Exhibit 2.2
AMENDED AND RESTATED STOCK PURCHASE AGREEMENT
BY AND BETWEEN
SIX CONTINENTS INTERNATIONAL HOLDINGS B.V.
AS SELLER,
AND
HPT IHG-2 PROPERTIES TRUST
AS BUYER
FEBRUARY 9, 2005
TABLE OF CONTENTS
1. Deadlines and Definitions......................................................................2
1.1 Deadlines..............................................................................2
1.2 Definitions............................................................................2
2. Transfer of Shares.............................................................................2
3. Purchase Price.................................................................................2
4. Buyer's Due Diligence and Inspection Rights; Termination Right.................................2
4.1 Review of Property and Property Documents..............................................2
4.2 Guidelines for Inspection Rights.......................................................3
4.3 Title and Survey Examination...........................................................3
4.4 As-Is, Where-Is, With All Faults Sale..................................................4
4.5 Termination Right......................................................................5
5. Covenants......................................................................................5
5.1 Seller's Covenants: Effective Date to Closing Date.....................................5
5.2 Seller's Covenants After the Closing Date.............................................10
5.3 Approvals and Notifications...........................................................10
5.4 SEC Matters...........................................................................10
5.5 Access to Records.....................................................................10
5.6 Required Work; Generators.............................................................11
6. Closing.......................................................................................11
6.1 Closing Mechanics.....................................................................11
6.2 Seller's Deliveries...................................................................12
6.3 Buyer's Deliveries....................................................................14
7. Closing Costs.................................................................................15
7.1 Seller's Closing Costs................................................................15
7.2 Buyer's Closing Costs.................................................................15
8. Representations and Warranties................................................................15
8.1 Seller's Representations and Warranties...............................................15
8.2 [Reserved.]...........................................................................22
8.3 Claims of Breach Prior To Closing.....................................................22
8.4 Survival and Limits On Buyer's Claims.................................................23
8.5 Buyer's Representations and Warranties................................................23
9. Casualty and Condemnation.....................................................................25
9.1 Major Event...........................................................................25
9.2 Closing Despite Casualty/Condemnation.................................................25
10. Other Conditions to Closing...................................................................26
10.1 Conditions to Buyer's Obligations.....................................................26
10.2 Conditions to Seller's Obligations....................................................27
10.3 Waiver of Conditions..................................................................27
11. Transaction Issues: Brokers, Confidentiality and Indemnity....................................27
11.1 Brokers...............................................................................28
11.2 Publicity.............................................................................28
11.3 Indemnity.............................................................................28
12. Default At or Prior to Closing................................................................28
12.1 Buyer Default.........................................................................29
12.2 Seller Default........................................................................29
13. Notices.......................................................................................30
14. General Provisions............................................................................31
14.1 Execution Necessary...................................................................31
14.2 Counterparts..........................................................................31
14.3 Successors and Assigns................................................................31
14.4 Governing Law.........................................................................32
14.5 Entire Agreement......................................................................32
14.6 Time is of the Essence................................................................32
14.7 Interpretation........................................................................32
14.8 Further Assurances....................................................................32
14.9 Exclusive Application.................................................................32
14.10 Partial Invalidity....................................................................33
14.11 No Implied Waiver.....................................................................33
14.12 Rights Cumulative.....................................................................33
14.13 Attorney's Fees.......................................................................33
14.14 Waiver of Jury Trial..................................................................33
14.15 Facsimile Signatures..................................................................33
14.16 No Recordation........................................................................34
14.17 Exhibits and Schedules................................................................34
14.18 Jurisdiction..........................................................................34
14.19 Currency..............................................................................34
15. Additional Termination Rights.................................................................34
16. Limitation of Liability.......................................................................34
17. Conflicting Terms.............................................................................35
18. Nonliability of Trustees......................................................................35
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SCHEDULE OF EXHIBITS AND SCHEDULES
REFERENCE
EXHIBIT TITLE PARAGRAPH
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A. LEGAL DESCRIPTION OF LAND RECITALS
B. HOTEL LEASE AGREEMENT RECITALS
C. INDEMNIFICATION AGREEMENT RECITALS
D. LIST OF ASSETS AND LIABILITIES TO BE TRANSFERRED OUT OF THE 5.1(K), 6.2(M)
COMPANY PRIOR TO CLOSING DATE AND 8.1(BB)
E. PUERTO RICO COMFORT LETTER 5.1(L)
E-1 NEW TAX CONCESSION
F. TENANT ESTOPPEL CERTIFICATE 5.1(N)
G. GROUND LEASE ESTOPPEL 5.1(N)
H. AFFIDAVIT OF TITLE 6.2(D)
I. AUTHORITY CERTIFICATE 6.2(F)
J. REAFFIRMATION OF REPRESENTATIONS 6.2(G)
K. LEASES 8.1(E)
L. LIST OF CONTRACTS 8.1(E)
M. PRESS RELEASE 11.2
N. LETTER REGARDING GUARANTEE 6.2(Q)
O. LESSEE GUARANTEE 6.2(T)
P. REQUIRED WORK 5.6
REFERENCE
SCHEDULE TITLE PARAGRAPH
------- ----- ---------
A DEFINITIONS 1.2
SELLER'S REPS AND WARRANTIES
6.1 CLOSING PROCEDURE 6.1
8.1(D) PENDING OR THREATENED LITIGATION 8.1(D)
8.1(F) CONDITIONS MATERIALLY AFFECTING THE PROPERTY 8.1(F)
8.1(G) CONDITIONS AFFECTING UTILITIES AND SERVICES 8.1(G)
8.1(H) VIOLATION OF LAWS RELATING TO ZONING, CONSTRUCTION, HEALTH 8.1(H)
AND FIRE SAFETY, ETC.
8.1(I) UNPAID (DELINQUENT) TAXES OR SPECIAL ASSESSMENTS 8.1(I)
8.1(K) HAZARDOUS MATERIALS 8.1(K)
8.1(M) MATERIAL DEFECTS IN PROPERTY 8.1(M)
8.1(N) UNPAID TAXES, ETC. 8.1(N)
8.1(O) UNOBTAINED LICENSES AND PERMITS 8.1(O)
8.1(R) VIOLATION OF LAWS 8.1(R)
8.1(T) MATERIAL DEFAULTS WITH RESPECT TO PERMITTED TITLE EXCEPTIONS 8.1(T)
8.1(W) INFORMATION WITH RESPECT TO LEASES AND GROUND LEASES 8.1(W)
8.1(AA) LIST OF MATERIAL GOVERNMENTAL LICENSES, PERMITS, 8.1(AA)
CONCESSIONS AND FRANCHISES
8.1(BB)(iii) PENDING OR THREATENED LITIGATION CONTINUING AFTER CLOSING 8.1(BB)(iii)
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AMENDED AND RESTATED
STOCK PURCHASE AGREEMENT
THIS AMENDED AND RESTATED
STOCK PURCHASE AGREEMENT (this "AGREEMENT") is
made and entered into as of February 9, 2005, by and between SIX CONTINENTS
INTERNATIONAL HOLDINGS B.V., a Netherlands closed limited liability company
("SELLER"), and HPT IHG-2 PROPERTIES TRUST, a Maryland real estate investment
trust ("BUYER").
RECITALS:
WHEREAS, Seller owns all of the issued and outstanding shares of common
stock, with a par value of One Hundred Dollars ($100) per share (the "COMPANY
SHARES"), of Crowne Plaza (Puerto Rico) Inc., a corporation organized under the
laws of the Commonwealth of Puerto Rico (the "COMPANY");
WHEREAS, the Company is the owner of the InterContinental San ▇▇▇▇ Resort
and Casino in San ▇▇▇▇, Puerto Rico (the "HOTEL"), including (i) fee simple
title ("pleno dominio") to the land described on EXHIBIT A (the "OWNED REAL
PROPERTY"), (ii) a valid and assignable leasehold estate in and to the leased
land also described on EXHIBIT A (the "LEASED REAL PROPERTY") and (iii) the
Property (as hereinafter defined);
WHEREAS, Seller and Buyer are parties to that certain
Stock Purchase
Agreement dated as of December 17, 2004, as amended as of December 22, 2004,
January 14, 2005, January 26, 2005, February 2, 2005 and February 8, 2005 (the
"ORIGINAL AGREEMENT"), pursuant and subject to the terms and conditions of which
Buyer has agreed to purchase the Company Shares from Seller;
WHEREAS, Seller and Buyer desire to amend and restate the Original
Agreement as herein provided;
WHEREAS, this Agreement contemplates a transaction in which Buyer will
purchase from Seller, and Seller will sell to Buyer, all of the Company Shares
for an aggregate purchase price of One Hundred Nineteen Million and No/100
Dollars ($119,000,000.00), plus an amount equal to the amount of Working Capital
of the Company at Closing and Buyer will thereby acquire all the outstanding
capital stock of the Company, all upon the terms and conditions set forth
herein;
WHEREAS, simultaneously with the execution of this Agreement by Buyer and
Seller, Buyer and certain related parties of Seller and the Company (each, a
"SELLER RELATED PARTY," collectively, the "SELLER RELATED PARTIES") are entering
into an Amended and Restated Purchase and Sale Agreement (as amended from time
to time, the "PURCHASE AND SALE AGREEMENT") pursuant to which Buyer will
purchase certain other hotels and properties owned by the Seller Related
Parties;
WHEREAS, a Seller Related Party (such party being the "LESSEE"), on one
hand, and the Company or a related party of Buyer (such party being the
"LESSOR"), on the other hand, shall enter into a Lease Agreement in the form
attached hereto as EXHIBIT B (the "HOTEL LEASE AGREEMENT") pursuant to which the
Lessor will lease the Hotel to the Lessee; and
WHEREAS, on the Closing Date, Buyer, Seller and Holiday Hospitality
Franchising, Inc., a Delaware corporation ("HHF"), will enter into an
Indemnification Agreement substantially in the form attached hereto as EXHIBIT C
(the "INDEMNIFICATION AGREEMENT"), pursuant to which Seller and HHF will
indemnify Buyer and its affiliates with respect to certain potential losses and
damages.
NOW, THEREFORE, for and in consideration of the promises, covenants,
representations and warranties hereinafter set forth, the sum of Ten Dollars
($10.00) and other good and valuable consideration in hand paid by Seller to
Buyer and by Buyer to Seller upon the execution of this Agreement, the receipt
and sufficiency of which are hereby acknowledged by each of the parties hereto,
the parties hereto hereby agree to amend and restate the Original Agreement in
its entirety as follows:
1. DEADLINES AND DEFINITIONS.
1.1 DEADLINES. Wherever used in this Agreement, the following
terms shall have the meanings set forth below:
"CLOSING DEADLINE" shall be the same date as the initial "Closing
Deadline" set forth in, and as such date may be extended in accordance with
the terms of, the Purchase and Sale Agreement.
"DUE DILIGENCE DEADLINE" shall mean February 9, 2005.
1.2 DEFINITIONS. In addition, wherever used in this Agreement, the
terms set forth on SCHEDULE A shall have the meanings set forth on SCHEDULE A.
2. TRANSFER OF SHARES. Subject to the terms and conditions of this
Agreement on the Closing Date, Buyer agrees to purchase from Seller, and Seller
agrees to sell to Buyer, all of the Company Shares for the consideration
specified below in Paragraph 3.
3. PURCHASE PRICE. Subject to the terms and conditions of this Agreement,
on the Closing Date, Buyer shall pay to Seller (1) an aggregate amount of One
Hundred Nineteen Million and No/100 Dollars ($119,000,000.00), in cash by wire
transfer, for the Company Shares (the "PURCHASE PRICE"), and (2) an aggregate
amount, in cash by wire transfer, equal to Thirty Two Million Seven Hundred
Thousand and No/00 Dollars ($32,700,000.00)] on account of the Working Capital
of the Company (such amount, together with the Purchase Price, the "ADJUSTED
PURCHASE PRICE").
4. BUYER'S DUE DILIGENCE AND INSPECTION RIGHTS; TERMINATION RIGHT.
4.1 REVIEW OF PROPERTY AND PROPERTY DOCUMENTS. Until Closing, and
subject to the terms of Paragraph 4.2, Seller shall provide, and shall cause the
Company to provide, Buyer and Buyer's Representatives with access to the
Property and the Property Documents, wherever located, upon reasonable prior
notice at reasonable times during business hours, with the right and license to
conduct Due Diligence with respect to the Property. Subject to Paragraphs 7.1
and 7.2, Buyer covenants and agrees that it will inspect the Hotel at its sole
cost and expense and will not allow any liens to attach against the Hotel as a
result of its Due
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Diligence. If Buyer or Seller Terminates this Agreement, then upon written
request from Seller, Buyer shall endeavor to deliver promptly to Seller (at no
cost to Buyer) copies of all Buyer's Diligence Reports in its possession (except
for such materials which Buyer deems confidential or proprietary), but with no
liability for the accuracy thereof and no representation that Seller or any
other party may rely thereon. Seller represents that neither it nor the Company
has altered or intentionally withheld any part of the Property Documents
delivered to Buyer.
4.2 GUIDELINES FOR INSPECTION RIGHTS. Buyer's rights to conduct
Due Diligence shall be subject to the following further requirements: (a) Due
Diligence must not unreasonably interfere with the operation or management of
the Hotel or unreasonably disturb the rights of guests or Tenants; (b) Buyer
must provide Seller with at least twenty-four (24) hours prior written notice of
its intent to perform Due Diligence on the Property and Seller shall have the
right to have a representative of Seller and/or the Company present during any
such entry upon the Property by Buyer or Buyer's Representatives; (c) Buyer
shall not contact any Tenant, Hotel contractor, Hotel guest, or Hotel employee
without Seller's prior written consent, which consent shall not be unreasonably
withheld or delayed; (d) Seller or its designated representative shall have the
right to pre-approve (which approval shall not be unreasonably withheld or
delayed), and be present during, any physical testing of the Property; (e) Buyer
shall immediately return the Property to the condition existing prior to any
tests and inspections; (f) Due Diligence activities may not unreasonably affect
the appearance of the Hotel in any way; and (g) Buyer may not conduct any
invasive sampling, boring, testing, or analysis of soils, surface water or
groundwater at the Property without first having obtained prior written approval
of Seller, which approval shall not be unreasonably withheld or delayed. Prior
to such time as Buyer or any of Buyer's Representatives enter the Property,
Buyer shall (i) obtain policies of general liability insurance which insure
Buyer and Buyer's Representatives with liability insurance limits of not less
than $1,000,000 combined single limit for personal injury and property damage
and name the Company as an additional insured and provide such additional
coverages with appropriate limits as Seller and/or the Company shall reasonably
require, and (ii) provide the Company with certificates of insurance evidencing
that Buyer has obtained the aforementioned policies of insurance.
Notwithstanding any provision in this Agreement to the contrary, except in
connection with the preparation of (i) a so-called "Phase I" environmental
report with respect to the Property or (ii) a zoning report with respect to the
Property, Buyer shall not contact any governmental official or representative
regarding hazardous materials on, or the environmental condition of, the
Property, or the status of compliance of the Property with zoning, building code
or similar Laws, without Seller's prior written consent thereto, which consent
shall not be unreasonably withheld or delayed.
4.3 TITLE AND SURVEY EXAMINATION. Seller, on or prior to the
Effective Date, delivered, or caused the Company to deliver, to Buyer a copy of
Seller's or the Company's, as applicable, most recent Survey of the Property and
a Title Commitment.
A. TITLE AND SURVEY OBJECTIONS. Buyer shall have until the Due
Diligence Deadline to notify Seller in writing of any Title Objections. If Buyer
fails to notify Seller of any Title Objections on or before such date, then,
notwithstanding any other provisions set forth herein, such failure to notify
Seller shall constitute a waiver of such right to object to such matters
existing as of the Effective Date and disclosed in the Title Commitment or
Survey. Seller shall notify Buyer within three (3) Business Days of its receipt
of such notice if Seller has
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elected to Remove, or to cause the Company to Remove, any such Title Objections.
If Seller fails to respond within such timeframe, Seller shall be deemed to have
declined to remove such Title Objections (other than Required Removal Items). If
Seller does not covenant in writing to Buyer that Seller will Remove, or cause
the Company to Remove, the Title Objections prior to Closing (other than
Required Removal Items), Buyer shall have until the Closing Date to elect in
writing, either to (a) Terminate this Agreement, and the parties shall have no
further rights or obligations hereunder, except for those which expressly
survive any such termination, or (b) waive its Title Objections (other than
Required Removal Items) and proceed with the transaction pursuant to the
remaining terms and conditions of this Agreement. If Buyer fails to give Seller
notice of its election by such time, it shall be deemed to have elected to
Terminate this Agreement. Any such Title Objection so waived by Buyer shall be
deemed to constitute a Permitted Title Exception and the Closing shall occur as
herein provided without any reduction of or credit against the Purchase Price.
