Exhibit 2.1
AMENDED AND RESTATED PURCHASE AND SALE AGREEMENT
BETWEEN
PRIME HOSPITALITY CORP.,
as Seller,
and
AMERICAN GENERAL HOSPITALITY OPERATING PARTNERSHIP, L.P.
as Purchaser
January 7, 1998
Las Vegas, Nevada (Crowne Plaza)
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS....................................... 1
1.1. "Acquisition Costs"..................................... 1
1.2. "Adjustments"........................................... 2
1.3. "Affiliate"............................................. 2
1.4. "Agreement"............................................. 2
1.5. "Business Day".......................................... 2
1.6. "Change in Control"..................................... 2
1.7. "Closing"............................................... 2
1.8. "Closing Date".......................................... 2
1.9. "Code".................................................. 2
1.10. "Construction Costs"................................... 2
1.11. "Contracts"............................................ 3
1.12. "Cut-Off Time"......................................... 3
1.13. "Defective Property"................................... 3
1.14. "Deposit".............................................. 3
1.15. "Diligence Notice"..................................... 3
1.16. "Documents"............................................ 3
1.17. "Due Diligence Material"............................... 4
1.18. "Environmental Laws"................................... 4
1.19. "Environmental Report"................................. 4
1.20. "Escrow Agent"......................................... 4
1.21. "Escrow Agreement"..................................... 4
1.22. "Estoppel Certificate"................................. 4
1.23. "Exchange Act"......................................... 5
1.24. "Excluded Intellectual Property"....................... 5
1.25. "FF&E"................................................. 5
1.26. "FF&E Leases".......................................... 5
1.27. "Financial Statements"................................. 5
1.28. "Franchise Agreement".................................. 5
1.29. "Franchisor Comfort Letters"........................... 5
1.30. "Full Service Hotels".................................. 5
1.31. "Group Two Sale Agreement"............................. 5
1.32. "Hazardous Substance".................................. 6
1.33. "Hotel"................................................ 6
1.34. "Improvements"......................................... 6
1.35. "Intangible Property".................................. 6
1.36. "Leased FF&E".......................................... 6
1.37. "Letter of Credit...................................... 6
1.38. "Liquidated Damages"................................... 6
1.39. "Liquor License"....................................... 6
1.40. "Mortgagee"............................................ 6
1.41. "Offer"................................................ 6
1.42. "Operating Leases"..................................... 7
1.43. "Operating Lessee"..................................... 7
1.44. "Original Agreement"................................... 7
1.45. "Other Agreements"..................................... 7
1.46. "Other Revenues"....................................... 7
1.47. "Permitted Encumbrances"............................... 7
1.48. "Person"............................................... 7
1.49. "Project Plan"......................................... 7
(i)
1.50. "Property"............................................. 7
1.51. "Proposed AmeriSuites Hotel"........................... 7
1.52. "Prorations Settlement"................................ 8
1.53. "Purchase Price"....................................... 8
1.54. "Purchaser"............................................ 8
1.55. "Real Property"........................................ 8
1.56. "REIT"................................................. 8
1.57. "Restricted Period".................................... 8
1.58. "Room Revenues"........................................ 8
1.59. "SEC Documents"........................................ 8
1.60. "Seller"............................................... 8
1.61. "Seller's knowledge"................................... 8
1.62. "Seller Subsidiary".................................... 8
1.63. "Space Leases"......................................... 8
1.64. "Subordination, Nondisturbance and Attornment
Agreement"........................................... 9
1.65. "Survey"............................................... 9
1.66. "Survival Period"...................................... 9
1.67. "Title Commitment"..................................... 9
1.68. "Title Company"........................................ 9
1.69. "WARN Act"............................................. 9
SECTION 2. PURCHASE AND SALE................................. 9
2.1. Purchase and Sale....................................... 9
2.2. Deposit................................................. 9
2.3. Closing................................................. 9
2.4. Purchase Price.......................................... 10
2.5. Tax Free Exchange....................................... 10
SECTION 3. DILIGENCE; CASUALTY AND CONDEMNATION.............. 11
3.1. Diligence Inspections................................... 11
3.2. Defective Property...................................... 13
3.3. Title Matters........................................... 14
3.4. Survey.................................................. 15
3.5. Additional Termination Option........................... 15
3.6. Adjournment of Closing.................................. 16
SECTION 4. CONDITIONS TO PURCHASER'S OBLIGATION TO CLOSE..... 16
4.1. Closing Documents....................................... 16
4.2. Condition of the Property............................... 18
4.3. Title Policies.......................................... 18
4.4. Opinions of Counsel..................................... 18
4.5. Other Approvals......................................... 19
4.6. Representations......................................... 19
4.7. Default Under Group Two Sale Agreement.................. 19
4.8. Default under Other Agreements.......................... 19
SECTION 5. CONDITIONS TO SELLER'S OBLIGATION TO CLOSE........ 19
5.1. Purchase Price.......................................... 19
5.2. Closing Documents....................................... 20
5.3. Opinion of Counsel...................................... 20
5.4. Other Approvals......................................... 20
5.5. Representations......................................... 20
5.6. Default Under Group Two Sale Agreement.................. 20
(ii)
5.7. Default under Other Agreements......................... 21
SECTION 6. REPRESENTATIONS OF SELLER......................... 21
6.1. Status and Authority of Seller......................... 21
6.2. Action of Seller....................................... 21
6.3. No Violations of Agreements............................ 21
6.4. Litigation............................................. 22
6.5. Existing Leases, Agreements, Etc....................... 22
6.6. Franchise Agreement.................................... 22
6.7. Contracts.............................................. 22
6.8. Taxes.................................................. 22
6.9. Not a Foreign Person................................... 22
6.10. Hazardous Substances................................... 23
6.11. Insurance.............................................. 23
6.12. FF&E................................................... 23
6.13. Employment and Union Contracts......................... 23
6.14. Adjacent Land Leases................................... 23
6.15. Trademarks............................................. 23
6.16. Compliance with Laws................................... 23
6.17. Inventory.............................................. 23
6.18. Holder of Liquor License............................... 23
SECTION 7. REPRESENTATIONS OF PURCHASER...................... 25
7.1. Status and Authority of Purchaser...................... 25
7.2. Action of Purchaser.................................... 25
7.3. No Violations of Agreements............................ 25
7.4. Litigation............................................. 25
7.5. No Conflicts........................................... 26
SECTION 8. COVENANTS OF SELLER AND PURCHASER................. 27
8.1. Covenants of Seller.................................... 27
SECTION 9. CLOSING COSTS..................................... 29
9.1. Closing Costs.......................................... 29
SECTION 10. DEFAULT.......................................... 30
10.1. Default by Seller...................................... 30
10.2. Default by Purchaser................................... 30
SECTION 11. LIQUOR LICENSE; FRANCHISE AGREEMENT............... 31
11.1. Liquor License......................................... 31
11.2. Franchise Agreement.................................... 31
11.3. License for Excluded Intellectual Property............. 32
SECTION 12. ADJUSTMENTS, PRORATIONS AND DEPOSITS............. 33
12.1. Matters to be Adjusted or Prorated..................... 33
12.2. Certiorari Proceeding.................................. 35
SECTION 13. RIGHT OF FIRST REFUSAL; RADIUS RESTRICTION;
AMERISUITES HOTEL PURCHASE OPTION................ 35
13.1. Right of First Refusal on Full Service Hotels.......... 35
(iii)
13.2. Radius Restriction..................................... 37
13.3. AmeriSuites Hotels..................................... 37
13.4. Multi-Property Exception............................... 40
13.5. Survival and Damages................................... 40
13.6. General Provisions..................................... 41
SECTION 14. MISCELLANEOUS.................................... 42
14.1. Agreement to Indemnify................................. 42
14.2. Brokerage Commissions.................................. 43
14.3. Publicity.............................................. 43
14.4. Confidentiality........................................ 44
14.5. Notices................................................ 45
14.6. Waivers, Etc........................................... 46
14.7. Assignment; Successors and Assigns..................... 46
14.8. Severability........................................... 47
14.9. Counterparts, Etc...................................... 47
14.10. Governing Law......................................... 47
14.11. Performance on Business Days.......................... 48
14.12. Attorneys' Fees....................................... 48
14.13. Section and Other Headings............................ 48
14.14. Financing and Priority of Operating Leases............ 48
14.15. Group Two Purchase and Sale Agreement................. 48
14.16. Exceptions to Liquidated Damages...................... 48
EXHIBITS*
Exhibit B Legal Description of the Premises
Exhibit D Franchise Agreement
Exhibit E-1 Form of Franchisor Comfort Letter in favor of Purchaser
Exhibit E-2 Form of Franchisor Comfort Letter in favor of Mortgagee
Exhibit H Form of Operating Lease
Exhibit I List of Personal Property and Equipment Subject to UCC
Financing Statements
Exhibit K List of Space Leases and Security Deposits
Exhibit L Form of Subordination, Non-Disturbance and Attornment
Agreement
Exhibit O Form of Representation Letter in favor of Accountants
Exhibit R Form of ▇▇▇▇ of Sale and Assignment Agreement
Exhibit S Form of Assignment and Assumption of Space Leases
Exhibit T List of Leased FF&E
Exhibit U List of Employment Agreements and Union Contracts
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* The following Exhibits have been deemed non-material for investment purposes
however, a copy of any Exhibit will be furnished to the Securities and
Exchange Commission upon request.
(iv)
Exhibit V Exclusions to Representations Regarding Compliance with
Applicable Laws
Exhibit W Form of Assignment and Assumption of Contracts
Exhibit X Environmental Report
(v)
AMENDED AND RESTATED AND SALE AGREEMENT
THIS AMENDED AND RESTATED PURCHASE AND SALE AGREEMENT is made as of the
7th day of January, 1998, between PRIME HOSPITALITY CORP., a Delaware
corporation ("Seller"), as seller, and AMERICAN GENERAL HOSPITALITY OPERATING
PARTNERSHIP, L.P. ("Purchaser"), as purchaser.
W I T N E S S E T H:
WHEREAS, Seller and Purchaser entered into that certain
Purchase and Sale Agreement dated as of November 20, 1997, as amended by
Amendment to Purchase and Sale Agreement dated January 7, 1998 (the "Original
--------
Agreement"), for the sale of certain properties, including the Property (as
---------
defined below); and
WHEREAS, Seller and Purchaser desire to amend and restate the
Original Agreement in the form of eight separate contracts, one contract for
each of the Properties (as defined in the Original Agreement) (such contracts
other than this Agreement being referred to herein as the "Other Agreements");
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and
WHEREAS, this Agreement shall constitute one of such eight
separate contracts which shall amend and restate the Original Agreement; and
WHEREAS, Seller is willing to sell Seller's interest in the
Property to Purchaser, subject to and 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, Seller and Purchaser
hereby agree that, with respect to the Property, all of the provisions of the
Original Agreement are superseded, amended and restated in their entirety to
read as follows:
SECTION 1. DEFINITIONS.
Capitalized terms used in this Agreement shall have the
meanings set forth below or in the Section of this Agreement referred to below:
1.1. "Acquisition Costs" shall mean all costs and expenses
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incurred by Seller in connection with the proposed acquisition of a Proposed
AmeriSuites Hotel, including without limitation, the purchase price under any
contract of sale for the same, any architect, engineer, attorney, accountant and
other professional fees, any due diligence expenses incurred in assessing the
Proposed AmeriSuites Hotel, title and survey costs, transfer taxes and pre-
opening expenses of the hotel, including without limitation, costs incurred in
the reflagging of the hotel, promotional and advertising expenses,
administrative
expenses, employee hiring and training expenses, the cost of supplies, equipment
and furniture purchased for the hotel, governmental, utility or other deposits
required for operation of the hotel and similar costs.
1.2. "Adjustments" shall have the meaning given such term in
-----------
Section 12.1.
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1.3. "Affiliate" shall mean, with respect to any entity, any
---------
entity that , directly or indirectly, controls or is controlled by or is under
common control with such entity. For the purposes of this definition, "control"
(including the correlative meanings of the terms "controlled by" and "under
common control with"), as used with respect to any entity, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such entity, through the ownership
of voting securities, partnership interests or other equity interests.
1.4. "Agreement" shall mean this Amended and Restated
---------
Purchase and Sale Agreement, together with Exhibits A through X attached hereto,
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as it and they may be amended from time to time as herein provided.
1.5. "Business Day" shall mean any day other than a Saturday,
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Sunday or any other day on which banking institutions in the State of New York
are authorized by law or executive action to close.
1.6. "Change in Control" shall mean (a) any merger or
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consolidation of Seller with or into any Person or any sale, transfer or other
conveyance, whether direct or indirect, of all or substantially all of the
beneficial ownership of Seller, in one transaction or a series of related
transactions, if, immediately after giving effect to such transaction any Person
is or becomes, directly or indirectly, the beneficial owner of more than fifty
percent (50%) of the shares of the total voting power of Seller; or (y) any
Person obtains the power to direct or cause the direction of the management
policies of Seller, whether through voting securities or by contract or
otherwise.
1.7. "Closing" shall have the meaning given such term in
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Section 2.3.
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1.8. "Closing Date" shall have the meaning given such term
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in Section 2.3.
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1.9. "Code" shall mean the Internal Revenue Code of 1986, as
----
amended, and the treasury regulations promulgated thereunder.
1.10. "Construction Costs" shall mean all hard and soft costs
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incurred by Seller or the Seller Subsidiary, as appropriate, in connection with
the acquisition of the site and
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construction and related improvements for a Proposed AmeriSuites Hotel,
including without limitation (a) the cost of funds used for such construction,
whether provided by a third party lender or by Seller (the interest on such
funds being calculated in the latter event at a rate equal to the prime rate
reported in the Money Rates column or comparable section of The Wall Street
---------------
Journal (or if The Wall Street Journal is no longer published, a different
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publication designated by Seller) as the rate then in effect for corporate loans
at large U.S. money center commercial banks, plus three percent (3%) compounded
monthly), (b) attorney, accountant, engineer, architect, contractor and other
professional fees; (c) any due diligence expenses incurred in assessing a site
for the Proposed AmeriSuites Hotel; (d) title and survey costs; (e) transfer
taxes; and (f) pre-opening expenses of the hotel, including without limitation,
promotional and advertising expenses, administrative expenses, employee hiring
and training expenses, the cost of supplies, equipment and furniture ordered or
purchased for the hotel, governmental, utility or other deposits required for
operation of the hotel and similar costs.
