EXHIBIT 2.8
AMENDED AND RESTATED PURCHASE AND SALE AGREEMENT
BETWEEN
FAIRFIELD HOLDING CORP.,
as Seller,
and
PORTLAND/SHELTON LLC, L.P.,
as Purchaser
January 7, ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇
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. "American General......................................................................... 2
1.6. "Assumed Debt" ........................................................................... 2
1.7. "Business Day" ........................................................................... 2
1.8. "Change in Control" ...................................................................... 2
1.9. "Closing" ................................................................................ 3
1.10. "Closing Date" .......................................................................... 3
1.11. "Code" .................................................................................. 3
1.12. "Construction Costs" .................................................................... 3
1.13. "Contracts" ............................................................................. 3
1.14. "Cut-Off Time" .......................................................................... 3
1.15. "Defective Property" .................................................................... 3
1.16. "Deposit" ............................................................................... 4
1.17. "Diligence Notice........................................................................ 4
1.18. "Documents" ............................................................................. 4
1.19. "Due Diligence Material" ................................................................ 4
1.20. "Environmental Laws" .................................................................... 4
1.21. "Environmental Report" .................................................................. 4
1.22. "Escrow Agent" .......................................................................... 4
1.23. "Escrow Agreement" ...................................................................... 4
1.24. "Estoppel Certificate" .................................................................. 4
1.25. "Exchange Act" .......................................................................... 5
1.26. "Excluded Intellectual Property" ........................................................ 5
1.27. "FF&E" .................................................................................. 5
1.28. "FF&E Leases" ........................................................................... 5
1.29. "Financial Statements" .................................................................. 6
1.30. "Franchise Agreement" ................................................................... 6
1.31. "Franchisor Comfort Letters" ............................................................ 6
1.32. "Full Service Hotels" ................................................................... 6
1.33. "Group Two Sale Agreement" .............................................................. 6
1.34. "Hazardous Substance" ................................................................... 6
1.35. "Hotel" ................................................................................. 6
1.36. "Improvements" .......................................................................... 6
1.37. "Intangible Property" ................................................................... 6
1.38. "Leased FF&E" ........................................................................... 7
1.39. "Letter of Credit........................................................................ 7
1.40. "Liquidated Damages" .................................................................... 7
1.41. "Liquor License" ........................................................................ 7
1.42. "Mortgagee" ............................................................................. 7
1.43. "Offer" ................................................................................. 7
1.44. "Operating Leases" ...................................................................... 7
1.45. "Operating Lessee" ...................................................................... 7
1.46. "Original Agreement" .................................................................... 7
1.47. "Other Agreements" ...................................................................... 7
1.48. "Other Revenues" ........................................................................ 7
1.49. "Permitted Encumbrances" ................................................................ 7
(i)
1.50. "Person" ................................................................................ 8
1.51. "Project Plan" .......................................................................... 8
1.52. "Property" .............................................................................. 8
1.53. "Proposed AmeriSuites Hotel" ............................................................ 8
1.54. "Prorations Settlement" ................................................................. 8
1.55. "Purchase Price" ........................................................................ 8
1.56. "Purchaser" ............................................................................. 8
1.57. "Real Property" ......................................................................... 8
1.58. "REIT" .................................................................................. 8
1.59. "Restricted Period" ..................................................................... 8
1.60. "Room Revenues" ......................................................................... 8
1.61. "SEC Documents" ......................................................................... 9
1.62. "Seller" ................................................................................ 9
1.63. "Seller's knowledge" .................................................................... 9
1.64. "Seller Subsidiary" ..................................................................... 9
1.65. "Space Leases" .......................................................................... 9
1.66. "Subordination, Nondisturbance and Attornment Agreement" ................................ 9
1.67. "Survey" ................................................................................ 9
1.68. "Survival Period" ....................................................................... 9
1.69. "Title Commitment" ...................................................................... 9
1.70. "Title Company" ......................................................................... 9
1.71. "WARN Act" .............................................................................. 9
SECTION 2. PURCHASE AND SALE................................................................... 10
2.1. Purchase and Sale......................................................................... 10
2.2. Deposit................................................................................... 10
2.3. Closing................................................................................... 10
2.4. Purchase Price............................................................................ 10
2.5. Tax Free Exchange......................................................................... 11
SECTION 3. DILIGENCE; CASUALTY AND CONDEMNATION................................................ 11
3.1. Diligence Inspections..................................................................... 11
3.2. Defective Properties...................................................................... 14
3.3. Title Matters............................................................................. 15
3.4. Survey.................................................................................... 15
3.5. Additional Termination Option............................................................. 16
3.6. Adjournment of Closing.................................................................... 17
SECTION 4. CONDITIONS TO PURCHASER'S OBLIGATION TO CLOSE....................................... 17
4.1. Closing Documents......................................................................... 17
4.2. Condition of the Property................................................................. 19