B. CURE OF TITLE MATTERS. At Closing, if this Agreement is not
Terminated as permitted herein, Seller shall Remove or cause to be Removed any
Title Objections to the extent (and only to the extent) that the same constitute
Required Removal Items.
C. BUYER'S RIGHT TO TERMINATE. If Seller fails to Remove or cause
to be removed any Title Objection (other than Required Removal Items) prior to
Closing that it has agreed to remove (or cause to be removed) pursuant to
subsection (A) above, then Buyer's sole remedy shall be to Terminate this
Agreement by written notice to Seller on or prior to the Closing Date, and the
parties shall have no further rights or obligations hereunder except for those
which expressly survive any such termination.
D. PRE-CLOSING "GAP" DEFECTS. Whether or not Buyer shall have
furnished to Seller any notice of Title Objections before the Due Diligence
Deadline, Buyer may at or prior to Closing notify Seller in writing of any
defects in the Title Commitment or the Survey appearing in the Title Commitment
or the Survey for the first time at any time after the Effective Date. With
respect to any Title Objections set forth in such notice, Buyer shall have the
same rights as those which apply to any notice of defects in title resulting
from a notice of title defects by Buyer on or before the Due Diligence Deadline
and Seller shall have the same rights and obligations to cure (or cause to be
cured) the same at or prior to Closing. If necessary, the date for Closing shall
be extended by written notice from Seller to Buyer (by not more than fifteen
(15) days) to allow Seller to cure such pre-closing "gap" defects.
4.4 AS-IS, WHERE-IS, WITH ALL FAULTS SALE. (a) EXCEPT AS OTHERWISE
EXPRESSLY PROVIDED IN THIS AGREEMENT OR ANY DOCUMENTS TO BE EXECUTED AND
DELIVERED BY SELLER AT THE CLOSING, SELLER DISCLAIMS THE MAKING OF ANY
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, REGARDING THE PROPERTY OR
MATTERS AFFECTING THE PROPERTY, WHETHER MADE BY SELLER, ON ITS 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
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ORDERS, STRUCTURAL AND OTHER ENGINEERING CHARACTERISTICS, TRAFFIC PATTERNS,
MARKET DATA, ECONOMIC CONDITIONS OR PROJECTIONS, THE FITNESS OF THE PROPERTY FOR
USE AS A HOTEL, THE FINANCIAL PERFORMANCE OR POTENTIAL OF THE PROPERTY AND ANY
OTHER INFORMATION PERTAINING TO THE PROPERTY OR THE MARKET AND PHYSICAL
ENVIRONMENTS IN WHICH THEY ARE LOCATED. BUYER ACKNOWLEDGES (I) THAT BUYER HAS
ENTERED INTO THIS AGREEMENT WITH THE INTENTION OF MAKING AND RELYING UPON ITS
OWN INVESTIGATION OR THAT OF THIRD PARTIES WITH RESPECT TO THE PHYSICAL,
ENVIRONMENTAL, FINANCIAL, ECONOMIC AND LEGAL CONDITION OF THE PROPERTY; AND (II)
THAT BUYER 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 EXECUTED AND DELIVERED TO BUYER AT THE CLOSING, MADE BY SELLER.
BUYER 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, BUYER SHALL PURCHASE THE PROPERTY IN THEIR "AS IS" CONDITION ON THE
CLOSING DATE.
(b) BUYER ACKNOWLEDGES THAT, TO THE EXTENT REQUIRED TO BE
OPERATIVE, THE DISCLAIMERS OF WARRANTIES CONTAINED IN THIS PARAGRAPH 4.4 ARE
"CONSPICUOUS" DISCLAIMERS FOR PURPOSES OF ANY APPLICABLE LAW, RULE, REGULATION
OR ORDER.
4.5 TERMINATION RIGHT. If Buyer, in its sole and absolute
discretion, determines not to proceed with the Transaction or is not satisfied
with any matters relating to the Property, Buyer may Terminate this Agreement by
written notice to Seller at any time on or prior to the Due Diligence Deadline.
If Buyer does not timely exercise such right to Terminate this Agreement, then
Buyer shall be deemed to have accepted the condition of the Property (subject to
Seller's compliance with the representations, warranties and covenants of this
Agreement, and the conditions set forth in Paragraph 10) and shall thereafter
have no right to Terminate this Agreement on account of such Due Diligence
termination right under this Paragraph 4.5. If after the Due Diligence Deadline
Buyer conducts further Due Diligence, Buyer acknowledges and agrees that Buyer
shall have no further right to terminate this Agreement with respect to such
further Due Diligence or otherwise in accordance with this Paragraph 4.5 after
the Due Diligence Deadline.
5. COVENANTS.
5.1 SELLER'S COVENANTS: EFFECTIVE DATE TO CLOSING DATE. Seller
agrees that after the Effective Date:
A. CAPITAL STOCK. Seller shall not, and shall cause the Company
not to, redeem, repurchase, sell, pledge or otherwise dispose of any shares of
the capital stock of the
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Company, or issue any new shares of capital stock of the Company, or grant any
options, warrant or other rights to purchase shares of capital stock of the
Company, without the prior written consent of Buyer.
B. CORPORATE DOCUMENTS. Seller shall not, and shall cause the
Company not to, cause any amendment, supplement, waiver or modification to or of
any of the Governing Documents of the Company, without the prior written consent
of Buyer.
C. NO ALTERATION OF TITLE. Seller shall not, and shall cause the
Company not to, transfer or alter or encumber in any way the Company's title to
the Real Property as it exists as of the Effective Date without written notice
to, and the prior written consent of, Buyer. If Buyer fails to object in writing
to any such proposed instrument within five (5) Business Days after receipt of
the aforementioned notice, Buyer shall be deemed to have approved the proposed
instrument. Buyer's consent shall not be unreasonably withheld or delayed with
respect to any such instrument that is proposed by Seller.
D. NEW LEASES AND MODIFICATIONS TO EXISTING LEASES. If the
Company desires to (i) enter into any new Lease or Ground Lease, (ii) cancel,
modify, amend, extend or renew any existing Lease or any Ground Lease, (iii)
consent to any assignment or sublease in connection with any Lease or any Ground
Lease, (iv) accept any prepayment of rent thereunder (more than thirty (30) days
in advance), or (v) take any other material action with respect to any Lease or
any Ground Lease, Seller shall deliver to Buyer written notice of such action,
which notice shall contain information regarding the proposed action that Seller
believes is reasonably necessary to enable Buyer to make informed decisions with
respect to the advisability of the proposed action. Seller shall not permit the
Company to take such action without Buyer's prior written consent, which consent
will not be unreasonably withheld, conditioned or delayed (and if no response by
Buyer is made within five (5) Business Days after Buyer's receipt of such
request and all documents related thereto, such consent shall be deemed to have
been granted). Seller shall promptly provide Buyer with true, correct and
complete copies of any Lease, modification, or amendment of a Lease entered into
by the Company. Notwithstanding any provision of this Agreement to the contrary,
without any requirement for notice or consent from Buyer, the Company may, but
shall not be obligated to, take any action with respect to any Lease that the
Lessee may, without the consent of the Lessor, take under the Hotel Lease
Agreement as if it had been in effect as of the Effective Date.
E. CONTRACTS. If the Company desires to (i) enter into any new
Contracts, (ii) cancel, modify, amend, extend or renew any existing Contracts,
(iii) waive any default under or accept any surrender of any Contracts, or (iv)
take any other material action with respect to any Contract, Seller shall
deliver to Buyer written notice of such action, which notice shall contain
information regarding the proposed action that Seller believes is reasonably
necessary to enable Buyer to make informed decisions with respect to the
advisability of the proposed action. Except for Contracts that can be
terminated, without penalty, upon thirty (30) days (or less) written notice from
the Company, Seller shall not permit the Company to take such action without
Buyer's prior written consent, which consent will not be unreasonably withheld,
conditioned or delayed (and if no response by Buyer is made within five (5)
Business Days after Buyer's receipt of such request and all documents related
thereto, such consent shall be deemed to have been granted); upon delivery of
such written consent, such Contract or modification
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thereof shall thereupon be included within the definition of "Contracts" set
forth herein. Seller shall promptly provide Buyer with true, correct and
complete copies of any Contract, modification, or amendment entered into by the
Company. Notwithstanding any provision of this Paragraph 5.1(E) to the contrary,
without any requirement for notice or consent from Buyer, the Company may, but
shall not be obligated to, take any action with respect to any Contracts that
the Lessee could, without the consent of Lessor, take under the Hotel Lease
Agreement as if it had been in effect as of the Effective Date.
F. MORTGAGE DISCHARGES. On or before the Closing Date, Seller
shall record, or cause to be recorded, at its sole expense, those certain
Mortgage Discharges and Cancellations in the appropriate land records in order
to remove certain mortgage or other liens as encumbrances against the Real
Property; as follows: (a) $9,480,000 mortgage recorded at page 121 of volume 750
of Carolina; (b) 2. $38,000,000 mortgage (reduced to $20,172,961.00) recorded at
page 122 of volume 750 of Carolina; (c) a fixture filing recorded at overleaf of
page 124 of volume 750 of Carolina; (d) the $45,000,000 mortgage in favor of
Column Financial, Inc.; (e) the Financing Statement in favor of Column
Financial, Inc.; (f) the $38,000,000 mortgage in favor of the Puerto Rico
Industrial, Medical, Higher Education and Environmental Pollution Control
Facilities Financing Authority; (g) the $9,480,000 mortgage in favor of bearer
of mortgage note; and (h) the $1,000,000 in favor of Column Financial, Inc.
encumbering the leasehold.
G. PERSONAL PROPERTY. Seller shall not, and Seller shall take all
actions required to ensure the Company does not, remove any of the Personal
Property Leases, Contracts, or Other Interests, and the Excluded Property, from
the Real Property nor use any of the Personal Property prior to the Closing Date
except such use thereof as is normal and customary in the operation and
maintenance of the Hotel.
H. OTHER CONSENTS AND APPROVALS. Seller and Buyer shall cooperate
and use commercially reasonable efforts (and Seller shall cause the Company to
cooperate and use commercially reasonable efforts) to promptly obtain all
approvals and consents to the Transaction, such approvals to be in form and
substance satisfactory to Seller and Buyer and their respective counsel,
including any approval from any agency or department of the government of Puerto
Rico (including, without limitation, the Puerto Rico Tourism Company and the
Commissioner of Financial Institutions) and any consents or approvals from third
parties to any of the Contracts, Leases or other agreements, provided that
exercise of commercially reasonable efforts shall not require the payment of any
fee or other economic consideration for any such approval or consent from any
party other than to a governmental agency.
I. INTELLECTUAL PROPERTY. Buyer acknowledges that subject to the
Hotel Lease Agreement, Seller Related Parties are retaining all right, title and
interest in and to all their respective intellectual property rights that may be
used within or comprise any part of the Property except as may be specifically
licensed to the Company pursuant to a separate license agreement with Lessee or
in accordance with the terms of the Hotel Lease Agreement.
J. LIQUOR LICENSE. Buyer acknowledges and agrees that the Lessee
will be responsible for applying for and obtaining any liquor licenses for the
Property from the applicable local and/or state authorities and otherwise be
liable for and conduct in accordance
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with applicable law all liquor operations at the Property on and after the
Closing Date in accordance with the terms and provisions of the Hotel Lease
Agreement.
K. ALLOWABLE TRANSACTIONS. Promptly after the Effective Date, but
in any event on or prior to the Closing Date, Seller shall cause the Company to
transfer to Lessee (1) all of its assets listed on EXHIBIT D for net book value,
and (2) all of its Liabilities of every nature whatsoever, whether actual or
contingent. Further, all employees of the Company shall be transferred to
Lessee, so that as of the Closing Date, the Company shall have no employees.
Finally, Seller shall cause the Company to settle any intercompany accounts
between the Company, on one hand, and Seller or a Seller Related Party, on the
other hand. Copies of all documentation required to accomplish the matters
contemplated by this Paragraph shall be provided to Buyer and its counsel prior
to their execution and at Closing. The parties shall cooperate in addressing any
reasonable comments on such documentation provided by Buyer or its counsel.
L. PUERTO RICO COMFORT LETTER/TAX CONCESSION. Attached as EXHIBIT
E is a copy of the "comfort" letter dated December 2, 2004 issued by the Puerto
Rico Tourism Company. The new tax concession referenced in such comfort letter
was issued on December 15, 2004 and is attached hereto as EXHIBIT E-1. Seller
shall use commercially reasonable efforts to (and shall cause the Company to use
commercially reasonable efforts to) obtain the approval of the Puerto Rico
Tourism Company for the transfer of the Company Shares from Seller to Buyer as
expeditiously as possible and to have the amended tax concession described
therein issued as promptly as possible after the Effective Date for the benefit
of Buyer. The parties shall cooperate in all respects to obtain the amended
concession as expeditiously as reasonably possible following the Effective Date.
In connection with the issuance of the amended concession, each party shall take
(and Seller shall cause the Company to take) all actions reasonably necessary to
ensure that "clean" debt certificates with respect to the Company and Seller
(i.e., reflecting no debt) are issued by all appropriate and required agencies
or departments of the government of Puerto Rico (or by any municipal or local
agencies or departments). Seller shall allow Buyer's representatives to
participate in any written application, hearing, telephone call or meeting
involving the Puerto Rico Tourism Company that in any way relates to the matters
contemplated by this paragraph, and shall provide Buyer and its counsel
reasonable notice of any such application, hearing, telephone call or meeting.
Seller shall provide in advance copies of any and all documentation submitted to
the Puerto Rico Tourism Company and shall provide a copy of any and all
documentation received from the Puerto Rico Tourism Company.
M. CASINO LICENSE/COMMISSIONER APPROVAL. Promptly after the
Effective Date, Seller shall cause the Company and Lessee to take all required
actions reasonably required to ensure that Lessee obtains a license to operate
the casino at the Hotel as expeditiously as reasonably possible following the
Effective Date and in any event on or prior to the Closing Date. Seller shall
cause the Company and Lessee to disclose to the Commissioner of Financial
Institutions the fact that the Company Shares will be transferred from Seller to
Buyer. The parties shall cooperate in all respects to obtain such approvals and
license as provided above. Seller shall keep Buyer and its counsel informed of
any and all communications with the Commissioner of Financial Institutions or
other governmental agencies relating to such matters.
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N. TENANT ESTOPPELS; GROUND LEASE ESTOPPELS. Seller shall use
reasonable efforts to obtain from each tenant under the Leases an estoppel
certificate duly executed by and delivered by such tenant in the form of EXHIBIT
F (each a "TENANT ESTOPPEL CERTIFICATE") with respect to each of the Leases and
as otherwise required pursuant to the terms of such Leases. Seller shall obtain
an estoppel certificate in the form of EXHIBIT G (each a "GROUND LEASE ESTOPPEL
CERTIFICATE") duly executed and delivered by such ground lessor under each
Ground Lease and as otherwise required pursuant to the terms of such Ground
Leases.
O. CHANGE IN BRANDS. Seller shall not permit the Company to
change, and it shall cause its affiliates not to change, the brand now in effect
with respect to the Hotel.
P. PERMITS. Seller shall use reasonable efforts to obtain all of
the permits set forth in Paragraph 10.1(K).
Q. SELLER'S ACTIONS. Seller shall use reasonable efforts prior to
the Closing Date to satisfy all of the closing conditions set forth in
Paragraphs 10.1(K) through (J) and cooperate with Buyer (as applicable) to
complete any documentation required to effectuate the matters contained therein.
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5.2 SELLER'S COVENANTS AFTER THE CLOSING DATE. All payments
received by Buyer or the Company after the Closing with respect to the revenue
generated by the Hotel prior to the Closing shall belong to Seller and Buyer or
the Company, as applicable, shall promptly deliver to Seller all such payments.
Subject to the terms of the Hotel Lease Agreement, all trade payables or other
Liabilities that relate to Hotel prior to the Closing, whether invoices are
received by Buyer or Seller, shall be paid by Seller or Lessee (for the account
of the Company if applicable) on or prior to the date such payment is due. Any
bills or other notices received by Buyer that relate to Hotel operations prior
to the Closing shall be promptly delivered to Seller. The provisions of this
paragraph shall survive the Closing.