1.11. "Contracts" shall mean, all hotel licensing agreements
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and other service contracts (including without limitation the Franchise
Agreement and the Liquor License), equipment leases, booking agreements and
other arrangements or agreements to which Seller is a party affecting the
ownership, repair, maintenance, management, leasing or operation of the
Property, to the extent Seller's interest therein is assignable or transferable.
1.12. "Cut-Off Time" shall mean 12:01 a.m. on the Closing
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Date of this Agreement.
1.13. "Defective Property" shall mean the Property if and
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when such Property (i) has been condemned in whole or in part, or (ii) by reason
of damage by fire, vandalism, acts of God or other casualty or cause, has
suffered damage such that expenditures equal to or greater than $500,000 (as
such cost is determined by an architect or engineer selected by Seller and
reasonably satisfactory to Purchaser) shall be required in order to restore the
Property into substantially the same condition as existing prior to such damage.
1.14. "Deposit" shall have the meaning given such term in
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Section 2.2.
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1.15. "Diligence Notice" shall mean that certain letter,
----------------
dated November 26, 1997, from Purchaser to Seller, delivered pursuant to
Sections 3.3 and/or 3.4 of the Original Agreement.
1.16. "Documents" shall mean, with respect to any Property,
---------
all books, records and files relating to the leasing, maintenance, management or
operation of the Property.
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1.17. "Due Diligence Material" shall have the meaning set
----------------------
forth in Section 14.4.
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1.18. "Environmental Laws" shall mean the Comprehensive
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Environmental Response, Compensation and Liability Act, 42 U.S.C. (S) 9601, et
seq., the Resource Conservation and Recovery Act, 42 U.S.C. (S) 6901, et seq.,
the Clean Air Act, 42 U.S.C. (S) 7401, et seq., the Clean Water Act, 33 U.S.C.
(S) 1251, et seq., the Toxic Substances Control Act, 15 U.S.C. (S) 2601, et
seq., and the Occupational Safety and Health Act, 29 U.S.C. (S) 651, et seq., as
any of the preceding have been amended prior to the date hereof, and any other
federal, state, or local law, ordinance, regulation, rule, order, decision or
permit relating to the protection of the environment or of human health from
environmental effects of Hazardous Substances and which are applicable to the
Hotel.
1.19. "Environmental Report" shall have the meaning given
--------------------
such term in Section 6.10.
------------
1.20. "Escrow Agent" shall mean Chicago Title Insurance
------------
Company.
1.21. "Escrow Agreement" shall mean that certain Escrow
----------------
Deposit Agreement dated as of even date herewith among Purchaser, Seller and
Escrow Agent.
1.22. "Estoppel Certificate" shall mean a statement made by
--------------------
the franchisor under the Franchise Agreement in favor of Purchaser and/or any
Mortgagee certifying to such matters as Purchaser and/or its Mortgagee may
reasonably request, including, without limitation, the following: that an
attached copy of the Franchise Agreement is a true, correct and complete copy of
such Franchise Agreement which has not been modified except as identified; that
Seller is not in monetary or other default under the Franchise Agreement and
that no event has occurred which with the giving of notice or the passage of
time or both will become a default under the Franchise Agreement; and to any
other matters which franchisor is required to certify pursuant to the terms of
the Franchise Agreement;
in a form reasonably acceptable to said franchisor; provided, however, that if
the Franchise Agreement (i) does not require and the estoppel certificate is
delivered without the inclusion of a statement that no event has occurred which
with the giving of notice or the passage of time or both will become a default,
or (ii) refers to any non-monetary, immaterial defaults under the Franchise
Agreement on an estoppel certificate, then in either case the estoppel
certificate shall be deemed satisfactory to fulfill Seller's obligations under
Section 4.1(h), provided Seller shall indemnify and hold harmless Purchaser
--------------
against any loss, cost, damage, claim or liability occasioned by such immaterial
default.
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1.23. "Exchange Act" shall mean the Securities Exchange Act
------------
of 1934, as amended.
1.24. "Excluded Intellectual Property" shall mean all
------------------------------
trademarks, trade names, copyrights, patents or technical processes owned or
used, in whole or in part, by Seller at the Property and also used in connection
with any other property owned, leased or managed by Seller (and shall not
include such items which are used with respect to Seller itself or Seller's
Affiliates).
1.25. "FF&E" shall mean, all supplies, appliances, machinery,
----
devices, fixtures, appurtenances, equipment, furniture, furnishings and articles
of tangible personal property of every kind and nature whatsoever located in or
at, or used exclusively in connection with the ownership, operation or
maintenance of the Property, excluding however (a) the Leased FF&E and (b) any
such items which are owned by tenants, subtenants, concessionaires or licenses
under the Space Leases, guests, invitees, employees, agents or independent
contractors.
1.26. "FF&E Leases" shall mean the leases for all of the
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Leased FF&E.
1.27. "Financial Statements" shall have the meaning given such
--------------------
term in Section 3.1(b).
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1.28. "Franchise Agreement" shall mean the hotel licensing
--------------------
agreement applicable to the Hotel which is listed on Exhibit D, pursuant to
---------
which the Hotel is operated under the flag identified on Exhibit D.
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1.29. "Franchisor Comfort Letters" shall mean letters from
----------------------------
the franchisor under the Franchise Agreement in favor of the Purchaser (or such
designee of Purchaser as may take title to the Property, provided Purchaser
advises Seller of such designee at least thirty (30) days prior to Closing) and
any Mortgagee, substantially in the forms attached as Exhibits E-1 and E-2 or in
------------ ---
such other form as the franchisor, Purchaser or Purchaser's designee or
Mortgagee, as applicable, shall agree, provided that such other form
substantially covers the matters set forth in said Exhibits E-1 and E-2.
------------ ---
1.30. "Full Service Hotels" shall mean hotels with a
-------------------
restaurant and meeting facilities and may have some or all of the following:
conference facilities, banquet space, lounge areas, gift shops, recreational
facilities (including swimming pool), and guest services (including room
service, valet service and laundry).
1.31. "Group Two Sale Agreement" shall have the meaning given
------------------------
that term in Section 14.15.
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1.32. "Hazardous Substance" shall mean any substance defined
-------------------
as a "hazardous waste," "hazardous substance," "toxic substance," "hazardous
material," pollutant, contaminant or any word of similar import under any
Environmental Laws, including, without limitation, oil, petroleum, or any
petroleum-derived substance or waste, asbestos or asbestos-containing materials,
PCBs, explosives, radioactive materials, dioxin, or urea formaldehyde
insulation.
1.33. "Hotel" shall mean the hotel located at the Property.
-----
1.34. "Improvements" shall mean all buildings, fixtures,
------------
walls, fences, landscaping and other structures and improvements situated on,
affixed or appurtenant to the Real Property.
1.35. "Intangible Property" shall mean all transferable or
-------------------
assignable permits, certificates of occupancy, operating permits, sign permits,
development rights and approvals, certificates, licenses, warranties and
guarantees, telephone exchange numbers identified with the Property held by
Seller and all other transferable intangible property, miscellaneous rights,
benefits and privileges of any kind or character with respect to the Property
held by Seller, including without limitation all trademarks, trade names,
copyrights, patents or technical processes, owned and used by Seller which
pertain solely to the Property and expressly excluding the Excluded Intellectual
Property and all trademarks, trade names, copyrights, patents or technical
processes used with respect to Seller itself or Seller's Affiliates, and
expressly excluding the Contracts.
1.36. "Leased FF&E" shall have the meaning given such term in
-----------
Section 6.12.
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1.37. "Letter of Credit" shall have the meaning given such
----------------
term in Section 2.2.
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1.38. "Liquidated Damages" shall have the meaning given such
------------------
term in Section 10.1.
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1.39. "Liquor License" shall mean a license to provide
--------------
alcoholic beverages at the Hotel issued by the state in which the Hotel is
located or other applicable governmental authority.
1.40. "Mortgagee" shall mean any and all lenders who provides
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financing to Purchaser in connection with the Property.
1.41. "Offer" shall have the meaning given such term in
----
Section 13.
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1.42. "Operating Lease" shall mean the lease to be entered
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into between Purchaser or its designee, as landlord, and Operating Lessee, as
tenant, on the Closing Date with respect to the Property, substantially in the
form of Exhibit H.
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1.43. "Operating Lessee" shall mean a wholly-owned subsidiary
----------------
of Seller as tenant, of an Operating Lease(s); which is a single-purpose entity
with the sole purpose of leasing, managing, maintaining, operating and
performing other related functions for the Hotel.
1.44. "Original Agreement" shall have the meaning given such
------------------
term in the recitals to this Agreement.
1.45. "Other Agreements" shall have the meaning given such
----------------
term in the recitals to this Agreement.
1.46. "Other Revenues" shall have the meaning given such term
--------------
in Section 12.1.
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1.47. "Permitted Encumbrances" shall mean (a) liens for taxes,
----------------------
assessments and governmental charges with respect to the Property not yet due
and payable or due and payable but not yet delinquent or as to which adequate
reserves are provided therefor; (b) the Space Leases; (c) applicable zoning
regulations and ordinances provided the same do not prohibit or impair in any
material respect use of the Property as a hotel as currently operated and
constructed; (d) UCC Financing Statements securing the purchase price of FF&E
under the FF&E Leases identified on Exhibit I; provided, however, that such
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liens shall be confined to the asset in question and the aggregate principal
amount of indebtedness secured by such liens shall not exceed the cost of
acquisition or construction of the property subject thereto; (e) such other
nonmonetary encumbrances with respect to the Property which are not objected to
by Purchaser in accordance with Section 3; and (f) such exceptions or matters,
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as the case may be, otherwise accepted by Purchaser pursuant to Section 3.
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1.48. "Person" shall mean any individual, corporation, general
------
and limited partnership, limited liability company, stock company or
association, joint venture, association, company, trust, bank, trust company,
land trust, business trust or other legal entity.
1.49. "Project Plan" shall have the meaning given such term in
------------
Section 13.3.
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1.50. "Property" shall mean all of the Seller's interest in
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the Real Property, and in the FF&E, the Documents, the Improvements and the
Intangible Property related to the Real Property.
1.51. "Proposed AmeriSuites Hotel" shall have the meaning
--------------------------
given such term in Section 13.3.
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1.52. "Prorations Settlement" shall have the meaning given
---------------------
such term in Section 12.1.
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1.53. "Purchase Price" shall have the meaning given such term
--------------
in Section 2.4.
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1.54. "Purchaser" shall have the meaning given such term in
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the preamble to this Agreement.
1.55. "Real Property" shall mean the real property described
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on Exhibit B, together with all easements, rights of way, privileges, licenses
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and appurtenances which Seller may now own with respect thereto.
1.56. "REIT" shall mean American General Hospitality
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Corporation.
1.57. "Restricted Period" shall have the meaning given such
-----------------
term in Section 13.
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1.58. "Room Revenues" shall have the meaning given such term
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in Section 12.1.
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1.59. "SEC Documents" shall mean all reports, schedules,
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forms, statements and other documents filed by the REIT with the SEC pursuant to
the Securities Act and the reporting requirements of Section 13 of the Exchange
Act.
1.60. "Seller" shall have the meaning given such term in the
------
preamble to this Agreement.
1.61. "Seller's knowledge" shall mean the actual knowledge,
------------------
after review of the Seller's records with respect to the matter at issue, of (a)
▇▇▇▇ ▇. ▇▇▇▇▇▇, Executive Vice President and Chief Financial Officer, (b) ▇▇▇▇▇
▇▇▇▇▇, President and Chief Executive Officer, (c) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Vice
President and Corporate Controller, (d) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Senior Vice President,
Secretary and Corporate Counsel, (e) ▇▇▇▇▇ ▇▇▇▇▇, Regional Vice President, (f)
▇▇▇▇▇ ▇▇▇▇▇▇▇, Regional Vice President, (g) ▇▇▇▇▇ ▇▇▇▇▇▇, Regional Vice
President and (e) the present general manager of the Property. The individuals
identified in this Section 1.61 are the individuals in the Seller who are most
------------
likely to have information concerning matters to which Seller is making a
representation or warranty in this Agreement.
1.62. "Seller Subsidiary" shall have the meaning set forth in
-----------------
Section 13.1.
------------
1.63. "Space Leases" shall mean, collectively, all of the
------------
leases, together with any amendments or modifications thereto, for the lease of
space within the Property with Seller as lessor which are identified on
Exhibit K.
---------
-8-
1.64. "Subordination, Nondisturbance and Attornment Agreement"
------------------------------------------------------
shall mean if Mortgagee desires a lien superior in priority to the Operating
Lease, an agreement substantially in the form attached hereto as Exhibit L.
---------
1.65. "Survey" shall have the meaning given such term in
------
Section 3.4.
-----------
1.66. "Survival Period" shall have the meaning given such term
---------------
in Section 6.
---------
1.67. "Title Commitment" shall have the meaning given such
----------------
term in Section 3.3.
-----------
1.68. "Title Company" shall mean, collectively, Chicago Title
-------------
Insurance Company and Commonwealth Land Title Insurance Company, each as a 50%
co-insurers, or such other title insurance company or companies as shall have
been reasonably approved by Purchaser and Seller.
1.69. "WARN Act" shall have the meaning given such term in
--------
Section 8.1(e).
--------------
SECTION 2. PURCHASE AND SALE.
