purchaser may
agree, at 10:00 a.m. local time, the Closing to occur on a date ( the "Closing
Date") designated by Seller in a written notice ("Closing Notice") from Seller
to Purchaser stating that Substantial Completion and the Opening Date have
occurred with respect to the Property. Such Closing Date shall not be less than
thirty (30) days nor more than forty-five (45) days after the Closing Notice, or
such later date as of which all conditions precedent to the Closing herein set
forth have either been satisfied or waived by the party in whose favor such
conditions run. In the event that Closing shall not have occurred within ninety
(90) days after the Outside Substantial Completion Date, either party (provided
such party shall not be in default hereunder), shall have the right, by the
giving of written notice to the other, to terminate this Agreement, in which
event this Agreement shall terminate and be of no further force or effect and
Seller shall reimburse to Purchaser the Purchaser's expenses incurred in respect
of the Property, not to exceed $30,000 (and direct Escrow Agent to refund to
Purchaser the Deposit).
3.2 Intentionally Omitted.
3.3 Purchase Price. At the Closing, the Purchase Price shall be payable
by wire transfer of immediately available funds on the Closing Date to an
account or accounts to be designated by the Seller prior to the Closing, subject
to any adjustments and apportionments made pursuant to Section 9.1 of this
Agreement.
3.4 Intentionally Omitted.
3.4A Intentionally Omitted
3.5 Seller's Option to Terminate. In addition to any other right of
Seller to terminate provided for elsewhere in this Agreement, Seller shall be
entitled to terminate its obligations to sell the Property, and its and/or
Tenant's obligation to lease the Property and any other transaction contemplated
herein (and such termination shall not constitute a default under any of the
related transactions or documents contemplated thereby, including this
Agreement), if Seller elects, in its sole and unfettered discretion, not to
commence or complete development of the Property as a hotel as contemplated by
this Agreement. In the event Seller elects to terminate its obligations to sell
the Property pursuant to this Section 3.5, this Agreement shall terminate and be
of no further force or effect and Seller shall reimburse to Purchaser the
Purchaser's expenses incurred in respect of the Property, not to exceed $30,000
(and direct Escrow Agent to refund to Purchaser the Deposit).
3.6 Competitor. In the event that any sale, assignment, transfer or
other disposition, for value or otherwise, voluntary or involuntary, by merger,
operation of law or otherwise, in a single transaction or a series of
transactions, of any interest in Purchaser or any Person having an interest in
Purchaser, directly or indirectly, results, directly or indirectly, in a
Competitor owning a Controlling Interest in Purchaser, Seller shall have the
right, but not the obligation, to terminate this Agreement (and such termination
shall not constitute a default under any of the related transactions or
documents contemplated thereby, including this Agreement), and, solely with
respect to this Section 3.6, Purchaser shall be entitled to direct Escrow Agent
to refund to Purchaser the Deposit
SECTION 4. CONDITIONS TO PURCHASER'S OBLIGATION TO CLOSE.
The obligation of the Purchaser to acquire the Property on the
applicable Closing Date shall be subject to the satisfaction or waiver of the
following conditions precedent on and as of the Closing Date:
4.1 Closing Documents. The Seller shall have delivered to the
Purchaser:
(a) A special warranty deed, duly executed by the Seller, conveying to
Purchaser good and marketable title to the Property, free from all liens,
encumbrances, security interests, options and adverse claims of any kind or
character, subject to the Permitted Encumbrances and except as otherwise
specifically permitted hereunder;
(b) A Warranty ▇▇▇▇ of Sale, an Assignment of Intangible Property and
an Assignment of Construction-Related Contracts, each duly executed by Seller
(or MI, as applicable), transferring and assigning to Purchaser all rights,
title and interest of Seller (and MI, as applicable) in the Assets, together
with, to the extent the same are in the Seller's or MI's (or their agent's)
possession, original (or copies certified by Seller as true and correct), fully
executed copies of all agreements constituting any of the same;
(c) The Lease for the Property duly executed by Tenant;
(d) The Limited Rent Guaranty duly executed by MI;
(e) The Confirmation and Amendment of Membership Interest Pledge
Agreement, duly executed by Residence Inn by Marriott, Inc., together with such
financing statements as Purchaser may reasonably require to perfect the
interests and liens granted pursuant to the Membership Interest Pledge
Agreement;
(f) A copy of the fully executed Franchise Agreement;
(g) The Owner Agreement duly executed by MI;
(h) A copy of the final certificate of occupancy for the Property;
(i) An architect's certificate in respect of the Improvements to the
Property substantially in the form attached hereto as Schedule L, or as
otherwise provided in Section 4.2(c) below;
(j) An engineer's certificate in respect of the Improvements to the
Property substantially in the form attached hereto as Schedule M, or as
otherwise provided in Section 4.2(c) below;
(k) Certified copies of applicable resolutions and certificates of
incumbency with respect to the Seller, Tenant, MI, and such other persons as the
Purchaser may reasonably require;
(l) Intentionally omitted;
(m) A certificate of a duly authorized officer of MI and Seller
confirming the continued truth and accuracy of the representations and
warranties of the Seller in this Agreement (subject to such changes as Seller
has given notice of to Purchaser pursuant to Section 6 and subject to Section
4.2(b));
(n) The Building Location Survey;
(o) The "As-Built" Drawings;
(p) The Permits (or copies thereof certified by Seller as true and
correct);
(q) Intentionally Omitted;
(r) Copies of any and all warranties and guarantees pertaining to the
Improvements, specifically including the manufacturers roof membrane warranty
issued with respect to the buildings comprising the Improvements;
(s) Insurance certificates to be provided by Tenant pursuant to
the Lease;
(t) The FF&E Schedule;
(u) Intentionally omitted;
(v) An Owner's affidavit in the usual and customary form of the Title
Company for the purpose of satisfying any request for the same in the Owner's
Policy Commitment;
(w) Intentionally omitted;
(x) A settlement statement;
(y) Copies of any outstanding payment or performance bonds and a
certificate of substantial completion substantially in the form set forth in AIA
Form G704;
(z) A copy of the final "punch-list" work, if any, required upon
Substantial Completion of the Improvements for such Property certified by
Seller;
(aa) Joint written notification from Seller and Purchaser to Escrow
Agent pursuant to the Escrow Agreement (hereinafter defined) authorizing the
release of the Deposit for application to the Purchase Price; and
(bb) Such other documents, certificates and other instruments as may be
reasonably required to consummate the transaction contemplated hereby.