5.3 APPROVALS AND NOTIFICATIONS. Each of Buyer and Seller, as
applicable, will, as promptly as practicable after the execution of this
Agreement (i) make, or cause to be made, all such filings and submissions to any
governmental authority as may be required or desirable (in Buyer or Seller's
respective discretion) to consummate the purchase and sale of the Company Shares
in accordance with the terms of this Agreement, and (ii) use its commercially
reasonable efforts to take, or cause to be taken, all other actions which are
necessary or advisable (in Buyer or Seller's respective discretion) in order for
Buyer or Seller to fulfill its obligations under this Agreement. Each of Buyer
and Seller will coordinate and cooperate (and Seller will cause the Company to
coordinate and cooperate) with the other in exchanging such information and
supplying such assistance as may be reasonably requested in connection with the
foregoing including, without limitation, providing copies of notices and
information supplied to or filed with any governmental authority (except for
notices and information which Buyer or Seller, as the case may be, acting
reasonably, considers highly confidential and sensitive which may be filed on a
confidential basis, but which may be shared with Buyer's or Seller's, as the
case may be, outside legal counsel or as otherwise provided in Paragraph 11.2),
and all notices and correspondence received from any governmental authority.
5.4 SEC MATTERS. Seller shall cooperate and shall cause the
Company to cooperate with Buyer or any of its affiliates in connection with the
preparation of any documents to be filed under the Securities Act of 1933, as
amended (the "SECURITIES ACT") or the Securities Exchange Act of 1934, as
amended (the "SECURITIES EXCHANGE ACT") and shall use commercially reasonable
efforts to provide such persons with financial statements and other financial
information that Buyer requests relating to periods prior to the Closing Date
and to obtain consents from Seller's and the Company's independent accountants
in connection therewith. The provisions of this paragraph shall survive the
Closing.
5.5 ACCESS TO RECORDS. After the Closing Date and during normal
business hours, Buyer shall afford to Seller, its lenders, counsel, accountants,
and other representatives, reasonable access to the books, contracts, and
records, insofar as the same relate to the Company and the Property and do not
otherwise constitute Confidential Materials and shall furnish such persons with
all information or copies thereof (including financial, tax and operating data)
concerning the Company and the Property as they reasonably may request. Requests
for such information shall be coordinated with Seller's designated
representatives, and Buyer shall use its commercially reasonable efforts to
assist the Seller, its lenders, counsel, accountants, and other representatives
in their examination.
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5.6 REQUIRED WORK; GENERATORS.
(A) Seller shall within twenty four (24) months of the Closing
Date:
(i) (a) address the property conditions described as an
"immediate need" in the property condition reports
prepared by ATC Associates, Inc. for the Hotel and
attached hereto as EXHIBIT P, and (b) mitigate the
effects of moisture related issues within the "mold
sensitive" areas identified in the reports by ATC
Associates, Inc for the Hotel; and
(ii) have Seller's engineers conduct a written evaluation of
the emergency power generators located at the Hotel in
order to ascertain such generator's ability to function
property during an emergency and the operating noise
levels; such review shall present the engineer's
conclusions as to whether the current condition of the
generators satisfactorily meets the needs of the Hotel,
and, if necessary, suggest a plan to remedy any
deficiencies revealed ins such evaluation. Seller and
Buyer agree to cooperate to establish a scope of work
plan and schedule for completion of any deficiency
identified in such review; and
(iii) Seller agrees to complete all projects actually in
process and identified in the property condition
reports prepared by ATC Associates, Inc. for the Hotel.
6. CLOSING. Subject to the satisfaction (or waiver) of the conditions
precedent set forth in Paragraphs 10.1 and 10.2, the time and place of Closing
shall be held at 9:00 a.m. Eastern standard time at or through the offices of
Buyer's attorneys on the Closing Date specified by Buyer to Seller on not less
than five (5) Business Days prior written notice or such other time and location
mutually agreed to by the parties.
6.1 CLOSING MECHANICS. The Closing shall be conducted through
escrow with the Closing Agent using an escrow procedure mutually acceptable to
both Seller and Buyer, or, if either Buyer or Seller determines in good faith
that such an escrow Closing is not practical, through a so-called "
New York
style" closing (in which authorized representatives of Seller and Buyer attend
the Closing). Seller and Buyer agree to execute and deliver into escrow on the
day prior to the Closing Date (or, if applicable, execute at a "pre-closing" at
10:00 a.m. Eastern standard time on the last Business Day prior to the Closing
Date but not deliver until the "
New York style" closing) all Closing Documents
with funding and release to occur on the Closing Date. Upon Closing, Buyer shall
deliver to Seller the Adjusted Purchase Price and the other items required of
Buyer as elsewhere set forth herein, and Seller shall deliver to Buyer the
Company Shares and the other items required of Seller as elsewhere set forth
herein. Notwithstanding anything contained in this Agreement to the contrary,
including Paragraph 10, Buyer and Seller agree that the Closing hereunder and
the consummation of the initial transaction under the Purchase and Sale
Agreement shall occur in accordance with the procedure
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set forth in a separate letter agreement duly executed and delivered by each
such party in connection with the Closing.
6.2 SELLER'S DELIVERIES. At Closing, Seller shall deliver, or
cause to be delivered to Buyer, the following:
A. STOCK CERTIFICATES. Certificate(s) representing the Company
Shares, duly endorsed in blank or accompanied by stock powers or other
instruments of transfer duly executed in blank, bearing or accompanied by all
requisite stock transfer stamps, and free and clear of any and all Liens.
B. GOOD STANDING CERTIFICATE. A certificate of the applicable
public official to the effect that the Company is a validly existing corporation
in good standing in the Commonwealth of Puerto Rico as of a date not more than
five (5) days prior to the Closing Date.
C. GOVERNING DOCUMENTS. True and correct copies of (i) Governing
Documents (other than the bylaws) of the Company certified by the applicable
public official of the Commonwealth of Puerto Rico, and (ii) bylaws of the
Company certified by the Secretary or Assistant Secretary of the Company.
D. AFFIDAVIT OF TITLE/GAP INDEMNITY. An Affidavit of Title for
the Hotel duly executed and delivered by Seller with respect to liens and title
matters in substantially the form of EXHIBIT H or as may otherwise be customary
in Puerto Rico or in such form as may be required by the Title Company.
E. CLOSING STATEMENT. A Closing Statement Agreement duly executed
and delivered by Seller in a form sufficient to account for the Transaction.
F. EVIDENCE OF AUTHORITY. Evidence that Seller has the requisite
power and authority to execute and deliver, and perform under, this Agreement
and all Closing Documents, consisting of a certificate of an Assistant Secretary
of Seller duly executed and delivered by such Assistant Secretary with respect
to the authority to act on behalf of Seller of the individual executing on
behalf of Seller all documents contemplated by this Agreement, in the form of
EXHIBIT I.
G. REAFFIRMATION. A reaffirmation of the representations,
warranties and covenants set forth in Paragraph 8.1 hereof in the form of
EXHIBIT J duly executed and delivered by Seller.
H. HOTEL LEASE AGREEMENT. A counterpart of the Hotel Lease
Agreement duly executed and delivered by the Lessee; provided, however, that
Buyer and Seller agree that the Hotel Lease Agreement shall be revised as to
form (not substance) as may be necessary to allow it to be executed as a public
instrument and recorded in the Registry of Property of Puerto Rico. Buyer agrees
that Seller or Lessee may file the Hotel Lease Agreement in the said Registry of
Property. Buyer and Seller shall each furnish such evidence of authority to the
persons executing the Hotel Lease Agreement as may be required to accomplish its
recording in the Registry of Property of Puerto Rico. All costs, taxes and
expenses associated with the cancellation of any revenue stamps and recording
stamps and vouchers charged or assessed in
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connection with the protocolizacion of the Hotel Lease Agreement in Puerto Rico
or the recording and cancellation of the Hotel Lease Agreement in the Puerto
Rico Registry of Property are herein referred to collectively as "Lease
Recording Charges."
I. INDEMNIFICATION AGREEMENT. An executed counterpart of the
Indemnification Agreement duly executed and delivered by Seller and HHF.
J. OTHER INSTRUMENTS. Such other instruments or documents as may
be reasonably requested by Buyer or the Title Company, or reasonably necessary,
to effect or carry out the purposes of this Agreement, subject to Seller's prior
approval thereof, which approval shall not be unreasonably withheld or delayed.
K. DELIVERY OF KEYS AND PROPERTY DOCUMENTS. The Property
Documents and all keys to the Property or any portion thereof.
L. OPINIONS. One or more written opinions from counsel to Seller
in customary form and substance reasonably satisfactory to Buyer, regarding the
authorization, execution, delivery and enforceability of the (i) Hotel Lease
Agreement, (ii) the Indemnification Agreement and (iii) such other opinions as
may be mutually agreed to by the parties.
M. TRANSFER OF ASSETS AND ASSUMPTION OF LIABILITIES. Evidence
satisfactory to Buyer that the assets and Liabilities listed on EXHIBIT D have
been transferred or assigned to Lessee and that Lessee has assumed and agreed to
pay the Company's Liabilities pursuant to Paragraph 5.1(K).
N. TAX CONCESSION. Any documentation filed with the Puerto Rico
Tourism Company since the Effective Date and, if issued, the amended tax
concession from the Puerto Rico Tourism Company and, if issued, the consent to
the transfer of the Company Shares to Buyer.
O. CASINO LICENSE. Evidence satisfactory to Buyer that the casino
license has been issued to Lessee.
P. SPECIAL PARTNERSHIP ELECTION. True and correct copies of the
election filed by the Company to elect to be treated as a "special partnership"
(the "SPECIAL PARTNERSHIP ELECTION") under Subchapter K of Chapter 2 of Subtitle
A of the Puerto Rico Internal Revenue Code of 1994, as amended (the "PR CODE"),
and the reply received from the Puerto Rico Treasury Department concerning such
election.
Q. LETTER REGARDING GUARANTY. A letter agreement dated as of the
Closing Date from IHG for the benefit of the Beneficial Parties (as defined
therein) in the form of EXHIBIT N duly executed and delivered by IHG.
R. GROUND LEASE CONSENT AND ESTOPPEL. A Ground Lease Estoppel
Certificate duly executed by the respective lessor with respect to each of the
Ground Leases and any consents that may be required as a result of the
Transaction under the terms of the Ground Leases in each case in form and
substance reasonably acceptable to Buyer.
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S. TENANT ESTOPPEL CERTIFICATES. Tenant Estoppel Certificates
from each of the tenants under the Leases to the extent received by Seller or
the Company.
T. LESSEE GUARANTY. The Guaranty Agreement, in substantially the
form of EXHIBIT O, duly executed and delivered by Lessee.
U. POST-CLOSING AGREEMENT. A Post-Closing Agreement dated the
Closing Date in the form reasonably agreed to by the parties hereto, duly
executed by Seller.
6.3 BUYER'S DELIVERIES. At the Closing, Buyer shall deliver or
cause to be delivered to Seller the following:
A. ADJUSTED PURCHASE PRICE. The Adjusted Purchase Price due at
Closing under this Agreement by wire transfer to such bank account outside of
Puerto Rico as Seller shall designate.
B. CLOSING DOCUMENT COUNTERPARTS. Executed counterparts of any of
the Closing Documents described in Paragraph 6.2 which are to be signed by
Buyer.
C. HOTEL LEASE AGREEMENT. An executed counterpart of the Hotel
Lease Agreement.
D. INDEMNIFICATION AGREEMENT. An executed counterpart of the
Indemnification Agreement.
E. OPINIONS. One or more written opinions from counsel to Buyer
in customary form and substance reasonably satisfactory to Seller, regarding (i)
the authorization, execution, delivery and enforceability of the Hotel Lease
Agreement and (ii) such other opinions as may be mutually agreed to by the
parties.
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7. CLOSING COSTS.
7.1 SELLER'S CLOSING COSTS. Seller shall pay the following: (a)
the fees and expenses of Seller's and the Company's attorneys, (b) the costs
(including recording costs) of any cure of title defects required of Seller
hereunder, (c) the commission due any broker retained by Seller, (d) half of all
escrow agent fees (if any are charged in connection with this Transaction), (e)
half of costs and expenses and premiums in connection with the preparation of
the title reports and the issuance of the Title Policy (including a
non-imputation and all other endorsements reasonably requested by Buyer), (f)
half of all recording charges due on recordation of any Closing Documents, (g)
half of the costs and expenses of the Surveyor to prepare the Survey, (h) half
of the cost and expense of any local counsel mutually retained by Buyer and
Seller in Puerto Rico, (i) half of the costs and expenses of all environmental
and engineering reports regarding any Property furnished to Buyer and any
follow-up studies required or suggested thereby or otherwise heretofore
requested by Buyer, (j) half of the costs of any zoning reports or related
zoning due diligence studies requested by Buyer in connection with its Due
Diligence hereunder and (k) half of the Lease Recording Charges.
7.2 BUYER'S CLOSING COSTS. Buyer shall pay the following: (a)
except as otherwise provided herein, the costs of Buyer's Due Diligence, (b)
half of the costs and expenses of all environmental and engineering reports
regarding any property furnished to Buyer and any recommended and/or follow-up
studies required or suggested thereby or otherwise heretofore requested by
Buyer, (c) the fees and expenses of Buyer's attorneys, (d) the commission due
any Broker retained by Buyer, (e) all lenders' fees related to any financing to
be obtained by Buyer; (f) half of all recording charges due on recordation of
any Closing Documents, (g) half of all escrow agent fees (if any are charged in
connection with this Transaction), (h) half of the costs and expenses from the
Title Company to prepare the title reports, (i) half of the costs, expenses and
premiums for the Title Commitment and Title Policy (including a non-imputation
and all other endorsements reasonably requested by Buyer), (j) half of the costs
of the costs of the Surveyor to prepare the Survey, (k) half of the cost and
expense of any local counsel mutually retained by Buyer and Seller in Puerto
Rico, (l) half of the costs of any zoning reports or related zoning due
diligence studies requested by Buyer in connection with its Due Diligence
hereunder and (n) half of the Lease Recording Charges.
8. REPRESENTATIONS AND WARRANTIES.
8.1 SELLER'S REPRESENTATIONS AND WARRANTIES. To induce Buyer to
enter into this Agreement, Seller covenants, represents and warrants to Buyer as
follows:
A. Each of Seller and the Company is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
formation, and has all requisite power and authority under the laws of such
jurisdiction and its respective charter documents to enter into and perform its
obligations under the Closing Documents and to consummate the transactions
contemplated thereby. Each of Seller and the Company is duly qualified to
transact business in each jurisdiction in which the nature of the business
conducted by it requires such qualification, except where such failure to
qualify would not have a material adverse effect on Seller or the transactions
contemplated hereby.
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B. Seller has taken (or will take, prior to the Closing Date) all
necessary action to authorize the execution, delivery and performance of this
Agreement and the other Closing Documents to which it is a party, 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 enforceable against Seller in accordance with
its terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws of general application affecting the
rights and remedies of creditors and general principles of equity.
C. The execution, delivery or performance of the Closing
Documents by Seller, and the compliance with the terms and provisions thereof,
will not result in any breach of the terms, conditions or provisions of, or
conflict with or constitute a default under, any Contract or Seller's Governing
Documents or result in the creation of any lien, charge or encumbrance upon any
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.
D. Except as may be set forth on SCHEDULE 8.1(D), 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 (i)
questions the validity of this Agreement or any of the other Closing Documents
or any action taken or to be taken pursuant thereto, (ii) will result in any
material adverse change in the business, operation, affairs or condition of the
Company or the Property, (iii) may result in or subject the Company to a
material liability, (iv) involves condemnation or eminent domain proceedings
against any material part of the Property or (v) is likely to materially and
adversely affect the ability of Seller to perform its obligations hereunder.
E. Other than (i) the Permitted Title Exceptions, (ii) the Leases
set forth on EXHIBIT K, (iii) the Contracts set forth on EXHIBIT L, (iv) the
Ground Leases, and (v) agreements and easements with governmental bodies and
utility companies which are reasonably necessary for the development and
operation of the Property as contemplated by this Agreement and the Closing
Documents, there are no material agreements, leases, licenses or occupancy
agreements affecting the Property which will be binding on the Company
subsequent to the Closing Date.
F. Except as may be set forth in SCHEDULE 8.1(F) or in the
written inspection reports delivered to Buyer in connection herewith, to
Seller's Knowledge, there is no fact or condition which materially and adversely
affects the physical condition of the Property which has not been set forth in
this Agreement, or in the other documents, certificates or statements furnished
to or obtained by Buyer in connection with the transactions contemplated hereby.
G. All utilities and services necessary for the use and operation
of the Property (including, without limitation, road access, water, electricity
and telephone) are available thereto, and are of sufficient capacity to meet
adequately all needs and requirements necessary for the current use and
operation of the Property. To Seller's Knowledge, except as may be set forth in
SCHEDULE 8.1(G), no fact, condition or proceeding exists which would result in
the termination or impairment of the furnishing of such utilities to the
Property.