2.1. Purchase and Sale. In consideration of the mutual
-----------------
covenants herein contained, Purchaser hereby agrees to purchase from Seller, and
Seller hereby agrees to sell to Purchaser, all of Seller's right, title and
interest in and to the Property for the Purchase Price, subject to and in
accordance with the terms and conditions of this Agreement.
2.2. Deposit. Purchaser has deposited with the Escrow Agent
-------
the sum of One Million Four Hundred Thirty-Six Thousand Two Hundred Fifty
Dollars ($1,436,250) (together with all interest accrued thereon, if any, the
"Deposit") in the form of an unconditional, irrevocable letter of credit issued
-------
by Bank One, Texas, N.A. (the "Letter of Credit"). The Letter of Credit shall be
----------------
in the amount of Seven Million Five Hundred Thousand Dollars ($7,500,000), which
amount shall represent the Deposit as well as the deposits required pursuant to
the Other Agreements. The Deposit (and the Letter of Credit) shall be held
pursuant to, and disbursed according to, the terms of the Escrow Agreement.
Notwithstanding anything to the contrary contained in this Agreement, until the
Deposit is disbursed in accordance with the Escrow Agreement, this Agreement
shall not terminate and shall remain in full force and effect to the extent
necessary for such purpose.
2.3. Closing. The purchase and sale of the Property shall be
-------
consummated at a closing (the "Closing") to be held at the offices of Willkie
-------
▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, One Citicorp Center, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
or at such other location as Seller and Purchaser may agree, at 10:00 a.m. local
-9-
time, on January 9, 1998 or such earlier date as Seller and Purchaser may agree
upon (the "Closing Date"); provided, however, that Seller shall have the right,
------------
by written notice to Purchaser, to adjourn the Closing Date for up to ninety
(90) days as set forth in Section 3 or to satisfy its obligations with respect
---------
to that Property under Section 4, unless such obligations shall have been waived
---------
by Purchaser and provided that such adjournment with respect to the Property
shall not adjourn the Closing Date with respect to any of the other properties
to be conveyed under the Other Agreements.
2.4. Purchase Price.
--------------
(a) At the Closing, Purchaser shall pay to Seller for the
Property a purchase price (the "Purchase Price") in the amount of Twenty-Six
--------------
Million Five Hundred Thousand Dollars ($26,500,000), allocated Twenty-Three
Million Four Hundred Fifty Thousand Dollars ($23,450,000) to the Real Property
and Improvements and Three Million Fifty Thousand Dollars ($3,050,000) to the
personal property including, without limitation the FF&E and the Intangible
Property.
(b) The Purchase Price (plus or minus adjustments and
prorations set forth in Section 12 hereof) shall be payable by wire transfer of
----------
immediately available federal funds on the Closing Date to an account to be
designated by Seller prior to the Closing.
2.5. Tax Free Exchange.
-----------------
(a) Purchaser shall use commercially reasonable efforts to
cooperate with Seller (which cooperation shall be at Seller's expense) in
structuring one or more Section 1031 exchanges, if so desired by Seller,
provided that such structuring shall not materially adversely affect Purchaser's
rights hereunder.
(b) Purchaser shall not be required to incur any additional
liability by reason of the provisions of this Section 2.5 and Seller hereby
-----------
indemnifies Purchaser from and against any and all cost, expense, loss,
liability or damage resulting from its cooperation under this Section 2.5.
-----------
(c) Purchaser and its agents and attorneys do not guarantee
any specific tax treatment by reason of this Section 2.5.
-----------
(d) Any reasonable costs and expenses incurred by purchaser in
connection with Purchaser complying with the terms of this Section 2.5 shall be
-----------
paid by Seller.
-10-
SECTION 3. DILIGENCE; CASUALTY AND CONDEMNATION
3.1. Diligence Inspections.
---------------------
(a) Purchaser and Purchaser's authorized representatives and
employees shall have the right, at Purchaser's sole cost, risk and expense, from
time to time to enter upon and pass through the Hotel during normal business
hours and upon reasonable notice to Seller to examine and inspect all of the
then-existing books, records, surveys, plans, specifications, permits,
certificates of occupancy and other files that are relevant to the management,
ownership, operation, use, occupancy, construction and leasing of the Hotel, as
are in Seller's possession and control, and have not been otherwise provided to
Purchaser pursuant to this Agreement. Purchaser agrees and acknowledges that it
has investigated and/or received the opportunity to investigate the Property to
its satisfaction and that it is not relying on any materials, statements,
representations or warranties of any kind, other than as specifically set forth
in this Agreement, in purchasing the Property. To the extent that, in connection
with such investigation, Purchaser, its agents, representatives or contractors,
has damaged or disturbed or does damage or disturb the Real Property or the
Improvements located thereon, Purchaser shall return the same to substantially
the same condition which existed immediately prior to such damage or
disturbance. In the event that the transactions contemplated by this Agreement
are not closed and consummated for any reason, Purchaser shall deliver to Seller
all tests, reports and inspections of the Property made and conducted by
Purchaser or for its benefit or any other documents or information Purchaser has
received pursuant to this Agreement. Purchaser shall indemnify, defend and hold
harmless Seller from and against any and all cost, expense, liability, loss or
damage which Seller may incur as a result of any act or omission of Purchaser or
its representatives, agents or contractors in connection with such examinations
and inspections, other than to the extent that any expense, loss or damage
arises from any gross negligence or willful misconduct of Seller. The provisions
of this Section 3.1(a) shall survive the termination of this Agreement and the
--------------
Closing.
(b) Seller has delivered to Purchaser true, correct and
complete copies (or where specifically indicated original counterparts) of the
following, together with all amendments, modifications, renewals or extensions
thereof:
(i) All warranties, guaranties, indemnities and claims
for the benefit of Seller relating to the Hotel or any part thereof which are
still in effect;
(ii) Financial statements prepared in accordance with
generally accepted accounting principals, balance sheets, income statements,
general ledgers and budgets for the Hotel, for
-11-
the current year to date and each of the three (3) years prior to the year of
this Agreement (the "Financial Statements"), including the itemization of annual
--------------------
insurance premiums for each such year for fire, extended coverage, workers'
compensation, vandalism and malicious mischief, general liability, business
interruption, rents and other forms of insurance shown thereon; expenses
incurred for water, electricity, natural gas, sewer and other utility charges;
total rents and revenues collected from tenants and from hotel guests and other
patrons of the Hotel; management fees; maintenance, repairs and other expenses
relating to the management and operation of the Hotel; occupancy statistics for
the Hotel for the current year to date and the prior three (3) calendar years;
and all capital expenditures made during the aforementioned periods. To the
extent that the Financial Statements provided by Seller for the current year do
not include any period up to and including the Closing Date, Seller shall,
within 25 days after the Closing Date, provide Purchaser with monthly unaudited
Financial Statements applicable to such period inclusive of the Closing Date;
(iii) All of the most recent real estate and personal
property tax statements with respect to the Hotel and, to the extent in Seller's
possession or control or readily available without expense, notices of appraised
value for the Real Property and Improvements;
(iv) To the extent in Seller's possession or control or
readily obtainable without expense, all engineering and architectural plans,
drawings and specifications relating to the Hotel, as well as copies of any
environmental reports, boundary surveys, engineering reports and subsurface
studies affecting the Hotel. If the Hotel is purchased by Purchaser, all such
documents and information shall thereupon be and become the property of
Purchaser without payment of any additional consideration therefor; provided,
however, in the event that the Closing does not actually occur, Purchaser shall
return such information to Seller;
(v) All Contracts;
(vi) All Space Leases and all agreements for real estate
commissions, brokerage fees, finder's fees or other compensation payable by
Seller in connection therewith which would be binding on Purchaser after
Closing;
(vii) All notices received from governmental authorities
in connection with the Hotel;
(viii) A list of all current Hotel employees and their
salaries or wages and all employment benefits accompanied by copies of their
employment agreements and/or union contracts, if any;
(ix) All FF&E Leases;
-12-
(x) The Franchise Agreement and a current deficiency
report and the two most recent inspection reports of the franchiser of the
Hotel, together with any product improvement plan requirements previously
submitted to Seller by such franchiser or to which Seller has agreed;
(xi) A schedule of any litigation, arbitration or
administrative proceedings pending or threatened with respect to any Hotel;
(xii) Any leases of adjacent land or facilities used in
connection with the operation of the Hotel; and
(xiii) Seller's 1997 capital and operating budgets and
all materials relating to its marketing program.
At such time prior to Closing as Seller has knowledge (as defined in this
Agreement) of any material inaccuracy, misstatement or omission in any of the
information furnished to Purchaser pursuant to this Section 3.1(b), Seller shall
--------------
notify Purchaser in writing of the same and shall supply Purchaser with updated
information or schedules, as required. Upon notification to Purchaser, any
representations and warranties of Seller in this Agreement related to such
information shall be deemed modified to incorporate such information. If any of
Seller's representations or warranties is modified such that any representation
or warranty is materially and adversely different than that made upon execution
of this Agreement, then Purchaser may terminate this Agreement by notice given
to Seller within ten (10) Business Days after Seller has provided such
information.
Purchaser's representatives shall have access to all financial and other
information relating to the Hotel, to the extent in Seller's possession and
control (and without requiring Seller to expend funds except a diminimus
amount), sufficient to enable the REIT to prepare audited financial statements
in conformity with Regulation S-X of the U.S. Securities and Exchange Commission
and to enable the REIT to satisfy its reporting obligations under the Exchange
Act or to prepare a registration statement, report or disclosure statement for
filing with the SEC on behalf of the REIT and/or its Affiliates. Prior to
completion of the audit of the Property currently being performed by Coopers &
▇▇▇▇▇▇▇, L.L.P., Seller shall provide to Purchaser's representatives a signed
representation letter substantially in the form attached hereto as Exhibit O for
---------
the Property.
3.2. Defective Property.
------------------
(a) If, prior to the Closing, (i) the Property suffers a
casualty or condemnation which causes the Property to become a Defective
Property, (ii) the Property is not, prior to the Closing, restored to a
condition substantially the same as the condition thereof immediately prior to
such casualty or condemnation, and (iii) Purchaser provides written notice of
same
-13-
to Seller no later than the Closing Date, time being of the essence, then
subject to paragraph (b) of this Section 3.2 and the remainder of this Section
----------- -------
3, Purchaser may elect at its option to terminate this Agreement. Promptly upon
-
learning of the same, Seller covenants and agrees to provide Purchaser with
prompt written notice of any casualty or condemnation affecting the Property.
(b) If Purchaser timely gives notice to Seller of any
Defective Property, and Purchaser and Seller shall, acting reasonably and in
good faith, be unable or unwilling to agree (x) that Seller shall, at its sole
cost, attempt to remedy the applicable defect prior to the Closing (in which
event Seller shall have the right to adjourn the Closing Date pursuant to the
provisions of Section 3.7 for up to ninety (90) days for such purpose), (y) that
-----------
Purchaser shall, notwithstanding such defect, acquire the Defective Property
subject to a reduction in the Purchase Price, as reasonably determined by Seller
and Purchaser, sufficient to compensate Purchaser for such defect, or (z) on the
substitution of another property owned by Seller for such Defective Property,
this Agreement shall, at Purchaser's option, terminate.
3.3. Title Matters. Purchaser has received from the Title
--------------
Company a preliminary title commitment for a fee policy having an effective date
after the date of the Original Agreement, for an ALTA (or such other form
reasonably approved by Purchaser) owner's policy of title insurance with respect
to the Property, together with complete and legible copies of all instruments
and documents referred to as exceptions to title (collectively, the "Title
-----
Commitment"). Except as set forth in the Diligence Notice, Purchaser
----------
acknowledges that it does not have any other objections to title exceptions
shown on the Title Commitment. Seller acknowledges and agrees that Seller shall
attempt to remedy the objections set forth in the Diligence Notice with respect
to the Property. Seller shall have the right to adjourn the Closing Date
pursuant to Section 3.6 for up to ninety (90) days for such purpose. If Seller
-----------
shall be unable to remove any such title defects to which Purchaser has objected
in accordance with this Section 3.3, Purchaser may elect (i) to terminate this
-----------
Agreement, and this Agreement shall be of no further force and effect, except as
otherwise expressly provided herein, or (ii) to consummate the transactions
contemplated hereby, notwithstanding such title defect, without any abatement or
reduction in the Purchase Price on account thereof. Purchaser shall make any
such election by written notice to Seller given on or prior to the earlier of
the Closing Date or the fifth Business Day after Seller's notice of its
inability to cure such defect, and time shall be of the essence with respect to
the giving of such notices by Purchaser. Failure of Purchaser to give such
notice shall be deemed an election by Purchaser to proceed in accordance with
clause (ii) above, and such exception shall be a Permitted Encumbrance.
-14-
Notwithstanding the foregoing, Seller shall be obligated to
take any and all actions necessary to remove as a title exception (and shall not
have the aforesaid option to not cure) any mortgages, deeds of trust, judgments
and other liens of a monetary nature, as well as any liens or encumbrances
created, permitted or suffered by Seller from and after the date of the
Diligence Notice.
3.4. Survey. Purchaser has received a survey with respect to
------
the Real Property (the "Survey") by a licensed surveyor in the jurisdiction in
------
which the Property is located, which (i) contains an accurate legal description
of the Property, (ii) shows the location, dimension and description (including
applicable recording information) of all utilities, easements, encroachments and
other physical matters affecting the Property, the number of striped parking
spaces located thereon and all applicable building set-back lines, (iii) states
whether the Property is located within a 100-year flood plain and (iv) is
certified to Purchaser and the Title Company and such other persons as shall
have been requested by Purchaser or Seller. Except as set forth in the Diligence
Notice, Purchaser acknowledges and agrees that it does not have any other
objections to any matter shown on the Survey. Seller acknowledges and agrees
that Seller shall attempt to remedy the objections set forth in the Diligence
Notice with respect to the Survey. Seller shall have the right to adjourn the
Closing Date for up to ninety (90) days pursuant to Section 3.6 for such
-----------
purpose. If Seller shall be unable to remove any such survey defect to which
Purchaser has objected, Purchaser may elect (i) to terminate this Agreement and
this Agreement shall terminate and be of no further force or effect except as
otherwise expressly provided herein, or (ii) to consummate the transactions
contemplated hereby, notwithstanding such defect, without any abatement or
reduction in the Purchase Price on account thereof. Purchaser shall make any
such election by written notice to Seller given on or prior to the earlier of
the Closing Date or fifth Business Day after Seller's notice of its inability to
cure such defect and time shall be of the essence with respect to the giving of
such notice by Purchaser. Failure of Purchaser to give such notice shall be
deemed an election by Purchaser to proceed in accordance with clause (ii) above
and such matter shall be a Permitted Encumbrance.