4.3. Title Policies............................................................................ 19
4.4. Opinions of Counsel....................................................................... 19
4.5. Other Approvals........................................................................... 20
4.6. Representations........................................................................... 20
4.7. Default under Group Two Sale Agreement.................................................... 20
4.8. Default under Other Agreements............................................................ 20
SECTION 5. CONDITIONS TO SELLER'S OBLIGATION TO CLOSE.......................................... 20
5.1. Purchase Price............................................................................ 21
5.2. Closing Documents......................................................................... 21
5.3. Opinion of Counsel........................................................................ 21
(ii)
5.4. Other Approvals........................................................................... 21
5.5. Representations........................................................................... 22
5.6. Default under Group Two Sale Agreement.................................................... 22
5.7. Default under Other Agreements............................................................ 22
SECTION 6. REPRESENTATIONS OF SELLER........................................................... 22
6.1. Status and Authority of Seller............................................................ 22
6.2. Action of Seller.......................................................................... 22
6.3. No Violations of Agreements............................................................... 23
6.4. Litigation................................................................................ 23
6.5. Existing Leases, Agreements, Etc.......................................................... 23
6.6. Franchise Agreement....................................................................... 23
6.7. Contracts................................................................................. 24
6.8. Taxes..................................................................................... 24
6.9. Not A Foreign Person...................................................................... 24
6.10. Hazardous Substances..................................................................... 24
6.11. Insurance................................................................................ 24
6.12. FF&E..................................................................................... 24
6.13. Employment and Union Contracts........................................................... 24
6.14. Adjacent Land Leases..................................................................... 24
6.15. Trademarks............................................................................... 24
6.16. Compliance with Laws..................................................................... 25
6.17. Inventory................................................................................ 25
6.18. Holder of Liquor License................................................................ 25
SECTION 7. REPRESENTATIONS OF PURCHASER........................................................ 26
7.1. Status and Authority of Purchaser......................................................... 26
7.2. Action of Purchaser....................................................................... 26
7.3. No Violations of Agreements............................................................... 27
7.4. Litigation................................................................................ 27
7.5. No Conflicts.............................................................................. 27
SECTION 8. COVENANTS OF SELLER AND PURCHASER................................................... 28
8.1. Covenants of Seller....................................................................... 28
8.2. Covenants of Purchaser.................................................................... 31
SECTION 9. CLOSING COSTS....................................................................... 31
9.1. Closing Costs............................................................................. 31
SECTION 10. DEFAULT............................................................................ 32
10.1. Default by Seller........................................................................ 32
10.2. Default by Purchaser..................................................................... 32
SECTION 11. LIQUOR LICENSE; FRANCHISE AGREEMENT................................................. 32
11.1. Liquor License........................................................................... 32
11.2. Franchise Agreement...................................................................... 33
11.3. License for Excluded Intellectual Property............................................... 34
SECTION 12. ADJUSTMENTS, PRORATIONS, AND DEPOSITS.............................................. 35
12.1. Matters to be Adjusted or Prorated....................................................... 35
(iii)
12.2. Reserves Held by Holders of Assumed Debt................................................. 36
12.3. Certiorari Proceeding.................................................................... 36
SECTION 13. RIGHT OF FIRST REFUSAL; RADIUS RESTRICTION; AMERISUITES HOTEL PURCHASE OPTION...... 37
13.1. Right of First Refusal on Full Service Hotels............................................ 37
13.2. Radius Restriction...................................................................... 39
13.3. AmeriSuites Hotels...................................................................... 39
13.4. Multi-Property Exception................................................................ 42
13.5. Survival and Damages.................................................................... 42
13.6. General Provisions...................................................................... 42
SECTION 14. MISCELLANEOUS...................................................................... 44
14.1. Agreement to Indemnify................................................................... 44
14.2. Brokerage Commissions.................................................................... 45
14.3. Publicity................................................................................ 45
14.4. Confidentiality.......................................................................... 46
14.5. Notices.................................................................................. 46
14.6. Waivers, Etc............................................................................. 48
14.7. Assignment; Successors and Assigns....................................................... 48
14.8. Severability............................................................................. 48
14.9. Counterparts, Etc........................................................................ 49
14.10. Governing Law........................................................................... 49
14.11. Performance on Business Days............................................................ 49
14.12. Attorneys' Fees......................................................................... 50
14.13. Section and Other Headings.............................................................. 50
14.14. Financing and Priority of Operating Lease............................................... 50
14.15. Group Two Purchase and Sale Agreement................................................... 50
14.16. Exceptions to Liquidated Damages........................................................ 50
EXHIBITS*
Exhibit B Legal Description of the Property
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 Lease 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
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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 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
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 PURCHASE AND SALE AGREEMENT
THIS AMENDED AND RESTATED PURCHASE AND SALE AGREEMENT is made as of the
7th day of January, 1998, between FAIRFIELD HOLDING CORP., a Delaware
corporation ("Seller"), as seller, and PORTLAND/SHELTON LLC ("Purchaser"), as
purchaser.