H. Except as may be set forth in SCHEDULE 8.1(H), or in the
written inspection reports (including environmental reports) delivered to Buyer
in connection herewith, to Seller's
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Knowledge (i) the Property and the use and operation thereof do not violate any
material federal, state, Commonwealth of Puerto Rico, municipal or other
governmental statutes, ordinances, by-laws, rules, regulations or any other
legal requirements, including, without limitation, those relating to
construction, occupancy, zoning, adequacy of parking, environmental protection,
occupational health and safety or fire safety applicable thereto; and (ii) there
are in effect all material licenses, permits and other authorizations necessary
for the current use, occupancy and operation thereof. To Seller's Knowledge,
except as may be set forth in SCHEDULE 8.1(H), there is no threatened request,
application, proceeding, plan, study or effort which would materially adversely
affect the present use or zoning of the Property or which would modify or
realign any adjacent street or highway.
I. Except as may be set forth in SCHEDULE 8.1(I), other than the
amounts disclosed by current tax bills, true and correct copies of which have
been delivered to Buyer, 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.
J. [RESERVED.]
K. Except as may be set forth in SCHEDULE 8.1(K), or in the
written inspection reports (including environmental reports) delivered to Buyer
in connection herewith, to Seller's Knowledge, none of Seller, the Company or
any other occupant or user of any of the Property, or any portion thereof, have
stored or disposed of (or engaged in the business of storing or disposing of) or
have released or caused the release of any hazardous waste, contaminants, oil,
radioactive or other material on the Property, or any portion thereof, the
removal of which is required or the maintenance of which is prohibited or
penalized by any applicable federal, state, Commonwealth of Puerto Rico or local
statutes, laws, ordinances, rules or regulations. To Seller's Knowledge, except
as may be set forth in SCHEDULE 8.1(K), or in the written inspection reports
(including environmental reports) delivered to Buyer in connection herewith, the
Property is free from any such hazardous waste, contaminants, oil, radioactive
and other materials, except any such materials maintained in accordance with
applicable law.
L. To Seller's Knowledge, except as contained in the written
inspection reports (including environmental reports) delivered to Buyer in
connection herewith, there are no defects or inadequacies in the Property which,
if uncorrected, would result in a termination of insurance coverage or an
increase in the premiums charged therefor.
M. Except as may be set forth in SCHEDULE 8.1(M), or in the
written inspection reports delivered to Buyer in connection herewith, to
Seller's Knowledge, the Property is in good working order and repair,
mechanically and structurally sound, free from material defects in materials and
workmanship and not subject to any unrepaired casualty.
N. Except as may be set forth in SCHEDULE 8.1(N):
(i) All income and other material Tax Returns that are
required to be filed on or before the Closing Date with respect to the Company
have been or will be duly and timely filed, and all material Taxes (whether or
not shown on such Tax Returns) that are required
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to be paid with respect to the Company have been or will be duly and timely
paid. All such Tax Returns are correct and complete in all material respects.
There are no Liens on any of the Company's assets or properties resulting from
any failure (or alleged failure) to pay any Tax, other than Permitted Title
Exceptions.
(ii) The Company has complied in all material respects with
all applicable laws, rules and regulations relating to the payment and
withholding of Taxes and has, within the time and the manner prescribed by Law,
withheld and paid over to the proper taxing authorities all material amounts
required to be so withheld and paid over under applicable laws.
(iii) No U.S. federal, state, Commonwealth of Puerto Rico,
local or foreign audits, examinations, investigations or other administrative
proceedings or court proceedings have been commenced or are presently pending or
threatened with regard to any Taxes or Tax Returns with respect to the Company.
There is no unresolved dispute or claim concerning any Tax liability of the
Company either claimed or raised by any Tax authority in writing.
(iv) There are no outstanding requests, agreements, consents
or waivers to extend the statutory period of limitations applicable to the
assessment of any Taxes or deficiencies against the Company. No power of
attorney has been granted by or with respect to the Company with respect to any
matter relating to Taxes.
(v) The Company is not a party to, is not bound by and has
no obligation under any Tax sharing agreement, Tax indemnification agreement or
similar contract or arrangement, and the Company has no potential liability or
obligation to any person as a result of, or pursuant to, any such agreement,
contract or arrangement.
(vi) The Company has not received written notice of any
claim made by an authority in a jurisdiction where the Company does not file Tax
Returns, that the Company is or may be subject to taxation by that jurisdiction.
(vii) The Real Property constitutes one or more separate
parcels for purposes of ad valorem real property Taxes, and is not subject to a
lien for non-payment of real property Taxes relating to any other property.
(viii) Commencing with the Company's 2001 taxable year, the
Company has had in effect a Special Partnership Election which has not been
revoked or altered and remains in full force and effect. No property of the
Company is subject to the "built-in-gain" provisions of Section 1397 of the PR
Code nor to the recapture provisions of Sections 1117 and/or 1118 of the PR
Code.
(ix) Seller is a direct, wholly-owned subsidiary of Six
Continents Overseas Holdings Limited, a United Kingdom limited company, which is
a direct, wholly-owned subsidiary of Six Continents PLC, a United Kingdom
corporation, which is a direct, wholly-owned subsidiary of InterContinental
Hotels Group, PLC, a publicly traded United Kingdom corporation.
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O. Except as may be set forth in SCHEDULE 8.1(O), or in the
written inspection reports delivered to Buyer in connection herewith, there are
in effect all material licenses (including liquor licenses, if required),
permits and other authorizations necessary for the current use, occupancy and
operation of the Property.
P. The Company has good title to the Personal Property free and
clear of all Liens other than Permitted Title Exceptions.
Q. The Personal Property located at or otherwise used in
connection with the Property (i) complies in all material respects with the
Inter Continental brand standards and (ii) is otherwise at adequate, appropriate
levels and at levels that are at least equal to those found at other
InterContinental hotels.
R. Except as may be set forth in SCHEDULE 8.1(R), or in the
written inspection reports (including without limitation environmental reports
and reports from ATC Associates, Inc.) delivered to Buyer in connection
herewith, to Seller's Knowledge there exists no violation of any law,
regulation, order or requirement issued by any governmental authority against or
affecting the Property and neither Seller nor the Company has received any
notice or order from any governmental authority requiring any repairs,
maintenance or improvements to are Property which have not been fully performed.
S. [RESERVED.]
T. Except as may be set forth on SCHEDULE 8.1(T), to Seller's
Knowledge, there exists no material default on the part of Seller or the Company
with respect to any Permitted Title Exception, other than those defaults which
can be cured or discharged by the payment of money and for which an allowance
for the payment thereof has been made at Closing.
U. Each of the financial statements of HHF heretofore delivered
to Buyer have been properly prepared in accordance with the Accounting
Principles (as defined in the Management Agreement (as defined in the Purchase
and Sale Agreement)), is true, correct and complete in all material respects and
fairly present the consolidated financial condition of HHF at and as of the
dates thereof and the results of its operations for the periods covered thereby.
Each of the financial statements for the Hotel heretofore delivered to Buyer has
been properly prepared in accordance with the Accounting Principles, is true,
correct and complete in all material respects and fairly present the financial
condition of the Hotel covered thereby at and as of the dates thereof and the
results of their operations for the periods covered thereby.
V. Neither Seller nor the Company is a debtor in any voluntary or
involuntary proceeding in bankruptcy.
W. Other than the Leases listed in SCHEDULE 8.1(W), the Ground
Leases and the Permitted Title Exceptions, there are no contracts or agreements
with respect to the use or occupancy of the Property. The copies of the Leases
and the Ground Leases heretofore delivered by Seller to Buyer are a true,
correct and complete copies thereof; neither the Leases nor the Ground Leases
have been amended except as evidenced by amendments similarly delivered and
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constitute the entire agreement between the Company and the tenants (or the
ground lessor, as applicable) thereunder. Except as otherwise set forth in
SCHEDULE 8.1(W): (i) to Seller's Knowledge, each of the Leases is in full force
and effect on the terms set forth therein and to Seller's Knowledge each tenant,
thereunder is legally required to pay all sums and perform all material
obligations set forth therein without concessions, abatements, offsets, defenses
or other basis for relief or adjustment; (ii) to Seller's Knowledge, each of the
Ground Leases is in full force and effect on the terms set forth therein and the
ground lessors thereunder are legally required to perform all material
obligations set forth therein without concessions, defenses or other basis for
relief or adjustment; (iii) no such tenant (or ground lessor with respect to the
performance of any obligations under the Ground Lease, as applicable) has
asserted in writing or, to Seller's Knowledge, has any defense to, offsets or
claims against, rent payable by it or the performance of its other obligations
under its Lease (or Ground Lease, as applicable); (iv) the Company has no
outstanding obligation to provide any such tenant with an allowance to
construct, or to construct at Seller's expense, any tenant improvements; (v) no
such tenant is in arrears in the payment of any sums or in the performance of
any material obligation required of it under its Lease beyond any applicable
grace period, and no such tenant has prepaid any rent or other charges; (vi) to
Seller's Knowledge, no such tenant or ground lessor, as applicable, has filed a
petition in bankruptcy or for the approval of a plan of reorganization or
management under the Federal Bankruptcy Code or under any other similar state
law, or made an admission in writing as to the relief therein provided, or
otherwise become the subject of any proceeding under any federal or state
bankruptcy or insolvency law, or has admitted in writing its inability to pay
its debts as they become due or made an assignment for the benefit of creditors,
or has petitioned for the appointment of or has had appointed a receiver,
trustee or custodian for any of its property; (vii) no such tenant or ground
lessor, as applicable, has requested in writing a modification of its Lease or
Ground Lease, respectively, or a release of its obligations under its Lease or
Ground Lease, respectively, in any material respect or has given written notice
terminating its Lease or Ground Lease, or has been released of its obligations
thereunder in any material respect prior to the normal expiration of the term
thereof; (viii) except as set forth in the Leases, no guarantor has been
released or discharged, voluntarily or involuntarily, or by operation of law,
from any obligation under or in connection with any Lease or any transaction
related thereto; (ix) all security deposits paid by tenants, are as set forth in
SCHEDULE 8.1(W); (x) all lease commissions due with respect to each of the
Leases has been paid, except as otherwise set forth on SCHEDULE 8.1(W); and (xi)
the other information set forth in SCHEDULE 8.1(W) is true, correct and complete
in all material respects. No default or breach exists under any Lease or Ground
Lease on the part of the Company.
X. The authorized capital stock of the Company consists of five
hundred thousand (500,000) shares of common stock, One Hundred and No/Dollars
($100) par value per share, all of which are owned by Seller free and clear of
all Liens. Each of the Company Shares has been validly issued and is fully paid
and non-assessable with no personal liability attaching to the ownership
thereof. No person other than Seller owns beneficially or otherwise an ownership
interest in the Company or any right, option or warrant to acquire any form of
ownership interest in the Company, and the Company has no commitment to issue
any such ownership interest or rights, options or warrants. No securities of the
Company are subject to any contractual restrictions, including any preemptive
right, right of first refusal or similar agreement. All securities of the
Company were issued in compliance with all applicable Federal, Commonwealth of
Puerto Rico and local securities laws.
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Y. (i) Each of the financial statements of the Company for the
past five fiscal years (copies of which have been provided to Buyer) fairly
presents in all material respects the financial position of the Company as of
its date or the periods therein set forth, as the case may be, in each case in
accordance with generally accepted accounting principles ("GAAP") consistently
applied during the periods involved and, with respect to any unaudited interim
financial statements, except for the omission of footnote disclosure and, to the
extent consistent with generally accepted accounting principles, normally
recurring year-end audit adjustments.
(ii) Subject to normal year-end adjustments, if any, the books
of account and other similar records of the Company are true and complete in all
material respects and have been maintained in accordance with sound business
practice. The Company has made and kept books, records and accounts which, in
reasonable detail, accurately and fairly reflect its transactions. The Company
maintains a system of accounting controls sufficient to provide reasonable
assurances that, in all material respects: (a) transactions are executed in
accordance with management's general or specific authorization; (b) transactions
are recorded as necessary (i) to permit preparation of financial statements in
conformity with GAAP and (ii) to maintain accountability for assets; (c) access
to assets is permitted only in accordance with management's general or specific
authorization; and (d) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
Z. Except for the matters described in Paragraphs 5.1(L) and
5.1(M), the execution, delivery and performance by Seller of this Agreement
require no action by or in respect of, or filing with, any governmental body,
agency, official or authority.
AA. The Company is not in violation of, or has never violated, any
applicable provisions of any laws, statutes, ordinances or regulations, except
for violations that have not had and would not reasonably be expected to have,
individually or in the aggregate, a material adverse effect. SCHEDULE 8.1 (AA)
correctly describes each governmental license, permit, concession or franchise
(a "PERMIT") material to the business of the Company, together with the name of
the governmental agency or entity issuing such Permit.
BB. As of immediately after the Closing, the Company will not:
(i) own the assets or retain the liabilities listed on
EXHIBIT D;
(ii) have any indebtedness or Liabilities of any nature
whatsoever (whether actual or contingent), other than
such liabilities incurred in the ordinary course of
business which are to be paid by Seller or Lessee after
the Closing (which shall be paid in accordance with
Paragraph 5.2);
(iii) except as disclosed on SCHEDULE 8.1(BB)(iii), have any
litigation, pending or to the Seller's Knowledge,
threatened; or
(iv) have any employees, consultants or advisors, or any
obligations of any nature (whether monetary or
otherwise) to any former employees, consultants or
advisors.
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CC. Neither the Company, nor any of its predecessors, has ever
conducted any business other than owning and operating the Hotel or owned any
assets except such assets as were necessary or incidental to owning and
operating the Hotel.
DD. None of this Agreement and the schedules, exhibits and other
documents delivered in connection herewith and therewith, when read together as
a whole, and with the documents or information delivered to Buyer in connection
with the transactions contemplated by this Agreement contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained therein not misleading.
EE. The Designated Representatives are the persons (either
individually or as a whole) to whom any condition which would render any of the
statements in Paragraph 8.1 untrue, inaccurate or incorrect in any material
respect (without regard to any knowledge qualifier contained in such statement)
should be communicated to, directly or indirectly, by any general manager of the
Hotel that first knows such condition.
8.2 [RESERVED.]
8.3 CLAIMS OF BREACH PRIOR TO CLOSING. If, at or prior to the
Closing, to Seller Knowledge's, any Seller's Warranty becomes untrue, inaccurate
or incorrect in any material respect (without regard to any materiality or
knowledge qualifier contained therein), Seller shall give Buyer written notice
thereof within ten (10) Business Days of obtaining such knowledge (but, in any
event, prior to the Closing). After the Due Diligence Deadline but prior to the
Closing, if to Buyer's Knowledge any Seller's Warranty is or becomes untrue,
inaccurate or incorrect in any material respect, Buyer shall give Seller written
notice thereof within five (5) Business Days of obtaining such knowledge (but,
in any event, prior to the Closing). In either such event, Seller shall have the
right to cure (or cause to be cured) such misrepresentation or breach and shall
be entitled to a reasonable adjournment of the Closing upon written notice to
Buyer (not to exceed fifteen (15) days) to attempt such cure. Seller shall
notify Buyer within three (3) Business Days of its receipt of such notice if
Seller has elected to cure such untrue, inaccurate or incorrect Seller's
Warranty. If Seller fails to respond within such time frame, Seller shall be
deemed to have declined to cure such untrue, inaccurate or incorrect Seller's
Warranty.
If any Seller's Warranty is untrue, inaccurate or incorrect in any material
respect as of the date made, and Seller is unable or unwilling to so cure (or
cause to be cured) such misrepresentation or breach, then Buyer, as its sole
remedy shall elect either (a) to waive such misrepresentation or breach and
consummate the Transaction without any reduction of or credit against the
Purchase Price, or (b) to Terminate this Agreement by written notice given to
Seller on or before the Closing Date, in which event Buyer shall be entitled to
recover from Seller within five (5) days of demand, all of Buyer's out-of-pocket
costs (including legal fees) incurred with respect to the transactions
contemplated by this Agreement.
If Buyer Knows prior to the Closing Date that any Seller's Warranty becomes
untrue, inaccurate or incorrect in any material respect through no fault of
Seller, and Seller is unable or unwilling to so cure (or cause to be cured) such
misrepresentation or breach, then Buyer, as its sole remedy shall elect either
(a) to waive such misrepresentation or breach and consummate the
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Transaction without any reduction of or credit against the Purchase Price, or
(b) to Terminate this Agreement by written notice given to Seller on or before
the Closing Date.
If any of Seller's Warranties are untrue, inaccurate or incorrect but are
not, in the aggregate, untrue, inaccurate or incorrect in any material respect,
Buyer shall be required to consummate the Transaction without any reduction of
or credit against the Purchase Price. If on the Closing Date, to Buyer's
Knowledge any of Seller's Warranties are untrue, inaccurate or incorrect in any
material respect and Buyer chooses to consummate the Transaction, Buyer waives
any right to seek damages against Seller if such breach would otherwise have
allowed Buyer to terminate this Agreement pursuant to its terms.