4.2 Condition of the Property
(a) No action shall be pending or threatened for the condemnation or
taking by power of eminent domain of all or any material portion of the
Property;
(b) All material licenses, permits and other authorizations necessary
for the current use, occupancy and operation of the Property shall be in full
force and effect; however, in the event that Seller fails to obtain any such
licenses, permits or other authorizations and discloses same to Purchaser,
Purchaser may, but shall not be required to, waive Seller's compliance with
Section 6.16 of this Agreement and proceed with Closing; and
(c) The Purchaser shall have received an architect's certificate
substantially in the form of Schedule L executed by the Architect and an
engineer's certificate substantially in the form of Schedule M, executed by the
Engineer in respect of the Property; provided, however, that in the event that
Seller is not able to deliver to Purchaser either or both of the foregoing
certificates executed by the Architect and/or Engineer, as applicable, Purchaser
shall accept in lieu thereof, a certificate executed by Seller in substantially
the form attached hereto as Schedule L-1 and/or Schedule M-1, as applicable.
4.3 Title Policies and Surveys.
(a) The Title Company shall be prepared, subject only to payment of the
applicable premium and delivery of all conveyance documents, to issue the title
policies pursuant to the Title Commitments, in accordance with Section 2.3.
(b) The Purchaser shall have received the Building Location Survey in
accordance with Section 2.4.
4.4 Opinions of Counsel. The Purchaser shall have received a written
opinion from counsel to the Seller and MI (which may be its in-house counsel),
in form and substance reasonably satisfactory to the Purchaser and its counsel,
regarding the organization, good standing and/or authority of the Seller and MI,
the Tenant, and the guarantor under the Limited Rent Guaranty and the
enforceability of this Agreement, the Lease in respect of the Property, the
Limited Rent Guaranty and the Owner Agreement and such other matters with
respect to the transactions contemplated by this Agreement as the Purchaser may
reasonably require.
4.5 FF&E Schedule. No later than twenty (20) days prior to Closing,
Seller shall provide to Purchaser a schedule (the "FF&E Schedule") of all FF&E
at the Property (other than the FF&E listed in the Plans and Specifications)
owned by Seller and which FF&E is intended to be part of the Assets to be owned
by Purchaser upon and following Closing. Upon reasonable prior notice to Seller,
Purchaser shall be entitled to inspect the FF&E at the Property prior to Closing
in order to confirm and verify the FF&E Schedule.
4.6 Other.
(a) The representations and warranties of the Seller and MI
set forth in Section 6 hereof (as the same may have been changed by notice from
Seller as provided therein) shall be true, correct and complete in all material
respects on and as of the Closing Date;
(b) No Act of Bankruptcy on the part of the Seller, MI or
Tenant shall have occurred and remain outstanding as of the Closing Date;
(c) The Seller shall be the sole owner of good and marketable
title to the Property free and clear of all liens, encumbrances, restrictions,
conditions and agreements (other than the Permitted Encumbrances and this
Agreement);
(d) Intentionally omitted;
(e) There shall be no unsatisfied state or federal tax liens
against or affecting the Seller, or any tax audit of the Seller in process,
which could result in a lien against the Property; and
(f) There shall be no outstanding, unsettled claim against the
Seller arising under any insurance policies in respect of Seller or the Property
which could result in a lien against the Property.
SECTION 5. CONDITIONS TO SELLER'S OBLIGATION TO CLOSE.
The obligation of the Seller to convey and transfer to the Purchaser
the Property on the Closing Date is subject to the satisfaction or waiver of the
following conditions precedent on and as of the Closing Date:
5.1 Purchase Price. The Purchaser shall deliver to the Seller the
Purchase Price as provided in Section 3.3.
5.2 Closing Documents. The Purchaser shall have delivered to the
Seller:
(a) Duly executed and acknowledged counterparts of the
documents described in Subsections 4.1(b), (c), (d), (e), (g), (x) and (aa);
(b) The Guaranty of Landlord's Obligations duly executed by
the Guarantor;
(c) The Confirmation and Amendment of Membership Interest
Pledge Agreement duly executed by Purchaser;
(d) A certificate of a duly authorized officer of the
Purchaser confirming the continued truth and accuracy of the representations and
warranties of the Purchaser in this Agreement;
(e) Certified copies of applicable resolutions and
certificates of incumbency with respect to the Purchaser, the Guarantor, and
such other persons as the Seller or the Tenant may reasonably require; and
(f) Such other documents, certificates and other instruments
as may be reasonably required to consummate the transaction contemplated hereby.
5.3 Opinions of Counsel. The Seller shall have received a written
opinion from (a) Lowndes, Drosdick, Doster, ▇▇▇▇▇▇ & ▇▇▇▇, P.A., counsel to the
Purchaser (or other counsel reasonably acceptable to Seller, MI and its
counsel), in form and substance reasonably satisfactory to Seller and its
counsel, regarding the good standing and authority of the Purchaser and the
Guarantor, and (b) counsel reasonably acceptable to Seller, MI, and its counsel
regarding the enforceability of this Agreement, the Lease, the Owner Agreement,
the Guaranty of Landlord's Obligations and such other matters with respect to
the transactions contemplated by this Agreement as MI, Seller or Tenant may
reasonably require.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF SELLER.
To induce the Purchaser to enter into this Agreement, the Seller and
MI, represent and warrant to the Purchaser as follows:
6.1 Status and Authority of the Seller. The Seller is, or will be at or
before Closing, a corporation duly organized, validly existing and in corporate
good standing under the laws of its state of incorporation, and has all
requisite power and authority under the laws of such state and its respective
charter documents to enter into and perform its obligations under this Agreement
and to consummate the transactions contemplated hereby. Seller is duly qualified
to transact business and is in good standing in the state in which the Property
is located.
6.2 Status and Authority of MI. MI is a corporation duly organized,
validly existing and in corporate good standing under the laws of its state of
incorporation, and has all requisite power and authority under the laws of such
state and its respective charter documents to enter into and perform its
obligations under this Agreement and to consummate the transactions contemplated
hereby. MI has duly qualified to transact business and is in good standing in
each of the state in which the Property is located.
6.3 Intentionally Omitted.
6.4 Status and Authority of Tenant. Tenant is, or will be at Closing, a
limited liability company, duly organized, validly existing and in good standing
under the laws of the State of Delaware and duly qualified to do business and in
good standing under the laws of the state in which the Property is located.
6.5 Intentionally Omitted.
6.6 Intentionally Omitted.
6.7 Intentionally Omitted.
6.8 Employees. The Seller shall be responsible for payment of all wages
and salaries payable to, and all vacation pay, pension and welfare benefits and
other fringe benefits accrued with respect to all individuals employed by the
Seller at the Property relating to the period prior to Closing and Tenant shall
be responsible for payment of all wages, salaries and benefits relating to the
period commencing on and from and after Closing. At no time hereunder, upon
Closing or under the Lease, shall any of the employees at the Property including
employees of any manager thereof, be or be deemed to be the employees of
Purchaser, and upon and after Closing, be or be deemed to be transferred to
Purchaser. If required, the Seller will comply with the notice and other
requirements under the Worker Adjustment Retraining and Notification Act ("WARN
Act"), the Consolidated Omnibus Budget Reconciliation Act ("COBRA") or any
similar state or local legislation with respect to such employee matters, and
such obligation shall survive Closing, notwithstanding anything to the contrary
in the WARN Act. Because Purchaser at no time will be or be deemed to be the
employer of employees at the Property, it is expressly understood and agreed
that Purchaser is not and shall not be responsible or liable, directly or
indirectly, for payment of any benefits, severance liability, compensation, pay
or other obligations, of whatever nature, due or alleged to be due to any
employee at the Property including employees of any manager thereof, or of the
Seller attributable to any time period up to, upon and after Closing. Similarly,
there shall be no union agreements, pension plans, health plans, benefit plans,
deferred compensation plans, bonus plans or vacation plans or similar agreements
for or concerning such employees which shall be binding upon Purchaser.