W I T N E S S E T H:
WHEREAS, Prime Hospitality Corp. and American General
Hospitality Operating Partnership ("American General") 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, Prime Hospitality Corp. and American General 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"); and
----------------
WHEREAS, this Agreement shall constitute one of such eight
separate contracts which shall amend and restate the Original Agreement; and
WHEREAS, American General has designated Purchaser pursuant to
the Original Agreement to receive title to the Property; and
WHEREAS, Seller, a wholly-owned subsidiary of Prime
Hospitality Corp., is the fee owner of the Property; and
WHEREAS, Seller desires to sell to Purchaser and Purchaser
desires to purchase Seller's interest in the Property, 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
-----------------
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
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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.
------------
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,
---------- -
as it and they may be amended from time to time as herein provided.
1.5. "American General" shall have the meaning given such
----------------
term in the recitals to this Agreement.
1.6. "Assumed Debt" shall have the meaning given such term
------------
in Section 2.4.
-----------
1.7. "Business Day" shall mean any day other than a
------------
Saturday, Sunday or any other day on which banking institutions in the State of
New York are authorized by law or executive action to close.
1.8. "Change in Control" shall mean (a) any merger or
-----------------
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.
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1.9. "Closing" shall have the meaning given such term in
-------
Section 2.3.
-----------
1.10. "Closing Date" shall have the meaning given such term
------------
in Section 2.3.
-----------
1.11. "Code" shall mean the Internal Revenue Code of 1986, as
----
amended, and the treasury regulations promulgated thereunder.
1.12. "Construction Costs" shall mean all hard and soft costs
------------------
incurred by Seller or the Seller Subsidiary, as appropriate, in connection with
the acquisition of the site and 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 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.
1.13. "Contracts" shall mean all hotel licensing agreements
---------
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.
1.14. "Cut-Off Time" shall mean 12:01 a.m. on the Closing
------------
Date of this Agreement.
1.15. "Defective Property" shall mean the Property if and
------------------
when the Property which (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
-3-
to restore the Property into substantially the same condition as existing prior
to such damage.
1.16. "Deposit" shall have the meaning given such term in
-------
Section 2.2.
-----------
1.17. "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.
------------ ---
1.18. "Documents" shall mean all books, records and files
---------
relating to the leasing, maintenance, management or operation of the Property.
1.19. "Due Diligence Material" shall have the meaning set
----------------------
forth in Section 14.4.
------------
1.20. "Environmental Laws" shall mean the Comprehensive
------------------
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.
1.21. "Environmental Report" shall have the meaning given
--------------------
such term in Section 6.10.
------------
1.22. "Escrow Agent" shall mean Chicago Title Insurance
------------
Company.
1.23. "Escrow Agreement" shall mean that certain Escrow
----------------
Deposit Agreement dated as of even date herewith among Purchaser, Seller and
Escrow Agent.