3.5. Additional Termination Option. If Purchaser shall elect,
-----------------------------
pursuant to any provision of this Agreement or the Other Agreements to terminate
any three or more of the Other Agreements and/or this Agreement, then, together
with such notice of termination with respect to this Agreement or an Other
Agreement which taken by itself or together with any prior notices of
termination would result in three or more such terminations, Purchaser may, in
such notice, or Seller may, within 10 Business Days of receipt of such notice of
termination by written notice to Purchaser, terminate this Agreement and
simultaneously terminate the Other Agreements and the Group Two
-15-
Sale Agreement, in which event the Deposit shall be returned to Purchaser and
the parties to this Agreement shall have no further obligations under this
Agreement, the Other Agreements and the Group Two Sale Agreement except as
expressly provided in this Agreement, the Other Agreements or the Group Two Sale
Agreement. Notwithstanding the foregoing, if any provision in any Other
Agreement expressly provides that a termination thereof shall not be considered
for purposes of determining whether three such terminations have occurred, such
provision of the Other Agreement shall be controlling.
3.6. Adjournment of Closing.
----------------------
(a) At the request of either Purchaser or Seller, the Closing
shall be adjourned for up to ninety (90) days until all objections with respect
to the Property set forth in the Diligence Notice have been cured or remedied.
(b) At Closing, if Seller is unable to deliver any Estoppel
Certificates (as required by Section 4.1(h)), Franchisor Comfort Letters (as
--------------
required by Section 4.1(j) or any necessary consents and approvals (as required
--------------
by Section 4.5)), then unless such requirement is waived by Purchaser in its
-----------
sole and absolute discretion, Seller shall have the right to adjourn the Closing
for up to ninety (90) days. If at Closing Seller is unable to deliver any
required Estoppel Certificates, Franchisor Comfort Letters or any necessary
consents and approvals for three or more Properties under any of the Other
Agreements and/or this Agreement, then unless the parties shall otherwise
mutually agree (or unless such requirement is waived by Purchaser in its sole
and absolute discretion), the Closing shall be adjourned with respect to the
Property and all of the other Properties to be conveyed under the Other
Agreements until such Estoppel Certificates, Franchisor Comfort Letters or
consents are obtained provided such adjournment shall not be longer than ninety
(90) days.
SECTION 4. CONDITIONS TO PURCHASER'S OBLIGATION TO CLOSE.
The obligation of Purchaser to acquire the Property on the Closing Date shall be
subject to the satisfaction of the following conditions precedent on and as of
the Closing Date, any or all of which may be waived by Purchaser in its sole and
absolute discretion:
4.1. Closing Documents. Seller shall have delivered to
-----------------
Purchaser:
(a) A good and sufficient special warranty deed in form as
shall be customary in the jurisdiction in which the Property is located, in
proper statutory form for recording, duly executed and acknowledged by Seller,
conveying fee simple title to the Property, free from all liens and encumbrances
other than the Permitted Encumbrances;
-16-
(b) A ▇▇▇▇ of sale and assignment agreement, substantially in
the form attached hereto as Exhibit R, duly executed and acknowledged by Seller,
---------
with respect to all of Seller's right, title and interest in, to and under the
FF&E, the Documents and the Intangible Property with respect to the Property;
(c) An assignment and assumption agreement, substantially in
the form attached hereto as Exhibit S, duly executed and acknowledged by Seller,
---------
with respect to all of Seller's right, title and interest in, to and under the
Space Leases with respect to the Property;
(d) Duly executed transfer tax forms, as required by
applicable law;
(e) To the extent the same are in Seller's possession, fully
executed copies of all Contracts pertaining to the Property;
(f) A duly executed original counterpart of the Operating
Lease for the Hotel and all other documents and sums required to be delivered by
Seller pursuant thereto (including without limitation any Subordination,
Nondisturbance and Attornment Agreement, if any, between Seller, as tenant, and
any Mortgagee);
(g) If necessary, an assignment and assumption agreement,
substantially in the form attached hereto as Exhibit W, duly executed and
---------
acknowledged by Seller and Operating Lessee, with respect to all of Seller's
right, title and interest in, to and under the Contracts;
(h) Duly executed Estoppel Certificates from the franchisor
under the Franchise Agreement; provided that any such Estoppel Certificate shall
be provided to Purchaser prior to Closing promptly following receipt by Seller
of the same;
(i) Certificates of title for any motor vehicles constituting
a portion of the FF&E;
(j) Franchisor Comfort Letters;
(k) Subject to the provisions of Section 11.1, copies of the
------------
Liquor License for the Hotel;
(l) All original Documents, to the extent in Seller's
possession and control, including without limitation all keys, access cards and
access combinations for the Hotel;
(m) Certified copies of all charter documents, applicable
corporate resolutions and certificates of incumbency with respect to Seller;
-17-
(n) An affidavit of Seller in accordance with Section 1445 of
the Code and such documentation as shall be required to comply with the
reporting requirements of Section 1099-S of the Code; and
(o) Such other conveyance documents, certificates, deeds,
affidavits, and other instruments as Purchaser or the Title Company may
reasonably require to omit standard exceptions to title and to effectuate the
transactions contemplated hereunder, including without limitation GAP
undertakings, or as customarily given by sellers in connection with real or
personal property with respect to the state in which the Property is located.
4.2. Condition of the Property.
-------------------------
(a) The Property shall, except as otherwise provided in
Section 3.2, be in substantially the same physical condition (including without
-----------
limitation, with respect to the environmental condition of the Property) as on
the date of this Agreement, ordinary wear and tear excepted;
(b) No material default or event which with the giving of
notice and/or lapse of time could constitute a material default shall have
occurred and be continuing under any material agreement benefiting or affecting
the Property in any material respect;
(c) 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 which would render the Property a Defective Property; and
(d) 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 in all material respects, including without limitation
the Liquor License and Franchise Agreement.
4.3. Title Policies. The Title Company shall be prepared,
--------------
subject only to payment of the applicable premium, endorsement and related fees
and delivery of all conveyance documents in recordable form, to issue a title
insurance policy to Purchaser, subject only to the Permitted Encumbrances, in
accordance with Section 3.3.
-----------
4.4. Opinions of Counsel. Purchaser shall have received a
-------------------
written opinion from counsel to Seller regarding the organization and authority
of Seller, the due execution and delivery of this Agreement and the Operating
Lease, having the customary and reasonable assumptions and qualifications, and
such other matters with respect to the transactions contemplated by this
Agreement or the Operating Lease as the Purchaser may reasonably require. Seller
and Purchaser shall agree upon local
-18-
counsel for the jurisdiction in which the Property is located to provide an
appropriate jurisdiction-specific opinion, the cost of which local counsel will
be shared equally by Seller and Purchaser. An opinion from in-house counsel to
Seller shall satisfy this Section 4.4 with respect to all matters which
-----------
customarily do not require a local counsel opinion.
4.5. Other Approvals. Seller shall have obtained and
---------------
delivered to Purchaser, in form and substance reasonably satisfactory to Seller
and Purchaser, (a) all required governmental approvals and waivers as may be
necessary or appropriate to consummate the transactions contemplated by this
Agreement; (b) the consent of the franchisor, if required; (c) the consent of
the ground lessor under that certain Lease dated June 29, 1973 (as amended, the
"Armonk Lease") for premises located in Armonk, New York to the transactions
------------
contemplated by the Group Two Sale Agreement; and (d) a modification of such
Armonk Lease to extend the initial term thereof such that at the closing of such
property there shall be at least thirty (30) years of the initial term
remaining.
4.6. Representations. All representations and warranties made
---------------
herein by Seller shall be true and correct in all material respects.
4.7. Default Under Group Two Sale Agreement. Seller shall not
--------------------------------------
be in default, or have committed an act or failed to perform an act which, with
the giving of notice, the passage of time or both, will become a default under,
the Group Two Sale Agreement.
4.8. Default under Other Agreements. Seller shall not be in
------------------------------
default, or have committed an act or failed to perform an act which, with the
giving of notice, the passage of time or both, will become a default under, any
of the Other Agreements.
In the event any condition to Purchaser's obligation to close
set forth in this Section 4 is not satisfied with respect to the Property by the
---------
Closing Date (as adjourned, if applicable), Purchaser shall not be obligated to
close and, at Purchaser's option, this Agreement shall terminate; provided,
however, such failure of a condition shall not be a default under this
Agreement.
SECTION 5. CONDITIONS TO SELLER'S OBLIGATION TO CLOSE.
The obligation of Seller to convey the Property on the Closing Date to Purchaser
is subject to the satisfaction of the following conditions precedent on and as
of the Closing Date, any or all of which may be waived by Seller in its sole and
absolute discretion:
5.1. Purchase Price. Purchaser shall deliver to Seller the
--------------
Purchase Price, pursuant to Section 2.4.
-----------
-19-
5.2. Closing Documents. Purchaser shall have delivered to
-----------------
Seller:
(a) Duly executed and acknowledged counterparts of the
documents described in Section 4.1 where applicable;
-----------
(b) Certified copies of all charter documents, partnership
agreements, applicable resolutions and certificates of incumbency with respect
to Purchaser and its general partner; and
(c) Such other conveyance documents, certificates, deeds,
affidavits and other instruments as Seller or the Title Company may reasonably
require to effectuate the transactions contemplated hereunder.
5.3. Opinion of Counsel. Seller shall have received a written
------------------
opinion from counsel to Purchaser regarding the organization and authority of
Purchaser, the due execution and delivery of this Agreement and the Operating
Lease, having the customary and reasonable assumptions and qualifications, and
such other matters with respect to the transactions contemplated by this
Agreement or the Operating Lease as Seller may reasonably require. As set forth
in Section 4.3, Seller and Purchaser shall agree upon local counsel for the
-----------
jurisdiction in which the Property is located to provide an appropriate
jurisdiction-specific opinion, the cost of which local counsel will be shared
equally by Seller and Purchaser. An opinion from in-house counsel to Purchaser
shall satisfy this Section 5.3 with respect to all matters which customarily do
-----------
not require a local counsel opinion.
5.4. Other Approvals. Seller and Purchaser shall have
---------------
received, in form and substance reasonably satisfactory to Seller and Purchaser,
(a) all required governmental approvals and waivers as may be necessary or
appropriate to consummate the transactions contemplated by this Agreement, other
than as expressly set forth in Section 11.1; (b) all consents of franchisors, if
------------
required; (c) the consent of the ground lessor under the Armonk Lease to the
transactions contemplated by the Group Two Sale Agreement; and (d) a
modification of such Armonk Lease to extend the initial term thereof such that
at the closing of such property there shall be at least thirty (30) years of the
initial term remaining.
5.5. Representations. All representations and warranties made
---------------
herein by Purchaser shall be true and correct in all material respects.
5.6. Default Under Group Two Sale Agreement. Purchaser shall
--------------------------------------
not be in default, or have committed an act or failed to perform an act which,
with the giving of notice, the passage of time or both, will become a default
under, the Group Two Sale Agreement.
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5.7. Default under Other Agreements. Purchaser shall not be
------------------------------
in default, or have committed an act or failed to perform an act which, with the
giving of notice, the passage of time or both, will become a default under, any
of the Other Agreements.
In the event any condition to Seller's obligation to close set
forth in this Section 5 is not satisfied, Seller shall not be obligated to close
and, at Seller's option, this Agreement shall terminate, and except with respect
to the failure of the conditions set forth in Section 5.1, Section 5.6 and
Section 5.7 (which shall be a default under this Agreement), such failure of a
condition shall not be a default under this Agreement.
SECTION 6. REPRESENTATIONS OF SELLER.
To induce Purchaser to enter into this Agreement, Seller represents to Purchaser
as follows:
6.1. Status and Authority of Seller. Seller 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. Seller has duly qualified to transact business in each
jurisdiction in which the nature of the business conducted by it requires such
qualification, except where failure to do so could not reasonably be expected to
have a material adverse effect.
6.2. Action of Seller. Seller 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 Seller on or prior
to the Closing Date, such document shall constitute the valid and binding
obligation and agreement of Seller, as the case may be, enforceable against
Seller 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.
6.3. No Violations of Agreements. Neither the execution,
---------------------------
delivery or performance of this Agreement or the Operating Lease by Seller, nor
compliance with the terms and provisions hereof or thereof, 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 Seller is bound.
-21-
6.4. Litigation. Seller has not received any written notice
----------
of and, to Seller's knowledge, no action or proceeding is pending or threatened
and no investigation looking toward such an action or proceeding has begun,
which (a) questions the validity of this Agreement or the Operating Lease or any
action taken or to be taken pursuant hereto, (b) will result in any material
adverse change in the business, operation, affairs or condition of the Property,
(c) will result in or subject the Property to a material liability, or (d)
involves condemnation or eminent domain proceedings against any part of the
Property.