The untruth, inaccuracy or incorrectness of all Seller's Warranties shall
be deemed material only if Buyer's aggregate damages resulting from the untruth,
inaccuracy or incorrectness of Seller's Warranties are reasonably estimated to
equal or exceed one hundred thousand dollars ($100,000.00).
8.4 SURVIVAL AND LIMITS ON BUYER'S CLAIMS. Seller's Warranties
(other than 8.1(X), 8.1(BB) and 8.1(CC) which shall survive indefinitely; and
8.1(A), 8.1(B), 8.1(C), 8.1(D), 8.1(K), 8.1(N), 8.1(U), 8.1(V), 8.1(Y), 8.1(Z)
and 8.1(DD) which shall survive for the duration of the applicable statute of
limitations) shall survive the Closing and not be merged therein for a period of
one (1) year. Covenants set forth in this Agreement shall survive until fully
performed. Notwithstanding the foregoing, with respect to claims first asserted
after the thirtieth (30th) anniversary of the Effective Date for breaches of
Seller's Warranties under 8.1(X), 8.1(BB) and 8.1(CC) and any corresponding
claims under the Indemnification Agreement, Buyer shall look solely to any
collateral hereafter pledged securing Seller's obligations hereunder for
satisfaction of such claim; PROVIDED, HOWEVER, nothing contained herein is
intended to, nor shall it, limit or reduce the rights of Buyer's affiliate under
the Management Agreement (as defined in the Purchase and Sale Agreement) or of
the Company under the Hotel Lease Agreement or limit or reduce the obligations
of any guarantor of either such agreement.
8.5 BUYER'S REPRESENTATIONS AND WARRANTIES. Buyer, as of the
Effective Date, represents and warrants to Seller as follows, and as a condition
precedent to Seller's obligation to consummate the Transaction at Closing
pursuant to the terms of this Agreement, the following representations of Buyer
shall be true and correct in all material respects as of the Closing Date:
A. STATUS AND AUTHORITY OF BUYER. Buyer is duly organized and
validly existing under the laws of the jurisdiction of its formation, and has
all requisite power and authority under the laws of such jurisdiction and under
its charter documents to enter into and perform its obligations under the
Closing Documents to which it is a party and to consummate the transactions
contemplated thereby. Buyer is duly qualified and in good standing in each
jurisdiction in which the nature of the business conducted by it requires such
qualification, except where such failure to qualify would not have a material
adverse effect on Buyer or the transactions contemplated hereby.
B. ACTION OF BUYER. Buyer has taken (or will take, prior to the
Closing Date) all necessary action to authorize the execution, delivery and
performance of each of the Closing
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Documents to which it is a party, and upon the execution and delivery of any
document to be delivered by Buyer on or prior to the Closing Date such document
shall constitute valid and binding obligation and agreement of Buyer enforceable
against Buyer in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws of
general application affecting the rights and remedies of creditors and general
principles of equity.
C. NO VIOLATIONS OF AGREEMENTS. Neither the execution, delivery
or performance of the Closing Documents by Buyer, nor compliance with the terms
and provisions 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, or charge upon any property or assets of Buyer pursuant to
the terms of any indenture, mortgage, deed of trust, note, evidence of
indebtedness or any other agreement or instrument by which Buyer is bound.
D. LITIGATION. To Buyer'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 the Closing Documents
or any action taken or to be taken pursuant hereto or (b) is likely to
materially and adversely affect the ability of Buyer to perform its obligations
hereunder.
E. BANKRUPTCY. Buyer is not a debtor in any voluntary or
involuntary proceeding in bankruptcy.
F. REPORTING. ▇▇▇▇ ▇▇▇▇▇▇ is the person to whom any condition
which would render any of the statements in this Paragraph 8.5 untrue,
inaccurate or incorrect in any material respect (without regard to any knowledge
qualifier contained in such statement) should be communicated to, directly or
indirectly, by any senior employee of HPT that first knows such condition.
G. SOPHISTICATED BUYER. Buyer is an experienced investor that
specializes in the investment in and ownership of hotel properties in
geographically diverse markets. Buyer is a sophisticated real estate owner and
investor with particular experience in the acquisition and ownership of hotels
similar to the Hotel. Buyer further represents and warrants that it is
purchasing the Company Shares solely for investment, with no present intention
to resell or distribute within the meaning of the Securities Act. Buyer hereby
acknowledges that the Company Shares have not been registered pursuant to the
Securities Act and may not be transferred in the absence of such registration or
an exemption available under the Securities Act.
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9. CASUALTY AND CONDEMNATION. Seller shall maintain, or cause the Company
to maintain, the property insurance coverage currently in effect for the
Property, or comparable coverage, through the Closing Date. If after the
Effective Date and on or prior to the Closing Date, any portion of the Property
is materially damaged or destroyed by fire or other casualty, or there shall be
commenced or instituted against the Property any Condemnation Proceeding, Seller
shall promptly (and in no event more than two (2) Business Days after the
occurrence of such casualty or Condemnation Proceeding) give written notice of
such event to Buyer, and the following provisions shall apply notwithstanding
the contrary terms of any applicable Laws with respect to the subject matter of
Paragraph 9:
9.1 MAJOR EVENT. If such damage or destruction or Condemnation
Proceeding results in the Hotel becoming Unsuitable for Its Permitted Use, as
reasonably determined by Buyer or Seller, (such damage or Condemnation
Proceeding shall be referred to as a "MAJOR EVENT"), then both Buyer and Seller
shall have the right to Terminate this Agreement by written notice to the other
party given no later than ten (10) Business Days after the giving of Seller's
notice of such event, and the Closing Date shall be extended, if necessary, to
provide sufficient time for Buyer or Seller to make such election. In the case
of a Major Event, and so long as neither party has elected to Terminate this
Agreement, in addition to the foregoing termination right, Seller or Buyer shall
have the option to extend the Closing Date for up to ninety (90) days for the
Hotel (to allow Seller to repair/restore the Hotel in a manner satisfactory to
Buyer). To the extent that Buyer or Seller elects to postpone Closing pursuant
to the provisions of this Paragraph, Buyer shall have the ability to conduct a
limited Due Diligence review (such review shall be limited to the conditions
directly related to any restoration and repair of the Hotel) with respect to the
Hotel up to and including the date that is ten (10) calendar days prior to the
extended closing date for the Hotel and Buyer shall have the right to Terminate
this Agreement solely as to the Hotel for reasons directly related to any
restoration and repair thereof.
9.2 CLOSING DESPITE CASUALTY/CONDEMNATION. If a casualty or
Condemnation Proceeding occurs and neither Buyer nor Seller Terminates this
Agreement, then at Closing (a) the conveyance of the Property shall be less such
portion of the Property so taken by (or, as applicable, shall be subject to)
said Condemnation Proceeding, without adjustment of the Purchase Price, (b)
Seller shall assign, or cause to be assigned, to Buyer (without recourse to
Seller) all the rights to all awards or insurance proceeds with respect to such
casualty or Condemnation Proceeding (except for business interruption coverage
with respect to rental payments prior to Closing); (c) Buyer and Seller shall,
or shall cause the Lessor and Lessee of the Hotel, to waive any of their
respective ability to terminate the Hotel Lease Agreement as to the Hotel as a
result of the Hotel being "Unsuitable for Its Permitted Use" pursuant to the
terms of the Hotel Lease Agreement; and (d) Seller shall provide a credit at
Closing equal to (i) the Company's deductible under the Company's insurance
policy, plus all proceeds or awards previously paid to the Company with respect
to such casualty or Condemnation Proceeding, less (ii) an amount equal to the
sum of (A) the costs, expenses and fees, including reasonable attorneys' fees,
expenses and disbursements, incurred by Seller or the Company in connection with
receiving such proceeds or award, (B) any portion of any Condemnation Proceeding
award that is allocable to loss of use of the Property prior to Closing, and the
proceeds of any rental loss, business interruption or similar insurance to the
extent allocable to the period prior to the
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Closing Date, and (C) the reasonable and actual costs incurred by Seller or the
Company in stabilizing and/or repairing the Property following such casualty or
condemnation.
10. OTHER CONDITIONS TO CLOSING. The obligation of Buyer and Seller to
close the Transaction shall be further subject to the satisfaction at or prior
to Closing of the conditions precedent set forth in this Paragraph.
10.1 CONDITIONS TO BUYER'S OBLIGATIONS. The conditions precedent to
Buyer's obligations at Closing referenced above are as follows, any or all of
which may be expressly waived by Buyer in writing, at its sole option.
A. REPRESENTATIONS. Seller's Warranties shall be true and correct
in all material respects on and as of the Closing Date, except as modified in a
manner permitted by Paragraphs 8.2 and 8.3, as if made on and as of such date
except to the extent that they expressly relate to an earlier date.
B. TITLE POLICY. At Closing, Company shall have received from the
Title Company the Title Policy (or a specimen or proforma policy thereof or
"marked" Title Commitment) together with an irrevocable written obligation of
the Title Company to issue a Title Policy in the form of such specimen or
proforma policy.
C. SELLER COMPLIANCE. Seller shall have performed, and shall have
caused the Company and Lessee to have performed, all of the covenants,
undertakings and obligations to be performed or complied with by Seller at or
prior to the Closing.
D. CLOSING DELIVERIES. Buyer shall have received the closing
deliveries listed in Paragraph 6.2 hereof.
E. PURCHASE AND SALE AGREEMENT. Buyer and Seller Related Parties
shall have entered into and consummated (or shall be in the process of
consummating simultaneously with this Transaction) the initial closing of the
transaction affecting all hotels under the Purchase and Sale Agreement.
F. TAX CONCESSION/APPROVAL. All actions required to obtain the
amendments to the tax concession and the Puerto Rico Tourism Company approval
contemplated by Paragraph 5.1(L) shall have been taken, in each case in a manner
reasonably satisfactory to Buyer.
G. CASINO LICENSE. Lessee shall have obtained the license to
operate the Hotel's casino and shall have taken the actions contemplated by
Paragraph 5.1(M).
H. PRE-CLOSING TRANSFER. Seller shall have caused the Company to
transfer certain assets and employees and otherwise effectuated the matters set
forth in Paragraph 5.1(K) in each case in a manner reasonably satisfactory to
Buyer.
I. WORKING CAPITAL. The Company shall have Working Capital in the
aggregate amount of at least Thirty Two Million Seven Hundred Thousand and No/00
Dollars ($32,700,000.00), plus the sum of (1) any proceeds received by Seller or
the Company on
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account of any claims under property insurance coverage relating to the
Property, or comparable coverage, which has not been applied to repair/restore
the Property, (2) any proceeds received by Seller or the Company on account of
any Condemnation Proceeding relating to the Property which has not been applied
to repair/the Property, and (3) an amount equal to the "deductible" which is
absorbed by the Company prior to claiming an insured loss under property
insurance coverage relating to the Property, or comparable coverage for which
proceeds have been paid under (1) above, which has not been applied to
repair/restore the Property .
J. GOVERNMENTAL APPROVALS. Any other approvals from federal,
state, Commonwealth of Puerto Rico or local government authorities required as a
result of the Transactions contemplated hereby, including if applicable any
approvals required by the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvement Act of 1976
("HSR"), shall have been obtained.
10.2 CONDITIONS TO SELLER'S OBLIGATIONS. The conditions precedent
to Seller's obligations at Closing referenced above are as follows, any or all
of which may be expressly waived by Seller in writing, at its sole option:
A. REPRESENTATIONS. Buyer's warranties set forth in Paragraph
8.5, shall be true and correct in all material respects on and as of the Closing
Date, except as modified in a manner permitted by this Agreement, as if made on
and as of such date except to the extent that they expressly relate to an
earlier date.
B. BUYER COMPLIANCE. Buyer shall have performed all of the
covenants, undertakings and obligations to be performed or complied with by
Buyer at or prior to the Closing.
C. PURCHASE AND SALE AGREEMENT. Buyer and the Seller Related
Parties shall have entered into and consummated (or shall be in the process of
consummating simultaneously with this Transaction) the initial closing of the
transaction affecting all hotels under the Purchase and Sale Agreement.
D. CLOSING DELIVERIES. Seller shall have received the closing
deliveries listed in Paragraph 6.3 hereof.
E. CASINO LICENSE. Lessee shall have obtained the license to
operate the Hotel's casino and shall have taken the actions contemplated by
Paragraph 5.1(m).
F. GOVERNMENTAL APPROVALS. Any other approvals from federal,
state, Commonwealth of Puerto Rico or local government authorities required as a
result of the Transactions contemplated hereby, including if applicable any
approvals required by the HSR, shall have been obtained.
10.3 WAIVER OF CONDITIONS. No waiver of a closing condition by
either party shall limit its rights to seek indemnification or any other legal
remedy available to such party.
11. TRANSACTION ISSUES: BROKERS, CONFIDENTIALITY AND INDEMNITY.
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11.1 BROKERS. Seller and Buyer expressly acknowledge that Seller's
Broker has acted as the exclusive broker with respect to the Transaction and
with respect to this Agreement. Seller shall pay any brokerage commission due to
Seller's Broker in accordance with the separate agreement between Seller and
Seller's Broker. Seller agrees to hold Buyer harmless and indemnify Buyer from
and against any and all Liabilities (including reasonable attorneys' fees,
expenses and disbursements) suffered or incurred by Buyer as a result of any
claims by Seller's Broker or any other party claiming to have represented Seller
as broker in connection with the Transaction. Buyer agrees to hold Seller
harmless and indemnify Seller from and against any and all Liabilities
(including reasonable attorneys' fees, expenses and disbursements) suffered or
incurred by Seller as a result of any claims by any other party claiming to have
represented Buyer as broker in connection with the Transaction.
11.2 PUBLICITY. Except for the Press Releases or Public
Announcements the forms of which are attached hereto as EXHIBIT M, or if no such
forms are attached, such other forms as are reasonable under the circumstances
or as may be required by law or as may be reasonably necessary, on a
confidential basis, to inform any rating agencies, potential sources of
financing, financial analysts, to perform its obligations and duties contained
in this Agreement or to receive legal, accounting and/or tax advice, the parties
agree that no party shall, with respect to this Agreement and the transactions
contemplated hereby, contact or conduct negotiations with public officials, make
any public pronouncements, issue press releases or otherwise furnish information
regarding this Agreement or the transactions contemplated hereby to any third
party without the consent of the other party, which consent shall not be
unreasonably withheld; provided, however, that, if such information is required
to be disclosed by law, the party so disclosing the information shall use
reasonable efforts to give notice to the other parties as soon as such party
learns that it must make such disclosure.
Buyer acknowledges that certain Ground Leases that affect the Hotel require
landlord consent to any assignment of those rights and/or release of the Company
or Seller from continued liability under such lease. Buyer hereby consents to
Seller's disclosure to any such landlords of Buyer's identity and financial
information. Buyer agrees to cooperate (at no material cost and expense) with
Seller and any such landlord and to provide such Buyer financial information as
may be reasonably requested by such landlord in order to consent to the proposed
assignment.
11.3 INDEMNITY. Buyer hereby agrees to indemnify, defend, and hold
Seller and each of the other Seller Parties free and harmless from and against
any and all Liabilities (including reasonable attorneys' fees, expenses and
disbursements) arising out of or resulting from (a) the breach of the terms of
Paragraph 11.2 or (b) the entry on the Property and/or the conduct of any Due
Diligence by Buyer or any of Buyer's Representatives at any time prior to the
Closing; provided, however, that Buyer's obligations under this clause (b) shall
not apply to the mere discovery of a pre-existing environmental or physical
condition at the Property. The foregoing indemnity shall survive the Closing
(and not be merged therein) or any earlier termination of this Agreement.
12. DEFAULT AT OR PRIOR TO CLOSING.
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12.1 BUYER DEFAULT. If Buyer defaults in the observance or
performance of its covenants and obligations hereunder, and such default
continues for five (5) Business Days after the date of receipt of written notice
from Seller demanding cure of such default, provided Seller is not in default,
Seller shall be entitled, as its sole and exclusive remedy hereunder, to
Terminate this Agreement by written notice to Buyer of such termination and,
provided the deposit contemplated by Paragraph 18 of the Purchase and Sale
Agreement, as amended from time to time, has not been posted by Buyer, to
receive liquidated damages equal to five percent (5%) of the Purchase Price on
or prior to the Closing Date as full liquidated damages for such default of
Buyer, the parties hereto acknowledging the difficulty of ascertaining the
actual damages in the event of such a default, that it is impossible more
precisely to estimate the damages to be suffered by Seller upon Buyer's default,
that such liquidated damages are intended not as a penalty, but as full
liquidated damages and that such amount constitutes a reasonable good faith
estimate of the potential damages arising therefrom, it being otherwise
difficult or impossible to estimate Seller's actual damages which would be
suffered by Seller in the event of default by Buyer. Except with respect to any
right, obligation or liability which survives Closing or termination of this
Agreement, including any indemnification provisions set forth in this Agreement,
Seller's right to Terminate this Agreement is Seller's sole and exclusive remedy
in the event of a default under this Agreement by Buyer, and Seller hereby
waives, relinquishes and releases any and all other rights and remedies (except
any that survive Closing or termination pursuant to the express provisions of
this Agreement), including, but not limited to: (1) any right to ▇▇▇ Buyer for
damages, (2) any right to ▇▇▇ Buyer for specific performance, or (3) any other
right or remedy which Seller may otherwise have against Buyer, either at law, or
equity or otherwise. To the extent that Seller's Related Party is entitled to
the deposit in accordance with the Purchase and Sale Agreement, Seller shall not
be able to receive any damages hereunder for Buyer's breach of the terms hereof.