1.24. "Estoppel Certificate" shall mean a statement 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:
(a) when from a franchisor under a Franchise Agreement, 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
-4-
Agreement; and to any other matters which franchisor is required to certify
pursuant to the terms of the Franchise Agreement;
(b) when from the holder of any Assumed Debt, that the copies
of the loan documents evidencing and securing the Assumed Debt previously
delivered to Purchaser are the true, correct and complete copies of such loan
documents which have not been modified except as identified; to the outstanding
principal indebtedness and accrued interest of the Assumed Debt; that Seller, as
borrower, is not in monetary or other default under the Assumed Debt loan
documents 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 Assumed Debt loan
documents; and to any other matters which such holder is required to certify
pursuant to the terms of the Assumed Debt loan documents;
each in a form reasonably acceptable to said franchisor or holder of Assumed
Debt; provided, however, that if any Franchise Agreement or loan document
evidencing the Assumed Debt (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 relevant
document on an estoppel certificate, then in either case the estoppel
certificate shall be deemed satisfactory to fulfill Seller's obligations under
Section 4.1(i), provided Seller shall indemnify and hold harmless Purchaser
--------------
against any loss, cost, damage, claim or liability occasioned by such immaterial
default.
1.25. "Exchange Act" shall mean the Securities Exchange Act
------------
of 1934, as amended.
1.26. "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).
1.27. "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.
1.28. "FF&E Leases" shall mean the leases for all of the
-----------
Leased FF&E.
-5-
1.29. "Financial Statements" shall have the meaning given
--------------------
such term in Section 3.1(b).
1.30. "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.
---------
1.31. "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.
------------ ---
1.32. "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).
1.33. "Group Two Sale Agreement" shall have the meaning given
------------------------
that term in Section 14.15.
-------------
1.34. "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.
1.35. "Hotel" shall mean the hotel located at the Property.
-----
1.36. "Improvements" shall mean all buildings, fixtures,
------------
walls, fences, landscaping and other structures and improvements situated on,
affixed or appurtenant to the Real Property.
1.37. "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
-6-
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.
1.38. "Leased FF&E" shall have the meaning given such term in
-----------
Section 6.14.
------------
1.39. "Letter of Credit" shall have the meaning given such
----------------
term in Section 2.2.
-----------
1.40. "Liquidated Damages" shall have the meaning given such
------------------
term in Section 10.1.
------------
1.41. "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.
1.42. "Mortgagee" shall mean any and all lenders who provides
---------
financing to Purchaser in connection with the Property.
1.43. "Offer" shall have the meaning given such term in
-----
Section 13.
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1.44. "Operating Lease" shall mean the lease to be entered
---------------
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.
---------
1.45. "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.
1.46. "Original Agreement" shall have the meaning given such
------------------
term in the recitals to this Agreement.
1.47. "Other Agreements" shall have the meaning given such
----------------
term in the recitals to this Agreement.
1.48. "Other Revenues" shall have the meaning given such term
--------------
in Section 12.1.
------------
1.49. "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
-7-
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 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, as the case
may be, otherwise accepted by Purchaser pursuant to Section 3.
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1.50. "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.
1.51. "Project Plan" shall have the meaning given such term
------------
in Section 13.3.
------------
1.52. "Property" shall mean collectively, all of the Seller's
--------
interest in the Real Property, and in the FF&E, the Documents, the Improvements
and the Intangible Property relating to the Real Property.
1.53. "Proposed AmeriSuites Hotel" shall have the meaning
--------------------------
given such term in Section 13.3.
------------
1.54. "Prorations Settlement" shall have the meaning given
---------------------
such term in Section 12.1.
------------
1.55. "Purchase Price" shall have the meaning given such term
--------------
in Section 2.4.
-----------
1.56. "Purchaser" shall have the meaning given such term in
---------
the preamble to this Agreement.
1.57. "Real Property" shall mean the real property described
-------------
in Exhibit B, together with all easements, rights of way, privileges, licenses
---------
and appurtenances which Seller may now own with respect thereto.
1.58. "REIT" shall mean American General Hospitality
----
Corporation.
1.59. "Restricted Period" shall have the meaning given such
-----------------
term in Section 13.
----------
1.60. "Room Revenues" shall have the meaning given such term
-------------
in Section 12.1.
------------
-8-
1.61. "SEC Documents" shall mean all reports, schedules,
-------------
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.
1.62. "Seller" shall have the meaning given such term in the
------
preamble to this Agreement
1.63. "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 1.63 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.
1.64. "Seller Subsidiary" shall have the meaning set forth in
-----------------
Section 13.1.
------------
1.65. "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.
---------
1.66. "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.
---------
1.67. "Survey" shall have the meaning given such term in
------
Section 3.4.
-----------
1.68. "Survival Period" shall have the meaning given such
---------------
term in Section 6.