6.9 Existing Agreements. There are no (or will not be at the Closing)
service contracts, maintenance agreements, leasing commissions or brokerage
agreements, repair contracts, property management contracts, contracts for the
purchase or delivery of labor, services, materials or goods, supplies or
equipment, leases, licensees or occupancy agreements, or similar agreements
entered into by or on behalf of any Seller which will be obligations of
Purchaser after the Closing, other than (i) the Permitted Encumbrances, (ii) the
documents to be assigned to the Purchaser pursuant to the terms hereof, (iii)
the Lease, (iv) the Owner Agreement, and (v) any other document or instrument
given or entered into in connection with the Closing.
6.10 Tax Returns. All tax returns for privilege, gross receipts,
excise, sales and use, personal property and franchise taxes required by law to
be filed by Seller prior to the date of the Closing will be prepared and duly
filed, prior to the Closing (or after the Closing with respect to pre-Closing
matters) and all taxes, if any, shown on such returns or otherwise determined to
be due, together with any interest or penalties thereon, will be paid by Seller
prior to the Closing, or allowance made therefor at the Closing.
6.11 Action of MI and Seller. MI and Seller have taken all necessary
action to authorize the execution, delivery and performance of this Agreement,
and upon the execution and delivery of any document to be delivered by MI or the
Seller on or prior to the Closing Date, such document shall constitute the valid
and binding obligation and agreement of MI and/or Seller, as applicable,
enforceable against MI and/or Seller, as the case may be, in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws of general application affecting the
rights and remedies of creditors and general principles of equity.
6.12 No Violations of Agreements. Neither the execution, delivery or
performance of this Agreement by the Seller and/or MI, nor compliance with the
terms and provisions hereof, will result in any breach of the terms, conditions
or provisions of, or conflict with or constitute a default under, or result in
the creation of any lien, charge or encumbrance upon the Property pursuant to
the terms of any indenture, mortgage, deed of trust, note, evidence of
indebtedness or any other agreement or instrument by which the Seller and/or MI,
as the case may be, is bound.
6.13 Litigation. Neither Seller nor MI has received written notice of
and, to the Seller's and MI's knowledge, no investigation, action or proceeding
is pending or, to the Seller's and MI's knowledge, threatened, and the Seller
has not received written notice of and, to the Seller's and MI's knowledge, no
investigation looking toward such an action or proceeding has begun, which (a)
questions the validity of this Agreement or any action taken or to be taken
pursuant hereto, or (b) may result in or subject the Property to a material
liability which is not covered by insurance, whether or not Purchaser is
indemnified by Seller and/or MI with respect to the same, or (c) involves
condemnation or eminent domain proceedings against any material part of the
Property.
6.14 Not A Foreign Person. The Seller is not a "foreign person" within
the meaning of Section 1445 of the United States Revenue Code of 1986, as
amended, and the regulations promulgated thereunder.
6.15 Construction Contracts; Mechanics' Liens. At the Closing, there
will be no outstanding contracts made by the Seller for the construction or
repair of any Improvements relating to the Property which have not been fully
paid for or provision for the payment of which has not been made by Seller and
Seller shall discharge and have released of record or bonded all mechanics' or
materialmen's liens, if any, arising from any labor or materials furnished to
the Property prior to the Closing to the extent any such lien is not insured
over by the Title Company or bonded over pursuant to applicable law.
6.16 Permits, Licenses. As of the Closing, there will be in effect all
material licenses (including liquor licenses, if required), permits and other
authorizations necessary for the then current use, occupancy and operation of
Property, unless failure to obtain any such licenses, permits and other
authorizations is disclosed to Purchaser, and Purchaser waives compliance
herewith in accordance with Section 4.2(b) of this Agreement.
6.17 Hazardous Substances. Except as otherwise disclosed to Purchaser,
including without limitation any matters described in the Environmental Report
and any Updated Environmental Report, to the Seller's and MI's knowledge, the
Seller, since the date that Seller acquired title to the Property, has not
stored or disposed of (or engaged in the business of storing or disposing of, or
authorized the storage or disposal of) nor has released nor caused nor
authorized the release of any hazardous waste, contaminants, oil, radioactive or
other material on the Property, or any portion thereof, the removal of which is
required or the maintenance of which is prohibited or penalized by any
applicable Federal, state or local statutes, laws, ordinances, rules or
regulations, and which has not as of the Closing Date been removed from the
Property in accordance with such applicable statutes, laws, ordinances, rules or
regulations.
6.18 Insurance. The Seller has received no written notice from any
insurance carrier of defects or inadequacies in the Property which, if
uncorrected, would result in a termination of insurance coverage or a material
increase in the premiums charged therefor.
6.19 Condition of Property. To MI's and Seller's knowledge, the
Improvements, as of the Closing Date, will be in good working order and repair,
mechanically and structurally sound, free from material defects in materials and
workmanship, constructed with materials that are "new," subject to such "punch
list" work as may be required upon Substantial Completion of the Improvements.
6.20 Financial Information. Financial information, including, without
limitation, all books and records and financial statements relating to the
Property, which have been provided to Purchaser are true, correct and complete
in all material respects.
6.21 Intentionally Omitted.
6.22 Title to FF&E. The Seller has good and marketable title to the
FF&E described on the FF&E Schedule and in the Plans and Specifications (to the
extent that the Plans and Specifications describe FF&E).
6.23 FF&E. The FF&E Schedule and the Plans and Specifications (to the
extent the Plans and Specifications describe FF&E) accurately describe in all
material respects the FF&E owned by the Seller and located at the Property and,
to Seller's knowledge, such FF&E is "new" and has not been used prior to its use
at the Property.