12.2 SELLER DEFAULT. If Seller defaults in the observance or
performance of its covenants and obligations hereunder, and such default
continues for the greater of five (5) Business Days after the date of receipt of
written notice from Buyer demanding cure of such default, then Buyer shall be
entitled either, at Buyer's option, (i) without waiving the right to elect the
option to Terminate this Agreement, to ▇▇▇ Seller for specific performance of
this Agreement, but only if such suit is filed within one hundred eighty (180)
days after the occurrence of Seller's alleged default, unless Buyer is legally
precluded from bringing such suit pursuant to bankruptcy law requirements within
such one hundred and eighty day period or (ii) to Terminate this Agreement by
the delivery to Seller of notice of such termination and Buyer shall be entitled
to all of its out-of pocket costs (including legal fees) incurred in connection
with the transactions contemplated by this Agreement payable within five (5)
days of demand; provided however that Buyer shall not be able to recover any of
its out-of-pocket costs (including legal fees) to the extent Seller fails or is
unable to deliver any Ground Lease Estoppel Certificate pursuant to Paragraph
5.1(N), so long as such failure or inability is not due to the fault of Seller.
Prior to the Closing, Buyer's rights to so Terminate this Agreement or ▇▇▇ for
specific performance, are Buyer's sole and exclusive remedies hereunder in the
event of a default hereunder by Seller, and Buyer hereby waives, relinquishes
and releases any and all other rights and remedies (except any that survive
Closing or termination pursuant to the express provisions of this Agreement),
including, but not limited to: (1) any right to ▇▇▇ for damages, or (2) any
other right or remedy which Buyer may otherwise have against Seller either at
law, in equity or otherwise. Buyer agrees that its failure to timely commence an
action for specific performance
- 29 -
within the period noted above shall be deemed a waiver by it of its right to
commence an action for specific performance as well as a waiver by it of any
right it may have to file or record a notice of LIS PENDENS or notice of
pendency of action or similar notice against any portion of the Property.
13. NOTICES. All notices, consents, approvals and other communications
which may be or are required to be given by either Seller or Buyer under this
Agreement shall be properly given only if made in writing and sent by (a) hand
delivery, (b) certified mail, return receipt requested, (c) a nationally
recognized overnight delivery service (such as Federal Express, UPS Next Day Air
or Airborne Express), or (d) telecopying to the telecopy number listed below
(provided that a copy of such notice is also sent within one Business Day to the
party by one of the other methods listed herein), with all postage and delivery
charges paid by the sender and addressed to the Buyer or Seller, as applicable
as set forth below, or at such other address (or telecopy number) as each may
request in writing in accordance with the provisions hereof. Such notices
delivered by hand, by telecopy, or overnight delivery service shall be deemed
received on the date of delivery and, if mailed, shall be deemed received upon
the earlier of actual receipt or two days after mailing. Said notice addresses
are as follows (and Seller and Buyer shall have the right to designate changes
to their respective notice addresses, effective five (5) days after the delivery
of written notice thereof):
IF TO SELLER: InterContinental Hotels Group
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
WITH A COPY TO: InterContinental Hotels Group
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Legal Dept. - ▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
WITH A COPY TO: ▇▇▇▇▇▇ & Bird LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
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IF TO BUYER:
Hospitality Properties Trust
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
WITH A COPY TO: ▇▇▇▇▇▇▇▇ & Worcester LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
14. GENERAL PROVISIONS.
14.1 EXECUTION NECESSARY. This Agreement shall not be binding upon
Seller or Buyer, respectively, until fully executed and delivered by a proper
official of Seller, or Buyer, respectively, and no action taken by either of
their representatives shall be deemed an acceptance of this Agreement until this
Agreement has been so executed by them and delivered to each other.
14.2 COUNTERPARTS. This Agreement may be executed in separate
counterparts. It shall be fully executed when each party whose signature is
required has signed at least one counterpart even though no one counterpart
contains the signatures of all of the parties to this Agreement.
14.3 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
the parties hereto and their respective successors and assigns and inure to the
benefit of the parties hereto and their respective permitted successors and
assigns. Buyer shall not have the right to assign or delegate any right, duty or
obligation of Buyer under this Agreement in whole or in part to any other party
other than its affiliates without the prior written consent of Seller, which
consent Seller may grant or withhold in its sole and absolute discretion, and
any such assignment shall be null and void AB INITIO. Notwithstanding the
foregoing, Buyer shall have the right to cause Seller to transfer the Company
Shares or portions thereof to an affiliate of Buyer which is wholly owned by
Buyer or wholly owned by the owners of Buyer, or to an affiliate which is owned,
in part, by Buyer and which is controlled by Buyer as to property, operating and
management issues, and which affiliate shall be designated in writing by Buyer,
together with delivery to Seller of evidence reasonably satisfactory to Seller
of the valid legal existence of Buyer's assignee, its qualification (if
necessary) to do business in the jurisdiction in which the Property is located
and of the authority of Buyer's affiliate to execute and deliver any and all
documents required of Buyer under the terms of this Agreement, which items shall
be received by Seller not less than three (3) Business Days prior to the Closing
Date. Notwithstanding the foregoing, the exercise of such right by Buyer shall
not relieve Buyer of any of its obligations and liabilities hereunder including
obligations and liabilities which survive the Closing or the termination of this
Agreement, nor shall any such assignment alter, impair or relieve such affiliate
from the waivers, acknowledgements and agreements of Buyer set forth herein, all
of
- 31 -
which are binding upon the affiliate(s) of Buyer. In the event of any permitted
designation by Buyer, any affiliate shall assume any and all obligations and
liabilities of Buyer under this Agreement but, notwithstanding such assumption,
Buyer shall continue to be liable hereunder.
14.4 GOVERNING LAW. This Agreement shall be governed by the laws of
the State of
New York.
14.5 ENTIRE AGREEMENT. This Agreement and all the exhibits and
schedules referenced herein and annexed hereto contain the entire agreement of
the parties hereto with respect to the matters contained herein, and no prior
agreement or understanding (including without limitation any letter of intent or
similar proposals or correspondence between Buyer and Seller pertaining to any
of the matters connected with this Transaction shall be effective for any
purpose. Neither this Agreement nor any provision hereof may be waived,
modified, amended, discharged or terminated except by an instrument signed by
the party against whom the enforcement of such waiver, modification, amendment,
discharge or termination is sought, and then only to the extent set forth in
such instrument.
14.6 TIME IS OF THE ESSENCE. TIME IS OF THE ESSENCE of the
Transaction and this Agreement. If the time period by which any right, option or
election provided under this Agreement must be exercised, or by which any act
required hereunder must be performed, or by which the Closing must be held,
expires on a Saturday, Sunday or legal or bank holiday, then such time period
shall be automatically extended through the close of business on the next
regularly scheduled Business Day.
14.7 INTERPRETATION. The titles, captions and paragraph headings
are inserted for convenience only and are in no way intended to interpret,
define, limit or expand the scope or content of this Agreement or any provision
hereof. Even though the defined term for a party hereunder may be used in the
singular in this Agreement such term shall also include any other person or
entity jointly and severally included within such definition. If any time period
under this Agreement ends on a day other than a Business Day, then the time
period shall be extended until the next Business Day. This Agreement shall be
construed without regard to any presumption or other rule requiring construction
against the party causing this Agreement to be drafted. If any words or phrases
in this Agreement shall have been stricken out or otherwise eliminated, whether
or not any other words or phrases have been added, this Agreement shall be
construed as if the words or phrases so stricken out or otherwise eliminated
were never included in this Agreement and no implication or inference shall be
drawn from the fact that said words or phrases were so stricken out or otherwise
eliminated.
14.8 FURTHER ASSURANCES. Each party agrees to execute and deliver
to the other such further documents or instruments as may be reasonable and
necessary in furtherance of the performance of the terms, covenants and
conditions of this Agreement; provided, however, that the execution and delivery
of such documents by such party shall not result in any additional liability or
cost to such party.
14.9 EXCLUSIVE APPLICATION. Nothing in this Agreement is intended
or shall be construed to confer upon or to give to any person, firm or
corporation other than Buyer and Seller (and their permitted successors or
assigns) hereto any right, remedy or claim under or by
- 32 -
reason of this Agreement. Except as set forth herein, all terms and conditions
of this Agreement shall be for the sole and exclusive benefit of the parties
hereto and may not be assigned.
14.10 PARTIAL INVALIDITY. If all or any portion of any of the
provisions of this Agreement shall be declared invalid by Laws applicable
thereto, then the performance of said offending provision shall be excused by
the parties hereto; provided, however, that, if the performance of such excused
provision affects any material aspect of this Transaction, the party for whose
benefit such excused provision was inserted may request that the other party
enter into a modification or separate agreement which sets forth in valid
fashion the substance of such offending provision in a manner which counsel to
both parties determine is valid.
14.11 NO IMPLIED WAIVER. Unless otherwise expressly provided herein,
no waiver by Seller or Buyer of any provision hereof shall be deemed to have
been made unless expressed in writing and signed by such party. No delay or
omission in the exercise of any right or remedy accruing to Seller or Buyer upon
any breach under this Agreement shall impair such right or remedy or be
construed as a waiver of any such breach theretofore or thereafter occurring.
The waiver by Seller or Buyer of any breach of any term, covenant or condition
herein stated shall not be deemed to be a waiver of any other breach, or of a
subsequent breach of the same or any other term, covenant or condition herein
contained.
14.12 RIGHTS CUMULATIVE. All rights, powers, options or remedies
afforded to Seller or Buyer either hereunder or by Law shall be cumulative and
not alternative, and the exercise of one right, power, option or remedy shall
not bar other rights, powers, options or remedies allowed herein or by Law,
unless expressly provided to the contrary herein.
14.13 ATTORNEY'S FEES. Should either party employ an attorney or
attorneys to enforce any of the provisions hereof or to protect its interest in
any manner arising under this Agreement, or to recover damages for breach of
this Agreement, the non prevailing party in any action pursued in a court of
competent jurisdiction (the finality of which is not legally contested) agrees
to pay to the prevailing party all reasonable costs, damages and expenses,
including attorneys' fees, expended or incurred in connection therewith.
14.14 WAIVER OF JURY TRIAL. EACH PARTY HEREBY WAIVES TRIAL BY JURY
IN ANY PROCEEDINGS BROUGHT BY THE OTHER PARTY IN CONNECTION WITH ANY MATTER
ARISING OUT OF OR IN ANY WAY CONNECTED WITH THE TRANSACTION, THIS AGREEMENT, THE
PROPERTY OR THE RELATIONSHIP OF BUYER AND SELLER HEREUNDER. THE PROVISIONS OF
THIS SECTION SHALL SURVIVE THE CLOSING (AND NOT BE MERGED THEREIN) OR ANY
EARLIER TERMINATION OF THIS AGREEMENT.
14.15 FACSIMILE SIGNATURES. Signatures to this Agreement transmitted
by telecopy or other electronic means shall be valid and effective to bind the
party so signing. Each party agrees to promptly deliver an execution original to
this Agreement with its actual signature to the other party, but a failure to do
so shall not affect the enforceability of this Agreement, it being expressly
agreed that each party to this Agreement shall be bound by its own telecopied or
electronic signature and shall accept the telecopied or electronic signature of
the other party to this Agreement.
- 33 -
14.16 NO RECORDATION. Seller and Buyer each agrees that neither this
Agreement nor any memorandum or notice hereof shall be recorded and Buyer agrees
(a) not to file any notice of pendency or other instrument (other than a
judgment) against the Property or any portion thereof in connection herewith and
(b) to indemnify Seller against all Liabilities (including reasonable attorneys'
fees, expenses and disbursements) incurred by Seller by reason of the filing by
Buyer of such notice of pendency or other instrument. Notwithstanding the
foregoing, (a) if the same is permitted pursuant to applicable Laws, Buyer shall
be entitled to record a notice of lis pendens against the Owned Real Property if
Buyer is entitled to seek (and is actually seeking) specific performance of this
Agreement by Seller in accordance with the terms of Paragraph 12.2 hereof, and
(b) Buyer shall be entitled to file a copy of all or a portion of this Agreement
(or make specific reference hereto) with the Securities and Exchange Commission
in connection with any of its filings required by Law or regulation pertaining
thereto.
14.17 EXHIBITS AND SCHEDULES. All exhibits and schedules referred to
in, and attached to, this Agreement are hereby incorporated herein in full by
this reference.
14.18 JURISDICTION. With respect to any suit, action or proceedings
relating to the Transaction, this Agreement, the Property or the relationship of
Buyer and Seller hereunder ("PROCEEDINGS") each party irrevocably (a) submits to
the exclusive jurisdiction of the Courts of the County of
New York, State of
New
York and the United States District Court for the Southern District of
New York,
and (b) waives any objection which it may have at any time to the laying of
venue of any proceedings brought in any such court, waives any claim that such
proceedings have been brought in an inconvenient forum and further waives the
right to object, with respect to such proceedings, that such court does not have
jurisdiction over such party. The provisions of this Paragraph shall survive the
Closing (and not be merged therein) or any earlier termination of this
Agreement.
14.19 CURRENCY. Each reference herein to any dollar amount is a
reference to such amount of United States dollars.
15. ADDITIONAL TERMINATION RIGHTS. (a) If the Transaction has not occurred
on or prior to December 31, 2005, other than by reason of a default by a party
hereto, and unless mutually extended by the parties hereto, this Agreement shall
automatically Terminate and this Agreement shall be of no force and effect
between the parties except for those obligations which survive such termination.
(b) If any condition to the Closing is not satisfied or waived by March 31, 2005
either party, so long as such party is not in default hereunder, may Terminate
this Agreement by written notice to the other party (subject to any rights of
such non-defaulting party hereunder) and this Agreement shall be of no force and
effect between the parties except for those provisions which expressly survive
such termination. (c) On or before the Closing Date, if the Purchase and Sale
Agreement is terminated then this Agreement shall also Terminate, provided
however that if such termination results from (i) a default by a "Seller"
thereunder, then Buyer shall have all of its rights hereunder against Seller as
if Seller was in default hereunder; or (ii) a default by the "Buyer" thereunder,
then Seller shall have all of its rights hereunder against Buyer as if Buyer was
in default hereunder.
16. LIMITATION OF LIABILITY. No advisor, trustee, director, officer,
employee, beneficiary, shareholder, member, partner, participant, representative
or agent of Buyer or Seller
- 34 -
shall have any personal liability, directly or indirectly, under or in
connection with this Agreement or any agreement made or entered into pursuant to
the provisions of this Agreement, or any amendment or amendments to any of the
foregoing made at any time or times heretofore or hereafter. In no event shall
any of Buyer or Seller be entitled to punitive, consequential or special damages
under this Agreement, and each of Buyer and Seller hereby waives any right to
claim, pursue or collect same. The provisions of this Paragraph shall survive
any termination of this Agreement and the Closing hereunder.
17. CONFLICTING TERMS. Seller acknowledges that certain provisions in this
Agreement and the Indemnification Agreement may be inconsistent or may conflict
with one another. In the event of an inconsistency or conflict between the terms
of this Agreement and the terms of the Indemnification Agreement, the terms of
the Indemnification Agreement shall control.
18. NONLIABILITY OF TRUSTEES. THE DECLARATION OF TRUST ESTABLISHING BUYER,
COPIES OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE "DECLARATION"), IS
DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF
MARYLAND, PROVIDES THAT, AND SELLER HEREBY AGREES THAT, THE NAME "HPT IHG-2
PROPERTIES TRUST" REFERS TO THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS
TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER,
SHAREHOLDER, EMPLOYEE OR AGENT OF BUYER SHALL BE HELD TO ANY PERSONAL LIABILITY,
JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, BUYER. ALL
PERSONS DEALING WITH BUYER, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF BUYER,
FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.
[Signatures on the Following Page]
- 35 -
IN WITNESS WHEREOF, Buyer and Seller have executed this Agreement under
seal as of the day and year first above written.