6.5. Existing Leases, Agreements, Etc. Other than any
--------------------------------
agreements provided to Purchaser not later than December 15, 1997, there are no
other material agreements for the use or occupancy of the Property which will be
binding on Purchaser subsequent to the Closing Date, which Purchaser cannot
terminate. The list of Space Leases attached hereto as Exhibit K is a current,
---------
complete and accurate listing of all leases affecting the Property as of the
date hereof. The copies of the Space Leases provided or made available to
Purchaser not later than December 15, 1997 are full and complete copies of said
Space Leases and, to Seller's knowledge, are valid, in full force and effect and
no party has breached any material condition or provision thereof. No tenant
under any Lease has prepaid rent or additional rent or any other items under the
Space Leases for more than one (1) month in advance and there are no security
deposits held by Seller under any of the Space Leases other than as set forth on
Exhibit K.
---------
6.6. Franchise Agreement. The Franchise Agreement listed on
-------------------
Exhibit D is the sole franchise agreement affecting the Property as of the date
---------
hereof. The copy of the Franchise Agreement provided or made available to
Purchaser not later than December 1, 1997 is a true and complete copy of said
Franchise Agreement and, to Seller's knowledge, is valid, in full force and
effect and no party has breached any material condition or provision thereof.
6.7. Contracts. The copies of the Contracts provided or made
---------
available to Purchaser not later than December 1, 1997 are true and complete
copies of said Contracts and, to Seller's knowledge, are valid, in full force
and effect and no party has breached any material condition or provision
thereof.
6.8. Taxes. To Seller's knowledge, other than the amounts
-----
disclosed by tax bills, no taxes or special assessments of any kind (special,
bond or otherwise) are or have been levied with respect to the Property, or any
portion thereof, which are outstanding or unpaid, other than amounts not yet due
and payable or, if due and payable, not yet delinquent.
6.9. Not a Foreign Person. Seller is not a "foreign person"
--------------------
within the meaning of Section 1445 of the Code.
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6.10. Hazardous Substances. To the best of Sellers' knowledge,
--------------------
and except for the conditions specifically described in the environmental report
listed on Exhibit X (the "Environmental Report"), (i) no Hazardous Substances
--------- --------------------
are located on or have been released or disposed of in, on, under or from the
Hotel so as to impose liability or require remediation under any Environmental
Laws and (ii) no liability under or violation of any Environmental Laws or
condition that could give rise to such liability or violation exists with
respect to the Hotel, including without limitation liabilities relating to
offsite disposal of waste in connection with the Hotel. To the best of Seller's
knowledge, there are no pending or threatened claims by any person arising out
of any alleged violation of Environmental Laws or any release or threatened
release of Hazardous Substances arising out of the ownership or operation of the
Hotel.
6.11. Insurance. Seller has not received any 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.
6.12. FF&E. All FF&E is owned by Seller (other than such items
----
listed on Exhibit T (the "Leased FF&E") and any such items which are owned by
--------- -----------
tenants, subtenants, concessionaires or licensees under the Space Leases,
guests, invitees, employees, agents or independent contractors).
6.13. Employment and Union Contracts. Exhibit U to this
------------------------------ ---------
Agreement is a true and complete list of all employment agreements and union
contracts or other labor agreements with respect to the Property.
6.14. Adjacent Land Leases. Seller does not lease any land or
--------------------
facilities adjacent to the Property.
6.15. Trademarks. Seller has received no written notice that
----------
the use of any trademark or tradename is in violation of any trademark or
tradename owned by any other person or entity.
6.16. Compliance with Laws. To Seller's knowledge, the
--------------------
Property is in compliance with all laws of governmental authorities which are
applicable to the Property or the use or operation of the Property, except as
set forth on Exhibit V.
---------
6.17. Inventory. At Closing, the Property shall contain
---------
sufficient supplies and personalty to operate the Property in a manner
consistent with the operation of the Property immediately prior to the Closing
by Seller.
6.18. Holder of Liquor License. The holder of the Liquor
License for the Property is Prime Hospitality Corp., a Delaware corporation.
-23-
The representations made in this Agreement by Seller shall be deemed remade by
Seller as of the Closing Date with the same force and effect as if made on, and
as of, such date; provided, however, that, Seller shall have the right, from
time to time prior to the Closing Date, to modify the representations as
necessary to conform to factual changes by notice to Purchaser. If a Seller
representation or warranty thereby is modified to an extent that the
representation or warranty is materially and adversely different than that made
upon execution of this Agreement, then Purchaser may terminate this Agreement,
provided notice of such termination is given to Seller within ten (10) Business
Days after Seller has provided notice of the modification.
The representations made in Section 6.1 and Section 6.2 shall survive the
----------- -----------
Closing indefinitely. The representations made in Section 6.3 through and
-----------
including Section 6.18 shall survive Closing for a period of one (1) year (the
------------
"Survival Period") and, upon termination of the Survival Period, shall terminate
---------------
absolutely will full and final discharge of liability except to the extent that
Purchaser shall have given to Seller written notice of a breach thereof within
the Survival Period (but in any event promptly after learning of such breach)
specifying in sufficient detail the facts constituting such alleged breach and
the loss then reasonably ascertainable as a consequence thereof, and an
opportunity to cure such breach within a reasonable period of time after
Purchaser having learned of such breach. Notwithstanding any provision to the
contrary set forth in this Agreement, Purchaser shall have no claim against
Seller and Seller shall have no liability to Purchaser, in the event of a breach
of any of Seller's representations and warranties and statements in this
Agreement in a respect which is not material and which does not result in any
loss or damage to Purchaser.
Except as otherwise expressly provided in this Agreement or any documents to be
delivered to Purchaser at the Closing, Seller disclaims the making of any
representations or warranties, express or implied, regarding the Property or
matters affecting the Property, whether made by Seller, on Seller's behalf or
otherwise, including, without limitation, the physical condition of the
Property, title to or the boundaries 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. Purchaser
acknowledges (i) that Purchaser has made and is relying upon its own
investigation or that of third parties with respect to the physical,
environmental, economic and legal condition of the Property and (ii) that
Purchaser is not relying upon any statements, representations or warranties of
any kind, other than
-24-
those specifically set forth in this Agreement or in any document to be
delivered to Purchaser at the Closing made by Seller. Purchaser further
acknowledges that it has not received from or on behalf of Seller any
accounting, 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. Subject to the provisions of this Agreement,
Purchaser shall purchase the Property in its "as is" condition on the Closing
Date.
SECTION 7. REPRESENTATIONS OF PURCHASER.
To induce Seller to enter into this Agreement, Purchaser represents to Seller as
follows:
7.1. Status and Authority of Purchaser. Purchaser is a
---------------------------------
limited partnership duly organized, validly existing and in trust good standing
under the laws of the State of Delaware 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. Purchaser has duly qualified and is in good
standing as a trust or unincorporated business association in each jurisdiction
in which the nature of the business conducted by it requires such qualification.
7.2. Action of Purchaser. Purchaser has taken all necessary
-------------------
action to authorize the execution, delivery and performance of its obligations
under this Agreement and the Operating Lease, and upon the execution and
delivery of any document to be delivered by Purchaser on or prior to the Closing
Date such document shall constitute the valid and binding obligation and
agreement of Purchaser, enforceable against 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.
7.3. No Violations of Agreements. Neither the execution,
---------------------------
delivery or performance of this Agreement or the Operating Lease by Purchaser,
nor compliance with the terms and provisions hereof or of the Operating Lease,
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 Purchaser pursuant to the
terms of any indenture, mortgage, deed of trust, note, evidence of indebtedness
or any other agreement or instrument by which Purchaser is bound.
7.4. Litigation. Purchaser has not received any written
----------
notice of, and, to Purchaser's knowledge, no action or proceeding is pending or
threatened and no investigation looking toward such an action or proceeding has
begun which questions
-25-
the validity of this Agreement or the Operating Lease or any action taken or to
be taken pursuant hereto or pursuant to the Operating Lease.
7.5. No Conflicts. Neither the execution, delivery and
------------
performance of this Agreement or the consummation of the transactions
contemplated hereby by Purchaser will conflict with or result in a material
breach or violation of, or constitute a default under the charter, bylaws,
certificate of limited partnership or limited partnership agreement, as the case
may be, of the Purchaser; any indenture, mortgage, deed of trust, loan
agreement, note, lease or other agreement or instrument to which Purchaser is a
party or to which it, any of its properties or other assets is subject; or any
applicable material statute, judgment, decree, order, rule or regulation of any
court or governmental agency or body applicable to Purchaser.
The representations made in this Agreement by Purchaser shall
be deemed remade by Purchaser as of the Closing Date with the same force and
effect as if made on, and as of, such date; provided, however, that, Purchaser
shall have the right, from time to time prior to the Closing Date, to modify the
representations as necessary to conform to factual changes by notice to Seller.
If a Purchaser representation or warranty thereby is modified to an extent that
the representation or warranty is materially and adversely different than that
made upon execution of this Agreement, then Seller may terminate this Agreement,
provided notice of such termination is given to Purchaser within ten (10)
Business Days after Seller has provided notice of the modification.
The representations made in Section 7.1 and Section 7.2 shall
----------- -----------
survive the Closing indefinitely. The representations made in Section 7.3
-----------
through and including Section 7.5 shall survive Closing for the Survival Period
-----------
and, upon termination of the Survival Period, shall terminate absolutely will
full and final discharge of liability except to the extent that Seller shall
have given to Purchaser written notice of a breach thereof within the Survival
Period (but in any event promptly after learning of such breach) specifying in
sufficient detail the facts constituting such alleged breach and the loss then
reasonably ascertainable as a consequence thereof, and an opportunity to cure
such breach within a reasonable period of time after Seller having learned of
such breach. Notwithstanding any provision to the contrary set forth in this
Agreement, Seller shall have no claim against Purchaser and Purchaser shall have
no liability to Seller, in the event of a breach of any of Purchaser's
representations and warranties and statements in this Agreement in a respect
which is not material and which does not result in any loss or damage to Seller.
-26-
SECTION 8. COVENANTS OF SELLER AND PURCHASER.
8.1. Covenants of Seller. Seller hereby covenants with
-------------------
Purchaser, which covenants shall be performed at Seller's sole cost and expense
unless otherwise set forth in this Agreement, that commencing upon the date of
the Original Agreement and continuing until the Closing Date (or as otherwise
set forth below):
(a) Upon learning of any material change in any condition of
the Property or of any event or circumstance which makes any representation or
warranty of Seller to Purchaser under this Agreement untrue or misleading in any
material respect, promptly to notify Purchaser thereof (Purchaser agreeing, on
learning of any such fact or condition, promptly to notify Seller thereof);
(b) To continue or cause to continue to operate the Property,
under the Franchise Agreement in a good and businesslike fashion consistent with
its past practices (which Seller believes to be in compliance with the Franchise
Agreement) and to cause the Property to be maintained in good working order and
condition in a manner consistent with its past practice;
(c) To provide to Purchaser, promptly upon reasonable
request, such unaudited financial and other information and certifications of
Seller with respect to the Property as Purchaser may from time to time
reasonably request in order to comply with any applicable securities laws and/or
any rules, regulations or requirements of the Securities and Exchange Commission
and, if required or requested, to permit Purchaser to incorporate by reference
any information included in filings made by Seller with the Securities and
Exchange Commission. Without limiting the foregoing, Seller shall provide to
Purchaser a copy of each monthly profit and loss statement for the Property;
(d) Seller shall not, without the Purchaser's written
consent, enter into any modifications, renewals or extensions of any of the
Space Leases or the Franchise Agreement, other than those modifications,
renewals or extensions required by the terms of the applicable document, or
enter into any other leases, agreements, mortgages or other loan documents or
other commitments relating to the Property or the operation of the Hotel other
than in the normal course of business and which are by their terms terminable
without penalty upon not more than thirty (30) days notice;
(e) From and after the Closing Date, to employ substantially
all of the present employees of the Hotel, in at least the number and positions
as are required in order to avoid triggering any notification requirements under
the Worker Adjustment Retraining and Notification Act ("WARN Act"), without
--------
limiting Seller's ability to discharge any or all of such employees thereafter
(provided, however, that no such discharge will trigger a WARN Act notification
or otherwise impose any obligations on Seller). Any employees of Seller working
at the
-27-
Hotel as of the Closing Date shall remain the employees of Seller after the
Closing Date. Seller hereby agrees to indemnify and hold harmless Purchaser from
and against any and all liability, cost, damages and expenses arising from or
relating to the failure of Seller to comply with this Section 8.1(e). The
--------------
provisions of this Section 8.1(e) shall survive the Closing;
--------------
(f) To operate, manage, and maintain the Hotel consistent
with Seller's prior practice and as a reasonable and prudent operator of like-
kind hotels in the same competitive market would operate, manage, and maintain
the Hotel, including, without limitation, (i) using reasonable efforts to keep
available the services of its present employees at the Improvements and to
preserve its relations with guests, suppliers and other parties doing business
with Seller with respect to the Hotel, (ii) accepting booking contracts for the
use of the Hotel facilities on terms not less favorable than the terms typically
arranged by Seller as of the date of this Agreement and in accordance with
Seller's prior practice, (iii) maintaining the current level of advertising and
other promotional activities for Hotel facilities, (iv) maintaining its books of
accounts and records in the usual, regular and ordinary manner, in accordance
with generally accepted accounting principles applied on a basis consistent with
the basis used in keeping its books in prior years; (v) continuing to operate
the Property under the Liquor License and Franchise Agreement in a fashion
consistent with its past practice (which Seller believes to be in compliance
with such Liquor License and Franchise Agreement); (vi) maintaining supplies and
personalty consistent with the prior operations of Seller; (vii) expending such
amounts for advertising and promotions as are scheduled to be expended prior to
Closing pursuant to Seller's 1997 operating budget for the Hotel; and (viii)
expending such amounts for capital improvements as are scheduled to be expended
prior to Closing pursuant to Seller's 1997 capital budget for the Hotel,
provided that if any such scheduled capital improvement is not completed prior
to Closing, Seller shall complete such improvements at its sole cost and expense
in a manner consistent with Seller's past operation of the Hotel and this
subparagraph (viii) shall survive Closing;
(g) To keep and maintain the Hotel in a state of repair and
condition consistent with the requirements of clause (f) above;
(h) To keep, observe, and perform all its obligations in all
material respects under the Space Leases, the Franchise Agreement, the Liquor
License and the Contracts for the Hotel, and all other applicable contractual
arrangements relating to the Hotel consistent with Seller's past practice;
(i) To not enter into any new agreements of the nature of
Contracts or Space Leases or any amendments, modifications, renewals or
extensions of any existing Contracts or Space Leases, without Purchaser's prior
written consent, except that the Seller
-28-
shall not be required to obtain Purchaser's consent to any new agreement or any
renewal or extension of existing agreements which may be terminated on not more
than thirty (30) days prior notice without cost or expense. Any such new
agreement or renewal or extension of existing agreements to which Purchaser's
consent was not obtained, whether or not such consent is required under this
Section 8.1(i) shall subject the applicable agreement to Purchaser's review
--------------
under Section 3;
---------
(j) To not cause or permit the removal of FF&E from the Hotel
except for the purpose of discarding and replacing, where needed or appropriate,
worn items, and timely make all repairs, maintenance, and replacements to keep
the Hotel and all FF&E in good operating condition;
(k) To comply with all federal, state, and municipal laws,
ordinances, regulations, and orders relating to the Hotel;
(l) To not sell or assign or enter into any agreement to sell
or assign, or to create or permit to exist any lien or encumbrance (other than a
Permitted Exception) on, the Hotel or any portion thereof;
(m) To not cancel any existing booking contracts for the use
of Hotel facilities or new booking contracts obtained by Seller after the date
of this Agreement except as may be consistent with Seller's past practices and
the practices of a reasonable and prudent operator of a like-kind hotels in the
same competitive market, and to continue to book contracts and reservations
consistent with prior practices;
(n) To pay or cause to be paid all taxes, assessments and
other impositions levied or assessed on the Hotel or any part thereof on or
before the date on which the payment thereof is due;
(o) To use reasonable, good faith efforts to obtain the
Estoppel Certificates, the Franchisor Comfort Letters, and any consents and
approvals necessary for the transaction contemplated by this Agreement at least
one week prior to the Closing; to continue to use reasonable, good faith efforts
to obtain such items thereafter; to promptly inform Purchaser of any issues or
problems which Seller foresees in obtaining any such items; and to deliver each
such item to Purchaser promptly after receipt thereof; and
(p) To keep the existing insurance coverage for the Hotel in
full force and effect.