The representations and warranties made in this Agreement by Seller
and, if applicable, MI, in Section 6.1 through Section 6.14, inclusive, are made
as of the date hereof and shall be deemed remade by the Seller and, if
applicable, MI, as of the Closing Date, with the same force and effect as if
made on, and as of, such date; and the representations and warranties made in
this Agreement by Seller and, if applicable, MI, in Section 6.15 through Section
6.23, inclusive, shall be made as of the Closing Date, provided, however, that,
the Seller shall have the right, from time to time prior to the Closing Date, to
modify the representations and warranties made in Section 6.12 (No Violation of
Agreements), Section 6.13 (Litigation) and Section 6.18 (Insurance) as a result
of changes in applicable conditions beyond the control of Seller, by notice to
the Purchaser and, in such event, the representations and warranties shall be
deemed modified to the extent required by such changes, and (a) if Seller and MI
agree to indemnify Purchaser against any loss that may be suffered by Purchaser
as a result of such changes, then Purchaser will be required to close hereunder
without any abatement of Purchase Price or changes in any other condition, and
(b) if Seller and MI elect not to so indemnify Purchaser, Purchaser shall have
the option to either accept the change and close, or reject the change, in which
case Purchaser's obligation to purchase the Property shall terminate. All
representations and warranties made in this Agreement by the Seller and MI shall
survive the Closing for a period of one year. Any action, suit or proceeding
with respect to the truth, accuracy or completeness of any such representation
or warranty shall be commenced, if at all, on or before the date which is twelve
(12) months after the date of Closing and, if not commenced on or before such
date, thereafter shall be void and of no force or effect.
Prior to the Closing, Purchaser will have had the opportunity to
investigate independently all physical aspects of the Property, and to make all
such independent inspections and/or investigations of the Property that
Purchaser deems necessary or desirable including, without limitation, review of
the building permits, certificates of occupancy, environmental audits and
assessments, toxic reports, surveys, investigation of land use and development
rights, development restrictions and conditions that are or may be imposed by
governmental agencies, agreements with associations or other private parties
affecting or concerning the Property, the condition of title, soils and
geological reports, engineering and structural certificates, tests and
third-party reports (if any), governmental agreements and approvals and
architectural plans and site plans. Purchaser represents and warrants that, in
entering into this Agreement, Purchaser has not relied on any representation,
warranty, promise or statement, express or implied, of Seller or MI, or anyone
acting for or on behalf of Seller or MI, other than as expressly set forth in
this Agreement; AND THAT, AS A MATERIAL INDUCEMENT TO THE EXECUTION AND DELIVERY
OF THIS AGREEMENT BY SELLER AND MI, PURCHASER ACKNOWLEDGES THAT THE PROPERTY
WILL, UPON THE ACQUISITION BY PURCHASER OF THE PROPERTY, BE IN ITS "AS IS"
CONDITION AND IN ITS "AS IS" STATE OF REPAIR, WITH ALL FAULTS SUBJECT ONLY,
HOWEVER, TO THE EXPRESS COVENANTS, REPRESENTATIONS AND WARRANTIES MADE BY THE
SELLER AND MI FOR THE BENEFIT OF PURCHASER EXPRESSLY SET FORTH IN THIS
AGREEMENT.
Except as otherwise expressly provided in this Agreement or any
documents executed and delivered by Seller or MI to the Purchaser at the
Closing, the Seller and MI disclaim the making of any representations or
warranties, express or implied, regarding the Property or matters affecting the
same, whether made by the Seller or MI, on the Seller's behalf or on MI's
behalf, or otherwise, including, without limitation, the physical condition of
the Property, title to, the boundaries or other survey matters of, the Real
Property, pest control matters, soil conditions, the presence, existence or
absence of hazardous wastes, toxic substances or other environmental matters,
compliance with building, health, safety, land use and zoning laws, regulations
and orders, structural and other engineering characteristics, traffic patterns,
market data, economic conditions or projections, and any other information
pertaining to the Property or the market and physical environments in which they
are located. The Purchaser acknowledges that the Purchaser has entered into this
Agreement with the intention of making and relying upon its own investigation or
that of third parties with respect to the physical, environmental, economic and
legal condition of the Property, except as expressly provided in Section 6.12,
Section 6.13, Section 6.15, Section 6.16, Section 6.17, Section 6.19, Section
6.20 and Section 6.22. The Purchaser further acknowledges that it has not
received from or on behalf of the Seller or MI, any accounting, feasibility,
marketing, economic, tax, legal, architectural, engineering, property management
or other advice with respect to this transaction and is relying solely upon the
advice of third party accounting, tax, legal, architectural, engineering,
property management and other advisors.
As used in this Agreement, the phrases "to Seller's knowledge," "to
MI's knowledge" and "to Seller's and MI's knowledge" or words of similar import
shall mean the actual (and not constructive or imputed) knowledge, without
independent investigation or inquiry, of ▇▇▇▇▇ ▇▇▇▇▇▇ (and any subsequent
officer of Lodging Development at MI having direct oversight responsibility for
the transactions contemplated hereby), or ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (and any subsequent
finance officer of MI having direct oversight responsibility for the
transactions contemplated hereby), or ▇▇▇▇ ▇▇▇ (and any subsequent Vice
President - Design and Project Management of Marriott International Design and
Construction Services, Inc. having direct oversight responsibility for the
transactions contemplated hereby) or ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, or of an employee of
Seller or MI, or any Affiliated Person as to either, assigned to work at the
Property in connection with construction of the Improvements and/or in
connection with the installment of the FF&E on a full-time basis, if any.
SECTION 7. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
To induce the Seller to enter into this Agreement, the Purchaser and,
if Purchaser is other than CHLP, CHLP represents and warrants to the Seller as
follows:
7.1 Status and Authority of the Purchaser. The Purchaser is duly
organized and validly existing under the laws of the jurisdiction in which it
was formed, and has all requisite power and authority under the laws of such
state and under its charter documents to enter into and perform its obligations
under this Agreement and to consummate the transactions contemplated hereby. The
Purchaser is, or will be by the Closing Date, duly qualified and in good
standing in the state in which the Property is located.
7.2 Status and Authority of the Guarantors. CHLP is a limited
partnership duly organized and validly existing under the laws of the State of
Delaware. CHP is a corporation duly organized and validly existing under the
laws of the State of Maryland. CHP and CHLP each has all requisite power and
authority under the laws of the state under whose laws it has organized or
incorporated and under their respective charter documents to enter into and
perform its obligations under this Agreement and to consummate the transactions
contemplated hereby. CHLP is, or will be by the Closing Date, duly qualified and
in good standing in the state in which the Property being acquired is located.
7.3 Action of the Purchaser. The Purchaser has taken all necessary
action to authorize the execution, delivery and performance of this Agreement,
and upon the execution and delivery of any document to be delivered by the
Purchaser on or prior to the Closing Date, such document shall constitute the
valid and binding obligation and agreement of the Purchaser, enforceable against
the Purchaser in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws of
general application affecting the rights and remedies of creditors and general
principles of equity.
7.4 No Violations of Agreements. Neither the execution, delivery or
performance of this Agreement by the Purchaser, nor compliance with the terms
and provisions hereof, will result in any breach of the terms, conditions or
provisions of, or conflict with or constitute a default under, or result in the
creation of any lien, charge or encumbrance upon any property or assets of the
Purchaser pursuant to the terms of any indenture, mortgage, deed of trust, note,
evidence of indebtedness or any other agreement or instrument by which the
Purchaser is bound.