SELLER:
SIX CONTINENTS
INTERNATIONAL HOLDINGS B.V.,
a Netherlands closed limited liability
company
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇, its attorney-in-fact
pursuant to a power of attorney
dated July 12, 2004
BUYER:
HPT IHG-2 PROPERTIES TRUST, a
Maryland real estate investment trust
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
[Signature Page to Amended and Restated
Stock Purchase Agreement]
SCHEDULE A
ATTACHED TO AND MADE A PART OF THAT CERTAIN:
AMENDED AND RESTATED
STOCK PURCHASE AGREEMENT
BY AND BETWEEN
SIX CONTINENTS INTERNATIONAL HOLDINGS B.V.
AS SELLER
AND
HPT IHG-2 PROPERTIES TRUST
AS BUYER
DATED AS OF FEBRUARY 9, 2005
"ADJUSTED PURCHASE PRICE" is defined in Paragraph 3 of this Agreement.
"AGREEMENT" shall mean this Amended and Restated
Stock Purchase Agreement
between Seller and Buyer including all schedules, exhibits and other attachments
hereto, and documents incorporated herein by reference.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or any
other day on which banking institutions in The Commonwealth of Massachusetts or
the State of Georgia are authorized by law or executive action to close.
"BUYER" shall mean the buyer referenced in the first paragraph of this
Agreement.
"BUYER'S DILIGENCE REPORTS" shall mean the results of any examinations,
inspections, investigations, tests, studies, analyses, appraisals, evaluations
and/or investigations prepared by or for or otherwise obtained by Buyer or
Buyer's Representatives in connection with Buyer's Due Diligence.
"BUYER'S KNOWLEDGE" or "BUYER KNOWS" shall mean the actual (and not the
imputed or constructive) knowledge of ▇▇▇▇ ▇▇▇▇▇▇ of Buyer.
"BUYER'S REPRESENTATIVES" shall mean Buyer's officers, employees, agents,
advisors, representatives, attorneys, accountants, consultants, lenders,
investors, contractors, architects and engineers.
"CLOSING" shall mean the consummation and closing of the Transaction.
"CLOSING AGENT" shall mean the Title Company or such other party as is
selected by Buyer and Seller to fund the Closing in escrow.
"CLOSING DATE" shall mean the date on which the Closing occurs, which shall
be on or before the Closing Deadline as defined in Paragraph 1.1 of this
Agreement.
"CLOSING DEADLINE" is defined in Paragraph 1.1 of this Agreement.
"CLOSING DOCUMENTS" shall mean the documents and instruments delivered by
Buyer and Seller, in order to consummate the Transaction.
"COMPANY" is defined in the Recitals to this Agreement.
"COMPANY SHARES" is defined in the Recitals to this Agreement.
"CONDEMNATION PROCEEDING" shall mean any proceeding in condemnation,
expropriation, eminent domain or any written request for a conveyance in lieu
thereof, or any notice that such proceedings have been or will be commenced
against any portion of the Property.
"CONFIDENTIAL MATERIALS" shall mean excerpts of any books, computer
software, databases, records or files (whether in a electronic or printed
format) that consist of or contain any of the following: appraisals; budgets;
strategic plans for the Property; internal analyses; information regarding the
marketing of the Property for sale; submissions relating to obtaining internal
authorization for the sale of the Company Shares by Seller or any direct or
indirect owner of any beneficial interest in Seller; attorney and accountant
work product; attorney-client privileged documents; internal correspondence of
Seller, any direct or indirect owner of any beneficial interest in Seller, the
Company, or any of their respective affiliates and correspondence between or
among such parties; or other information or materials in the possession or
control of Seller, any direct or indirect owner of any beneficial interest in
Seller, the Company or the Company's property manager which such party deems
proprietary or confidential.
"CONTRACTS" shall mean all contracts respecting leasing, management,
maintenance or operation of the Real Property, including, but not limited to,
equipment leases, agreements with respect to building systems, service,
construction, and maintenance contracts, but specifically any license to the
Company of computer hardware, software or systems. A summary list of the
Contracts (including identity of contract parties and type of service) is shown
on EXHIBIT L and made a part hereof.
"DESIGNATED REPRESENTATIVES" shall mean ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇, each of IHG.
"DUE DILIGENCE" shall mean the investigation by Buyer and Buyer's
Representatives of the feasibility and desirability of acquiring the Property as
a result of Buyer's purchase of the Company Shares, including all audits,
surveys, examinations, inspections, investigations, tests, studies, analyses,
appraisals, evaluations, investigations and verifications with respect to the
Property, the Property Documents, title matters, applicable land use and zoning
Laws and other Laws applicable to the Property, the physical condition of the
Property, the economic status of the Property, and other information and
documents regarding the Property, including, but not limited to, investigations
of the legal and physical status of the Property by such consultants,
- 2 -
engineers, architects and/or entomologists as Buyer requires, tests and
assessments with respect to environmental matters, soil tests, asbestos
analysis, mold analysis, structural review, examination of title to the
Property, preparation of a Survey of the Land, and verification of all
information made or to be made available to Buyer with respect to Property.
"DUE DILIGENCE DEADLINE" is defined in Paragraph 1.1 of this Agreement.
"EFFECTIVE DATE" shall mean December 17, 2004, the date of the Original
Agreement.
"EXCLUDED PROPERTY" shall mean the assets to be transferred by the Company
pursuant to clause (1) of Paragraph 5.1(K).
"GAAP" is defined in Paragraph 8.1(Y) of this Agreement.
"GOVERNING DOCUMENTS" shall mean the certificate or articles of
incorporation, bylaws, declaration of trust, formation or governing agreement or
other charter documents or organizational or governing documents or instruments.
"GROUND LEASE" shall mean the ground leases granting the Company's interest
in the Leased Real Property.
"GROUND LEASE ESTOPPEL CERTIFICATE" is defined in Paragraph 5.1(N) of this
Agreement.
"HHF" is defined in the Recitals to this Agreement.
"HOTEL" is defined in the Recitals to this Agreement.
"HOTEL LEASE AGREEMENT" is defined in the Recitals to this Agreement.
"IHG" shall mean InterContinental Hotels Group PLC, a corporation organized
under the laws of the United Kingdom.
"INDEMNIFICATION AGREEMENT" is defined in the Recitals to this Agreement.
"LAND" shall mean those certain tracts or parcels of land (whether owned or
leased), more particularly described on EXHIBIT A.
"LAW" shall mean any federal, state, Commonwealth of Puerto Rico, local or
foreign law, statute, ordinance, code, order, decrees, or other governmental
rule, regulation or requirement, including common law.
"LEASE RECORDING CHARGES" is defined in Paragraph 6.2(H).
"LEASED REAL PROPERTY" is defined in the Recitals to this Agreement.
"LEASES" shall mean all leases, subleases, rental agreements and other
occupancy agreements for the use or occupancy of any portion of the Real
Property, or improvements
- 3 -
located thereon, if any, together with all amendments to, modifications of,
renewals and extensions thereof, but excluding the Hotel Lease Agreement.
"LESSEE" is defined in the Recitals to this Agreement.
"LESSOR" is defined in the Recitals to this Agreement.
"LIABILITIES" shall mean any and all direct or indirect damages, demands,
claims, payments, problems, conditions, obligations, actions or causes of
action, assessments, losses, liabilities, costs and expenses of any kind or
nature whatsoever, including, without limitation, penalties, interest on any
amount payable to a third party, lost income and profits, and any legal or other
expenses (including, without limitation, reasonable attorneys' fees and
expenses) reasonably incurred in connection with investigating or defending any
claims or actions, whether or not resulting in any liability. In no event shall
"Liabilities" include the right of the Buyer, Seller or the Company to collect
punitive, consequential, or special damages under this Agreement, and each of
Buyer, Seller and the Company, by and through the Seller, waive any right to
collect the same.
"LIEN" shall mean any mortgage, charge, deed of trust, security deed, lien,
judgment, pledge, conditional sales contract, security interest, past-due Taxes,
past-due assessments, contractor's lien, materialmen's lien, construction lien,
judgment or similar encumbrance against the Property or the Company Shares of a
monetary nature.
"MAJOR EVENT" is defined in Paragraph 9.1 of this Agreement.
"OTHER INTERESTS" shall mean the following other interests of Seller in and
to the Real Property, Leases, Contracts, or Personal Property, or pertaining
thereto: (a) to the extent that the same are in effect as of the Closing Date,
any licenses (but excluding any franchise license rights or liquor licenses),
permits and other written authorizations necessary for the use, operation or
ownership of the Real Property, and (b) any guaranties and warranties in effect
with respect to any portion of the Real Property or the Personal Property as of
the Closing Date.
"OWNED REAL PROPERTY" is defined in the Recitals to this Agreement.
"PERMIT" is defined in Paragraph 8.1(AA) of this Agreement.
"PERMITTED TITLE EXCEPTIONS" shall mean, subject to Buyer's rights to
review and make objection to the status of title and survey as set forth in this
Agreement, and the right of Buyer to Terminate this Agreement pursuant to
Paragraph 4.5 if the Due Diligence is not satisfactory, the following: (a) the
Leases and any new Leases entered into between the Effective Date and the
Closing Date in accordance with the terms of this Agreement; (b) all Liens for
real estate Taxes and assessments not yet due and payable as of the Closing
Date; (c) local, state, federal or foreign (if applicable) zoning and building
Laws; (d) the Record Exceptions disclosed by the Title Commitment and not
Removed or required to be Removed as provided in Paragraph 4 hereof; (e) the
state of facts disclosed by a current Survey of the Land obtained by Buyer and
not Removed or required to be Removed as provided in Paragraph 4 hereof; and (f)
any other matters approved as Permitted Title Exceptions in writing by Buyer
prior to Closing or deemed approved as Permitted Title Exceptions pursuant to
this Agreement.
- 4 -
"PERSONAL PROPERTY" shall mean (a) all Property Documents; (b) all keys and
combinations to all doors, cabinets, safes, enclosures and other locking items
or areas on or about the Property and any improvement on the Land; (c) the food
and beverage inventory of the Hotel; and (d) all tangible personal property,
including, but not limited to, all "Inventories", as such term is defined in the
Uniform System of Accounts, and all other tools, vehicles, supplies, artwork,
furniture, furnishings, machinery, equipment, specialized hotel equipment and
other tangible personal property, in each case, owned or leased by Seller (in
its own name or by and through the Company) in connection with the ownership,
operation or maintenance of the Hotel, including without limitation all china,
glassware, silverware, linens, towels, curtains, uniforms, works of art,
engineering, maintenance, and housekeeping supplies, draperies, materials and
carpeting, used or intended for use, but not for sale, in connection with the
operation of the Hotel, all equipment used in the operation of the kitchen,
dining rooms, lounges, bars, laundry, dry cleaners, lobby, reservation desk and
all supplies, merchandise, food and beverages held for sale in connection with
the operation of the Hotel, which are on hand on the Effective Date; but
specifically excluding (i) any Confidential Materials and (ii) any computer
hardware, software, or system that is licensed to Seller.
"PR CODE" is defined in Paragraph 6.2P of this Agreement.
"PROCEEDINGS" is defined in Paragraph 14.18 of this Agreement.
"PROPERTY" shall mean the Real Property, the Leases, the Contracts, the
Personal Property and the Other Interests, but specifically excluding any right
or interest to any liquor license rights and intellectual property.
"PROPERTY DOCUMENTS" shall mean all books, records and files of Seller and
the Company and of the management agent for the Property related to the Property
(other than Confidential Materials; provided, however that Seller shall make
available extracts of non-confidential information contained in such books,
records or files).
"PURCHASE AND SALE AGREEMENT" is defined in the Recitals to this Agreement.
"PURCHASE PRICE" is defined in Paragraph 3 of this Agreement.
"REAL PROPERTY" shall mean the Land, including, without limitation, (a) the
Hotel and any other buildings located on the Land and all other improvements,
(b) all easements and rights-of-way, appurtenant to the Land and other
easements, rights-of-way, grants of right, licenses, privileges or other
agreements for the benefit of, belonging to or appurtenant to the Land whether
or not situated upon the Land, including, without limitation, signage rights and
parking rights or agreements, all whether or not specifically referenced on
EXHIBIT A, (c) all mineral, oil and gas rights, riparian rights, water rights,
sewer rights and other utility rights allocated to the Land, (d) all right,
title and interest, if any, of the owner of the Land in and to any and all
strips and gores of land located on or adjacent to the Land, and (e) all right,
title and interest of the owner of the Land in and to any roads, streets and
ways, public or private, open or proposed, in front of or adjoining all or any
part of the Land and serving the Land.
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"RECORD EXCEPTIONS" shall mean all instruments recorded in the real estate
records of the locality in which the Land is located which affect the status of
title to the Real Property or which affect the recordation of any Ground Lease
with a first priority rank on the Leased Real Property.
"REMOVE" with respect to any exception to title shall mean that Seller
causes the Title Company to remove or affirmatively insure over the same as an
exception to the Title Policy, without any additional cost to Buyer, whether
such removal or insurance is made available in consideration of payment,
bonding, indemnity of Seller or otherwise.
"REQUIRED REMOVAL ITEMS" shall mean, collectively, any Title Objections to
the extent (and only to the extent) that the same (a) have not been caused by
Buyer or any Buyer's Representatives, and (b) are either: (i) Liens evidencing
monetary encumbrances (other than liens for general real estate Taxes or
assessments not yet due and payable) which can be Removed by payment of
liquidated amounts, (ii) liens or encumbrances (including, but not limited to,
monetary liens) created by Seller or the Company after the Effective Date and
not consented to or deemed consented to by Buyer; or (iii) items which Seller
has agreed to Remove pursuant to Paragraph 4.3 of this Agreement.
"SECURITIES ACT" is defined in Paragraph 5.4 of this Agreement.
"SECURITIES EXCHANGE ACT" is defined in Paragraph 5.4 of this Agreement.
"SELLER" shall mean the Seller referenced in the first paragraph of this
Agreement.
"SELLER PARTIES" shall mean and include, collectively, (a) Seller; (b) the
Company (c) counsel to Seller and/or the Company; (d) any Broker retained by
Seller or the Company; (e) the Company's property manager; (f) any direct or
indirect owner of any beneficial interest in Seller; (g) any officer, director,
employee, or agent of Seller or the Company, or their counsel; and (h) any other
entity or individual affiliated or related in any way to any of the foregoing.
"SELLER RELATED PARTIES" is defined in the Recitals to this Agreement.
"SELLER RELATED PARTY" is defined in the Recitals to this Agreement.
"SELLER'S BROKER" shall mean The ▇▇▇▇▇▇▇▇▇ Group, Inc.
"SELLER'S KNOWLEDGE" shall mean the actual (and not the imputed or
constructive) knowledge of the Designated Representatives.
"SELLER'S WARRANTIES" shall mean Seller's representations and warranties
set forth in this Agreement as the same may be modified or waived by Buyer
pursuant to this Agreement.
"SPECIAL PARTNERSHIP ELECTION" is defined in Paragraph 6.2P of this
Agreement.
"SURVEY" shall mean a survey of the Land obtained by Buyer pursuant to
Paragraph 4.
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"TAX" shall mean any and all federal, state, Commonwealth of Puerto Rico,
local or non-U.S. taxes, fees, levies, duties, tariffs, imposts, and other
similar charges on or with respect to net income, alternative or add-on minimum,
gross income, gross receipts, sales, use, ad valorem, franchise, capital,
paid-up capital, profits, greenmail, license, withholding, payroll, employment,
excise, severance, stamp, occupation, premium, property, environmental, Section
59A of the Internal Revenue Code of 1986, as amended, or windfall profit tax,
custom, duty, value added, volume of business or other tax, governmental fee or
other like assessment or charge of any kind whatsoever, together with any
interest or any penalty, addition to tax or additional amount imposed by any
governmental entity responsible for the imposition of any such tax.
"TAX RETURN" shall mean any return, claim, election, information return,
declaration, report, statement and other document required to be filed in
respect of Taxes.
"TENANT" shall mean a tenant under a Lease; collectively, all tenants under
the Leases are referred to as the "Tenants."
"TENANT ESTOPPEL CERTIFICATE" is defined in Paragraph 5.1(N).
"TERMINATE" shall mean the termination of this Agreement, by Buyer or
Seller as applicable as set forth in this Agreement, in which event thereafter
neither party hereto shall have any further rights, obligations or liabilities
hereunder except to the extent that any right, obligation or liability set forth
in this Agreement expressly survives termination hereof.
"TITLE COMMITMENT" shall mean the commitment of the Title Company to issue
the Title Policy.
"TITLE COMPANY" shall mean Chicago Title Insurance Company.
"TITLE OBJECTIONS" shall mean any defects in title (including any Record
Exceptions which are not acceptable to Buyer) or Survey (including the
description of the Land) which may be revealed by Buyer's examinations thereof
to which Buyer timely objects in accordance with the terms of Paragraph 4.3.