SECTION 9. CLOSING COSTS.
9.1. Closing Costs. Each of the parties hereto shall pay its
-------------
own expenses in connection with this Agreement and the transactions contemplated
hereby, including, without
-29-
limitation, any legal and accounting fees, inspection fees, and the costs and
expenses of preparing engineering and environment reports, market studies and
appraisals, whether or not the transactions contemplated hereby are consummated.
The cost of the Survey, Title Commitment (and the policies and endorsements
issued pursuant thereto), all state and local sales, transfer, excise, value-
added or other similar taxes, all recording and filing fees that may be imposed
by reason of the sale, transfer, assignment and delivery of the Property shall
be shared equally by Seller and Purchaser. As between Purchaser and Seller, the
cost of seeking consents including, without limitation, any transfer or
assumption fees incurred in connection therewith, Franchisor Comfort Letters and
Estoppel Certificates shall be borne solely by Seller.
SECTION 10. DEFAULT.
10.1. Default by Seller. If Seller shall have made any
-----------------
representation herein which shall be untrue or misleading in any material
respect (subject to the right to cure in Section 6), or if Seller shall fail to
---------
perform any of the material covenants and agreements contained herein to be
performed by Seller and such failure continues for a period of ten (10) days
after notice thereof from Purchaser, Purchaser, as its sole and exclusive
remedy, may terminate this Agreement, in which event the Deposit shall be
returned to Purchaser and Seller shall be obligated to pay Purchaser One Million
Four Hundred Thirty-Six Thousand Two Hundred Fifty Dollars ($1,436,250) as
liquidated damages and not as a penalty (the "Liquidated Damages"). Purchaser
------------------
and Seller acknowledge that the damages which may be incurred by Purchaser in
the event of Seller's default are difficult to quantify as of the date of this
Agreement; the Liquidated Damages represent the parties reasonable estimate of
Purchaser's probable future damages in the event of Seller's default and the
Liquidated Damages represent fair and reasonable compensation to Purchaser in
the event of Seller's default. Except with respect to the Liquidated Damages,
Purchaser hereby waives any and all rights it may have to ▇▇▇ Seller for money
damages in connection with this Agreement.
10.2. Default by Purchaser. If Purchaser shall have made any
--------------------
representation herein which shall be untrue or misleading in any material
respect (subject to the right to cure in Section 7), or if Purchaser shall fail
---------
to perform any of the covenants and agreements contained herein to be performed
by it and such failure shall continue for a period of ten (10) days after notice
thereof from Seller, Seller may, as its sole and exclusive remedy at law and in
equity, terminate this Agreement, whereupon Purchaser shall be obligated to pay
Seller an amount equal to the Liquidated Damages, as liquidated damages and not
as a penalty. The Deposit shall be retained by Seller and offset against the
Liquidated Damages. Purchaser and Seller acknowledge that the damages which may
be incurred by Seller in the event of Purchaser's default are difficult to
quantify as of the date of
-30-
this Agreement; the Liquidated Damages represent the parties reasonable estimate
of Seller's probable future damages in the event of Purchaser's default and the
Liquidated Damages represent fair and reasonable compensation to Seller in the
event of Purchaser's default.
SECTION 11. LIQUOR LICENSE; FRANCHISE AGREEMENT.
11.1. Liquor License. Seller currently holds the Liquor
--------------
License for the Hotel and if, in compliance with all applicable laws, statutes,
rules, regulations and ordinances, Seller may continue to hold such Liquor
License following the Closing, Seller shall maintain the Liquor License and
Purchaser shall not interfere with the maintenance of the Liquor License. If
Seller may not continue to hold a Liquor License for the Property following the
Closing or if the existing Liquor License needs to be revised to reflect the
Purchaser as owner of the Property, then Seller shall apply for a new or
modified Liquor License or, if advised by local counsel to be required under
local laws, regulations or orders, Purchaser or its designee shall apply for a
liquor license for the Hotel, at Seller's sole cost and expense, promptly after
Closing. Seller and Purchaser shall cooperate to obtain a liquor license for the
Hotel or modifications to the existing Liquor License or to maintain the
existing Liquor License in effect. Until such time as such new or modified
liquor license is obtained, Seller shall take all steps reasonably necessary to
enable the current Liquor License to be used by the Hotel and to permit the
uninterrupted sale and service of alcoholic beverages at the Hotel. The
provisions of this Section 11.1 shall survive the Closing.
------------
11.2. Franchise Agreement.
-------------------
(a) Purchaser may instruct Seller to terminate the Franchise
Agreement with such termination to be effective as of the Closing Date, in
Purchaser's sole discretion, provided that in such event Purchaser shall be
solely responsible for the payment of liquidated damages, termination fees,
costs or other liabilities arising from or related to the termination of such
Franchise Agreement and shall indemnify and hold harmless Seller therefrom. The
preceding provisions of this Section 11.2 shall survive the Closing or earlier
------------
termination of this Agreement.
(b) As between Seller and Purchaser, Seller shall be solely
responsible for obtaining, at its sole cost and expense, the Franchisor Comfort
Letters and the consent of the franchisor, if required pursuant to the Franchise
Agreement, to the transactions described in this Agreement; provided that the
failure of Seller to obtain such Franchisor Comfort Letters or consents of
franchisors, after using commercially reasonable, good faith efforts to do so in
accordance with Section 8.1(o), shall not be a default under this Agreement;
--------------
provided further that Seller's obligation and liability to pay administrative
fees imposed by the franchisor for such Franchisor Comfort Letters,
-31-
such consents or otherwise in connection with the transaction contemplated by
this Purchase Agreement shall be limited to the first One Hundred Thousand
Dollars ($100,000) of the collective administrative fees required by the
franchisor and by any franchisor in connection with the transactions
contemplated by the Other Agreements and one-half of all amounts in excess
thereof, and Purchaser hereby covenants and agrees to pay the other one-half of
such administrative fees in excess of One Hundred Thousand Dollars ($100,000).
In no event shall the requirement of payment of administrative fees constitute a
reason for Purchaser to fail to close on the Property.
(c) In the event Purchaser directs Seller to terminate the
Franchise Agreement pursuant to this Section 11.2 and intends to cause Operating
------------
Lessee, as lessee, to enter into a new franchise agreement at the Closing and
has a binding commitment from the new franchisor for the same (subject to
reasonable conditions), Seller and Purchaser hereby agree to negotiate in good
faith to an adjustment of the rent payable pursuant to the Operating Lease,
based on the terms and conditions of the new franchise agreement and its
anticipated effect on Gross Revenues (as defined in the Operating Lease).
(d) Notwithstanding anything to the contrary contained herein
(including without limitation subparagraph (b) above), if in connection with the
transaction contemplated by this Agreement or the obtaining of the Franchisor
Comfort Letters or franchisor consents, the franchisor requires any capital
improvement to be made at the Property (hereinafter, a "PIP"), Purchaser shall
be solely responsible for the cost and expense of the same. In no event shall
the requirement of a PIP constitute a reason for Purchaser to fail to close on
the Property. In lieu of agreeing to any PIP requirement, Purchaser may direct
Seller to terminate the Franchise Agreement as provided in Section 11.2(a). If
---------------
any such PIP requirement is imposed solely as a result of Purchaser's request
for a Franchisor Comfort Letter, Purchaser may waive the delivery of such
Franchisor Comfort Letter as a condition to Closing.
11.3. License for Excluded Intellectual Property. At the
------------------------------------------
Closing, as part of the ▇▇▇▇ of sale and assignment agreement, Seller shall
grant to Purchaser a nonexclusive license to use the Excluded Intellectual
Property pursuant to the following terms and conditions:
(a) the license shall be effective from the Closing Date
until the earlier of (i) the tenth anniversary of the Closing Date; or (ii) a
termination pursuant to the provisions of Section 11.3(d) below;
---------------
(b) upon the expiration of the license pursuant to clause (i)
of subparagraph (a) above, the license shall automatically terminate, without
the need of notice from Seller,
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and Purchaser shall have no further right to use the Excluded Intellectual
Property in connection with the Property;
(c) Purchaser covenants that it shall not and shall not
permit the license for the Excluded Intellectual Property to be used in any
manner which could impair the value of the Excluded Intellectual Property or the
reputation of Seller or Seller's Affiliates or of any of the properties owned by
Seller sharing the Excluded Intellectual Property with the Property; Purchaser
shall indemnify and hold harmless Seller from and against any losses, costs or
damages incurred by Seller as a result of Purchaser's failure to perform the
covenant set forth in this subparagraph (c); and
(d) in the event Purchaser fails to perform the covenant set
forth in subparagraph (c) above, Seller shall have the right to terminate the
license upon written notice to Purchaser, and Purchaser shall have no further
right to use the Excluded Intellectual Property.
The provisions of this Section 11.3 shall survive the Closing.
------------
SECTION 12. ADJUSTMENTS, PRORATIONS AND DEPOSITS.
12.1. Matters to be Adjusted or Prorated. To the extent then
----------------------------------
capable of being calculated or estimated, on the Closing Date (the "Prorations
----------
Settlement"), and otherwise within 30 days after the Closing Date, the following
----------
items shall be apportioned as of the Cut-Off Time with respect to the Property
and appropriate payments made as described in this Agreement in respect thereof
(collectively, the "Adjustments"):
-----------
(a) Real estate and ad valorem taxes and assessments based on
the rates and assessed valuation applicable in the current fiscal tax year, or
if not established for such year, the latest fiscal year for which assessed. (In
the latter case, an appropriate correction in the adjustment shall be made
within one year after the Closing Date when the current year's assessments are
established.)
(b) All rates, rents, charges, and payments for sewer, water,
gas, electricity, telephone and other utility services for which final bills
have not been rendered as of the Closing Date. Seller shall exercise reasonable
efforts to cause meters to be read as of the Closing Date.
(c) Compensation for all employees, including all accrued
wages, fringe benefits, including pension and similar benefits, vacation and
sick pay, unemployment compensation, social security and other payroll taxes,
and disability and workers' compensation insurance.
(d) Any taxes accrued and/or payable to the various local
governments by any business entity operating the Hotel and
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its related businesses, including business and occupation taxes, retail sales
taxes, gross receipts taxes, and other special lodging or hotel taxes, but
excluding income taxes and franchise taxes of Seller.
(e) Rents collected under the Space Leases, including
percentage rents (if any) based on the results from the most recently completed
period (and adjusting payments shall be made as soon as reasonably practical
after the Closing Date when final results are reported).
(f) All revenues from the rental of Hotel rooms (exclusive of
Other Revenues) ("Room Revenues") for the night that includes 12:01 a.m. on the
-------------
Closing Date, which shall be divided equally between Purchaser and Seller.
(g) All revenues earned from operation of the Hotel other
than Room Revenues, including without limitation, revenues from the sale of
food, beverages, rental of meeting and banquet rooms, telephone sales, vending
machines, valet and parking services, revenues from any "mini-bars" located in
the Hotel rooms and all other revenues (the "Other Revenues"), provided that
--------------
Other Revenues arising from the sale of food and beverages in restaurants and
bars which do not remain open the entire Cut-Off Night shall be apportioned as
of the last hour at which the applicable restaurant or bar is open.
(h) All sales, excise, hotel occupancy or other similar taxes
(excluding in any event income, franchise and real property taxes) collected
with respect to the Room Revenues and Other Revenues.
(i) All costs and expenses of operating the Hotel, including
without limitation, amounts paid or payable under the Contracts, Franchise
Agreement, and FF&E Leases which are reasonably capable of such proration.