7.5 Litigation. Purchaser has received no written notice of and, to
Purchaser's knowledge, no investigation, action or proceeding is pending and, to
Purchaser's knowledge, no action or proceeding is threatened and Purchaser has
received no notice of, and to Purchaser's knowledge, no investigation looking
toward such an action or proceeding has begun, which questions the validity of
this Agreement or any action taken or to be taken pursuant hereto.
The representations and warranties made in this Agreement by the
Purchaser are made as of the date hereof and shall be deemed remade by the
Purchaser as of the Closing Date with the same force and effect as if made on,
and as of, such date. All representations and warranties made in this Agreement
by the Purchaser shall survive the Closing for a period of one year. Any action,
suit or proceeding with respect to the truth, accuracy or completeness of any
such representation or warranty shall be commenced and served, if at all, on or
before the date which is twelve (12) months after the date of Closing and, if
not commenced on or before such date, thereafter shall be void and of no force
or effect.
As used in this Agreement, the phrase "to Purchaser's knowledge" or
words of similar import shall mean the actual (and not constructive or imputed)
knowledge, without independent investigation or inquiry, of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇, C. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇.
SECTION 8. COVENANTS OF THE SELLER.
The Seller and MI hereby covenant with the Purchaser as follows:
8.1 Compliance with Laws. From the date of this Agreement to the
Closing Date for the purchase of the Property, Seller shall use commercially
reasonable efforts to comply in all material respects with (i) all laws,
regulations and other requirements affecting the Property, from time to time
applicable, of every governmental body having jurisdiction of the Property or
the use or occupancy of any Improvements located thereon and (ii) all terms,
covenants and conditions of instruments of record affecting the Property.
8.2 Completion of Punch List; Correction of Defects. To complete, at
the Seller's or MI's cost, all punch-list items and any work required to obtain
the final Certificate of Occupancy if not available at Closing and to correct,
at Seller's or MI's cost, all defects in the Improvements that are discovered
and disclosed by or to the Seller within one year following the acceptance of
the Improvements by the Seller from the general contractor for such
Improvements. At Closing, Seller and MI shall, at Purchaser's request, certify
the outside date of such one-year warranty period to Purchaser. The Purchaser
agrees to cooperate with the Seller, MI and/or the Tenant in enforcing any
applicable warranties or guaranties with respect to such defects. Seller and/or
Tenant shall have the exclusive right and obligation to pursue the
aforementioned rights and remedies; however, in the event that Seller and/or
Tenant fails to exercise such rights and remedies, after ten (10) days from
notice by Purchaser to Seller of such failure to exercise such rights and
remedies, Purchaser shall then have the right to pursue the same. The provisions
of this Section 8.2 shall survive the Closing.
8.3 Insurance. The Seller shall, at no expense to the Seller,
reasonably cooperate with Purchaser in connection with Purchaser's obtaining any
insurance which may be required to be maintained by Purchaser under the terms of
the Lease for the Property following the Closing.
8.4 Material Defects in Structural Systems. If, to Seller's or MI's
knowledge, a material construction defect or a material design defect in the
structural system of the Improvements exists at any time during construction and
prior to Closing, Seller or MI shall disclose the same to Purchaser, provided
that neither Seller nor MI shall have any obligation to correct such disclosed
defects if the cost to correct such defects exceeds $250,000. If such cost
exceeds $250,000 and Seller and MI elect not to correct, then Purchaser's sole
remedy shall be to terminate this Agreement, in which event this Agreement shall
terminate and be of no further force or effect and Seller shall reimburse to
Purchaser the Purchaser's expenses incurred in respect of the Property, not to
exceed $30,000 (and direct Escrow Agent to refund to Purchaser the Deposit).
8.5 Final Payment. Upon final payment to the general contractor in
respect of the Property, Seller shall provide Purchaser with a copy of the final
requisition received from the general contractor, evidence of Seller's payment
thereof, and a final release of liens.
SECTION 9. APPORTIONMENTS.
9.1 Apportionments. Representatives of the Purchaser, Tenant and the
Seller shall make and perform any and all of the adjustments and apportionments
which are appropriate and usual for a transaction of this nature, taking into
account the applicable provisions of the Lease and this Agreement. The
adjustments hereunder shall be calculated or paid in an amount based upon a fair
and reasonable estimated accounting performed and agreed to by representatives
of the Seller and the Purchaser at the Closing. Subsequent final adjustments and
payments shall be made in cash or other immediately available funds as soon as
practicable after the Closing Date, and in any event within ninety (90) days
after the Closing Date, based upon an agreed accounting performed by
representatives of the Seller, Tenant and the Purchaser. In the event the
parties have not agreed with respect to the adjustments required to be made
pursuant to this Section 9.1 within such ninety-day period, upon application by
either party, a certified public accountant reasonably acceptable to the
Purchaser and the Seller shall determine any such adjustments which have not
theretofore been agreed to between the Seller and the Purchaser. The charges of
such accountant shall be borne fifty percent (50%) by the Seller and fifty
percent (50%) by the Purchaser.
9.2 Closing Costs. (a) All Third-Party Costs (hereinafter defined)
shall be borne fifty percent (50%) by Seller and fifty percent (50%) by
Purchaser. As used herein, the term "Third-Party Costs" shall include the
following: (i) environmental reports prepared in connection with the purchase
and sale of the Property pursuant to this Agreement; (ii) property surveys of
the Property prepared in connection with due diligence under this Agreement;
(iii) premiums for the title insurance policies to be provided at the Closing
pursuant to Section 2.3 and Section 4.3(a); (iv) any closing or escrow charges
or other expenses payable to the Title Company conducting the Closing; and (v)
property appraisals prepared in connection with the purchase and sale of the
Property pursuant to this Agreement.
(b) Seller and Purchaser shall each pay one-half of any transfer,
sales, use, recordation or other similar taxes, impositions or expenses incurred
in connection with the Closing of the transaction contemplated hereby and/or the
recordation or filing of any documents or instruments in connection therewith or
the sale, transfer or conveyance of the Property from Seller to Purchaser or the
lease of the Property from Purchaser to Tenant; provided Seller shall be solely
responsible for any taxes due in respect of its income, net worth or capital, if
any, and any privilege, sales and occupancy taxes, due or owing to any
governmental entity in connection with the operation of the Property for any
period of time prior to Closing, and Purchaser or Tenant, as applicable, shall
be solely responsible for all such taxes for any period from and after Closing,
and provided further that any income tax arising as a result of the sale and
transfer of the Property by Seller to Purchaser shall be the sole responsibility
of Seller and any income tax arising as a result of the lease of the Property
from Purchaser to Tenant shall be the sole responsibility of Tenant or
Purchaser, as applicable.
(c) Except as expressly provided in this Section 9, Seller and
Purchaser shall each pay their own separate costs and expenses incurred in
connection with the transaction contemplated hereby, including the fees and
expenses of counsel in connection with the preparation and negotiation of this
Agreement, the Lease and all other documents and instruments in connection
therewith and in consummating any and all of the transactions contemplated
hereby and thereby.