---------
1.69. "Title Commitment" shall have the meaning given such
----------------
term in Section 3.3.
-----------
1.70. "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.
1.71. "WARN Act" shall have the meaning given such term in
--------
Section 8.1(e).
--------------
-9-
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 Seven Hundred Seventy-One Thousand Dollars ($771,000) (together with
all interest accrued thereon, 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
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 Fourteen
--------------
Million Two Hundred Twenty-Five Thousand Dollars ($14,225,000), allocated Twelve
Million Five Hundred Ninety Thousand Dollars ($12,590,000) to the Real Property
and Improvements and One Million Six Hundred Thirty-Five Thousand Dollars
($1,635,000) to the personal property including, without limitation, the FF&E
and the Intangible Property.
(b) A portion of the Purchase Price shall be paid by
Purchaser assuming certain debt in accordance with Section 2.4(c)
--------------
-10-
and the remainder (plus or minus adjustments and prorations as 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.
(c) Purchaser shall receive a credit against the Purchase
Price for a portion of the Purchase Price equal to the sum of (i) the
outstanding principal balance and (ii) accrued interest thereon and assumption
fees for the account of Seller as Seller shall direct Purchaser to pay, by
virtue of assuming certain debt (collectively, the "Assumed Debt") in an
------------
aggregate original principal amount equal to $5,600,579, which Assumed Debt is
secured by a lien against the Property.
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 a Section 1031 exchange with respect to the Property, 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.
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
-11-
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 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
-12-
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 documents evidencing, securing or related to
the Assumed Debt;
(iv) 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;
(v) 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;
(vi) All Contracts;
(vii) 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;
(viii) All notices received from governmental
authorities in connection with the Hotel;
(ix) 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;
(x) All FF&E Leases;
(xi) 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;
(xii) A schedule of any litigation, arbitration or
administrative proceedings pending or threatened with respect to the Hotel;
-13-
(xiii) Any leases of adjacent land or facilities used in
connection with the operation of the Hotel; and
(xiv) 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 Hotels, 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 the
completion of the audit of the Property currently being performed by Coopers &
▇▇▇▇▇▇▇, L.L.P., Seller shall provide to Coopers & ▇▇▇▇▇▇▇, L.L.P. 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 would cause 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 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 that it
considers the Property a Defective Property, and Purchaser and Seller shall,
acting reasonably and in good faith, be unable or
-14-
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 effective 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 on the Diligence Notice, Purchaser
----------------
acknowledges and agrees that it does not have any other objections to any 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 with respect to the affected Properties, 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.
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
------
-15-
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 on 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 pursuant to Section 3.6 for up
-----------
to ninety (90) days 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 of 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 the
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 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 or 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 with respect to this
Section 3.5 whether three such terminations have
-----------
-16-
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(i)), Franchisor Comfort Letters (as
---------------
required by Section 4.1(k) 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 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;
(b) An original fully executed counterpart of each document
evidencing or securing the Assumed Debt, to the extent the same is in Seller's
possession, custody or control; provided that if Seller is unable to produce an
original fully executed counterpart of any such document, Seller may provide a
copy of
-17-
such document certified by Seller to be a true and correct copy thereof, in lieu
thereof;
(c) 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;
(d) 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;
(e) Duly executed transfer tax forms, as required by
applicable law;
(f) To the extent the same are in Seller's possession, fully
executed copies of all Contracts pertaining to the Property;
(g) 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);
(h) 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;
(i) Duly executed Estoppel Certificates from the franchisor
under the Franchise Agreement and the holders of the Assumed Debt; provided that
any such Estoppel Certificate shall be provided to Purchaser prior to Closing
promptly following receipt by Seller of the same;
(j) Certificates of title for any motor vehicles constituting
a portion of the FF&E;
(k) Franchisor Comfort Letters;
(l) Subject to the provisions of Section 11.1, copies of the
------------
Liquor License for the Hotel;
(m) 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;
-18-
(n) Certified copies of all charter documents, applicable
corporate resolutions and certificates of incumbency with respect to Seller;
(o) 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
(p) 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
-19-
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 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) all lender consents necessary in connection with the assumption
of the Assumed Debt; (c) the consent of the franchisor, if required; (d) 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 (e) a
modification of such Armonk Lease to extend the initial term thereof such that
at the closing of the 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
-20-
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.