(j) Seller's active guest ledger, cash drawers and house
account, which shall be purchased at par.
Seller shall pay all accounts payable at the Hotel relating to services
or goods provided prior to Closing.
With respect to subparagraph (b) through (j), it is the intent of
Seller and Purchaser that all income and expenses relating to the Property shall
be prorated as provided in this Section 12 such that Seller shall have the
----------
benefit of all income and be responsible for all expenses and liabilities
incurred in connection with the Property fairly allocable to the period prior to
the Closing Date and that Operating Lessee under the Operating Lease at the
Property shall have the benefit of all income and be responsible for all
expenses and liabilities of the Property relating to the period from and after
the Closing Date. With respect to the prorations and Adjustments set forth in
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subparagraph (a) of this Section 12.1, the Purchase Price shall be adjusted
------------
based on the prorations between Seller and Purchaser with respect to such
subparagraph.
12.2. Certiorari Proceeding. Any refunds with respect to
---------------------
certiorari proceedings for tax years prior to and including the current tax year
shall belong to Seller and Seller may continue with and control such
proceedings, provided that if any portion of a refund is received by Seller
which relates to any period after the Closing, such portion shall be delivered
to Purchaser. After the Review Period, Seller shall keep Purchaser advised of
the status of any certiori proceedings which relate to the current tax year or
could affect the taxes due for a subsequent tax year and Purchaser shall have
the right to participate in and approve tax settlements of such certiori
proceedings which relate to the current tax year, which settlements shall not be
effective without Purchaser's prior written approval.
SECTION 13. RIGHT OF FIRST REFUSAL; RADIUS RESTRICTION;
AMERISUITES HOTEL PURCHASE OPTION.
13.1. Right of First Refusal on Full Service Hotels.
---------------------------------------------
(a) Seller hereby grants to Purchaser a right of first
refusal for a period commencing on the Closing Date and terminating on the
earlier of (i) the fifth anniversary of the Closing Date and (ii) the date upon
which Article XXXVI of the Operating Lease for the Property is effected such
that Seller no longer manages the Property (the "Restricted Period") on any and
-----------------
all Full Service Hotels owned as of the date of this Agreement or acquired or
constructed during the Restricted Period by (A) Seller or (B) any of Seller's
wholly-owned subsidiaries or any other Person for which Seller may direct the
sale of such Person's assets, whether through voting securities or by contract
or otherwise (a "Seller Subsidiary"), on the terms and conditions set forth in
-----------------
this Section 13.1. If during the Restricted Period, Seller or a Seller
------------
Subsidiary shall receive a bona fide offer (the "Offer") from an unaffiliated
-----
third party to purchase one or more of its Full Service Hotels and such Offer
contains a price and terms acceptable to Seller or the Seller Subsidiary, as
applicable, then Seller (x) shall notify Purchaser in writing promptly after the
receipt of the Offer, such notice to be accompanied by a copy of the Offer, and
(y) as promptly as possible, shall provide copies of, or reasonable access to,
due diligence materials in Seller's possession, custody or control relating to
the such Full Service Hotels (including historical occupancy and Rev PAR
information, title policies, title commitments and copies of documents
referenced therein, surveys, environmental audits, zoning reports, engineering
reports, appraisals, budgets and other similar materials, all to the extent in
Seller's possession or control). By its delivery of such due diligence
materials, Seller shall not be warranting or
-35-
guaranteeing the accuracy of such information (though Seller shall not deliver
any information which it knows to be untrue or misleading), it being agreed that
Purchaser shall be responsible for making an independent investigation and
determination with respect to such information. Within ten (10) Business Days
after the receipt of Seller's notice and the documents referred to in clause (y)
of this Section 13.1, Purchaser shall notify Seller and the Seller Subsidiary in
writing whether Purchaser desires to purchase the applicable Full Service Hotel
at the price and on the terms set forth in the Offer.
(b) If Purchaser shall fail to respond within the ten (10)
Business Day period referenced in subparagraph (a) above, Purchaser shall be
deemed conclusively to have elected not to purchase the Full Service Hotel. In
such event or if Purchaser elects not to purchase the Full Service Hotel, Seller
or the Seller Subsidiary shall have the right to transfer the Full Service Hotel
covered by the Offer to the party making the Offer, substantially in accordance
with the terms of the Offer and without material modifications beneficial to
said third party purchaser, without any further notice to Purchaser. If,
however, Seller or the Seller Subsidiary and such third party purchaser
thereafter agree to terms for such purchase which are materially different from
those provided in the Offer and beneficial to the third party purchaser, then
Purchaser's right of first refusal under this Section 13.1 shall be renewed with
------------
respect to such Full Service Hotel, on the terms of the Offer as so modified. If
the sale of a Full Service Hotel is consummated with a third party, provided
that Seller shall have complied with the requirements of this Section 13.1, this
------------
Section 13.1 shall no longer be applicable with respect to such Full Service
Hotel simultaneously with the sale. The exercise or non-exercise by Purchaser of
the right to purchase a Full Service Hotel does not affect Purchaser's
continuing right of first refusal with respect to any other Full Service Hotels.
(c) If Purchaser elects to purchase the Full Service Hotel
pursuant to the Offer, then within ten (10) Business Days after Seller's receipt
of Purchaser's election to purchase, Seller or a Seller Subsidiary, as
applicable, and Purchaser shall execute and deliver a contract of sale relating
to such Full Service Hotel, containing the terms and conditions set forth in the
Offer. Within three (3) Business Days after execution of such contract of sale,
Purchaser shall pay the "Deposit" amount required thereunder to be held in
escrow pursuant to the terms of the contract of sale. Purchaser agrees that the
deposit required by any contract of sale to which Purchaser is a party for a
Full Service Hotel shall be five percent (5%) of the purchase price for the Full
Service Hotel.
(d) Notwithstanding anything to the contrary contained in
this Agreement, the provisions of this Section 13.1 shall not apply to the
------------
Property or to any other properties for which Purchaser has terminated this
Agreement or any of the Other
-36-
Agreements, as applicable, or which has been eliminated from the Group Two Sale
Agreement (unless the problem which Purchaser identified in the applicable
notice of termination has been remedied in full), and Seller may sell such
Properties without regard to this Section 13.1.
------------
(e) Purchaser's rights under this Section 13.1 shall not
------------
apply to any Full Service Hotel which is subject to any foreclosure sale, or
deed-in-lieu thereof and upon the completion of any such foreclosure sale or
deed-in-lieu thereof, this Section 13.1 shall no longer be applicable with
respect to such Full Service Hotel, unless the purchaser at such foreclosure
sale is the Seller or a Seller Subsidiary. No further instrument or confirmation
shall be required with respect to such termination.
(f) Notwithstanding anything to the contrary contained in
this Agreement, this Section 13.1 shall not apply to the Full Service Hotel
------------
located in St. ▇▇▇▇▇▇ and known as "Frenchman's Reef" and Purchaser may sell
that property without regard to this Section 13.1.
------------
13.2. Radius Restriction. Subject to the provisions of
------------------
Section 13.4 below, during the Restricted Period, neither Seller nor any Seller
------------
Subsidiary shall own, lease, acquire, construct or manage any Full Service Hotel
located within a three (3) mile radius of the Hotel.
13.3. AmeriSuites Hotels.
------------------
(a) In the event that Seller or any Seller Subsidiary shall
seek to acquire and/or construct a new "AmeriSuites" brand hotel within a radius
of three (3) miles of the Property (each a "Proposed AmeriSuites Hotel") at any
--------------------------
time during the Restricted Period, Purchaser or any of its Affiliates shall have
the right and option to purchase said Proposed AmeriSuites Hotel (or Seller's
interest therein) pursuant to the terms and conditions set forth below.
(b) With respect to each Proposed AmeriSuites Hotel, to the
extent in Seller's possession and control and (to the extent applicable to the
Proposed AmeriSuites Hotel) Seller shall submit in writing to Purchaser (or
shall provide Purchaser with notice of and reasonable access to) the items set
forth in clauses (i) through (ix) below (collectively, a "Project Plan") as soon
------------
as such information is readily available and, with respect to any Proposed
AmeriSuites Hotel which Seller seeks to construct, no later than 210 days prior
to the anticipated completion date for construction set forth in the Project
Plan. The Project Plan shall be comprised of the following:
(i) to the extent then available or completed, detailed
plans and specifications for the construction of the Proposed AmeriSuites Hotel;
-37-
(ii) a schedule for the estimated costs of construction
prepared jointly by the contractor engaged to perform the work and Seller; a
construction schedule setting forth the target commencement date, substantial
completion date and final completion date for the construction of the Projected
AmeriSuites Hotel and the dates for completion of the various phases of
construction, if applicable;
(iii) estimated operating expenses and cash flow,
occupancy projections and Rev PAR information for the first twelve months after
opening and for periods thereafter, to the extent then developed;
(iv) historical occupancy and Rev Par information for the
preceding three years;
(v) estimated costs for reflagging the Proposed
AmeriSuites Hotel;
(vi) a title insurance commitment issued in Seller's name
relating to the site of the Proposed AmeriSuites Hotel, together with copies of
all documents referenced therein;
(vii) a survey of the site for the Proposed AmeriSuites
Hotel;
(viii) any environmental or engineering reports prepared
in connection with the Proposed AmeriSuites Hotel; and
(ix) such other information (including without limitation
market information) with respect to a Proposed AmeriSuites Hotel as may be
reasonably necessary to permit a purchaser to adequately evaluate the same,
provided such information has been developed and is in the possession of Seller
or may be obtained at a nominal cost.
By its delivery of the Project Plan as provided in this Section 13.3(b), Seller
---------------
shall not be warranting or guaranteeing the accuracy of such information (though
Seller shall not deliver any information which it knows to be untrue or
misleading), it being agreed that Purchaser shall be responsible for making an
independent investigation and determination with respect to such information.
(c) No later than the date which is 30 days after Seller has
provided the Project Plan to Purchaser, Purchaser shall notify Seller whether it
will acquire the Proposed AmeriSuites Hotel on the following terms and
conditions:
(i) The purchase price for the Proposed AmeriSuites Hotel
shall be either (X) one hundred five percent (105%) of Construction Costs, if
Seller constructs the Proposed AmeriSuites Hotel or (Y) 105% of Acquisition
Costs, if Seller acquires an existing Proposed AmeriSuites Hotel; provided,
-38-
however, that if Seller is able to assign to Purchaser any contract of sale
between Seller and an owner of a Proposed AmeriSuites Hotel, without penalty,
consent or a requirement of Seller's continuing liability thereafter, then
Purchaser, in its sole discretion, may accept such assignment and pay to Seller
in lieu of the purchase price described in this subparagraph (i), an amount
equal to the sum of (A) any deposits made by Seller under the contract of sale,
(B) any reasonable costs or expenses incurred by Seller as of the date of the
assignment and (C) an amount equal to that which, absent the assignment to
Purchaser, would have been five percent (5%) of Acquisition Costs or
Construction Costs, as appropriate;
(ii) Within three (3) Business Days after providing its
notice of intent to purchase the Proposed AmeriSuites Hotel, Purchaser shall
provide to an escrow agent reasonably acceptable to Seller and Purchaser a
deposit toward the purchase price in an amount equal to five percent (5%) of the
purchase price, which deposit, at Purchaser's election, may be in the form of a
letter of credit issued by a bank or other lending institution reasonably
approved by Seller;
(iii) Any hotel which Purchaser or its Affiliates
acquires pursuant to this Section 13.3 shall be operated as an AmeriSuites brand
------------
hotel pursuant to a franchise agreement entered into by Purchaser or its
Affiliate, as franchisee, and Seller, as franchisor, which franchise agreement
shall have a minimum term of ten (10) years and be in Seller's then-standard
form of franchise agreement at such time;
(iv) At the Closing, in the event Purchaser or its
Affiliate simultaneously enters into an operating lease with an Affiliate of
Purchaser for the operation of the Proposed AmeriSuites Hotel and directs that
the such entity be the franchisee, Seller, as franchisor, shall provide a
"comfort letter" in favor of Purchaser substantially in the form of Exhibit E-1;
-----------
and
(v) If Seller constructs the Proposed AmeriSuites Hotel,
the obligation of Purchaser to close on the acquisition thereof shall be
conditioned on receipt of a temporary certificate of occupancy for the Proposed
AmeriSuites Hotel.
(d) If Purchaser elects to acquire the Proposed AmeriSuites
Hotel, then within ten (10) Business Days after Seller's receipt of Purchaser's
election to purchase, Seller or a Seller Subsidiary, as applicable, and
Purchaser shall execute and deliver a contract of sale relating to such Proposed
AmeriSuites Hotel, containing (among other terms) the terms and conditions set
forth in this Section 13.3.
------------
(e) If Purchaser fails to exercise its option to purchase by
providing written notice to Seller within the time period set forth in
subparagraph (c), Purchaser shall be deemed
-39-
conclusively to have rejected its option to purchase the Proposed AmeriSuites
Hotel. In such event or if Purchaser rejects its option to purchase a Proposed
AmeriSuites Hotel, this Agreement immediately shall terminate and be of no
further force and effect with respect to such Proposed AmeriSuites Hotel.
Notwithstanding the foregoing, Seller shall be obligated to re-offer such
Proposed AmeriSuites Hotel to Purchaser in accordance with this Section 13.3 if
------------
the size of the Proposed AmeriSuites Hotel is changed substantially or any
projection of total costs and expenses for such Proposed AmeriSuites Hotel shows
total costs and expenses which are substantially less than those contained in
the Project Plan. The exercise or non-exercise by Purchaser of the right to
purchase a particular Proposed AmeriSuites Hotel does not affect Purchaser's
continuing rights under this Section 13.3 with respect to any other Proposed
------------
AmeriSuites Hotels.