(d) The obligations of the parties under this Section 9 shall survive
the Closing.
SECTION 10. DEFAULT.
10.1 Default by the Seller. If (i) the Seller or MI shall have made any
representation or warranty herein which shall be untrue in any material respect
when made or updated as herein provided, or (ii) if the Seller or MI shall fail
to perform any of the material covenants and agreements contained herein and
such condition or failure continues for a period of ten (10) days (or such
additional period as may be reasonably required to effectuate a cure of the
same) after notice thereof from the Purchaser, the Purchaser may terminate this
Agreement and Seller shall reimburse to Purchaser the Purchaser's expenses
incurred in respect of the Property, not to exceed $30,000 (and direct Escrow
Agent to refund to Purchaser the Deposit), and/or the Purchaser may pursue any
and all remedies available to it at law or in equity, including, but not limited
to, a suit for specific performance or other equitable relief; provided,
however, that, (x) in no event shall the Seller or MI be liable for (and
Purchaser hereby agrees that it will not commence or prosecute any action for)
consequential or punitive or exemplary damages and (y) in no event shall the
aggregate liability of the Seller or MI under this Agreement and of MI and
"Seller" therein under the 3-Pack Contract exceed an amount equal to Three
Million One Hundred Fifty-two Thousand Six Hundred Eighty Dollars
($3,152,680.00) plus the reasonable attorneys' fees and expenses incurred by
Purchaser in enforcing this Agreement and/or the 3-Pack Contract against Seller,
"Seller" under the 3-Pack Contract and/or MI in respect of such default. It is
understood and agreed that for purposes of this Section 10.1, if a default
results from a false representation or warranty, such default shall be deemed
cured if the events, conditions, acts or omissions giving rise to the falsehood
are cured within the applicable cure period even though, as a technical matter,
such representation or warranty was false as of the date actually made.
10.2 Default by the Purchaser. If (i) the Purchaser shall have made any
representation or warranty herein which shall be untrue or misleading in any
material respect, or (ii) if the Purchaser shall fail to perform any of the
covenants and agreements contained herein and such condition or failure shall
continue for a period of ten (10) days (or such additional period as may be
reasonably required to effectuate a cure of the same; provided that no such
extension of time shall apply to Purchaser's failure to pay the Purchase Price
at Closing or otherwise operate to extend the Closing Date) after notice thereof
from the Seller, or (iii) the Seller becomes entitled to terminate (and in fact
terminates) the 3-Pack Contract as a result of Purchaser's default pursuant to
Section 10.2 of the 3-Pack Contract, the Seller may, as its sole and exclusive
remedy, at law, or in equity, terminate this Agreement, whereupon the Purchaser
shall pay to the Seller, as liquidated damages and not as a penalty, for and on
account of the Property (and the properties remaining unsold under the 3-Pack
Contract, if any) the sum of Three Million One Hundred Fifty-two Thousand Six
Hundred Eighty Dollars ($3,152,680.00) (which sum is inclusive of the amount of
liquidated damages, if any, paid or payable by Purchaser pursuant to Section
10.02 of the 3-Pack Contract, it being the intent and agreement of the parties
that Purchaser's aggregate liability for liquidated damages under this Agreement
and the 3-Pack Contract shall not exceed $3,152,680.00, including any portion of
the Aggregate Deposit applied thereto pursuant to Section 10.3 hereof or Section
10.3 of the 3-Pack Contract), plus the reasonable attorneys' fees and expenses
incurred by Seller in enforcing this Agreement and/or the 3-Pack Contract
against Purchaser in respect of Purchaser's default.
It is understood and agreed that for purposes of this Section 10.2, if
a default results from a false representation or warranty, such default shall be
deemed cured if the events, conditions, acts or omissions giving rise to the
falsehood are cured within the applicable cure period even though, as a
technical matter, such representation or warranty was false as of the date
actually made.
10.3 Purchaser's Deposit. In order to secure Purchaser's performance
hereunder, including, without limitation, its obligation to pay liquidated
damages as provided in Section 10.2, Purchaser has heretofore provided, or will
provide immediately upon the execution and delivery of this Agreement, a Seven
Hundred Sixty Thousand Seven Hundred Thirty Dollar ($760,730.00) cash deposit
(the "Deposit") to the Escrow Agent. The Escrow Agent shall hold and disburse
the Deposit pursuant to the terms of that certain Escrow Agreement, dated
November 24, 1999 (the "Original Escrow Agreement"), entered into among MI,
Purchaser, Escrow Agent, TownePlace Management Corporation and Residence Inn by
Marriott, Inc., as amended by that certain Amendment to Escrow Agreement of even
date herewith, entered into among the parties to the Original Escrow Agreement
and SpringHill SMC Corporation (the Original Escrow Agreement as so amended
herein the "Escrow Agreement"). The Deposit together with the "Deposit" under
the 3-Pack Contract is herein referred to as the "Aggregate Deposit."
If Purchaser defaults on its obligations hereunder such that Seller
becomes entitled to liquidated damages as provided in Section 10.2, Seller shall
be immediately entitled to the entire Aggregate Deposit to be applied to such
liquidated damages. If Purchaser elects to terminate this Agreement pursuant to
Sections 2.3, 2.4, 2.5, 2.7 or 8.4, or if Seller elects to terminate this
Agreement pursuant to the provisions of Section 3.5 or 3.6, or if either party
elects to terminate this Agreement pursuant to Section 3.1, Purchaser shall be
entitled to the prompt return of the Deposit and the parties shall so direct the
Escrow Agent to pay to Purchaser and thereupon shall have no further obligations
hereunder except any obligations which expressly survive a termination of this
Agreement. In the event Seller becomes entitled to the Aggregate Deposit,
inclusive of the Deposit, hereunder, the Escrow Agent shall promptly disburse
the Aggregate Deposit, including the Deposit, to Seller in the manner provided
for in the Escrow Agreement.
The Aggregate Deposit (inclusive of the Deposit) shall be held by
Escrow Agent in an interest-bearing account and Escrow Agent shall be authorized
to deliver the interest accrued thereon from time to time to Purchaser. Upon the
occurrence of the Closing, the Escrow Agent shall return the Deposit to
Purchaser.
SECTION 11. MISCELLANEOUS.