-----------
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;
(c) Duly executed and acknowledged assignment and assumption
documents for the assumption of the Assumed Debt, in forms reasonably acceptable
to Purchaser and the lender;
(d) Such other conveyance documents, certificates, deeds,
affidavits and other instruments as Seller, the Title Company or any lender
holding all or any portion of the Assumed Debt 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 each 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 lender consents necessary
------------
or appropriate in connection with the assumption of the Assumed Debt; (c) the
consent of franchisor, if required; (d) the consent of the ground lessor under
the Armonk Lease to the transactions contemplated by the Group Two Sale
Agreement; and (e) a modification of such Armonk Lease to extend the initial
-21-
term thereof such that at the Closing of the 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.
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; provided however,
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,
-22-
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.
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 true and complete copies 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.
-23-
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.
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
-24-
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.
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
-25-
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 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.
-26-
7.3. No Violations of Agreements. Neither the execution,
---------------------------
delivery or performance of this Agreement nor 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 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
-27-
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.
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
with respect to 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, the Franchise Agreement or the documents evidencing and securing
the Assumed Debt, other than those modifications, renewals or extensions
required by the terms of the applicable document, or enter into any other
leases,
-28-
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 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;
-29-
(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, the documents evidencing and securing the Assumed Debt 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, Space Leases, or documents evidencing the
Assumed Debt, without Purchaser's prior written consent, except that the Seller
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
-30-
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.
8.2. Covenants of Purchaser. Purchaser hereby covenants with
----------------------
Seller commencing on the date of the Original Agreement and continuing until the
Closing Date, Purchaser shall exercise best efforts to cause or permit the
Purchaser to assume the Assumed Debt as payment of a portion of the Purchase
Price, in accordance with the terms of this Agreement. Without limiting the
foregoing, Purchaser agrees that it shall form special purpose entities, provide
financial and other information reasonably requested by any holder of Assumed
Debt, provide legal opinions regarding the due formation and good standing of
the assignee of the Assumed Debt and the due authorization and execution of the
documents evidencing the assumption, negotiate in good faith the assumption
documents, and perform such other acts and provide such other information as any
holder of Assumed Debt may reasonably require. Seller shall pay the reasonable
third-party costs incurred by Purchaser in complying with this Section 8.2
-----------
promptly upon receipt of invoices or other reasonable evidence of the incurrence
of such costs; the provisions of this sentence shall survive the Closing or
earlier termination of this Agreement.
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 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.
-31-
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 Seven
Hundred Seventy-One Thousand Dollars ($771,000) 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 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 a 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 the Liquor License 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
-32-
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 a 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, 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
-33-
good faith to an adjustment of the rent payable pursuant to the Operating Lease
for the Property, 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, 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.
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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 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
-35-
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
Agreements, 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 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. Reserves Held by Holders of Assumed Debt. In connection
----------------------------------------
with the assumption by Purchaser of the Assumed Debt, Seller shall assign to
Purchaser all of its right, title and interest in and to all reserves and
deposits held by a holder of Assumed Debt for real property taxes, insurance
premiums, FF&E, Improvements and other purposes. At the Closing, Purchaser shall
pay to Seller the aggregate amount of such reserves and deposits.
12.3. 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
-36-
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 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,
-37-
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 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
-38-
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;
(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;
-39-
(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, 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;
-40-
(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 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
-41-
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-Property 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 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
-42-
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 relating to payment of a portion of the
purchase price by assumption of debt and 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.
------------
(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
-43-
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, the Assumed Debt 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, the Space Leases or
the Assumed Debt 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.
(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.
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(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 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
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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 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,
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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).
(a) 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.
(b) 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. (▇▇▇) ▇▇▇-▇▇▇▇]
if to Purchaser, to:
American General Hospitality
Operating Partnership, L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and/or ▇▇▇▇▇ ▇. ▇▇▇▇▇
[Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇]
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with a copy to:
Battle ▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
[Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇]
(c) 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.
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
-48-
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.
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.
-49-
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.
-50-
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed as a sealed instrument as of the date first above written.
SELLER:
FAIRFIELD HOLDING CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Vice President
PURCHASER:
PORTLAND/▇▇▇▇▇▇▇ LLC, a Delaware
limited liability company
By: AGH Portland/▇▇▇▇▇▇▇ LLC, a
Delaware limited liability
company, its managing member
By: Portland/▇▇▇▇▇▇▇ Corp.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
Executive Vice President
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