(f) Except as provided by subsection (g) below, the
obligations of Seller under this Section 13.3 shall apply to any "AmeriSuites"
------------
hotels which Seller or any Seller Subsidiary owns or which Seller or any Seller
Subsidiary has the right to sell, and Seller shall cause such Seller
Subsidiaries desiring to sell any "AmeriSuites" or similar hotel to comply with
this Section 13.3 on the same terms as Seller. Reference to "sell" in this
------------
Section 13.3 shall refer to sale of fee simple title, ground lease, joint
------------
venture or similar arrangements.
(g) The provisions of this Section 13.3 shall not apply to
------------
any AmeriSuites hotels which are owned, operated or under construction by Seller
or a Seller Subsidiary as of the date of this Agreement, including without
limitation those certain AmeriSuites hotels located at (i) Shelton, CT, (ii)
Secaucus, NJ, (iii) Princeton, NJ and (iv) Las Vegas, NV, and Seller may own,
operate and/or construct such AmeriSuites hotels without regard to this
Agreement.
13.4. Multi-Properties Exception. Notwithstanding anything to
--------------------------
the contrary contained herein, if Seller at any time (including during the
Restricted Period), (i) has the opportunity to own, lease, acquire, construct or
manage five (5) or more Full Service Hotels (other than the Hotel and the hotels
subject to the Other Agreements or the Group Two Sale Agreement) as a result of
a single transaction and (ii) twenty-five percent (25%) or less of such Full
Service Hotels would violate the restrictions set forth in Section 13.2 above,
------------
then Seller, in its sole discretion, may own, lease, acquire, construct or
manage such Full Service Hotels, which Full Service Hotels shall not be subject
to the provisions of Section 13.2 and there shall be no default of this
------------
Agreement by reason of Seller owning, leasing, acquiring, developing or managing
such Full Service Hotels.
13.5. Survival and Damages. Notwithstanding any contrary
--------------------
limitations contained elsewhere in this Agreement, the provisions of this
Section 13 shall survive the Closing for the duration of the Restricted Period.
----------
In the event that Seller or a
-40-
Seller Subsidiary shall breach any of the covenants and provisions contained in
this Section 13, Purchaser shall be entitled to enforce the terms of this
----------
section by specific performance or seek damages in a court of law and the
provisions of Section 10 shall not apply.
----------
13.6. General Provisions.
------------------
(a) The provisions of this Section 13 shall be binding solely
----------
on Seller and Seller Subsidiaries and not on other of Seller's Affiliates or
their respective directors, officers, shareholders or employees. Furthermore,
the provisions of this Section 13 shall not apply to transfers by operation of
----------
law, deed or otherwise to a Person in the event of a Change in Control of
Seller, and immediately after such a Change in Control, the provisions of this
Section 13 shall be deemed null, void and of no further force and effect.
----------
(b) When applicable pursuant to Section 13.1 or Section 13.3,
------------ ------------
Seller or a Seller Subsidiary, as applicable, and Purchaser or its Affiliate, as
applicable, shall use reasonable, good faith efforts to agree upon the terms of
the contract of sale which shall incorporate the terms of this Agreement to the
extent consistent with the Offer or the provisions of Section 13.3, as
------------
applicable, provided that the provisions in this Section 13 shall not be
----------
included in such a contract of sale. If Seller or a Seller Subsidiary and
Purchaser or its Affiliate shall be unable to agree on the terms thereof within
ten (10) Business Days after Seller's receipt of Purchaser's election to
purchase, the parties shall submit such issue to binding arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association or any successor organization thereto.
(c) Time shall be of the essence as to all periods set forth
in this Section 13.
----------
(d) If Purchaser shall at any time materially breach its
agreement to purchase any Full Service Hotel or any Proposed AmeriSuites Hotel
or materially default under any contract of sale entered into with respect
thereto (subject to any applicable notice and cure periods), Purchaser
thereafter shall have no further rights to purchase hotel properties pursuant to
Section 13.1 and/or Section 13.3 and Seller shall have no further obligations
------------ ------------
under said Sections. This provision shall be in addition to any and all other
remedies, including liquidated damages provisions, which Seller may have under
said contracts of sale.
(e) As a condition to receiving the due diligence materials
and Project Plans contemplated in Section 13.1 and Section 13.3, Purchaser shall
------------ ------------
sign a confidentiality agreement in form reasonably acceptable to Seller, which
confidentiality agreement shall contain substantially the same provisions as
Section 14.4.
------------
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(f) None of the rights created or granted pursuant to this
Section 13 shall constitute a lien on any property.
----------
(g) Neither party hereto shall record this Agreement or any
memorandum thereof without the written consent of the other party.
(h) The provisions of this Section 13 shall be personal to
----------
Purchaser and its Affiliates. In no event shall Purchaser assign, transfer or
otherwise convey its rights under this Section 13 to any Person other than an
----------
Affiliate of Purchaser without Seller's prior written consent, which consent may
be withheld in Seller's sole discretion; any transfer in violation of this
Section 13.6(h) shall be void and of no force or effect.
---------------
(i) Notwithstanding anything to the contrary contained in
this Agreement, Seller retains the unrestricted right to continue to grant
franchise agreements for "AmeriSuites" hotels to unaffiliated third-parties. So
long as such franchisees are not Seller Affiliates, the provisions of this
Section 13 shall be inapplicable with respect thereto.
----------
(j) The provisions of this Section 13 shall survive the
----------
Closing.
SECTION 14. MISCELLANEOUS.
14.1. Agreement to Indemnify.
----------------------
(a) Subject to any express provisions of this Agreement to
the contrary, (i) Seller shall indemnify and hold harmless Purchaser and its
permitted (under this Agreement) successors and assigns 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) Space Leases or the Contracts and relating to
periods prior to the Closing or (y) any damage to property of others or injury
to or death of any person or any claims for any debts or obligations occurring
on or about or in connection with the Property or any portion thereof at any
time or times prior to the Closing or (z) all accounts payable and sales taxes
due for or on account of the period prior to Closing, and (ii) Purchaser shall
indemnify and hold harmless 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) the Contracts or the Space Leases relating to periods on or
after the Closing, or (y) any damage to property of others or injury to or death
of any person or any claims for any debts or obligations occurring on or about
the Property or any portion thereof at any time or times on or after the Closing
or (z) sales taxes due for or on account of the period from and after the
Closing.
-42-
(b) Whenever it is provided in this Agreement that an
obligation of Seller will be assumed by Purchaser on or after the Closing,
Purchaser shall be deemed to have also agreed to indemnify and hold harmless
Seller and its 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 Purchaser to perform the obligation so assumed on or after
the 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) At the request of either party, the provisions of this
Section 14.1 shall be included in any or all of the Closing documents
------------
contemplated by this Agreement. The provisions of this Section 14.1 shall
------------
survive the Closing and the termination of this Agreement.
14.2. Brokerage Commissions. Each of the parties hereto
---------------------
represents to the other parties that it dealt with no broker, finder or like
agent in connection with this Agreement or the transactions contemplated hereby,
other than NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities, Inc.. Seller shall be solely
responsible for and shall indemnify and hold harmless Purchaser and its
respective legal representatives, heirs, 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 NationsBanc
▇▇▇▇▇▇▇▇▇▇ Securities, Inc. or any other broker, finder or like agent claiming
by or through Seller. Purchaser shall be solely responsible for and shall
indemnify and hold harmless Seller and its respective legal representatives,
heirs, 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 any broker, finder or like agent claiming
by or through Purchaser. The provisions of this Section 14.2 shall survive the
------------
Closing and any termination of this Agreement.
14.3. Publicity. The parties agree that no party shall
---------
contact or conduct negotiations with public officials, make any public
pronouncements, issue press releases or otherwise
-43-
furnish information regarding this Agreement, the transactions contemplated by
this Agreement or any materials provided or prepared in accordance with this
Agreement (including without limitation, all due diligence materials, whether
prepared by Seller or Purchaser) to any third party without the consent of the
other parties, which consent shall not be unreasonably withheld, delayed or
conditioned, except as required by law or contractual obligations of such
parties to third parties or as advised by reputable counsel to be in accordance
with law or such contractual obligation. No party, or its employees shall trade
in the securities of any parent or affiliate of Seller or of Purchaser until a
public announcement of the transactions contemplated by this Agreement has been
made. No party shall record this Agreement or any notice thereof. The provisions
of this Section 14.3 shall survive the Closing or earlier termination of this
------------
Agreement.
14.4. Confidentiality. Except to the extent otherwise
---------------
provided herein, required by law or advised by counsel to be in accordance with
law or as contemplated by Section 14.3, until the consummation of the
------------
transactions contemplated by this Agreement, Seller and Purchaser shall hold and
shall cause the Seller Subsidiaries and the Purchaser's Affiliates,
respectively, to hold all information and documents obtained in connection with
the transactions contemplated by this Agreement confidential, including without
limitation any oral and written information concerning the Seller and the Hotel
(collectively, the "Due Diligence Material"), provided that the parties to this
----------------------
Agreement may disclose such information and documents to their respective legal
counsel, accountants, employees (to the extent an employee's services are
requested in connection with this Agreement), lenders and their counsel,
brokers, boards of directors, any hotel franchisors, any marketing company
employed to do feasibility studies or any investment banking, environmental or
engineering consultants retained in connection with the proposed transaction,
subject to this confidentiality provision. If the purchase and sale contemplated
by this Agreement is not consummated for any reason whatever, each party to this
Agreement shall as soon as reasonably practicable, return all such information
and documents (and any copies thereof in such parties' possession) to the other
party. Purchaser and Seller each hereby agree to indemnify and hold harmless the
other from and against any and all claims, demands, suits, causes of action,
judgments, damages, losses, fines, penalties, costs and expenses, including
without limitation reasonable attorneys' fees and disbursements relating to the
a breach by such indemnifying party (or its directors, officers, shareholders,
partners, members, agents, employees or any independent contractors retained by
it) of any of the covenants to be performed by such party contained in this
Section 14.4. Notwithstanding anything to the contrary contained in this
------------
Agreement, the provisions of this Section 14.4 shall survive the Closing for a
------------
period of two (2) years. With respect to the indemnity obligations or any breach
of this Section 14.4, the provisions of Section 10 shall
------------ ----------
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not apply and the indemnified party may seek damages in a court of law or
exercise any other remedies available at law or equity.
14.5. 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 Seller to:
Prime Hospitality Corp.
▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Mr. ▇▇▇▇▇ ▇▇▇▇▇
[Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇]
and
Prime Hospitality Corp.
▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: General Counsel
[Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇]
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
One Citicorp Center
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
[Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇]
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if to Purchaser, to:
American General Hospitality
Operating Partnership, L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and/or ▇▇▇▇▇ ▇. ▇▇▇▇▇
[Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇]
with a copy to:
Battle ▇▇▇▇▇▇ 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.
14.6. 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.
14.7. Assignment; Successors and Assigns. Except as otherwise
----------------------------------
expressly set forth in this Agreement, this Agreement and all rights and
obligations hereunder shall not be assignable by any party without the written
consent of the other parties; provided, however, that (a) Purchaser shall have
the right to designate an Affiliate(s) of Purchaser to receive record title to
the Property, (b) Seller shall have the right to designate an Affiliate of
Seller to be the Operating Lessee under the Operating Lease. This Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective legal representatives, 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.
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14.8. 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.
14.9. 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.
14.10. Governing Law. This Agreement shall be interpreted,
-------------
construed, applied and enforced in accordance with the laws of the State of New
York applicable to contracts between residents of the State of New York which
are to be performed entirely within the State of New York, regardless of (i)
where this Agreement is executed or delivered; or (ii) where any payment or
other performance required by this Agreement is made or required to be made; or
(iii) where any breach of any provision of this Agreement occurs, or any cause
of action otherwise accrues; or (iv) where any action or other proceeding is
instituted or pending; or (v) the nationality, citizenship, domicile, principal
place of business, or jurisdiction of organization or domestication of any
party; or (vi) whether the laws of the forum jurisdiction otherwise would apply
the laws of a jurisdiction other than the State of New York; or (vii) any
combination of the foregoing.
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 New York as is provided by law; and the parties consent to the
jurisdiction of said court or courts located in the State of New York and to
service of process by registered mail, return receipt requested, or by any other
manner provided by law.
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14.11. 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.
14.12. 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.
14.13. 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.
14.14. Financing and Priority of Operating Lease. If
-----------------------------------------
Purchaser, in connection with the Closing or thereafter during the term of the
Operating Lease, desires to obtain financing from a Mortgagee secured by a lien
on the Property, Purchaser shall cause the Mortgagee to provide Operating
Lessee, as lessee, with a Subordination, Nondisturbance and Attornment
Agreement. If Purchaser shall fail to provide such Subordination, Nondisturbance
and Attornment Agreement, the Operating Lease shall be superior to the lien of
said financing. The provisions of this Section 14.14 shall survive Closing or
-------------
termination of this Agreement.
14.15. Group Two Purchase and Sale Agreement.
-------------------------------------
Contemporaneously with entering into the Original Agreement, Purchaser and
Seller entered into that certain Purchase and Sale Agreement for the sale of an
additional eleven properties (or leasehold interests therein) (the "Group Two
---------
Sale Agreement"), the closing of which sale is not contemplated to occur prior
--------------
to September 30, 1998. The parties agree that any default or termination of this
Agreement automatically shall be a default or termination, as applicable, of the
Group Two Sale Agreement.
14.16. Exceptions to Liquidated Damages. Notwithstanding
--------------------------------
anything to the contrary contained in this Agreement, the provisions of Section
-------
10 shall not apply to any rights or obligations of Seller or Purchaser which
--
survive the Closing and in connection with such matters which survive the
Closing, a party may seek damages in a court of law or exercise any other
remedies available at law or equity.
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed as a sealed instrument as of the date first above written.
SELLER:
PRIME HOSPITALITY CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Vice President
PURCHASER:
AMERICAN GENERAL HOSPITALITY
OPERATING PARTNERSHIP, L.P., a
Delaware limited partnership
By: AGH GP, Inc., its sole general partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
Executive Vice President
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