11.1 Agreement to Indemnify. (a) Subject to any express provisions of
this Agreement to the contrary, from and after the Closing, (i) the Seller and,
if Seller is not MI, MI shall indemnify, defend and hold harmless the Purchaser
from and against any and all obligations, claims, losses, damages, liabilities,
and expenses (including, without limitation, reasonable attorneys' and
accountants' fees and disbursements) arising out of (v) any termination of
employment of employees at the Property prior to or upon the Closing resulting
from the termination of employment of such employees by Seller or its operator
and/or the failure of Tenant to hire such employees (including, without
limitation, severance pay, wrongful discharge claims, and claims and/or fines
under federal, state or local statutes or regulations, including without
limitation the Worker Adjustment and Retraining Notification Act), (w) the
employment of such individuals prior to the Closing Date, including, without
limitation, employment-related claims; COBRA-related claims; disability claims;
vacation; sick leave; wages; salaries; payments due (or allocable) to any
medical, pension, and health and welfare plans, and any other employee benefit
plan established for the employees at the Property; and employee-related tax
obligations such as, but not limited to, social security and unemployment taxes
accrued as of the Closing Date, (x) events, acts, or omissions of the Seller
that occurred in connection with its ownership or operation of the Property
prior to the Closing Date or obligations accruing prior to the Closing Date
under any Contract of Seller (except to the extent of any adjustment made in
respect of such Contract at Closing), (y) any material breach of a
representation or warranty made by Seller and, if Seller is not MI, MI under
Section 6 (as such representations and warranties may be modified pursuant to
said Section 6 and subject to the one-year limitation period set forth therein),
or (z) any claim against Purchaser for damage to property of others or injury to
or death of any person or any debts or obligations of or against Seller and
arising out of any event occurring on or about or in connection with Property or
any portion thereof, at any time or times prior to the Closing Date, and (ii)
the Purchaser and, if Purchaser is not CHLP, CHLP shall indemnify, defend and
hold harmless the Seller from and against any and all obligations, claims,
losses, damages, liabilities and expenses (including, without limitation,
reasonable attorneys' and accountants' fees and disbursements) arising out of
(x) events, acts, or omissions of the Purchaser that occur in connection with
its ownership or operation of the Property from and after the Closing Date or
obligations accruing from and after the Closing Date under any Contract (except
to the extent of any adjustment made in respect of such Contract at Closing),
(y) any material breach of a representation or warranty made by Purchaser and,
if Purchaser is not CHLP, CHLP under Section 7 (and subject to the one year
limitation period set forth therein), or (z) any claim against Seller for damage
to property of others or injury to or death of any person or any claims for any
debts or obligations of or against Seller and arising out of any event occurring
on or about or in connection with the Property or any portion thereof, at any
time or times from and after the Closing Date. The provisions of this Section
11.1 shall not apply to any liabilities or obligations with respect to hazardous
substances, the liabilities of the parties with respect thereto being governed
by the representation and warranty of Seller set forth in Section 6.17.
(b) Whenever it is provided in this Agreement that an obligation will
continue after Closing as an obligation of Purchaser or be assumed by Purchaser
after the Closing, the Purchaser and, if Purchaser is not CHLP, CHLP shall be
deemed to have also agreed to indemnify and hold harmless the Seller and MI and
their respective successors and assigns from and against all claims, losses,
damages, liabilities, costs, and expenses (including, without limitation,
reasonable attorneys' and accountants' fees and expenses) arising from any
failure of the Purchaser to perform the obligation so continued or assumed after
the Closing (but not with respect to any act or omission which occurred prior to
Closing).
(c) Whenever either party shall learn through the filing of a claim or
the commencement of a proceeding or otherwise of the existence of any liability
for which the other party is or may be responsible under this Agreement, the
party learning of such liability shall notify the other party promptly and
furnish such copies of documents (and make originals thereof available) and such
other information as such party may have that may be used or useful in the
defense of such claims and shall afford said other party full opportunity to
defend the same in the name of such party and shall generally cooperate with
said other party in the defense of any such claim.
(d) The provisions of this Section 11.1 shall survive the Closing
hereunder and the termination of this Agreement. All representations and
warranties made in this Agreement shall survive the Closing for a period of one
year. Any action, suit or proceeding with respect to the truth, accuracy or
completeness of any such representation or warranty shall be commenced, if at
all, on or before the date which is twelve (12) months after the date of Closing
and served promptly (but in no event later than sixty (60) days after
commencement) and, if not commenced on or before such date and so served,
thereafter shall be void and of no force or effect.
11.2 Brokerage Commissions. Each of the parties hereto represents to
the other party that it dealt with no broker, finder or like agent in connection
with this Agreement or the transactions contemplated hereby, and that it
reasonably believes that there is no basis for any other person or entity to
claim a commission or other compensation for bringing about this Agreement or
the transactions contemplated hereby. The Seller shall indemnify and hold
harmless the Purchaser and its successors and assigns from and against any loss,
liability or expense, including, reasonable attorneys' fees, arising out of any
claim or claims for commissions or other compensation for bringing about this
Agreement or the transactions contemplated hereby made by any broker, finder or
like agent, if such claim or claims are based in whole or in part on dealings
with the Seller. The Purchaser shall indemnify and hold harmless the Seller and
its successors and assigns from and against any loss, liability or expense,
including, reasonable attorneys' fees, arising out of any claim or claims for
commissions or other compensation for bringing about this Agreement or the
transactions contemplated hereby made by any broker, finder or like agent, if
such claim or claims are based in whole or in part on dealings with the
Purchaser. Nothing contained in this section shall be deemed to create any
rights in any third party. The provisions of this Section 11.2 shall survive the
Closing hereunder and any termination of this Agreement.
11.3 Intentionally Omitted.
11.4 Publicity. The parties agree that no party shall, with respect to
this Agreement and the transactions contemplated hereby, contact or conduct
negotiations with public officials, make any public pronouncements, issue press
releases or otherwise furnish information regarding this Agreement or the
transactions contemplated hereby to any third party without the consent of the
other party, which consent shall not be unreasonably withheld, conditioned or
delayed, except as may be required by law or as may be reasonably necessary, on
a confidential basis, to inform any rating agencies, potential sources of
financing, financial analysts, or to entities involved with a sale of a
controlling interest in the Seller, the Purchaser or any of their affiliates or
to receive legal, accounting and/or tax advice; provided, however, that, if such
information is required to be disclosed by law, the party so disclosing the
information will use reasonable efforts to give notice to the other party as
soon as such party learns that it must make such disclosure.
11.5 Notices. (a) Any and all notices, demands, consents, approvals,
offers, elections and other communications required or permitted under this
Agreement shall be deemed adequately given if in writing and the same shall be
delivered either in hand, by telecopier with written acknowledgment of receipt,
or by mail or Federal Express or similar expedited commercial carrier, addressed
to the recipient of the notice, postpaid and registered or certified with return
receipt requested (if by mail), or with all freight charges prepaid (if by
Federal Express or similar carrier).
(b) All notices required or permitted to be sent hereunder shall be
deemed to have been given for all purposes of this Agreement upon the date of
acknowledged receipt, in the case of a notice by telecopier, and, in all other
cases, upon the date of receipt or refusal, except that whenever under this
Agreement a notice is either received on a day which is not a Business Day or is
required to be delivered on or before a specific day which is not a Business
Day, the day of receipt or required delivery shall automatically be extended to
the next Business Day.
(c) All such notices shall be addressed,
if to the Seller to:
Marriott International, Inc
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇. 52/924.11
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Treasury
[Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇]
with a copy to:
Marriott International, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇. 52/923.00
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Law Department
[Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇]
and
Holland & Knight LLP ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
[Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇]
If to the Purchaser, to:
CNL Hospitality Partners, LP
CNL Center at City Commons
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Senior Vice President of Finance and Administration
[Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇]
with a copy to:
Lowndes, Drosdick, Doster, ▇▇▇▇▇▇ & ▇▇▇▇, P.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Post Office Box 2809
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
[Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇]
If to MI:
Marriott International, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇. 52/924.11
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Treasury
[Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Marriott International, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇. 52/923.00
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Law Department
[Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇]
and
Holland & Knight LLP ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
[Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇]
(d) By notice given as herein provided, the parties hereto and their
respective successors and assigns shall have the right from time to time and at
any time during the term of this Agreement to change their respective addresses
effective upon receipt by the other parties of such notice and each shall have
the right to specify as its address any other address within the United States
of America.
11.6 Waivers, Etc. Any waiver of any term or condition of this
Agreement, or of the breach of any covenant, representation or warranty
contained herein, in any one instance, shall not operate as or be deemed to be
or construed as a further or continuing waiver of any other breach of such term,
condition, covenant, representation or warranty or any other term, condition,
covenant, representation or warranty, nor shall any failure at any time or times
to enforce or require performance of any provision hereof operate as a waiver of
or affect in any manner such party's right at a later time to enforce or require
performance of such provision or any other provision hereof. This Agreement may
not be amended, nor shall any waiver, change, modification, consent or discharge
be effected, except by an instrument in writing executed by or on behalf of the
party against whom enforcement of any amendment, waiver, change, modification,
consent or discharge is sought.
11.7 Assignment; Successors and Assigns. This Agreement and all rights
and obligations hereunder shall not be assignable by any party without the
written consent of the other party, except that the Purchaser may assign this
Agreement to any entity wholly owned, directly or indirectly, by CHLP provided,
however, that, in the event this Agreement shall be assigned to any entity
wholly owned, directly or indirectly, by CHLP, CHLP shall remain fully and
primarily liable for the obligations of the "Purchaser" hereunder. This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and permitted assigns. This Agreement is
not intended and shall not be construed to create any rights in or to be
enforceable in any part by any other persons.
11.8 Severability. If any provision of this Agreement shall be held or
deemed to be, or shall in fact be, invalid, inoperative or unenforceable as
applied to any particular case in any jurisdiction or jurisdictions, or in all
jurisdictions or in all cases, because of the conflict of any provision with any
constitution or statute or rule of public policy or for any other reason, such
circumstance shall not have the effect of rendering the provision or provisions
in question invalid, inoperative or unenforceable in any other jurisdiction or
in any other case or circumstance or of rendering any other provision or
provisions herein contained invalid, inoperative or unenforceable to the extent
that such other provisions are not themselves actually in conflict with such
constitution, statute or rule of public policy, but this Agreement shall be
reformed and construed in any such jurisdiction or case as if such invalid,
inoperative or unenforceable provision had never been contained herein and such
provision reformed so that it would be valid, operative and enforceable to the
maximum extent permitted in such jurisdiction or in such case.
11.9 Counterparts, Etc. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement
constitutes the entire agreement of the parties hereto with respect to the
subject matter hereof and shall supersede and take the place of any other
instruments purporting to be an agreement of the parties hereto relating to the
subject matter hereof. This Agreement may not be amended or modified in any
respect other than by the written agreement of all of the parties hereto.
11.10 Governing Law. This Agreement shall be interpreted, construed,
applied and enforced in accordance with the laws of the State of Maryland.
To the maximum extent permitted by applicable law, any action to
enforce, arising out of, or relating in any way to, any of the provisions of
this Agreement may be brought and prosecuted in such court or courts located in
the State of Maryland as is provided by law; and the parties consent to the
jurisdiction of said court or courts located in the State of Maryland and to
service of process by registered mail, return receipt requested, or by any other
manner provided by law.
11.11 Performance on Business Days. In the event the date on which
performance or payment of any obligation of a party required hereunder is other
than a Business Day, the time for payment or performance shall automatically be
extended to the first Business Day following such date.
11.12 Attorneys' Fees. If any lawsuit or arbitration or other legal
proceeding arises in connection with the interpretation or enforcement of this
Agreement, the prevailing party therein shall be entitled to receive from the
other party the prevailing party's costs and expenses, including reasonable
attorneys' fees, incurred in connection therewith, in preparation therefor and
on appeal therefrom, which amounts shall be included in any judgment therein.
11.13 Relationship. Nothing herein contained shall be deemed or
construed by the parties hereto, nor by any third party, as creating the
relationship of principal and agent or of partnership or joint venture between
the parties hereto, it being understood and agreed that no provision contained
herein, nor any acts of the parties hereto shall be deemed to create the
relationship between the parties hereto other than the relationship of seller
and purchaser.
11.14 Section and Other Headings. The headings contained in this
Agreement are for reference purposes only and shall not in any way affect the
meaning or interpretation of this Agreement.
11.15 Disclosure. From and after the Closing, and at the written
request of Purchaser, Seller shall provide such financial statements in respect
of such Seller's operations from the date of Seller's commencement of business
to the date of such Closing to the extent such financial statements are required
by applicable securities laws and regulations and the SEC's interpretation
thereof; provided, however, that (i) Seller reserves the right, in good faith,
to challenge, and require Purchaser to use commercially reasonable efforts to
challenge, any assertion by the SEC, any other applicable regulatory authority,
or Purchaser's independent public accountants that applicable law or regulations
require the provision of such financial statements, (ii) Purchaser shall not,
without Seller's consent (which consent shall not be unreasonably withheld,
delayed or conditioned), acquiesce to any such challenged assertion until
Purchaser has exhausted all reasonable available avenues of administrative
review, and (iii) Purchaser shall consult with Seller in pursuing any such
challenge and will allow Seller to participate therein if and to the extent that
Seller so elects. Any and all costs and expenses incurred by Seller, including
without limitation reasonable attorneys fees and expenses, in connection with
providing such financial statements to Purchaser or in connection with any
challenge to an SEC assertion (including Seller's consultation or participation
with Purchaser in respect of same) shall be reimbursed to Seller by Purchaser
within ten (10) days following written demand by Seller.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as a sealed instrument as of the date first above written.
SELLERS:
SPRINGHILL SMC CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President
PURCHASER:
CNL HOSPITALITY PARTNERS, LP
By: CNL Hospitality GP Corp.,
a Delaware corporation, its general
partner
By: /s/ C. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
C. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇,
Vice President of Finance
and Administration
MI:
MARRIOTT INTERNATIONAL, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Authorized Signatory
The undersigned, CNL Hospitality Properties, Inc., joins herein for the purpose
of evidencing its agreement to enter into and deliver the Guaranty of Landlord's
Obligations pursuant to the terms of the foregoing Agreement.
CNL HOSPITALITY PROPERTIES, INC.
By: /s/ C. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
C. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇,
Vice President of Finance and
Administration