"TITLE POLICY" shall mean the ALTA Owner's Policy of Title Insurance (or
such other comparable form of title insurance policy as is available in the
jurisdiction in which the Property is located) issued by the Title Company in
the amount of the Purchase Price and in the form of the Title Commitment, and
containing, unless prohibited by applicable statutes or regulations, such
non-imputation and such other endorsements reasonably required by Buyer.
"TRANSACTION" shall mean the purchase of the Company Shares by Buyer and
the other transactions contemplated by this Agreement.
"UNIFORM SYSTEM OF ACCOUNTS" shall mean the Uniform System of Accounts for
the Lodging Industry, prepared by The Hotel Association of
New York City, Inc.,
in effect as of the date hereof.
"UNSUITABLE FOR ITS PERMITTED USE" shall mean a state or condition of the
Hotel such that (a) following any damage or destruction to the Hotel, the Hotel
cannot be operated in the
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good faith judgment of Buyer or Seller on a commercially practicable basis and
it cannot reasonably be expected to be restored to substantially the same
condition as existed immediately before such damage or destruction within twelve
(12) months following such damage or destruction or such shorter period of time
as to which business interruption insurance is available to cover rent and other
costs related to the Hotel following such damage or destruction, or (b) as the
result of a partial taking by condemnation, the Hotel cannot be operated, in the
good faith judgment of Buyer or Seller on a commercially practicable basis in
light of then existing circumstances.
"WORKING CAPITAL" shall mean cash on deposit in same day funds with a U.S.
bank of national reputation reasonably acceptable to Buyer, free and clear of
all Liens.
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The following exhibits and schedules have been omitted and will be
supplementally furnished to the Securities and Exchange Commission upon request.
EXHIBIT TITLE
------- -----
A. LEGAL DESCRIPTION OF LAND
D. LIST OF ASSETS AND LIABILITIES TO BE TRANSFERRED OUT OF THE COMPANY PRIOR
TO CLOSING DATE
E. PUERTO RICO COMFORT LETTER
E-1 NEW TAX CONCESSION
F. TENANT ESTOPPEL CERTIFICATE
G. GROUND LEASE ESTOPPEL
H. AFFIDAVIT OF TITLE
I. AUTHORITY CERTIFICATE
J. REAFFIRMATION OF REPRESENTATIONS
K. LEASES
L. LIST OF CONTRACTS
M. PRESS RELEASE
P. REQUIRED WORK
SCHEDULE TITLE
-------- -----
A DEFINITIONS
SELLER'S REPS AND WARRANTIES
6.1 CLOSING PROCEDURE
8.1(D) PENDING OR THREATENED LITIGATION
8.1(F) CONDITIONS MATERIALLY AFFECTING THE PROPERTY
8.1(G) CONDITIONS AFFECTING UTILITIES AND SERVICES
8.1(H) VIOLATION OF LAWS RELATING TO ZONING, CONSTRUCTION, HEALTH
AND FIRE SAFETY, ETC.
8.1(I) UNPAID (DELINQUENT) TAXES OR SPECIAL ASSESSMENTS
8.1(K) HAZARDOUS MATERIALS
8.1(M) MATERIAL DEFECTS IN PROPERTY
8.1(N) UNPAID TAXES, ETC.
8.1(O) UNOBTAINED LICENSES AND PERMITS
8.1(R) VIOLATION OF LAWS
8.1(T) MATERIAL DEFAULTS WITH RESPECT TO PERMITTED TITLE EXCEPTIONS
8.1(W) INFORMATION WITH RESPECT TO LEASES AND GROUND LEASES
8.1(AA) LIST OF MATERIAL GOVERNMENTAL LICENSES, PERMITS,
CONCESSIONS AND FRANCHISES
8.1(BB)(iii) PENDING OR THREATENED LITIGATION CONTINUING AFTER CLOSING
EXHIBIT B
HOTEL LEASE AGREEMENT
LEASE AGREEMENT
Dated as of February ___, 2005
By and Between
HPT IHG PR, INC.,
AS LANDLORD,
AND
INTERCONTINENTAL HOTELS (PUERTO RICO) INC.,
AS TENANT
LEASE AGREEMENT
THIS LEASE AGREEMENT is entered into as of this _____ day of February __,
2005, by and between HPT IHG PR, INC., a Puerto Rico corporation, as landlord
("LANDLORD"), and INTERCONTINENTAL HOTELS (PUERTO RICO) INC., a Puerto Rico
corporation, as tenant ("TENANT").
WITNESSETH:
WHEREAS, Landlord owns or leases the Property (this and other capitalized
terms used and not otherwise defined herein having the meanings ascribed to such
terms in ARTICLE 1); and
WHEREAS, Landlord wishes to lease the Property to Tenant and Tenant wishes
to lease the Property from Landlord, all subject to and upon the terms and
conditions herein 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, Landlord and Tenant hereby agree
as follows:
ARTICLE 1
DEFINITIONS
For all purposes of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires, (i) the terms defined in this Article
shall have the meanings assigned to them in this Article and include the plural
as well as the singular, (ii) all accounting terms not otherwise defined herein
shall have the meanings assigned to them in accordance with GAAP, (iii) all
references in this Agreement to designated "Articles," "Sections" and other
subdivisions are to the designated Articles, Sections and other subdivisions of
this Agreement, and (iv) the words "herein," "hereof," "hereunder" and other
words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision.
1.1 "ADDITIONAL CHARGES" shall have the meaning given such term in
SECTION 3.1.3 (a).
1.2 "ADDITIONAL RENT" shall have the meaning given such term in SECTION
3.1.2 (a).
1.3 "AFFILIATE" or "AFFILIATED PERSON" shall mean, with respect to any
Person, (a) in the case of any such Person which is a partnership, any partner
in such partnership, (b) in the case of any such Person which is a limited
liability company, any member of such company, (c) any other Person which is a
Parent, a Subsidiary, or a Subsidiary of a Parent with respect to such Person or
to one or more of the Persons referred to in the preceding clauses (a) and (b),
and (d) any other Person who is an officer, director, trustee or employee of, or
partner in or member of, such Person or any Person referred to in the preceding
clauses (a), (b) and (c).
1.4 "AGREED UPON PROCEDURE LETTER" shall mean a letter from Ernst &
Young or another firm of independent certified public accountants (the
"auditor") selected by Tenant and approved by Landlord (which approval shall not
be unreasonably withheld or delayed) which letter shall, subject to the
limitations and conditions imposed by the auditor, address the following
components and such other reasonable matters as Landlord and the auditor shall
reasonably agree:
(a) That auditor has tested Tenant's systems of internal controls.
(b) That auditor has verified that the information provided was
generated from the same reporting systems as Tenant uses for its
regular periodic accounting and reporting.
(c) That auditor has verified the mathematical accuracy of the Officer's
Certificate delivered with such Agreed Upon Procedure Letter.
(d) That auditor has recomputed the annual calculation of System Fees,
contributions to the FF&E Reserve, expenditures from the FF&E
Reserve, and the Additional Rent.
(e) That auditor has confirmed that the Hotel is subjected to audit
procedures by Tenant's internal audit department, if any, and
reviewed work papers provided in connection therewith. If auditor
has performed hotel level audit procedures at the Hotel, auditor
shall so state and list the procedures performed and results
obtained. In any event at least three of the Pooled FF&E Hotels
shall be subjected to audit procedures each Fiscal Year by either
internal audit or the auditor.
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1.5 "AGREEMENT" shall mean this Lease Agreement, including the Exhibits
attached hereto, as it and they may be amended from time to time as herein
provided.
1.6 "APPLICABLE LAW" shall mean all federal, State, county, municipal,
local and other governmental statutes, laws, rules, orders, regulations,
by-laws, ordinances, judgments, decrees and injunctions affecting the Property,
Landlord, or Tenant or the maintenance, construction, alteration or operation of
the Property, whether now or hereafter enacted or in existence, including,
without limitation, (a) Environmental Laws, (b) all permits, licenses,
authorizations, certificates and regulations necessary to operate the Property
for its Permitted Use, (c) all covenants, agreements, ground leases,
restrictions and encumbrances contained in any instruments at any time in force
affecting the Property, including those which may (i) require material repairs,
modifications or alterations in or to the Property or (ii) in any way materially
and adversely affect the use and enjoyment thereof, but excluding any
requirements arising as a result of Landlord's status as a real estate
investment trust, (d) the Tax Exemption Decree, the Puerto Rico Tourism
Development Act of 1993 and the regulations thereunder, (e) the outcome of any
arbitration, or (f) any collective bargaining agreement or other agreement or
legal requirement pertaining to any union representing employees of the Hotel.
1.7 "APPLICABLE PERCENTAGE" shall mean the following percentages for the
corresponding periods:
Year Rate
---- ----
2005 0%
2006 0%
2007 3.0%
2008 3.5%
2009 4.0%
2010 4.5%
Thereafter 5.0%
1.8 "ARBITRATION" shall mean an arbitration conducted in accordance with
the terms of SECTION 20.19.
1.9 "AWARD" shall mean all compensation, sums or other value awarded,
paid or received by virtue of a total or partial Condemnation of any of the
Property (after deduction of all reasonable legal fees and other reasonable
costs and expenses,
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including, without limitation, expert witness fees, incurred by Landlord in
connection with obtaining any such award).
1.10 "BASE TOTAL HOTEL SALES" shall mean Total Hotel Sales for the Base
Year.
1.11 "BASE YEAR" shall mean the 2006 Fiscal Year; PROVIDED, HOWEVER, if
there shall occur a casualty, Condemnation or other force majeure event with
respect to the Hotel which causes a material decline in Total Hotel Sales for
the Hotel or a force majeure event in Canada, the United States or Caribbean
region or in any relevant market that results in a ten percent (10%) annual
decline in REVPAR for the Upscale segment or other appropriate segment, as
determined by ▇▇▇▇▇ Travel Research, in Canada, the United States or Caribbean
region or in the relevant market, which, in either case, causes a material
decline in Total Hotel Sales for the Hotel for the 2006 Fiscal Year, the Base
Year shall be adjusted to be the first full Fiscal Year of operation of the
Hotel after the resolution of any such casualty, Condemnation or force majeure
event and the return of the Hotel to its substantially normal status.
1.12 "BUSINESS DAY" shall mean any day other than Saturday, Sunday, or
any other day on which banking institutions in The Commonwealth of Massachusetts
or the State of
New York are authorized by law or executive action to close.
1.13 "CAPITAL ADDITION" shall mean any renovation, repair or improvement
to the Property (or portion thereof), the cost of which constitutes a Capital
Expenditure.
1.14 "CAPITAL EXPENDITURE" shall mean any expenditure treated as capital
in nature in accordance with GAAP.
1.15 "CAPITAL REPLACEMENTS" shall mean, collectively, replacements and
renewals to the FF&E and Capital Additions.
1.16 "CLAIM" shall mean any claim, charge, lien, attachment, levy or
encumbrance.
1.17 "CODE" shall mean the Internal Revenue Code of 1986 and, to the
extent applicable, the Treasury Regulations promulgated thereunder, each as from
time to time amended, and any reference to any statutory or regulatory provision
shall be deemed to be a reference to any successor statutory or regulatory
provision.
- 4 -
1.18 "COMMENCEMENT DATE" shall mean the date of this Agreement.
1.19 "CONDEMNATION" shall mean (a) the exercise of any governmental power
with respect to the Property, whether by legal proceedings or otherwise, by a
Condemnor of its power of condemnation, (b) a voluntary sale or transfer of the
Property by Landlord to any Condemnor, either under threat of condemnation or
while legal proceedings for condemnation are pending, or (c) a taking or
voluntary conveyance of all or part of the Property, or any interest therein, or
right accruing thereto or use thereof, as the result or in settlement of any
condemnation or other eminent domain proceeding affecting such Property, whether
or not the same shall have actually been commenced.
1.20 "CONDEMNOR" shall mean any public or quasi-public Person, having the
power of Condemnation.
1.21 "CONSUMER PRICE INDEX" shall mean the Consumer Price Index for all
Urban Consumers, U.S. City Average, published by the United States Bureau of
Labor Statistics or if such index is no longer published, such other index as is
published in substitution thereof.
1.22 "DEBT SERVICE COVERAGE RATIO" shall mean, with respect to any loan
or other debt secured by a Hotel Mortgage, the quotient obtained by dividing (a)
the NOI of the properties securing such loan or other debt for the twelve (12)
months ending on the date on which such Hotel Mortgage is granted by (b)
regularly scheduled interest and principal payments projected to be paid
thereunder during the first (1st) twelve (12) months after the first day of the
month next after such date.
1.23 "DEFAULT" shall mean any event or condition which with the giving of
notice and/or lapse of time would ripen into an Event of Default.
1.24 "DISBURSEMENT RATE" shall mean a per annum rate equal to the greater
of (x) nine (9%) percent and (y) the sum of the rate for fifteen (15) year U.S.
Treasury Obligations, as published in THE WALL STREET JOURNAL, plus three
hundred eighty (380) basis points.
1.25 "EASEMENT AGREEMENT" shall mean any conditions, covenants and
restrictions, easements, declarations, licenses and other agreements which are
Permitted Encumbrances and such
- 5 -
other agreements as may be granted in accordance with SECTION 19.1.
1.26 "ENTITY" shall mean any corporation, general or limited partnership,
limited liability company or partnership, stock company or association, joint
venture, association, company, trust, bank, trust company, land trust, business
trust, cooperative, any government or agency, authority or political subdivision
thereof or any other entity.
1.27 "ENVIRONMENT" shall mean soil, surface waters, ground waters, land,
biota, sediments, surface or subsurface strata and ambient air.
1.28 "ENVIRONMENTAL LAWS" shall mean all applicable laws, statutes,
regulations, rules, ordinances, codes, licenses, permits and orders, from time
to time in existence, of all courts of competent jurisdiction and Government
Agencies, and all applicable judicial and administrative and regulatory decrees,
judgments and orders, including common law rulings and determinations, relating
to injury to, or the protection of, real or personal property or human health or
the Environment, including, without limitation, all valid and lawful
requirements of courts and other Government Agencies pertaining to reporting,
licensing, permitting, investigation, remediation and removal of underground
improvements (including, without limitation, treatment or storage tanks, or
water, gas or oil ▇▇▇▇▇), or emissions, discharges, releases or threatened
releases of Hazardous Substances, chemical substances, pesticides, petroleum or
petroleum products, pollutants, contaminants or hazardous or toxic substances,
materials or wastes, whether solid, liquid or gaseous in nature, into the
Environment, or relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Substances,
underground improvements (including, without limitation, treatment or storage
tanks, or water, gas or oil ▇▇▇▇▇), or pollutants, contaminants or hazardous or
toxic substances, materials or wastes, whether solid, liquid or gaseous in
nature.
1.29 "EVENT OF DEFAULT" shall have the meaning given such term in SECTION
12.1.
1.30 "EXCESS TOTAL HOTEL SALES" shall mean with respect to any Lease
Year, or portion thereof, the amount of Total Hotel Sales for such Property for
such Lease Year, or portion thereof, in excess of Base Total Hotel Sales for the
equivalent period in the Base Year.
- 6 -
1.31 "EXPIRATION DATE" shall mean the date on which the Term shall
expire.
1.32 "EXTENDED TERMS" shall have the meaning given such term in SECTION
2.4.
1.33 "FF&E ESTIMATE" shall have the meaning given such term in SECTION
5.1.2 (c).
1.34 "FF&E RESERVE" shall mean an interest-bearing account established
for funds to be held in reserve for Capital Replacements in Landlord's name at a
bank selected by Landlord.
1.35 "FINANCIAL OFFICER'S CERTIFICATE" shall mean, as to any Person, a
certificate of the chief executive officer, chief financial officer or chief
accounting officer (or such officers' authorized designee) of such Person, duly
authorized, accompanying the financial statements required to be delivered by
such Person pursuant to SECTIONS 3.1.2 or 5.3, in which such officer shall
certify (a) that such statements have been properly prepared in accordance with
GAAP and are true, correct and complete in all material respects and fairly
present the consolidated financial condition of such Person at and as of the
dates thereof and the results of its and their operations for the periods
covered thereby, and (b) in the event that the certifying party is an officer of
Tenant and the certificate is being given in such capacity, certify that no
Event of Default has occurred and is continuing hereunder.
1.36 "FISCAL MONTH" shall mean each calendar month in the Term or each
partial calendar month in the Term.
1.37 "FISCAL YEAR" shall mean each calendar year in the Term and each
partial calendar year in the Term.
1.38 "FIXED TERM" shall have the meaning given such term in SECTION 2.3.
1.39 "FIXTURES" shall have the meaning given such term in SECTION 2.1(d).
1.40 "GAAP" shall mean generally accepted accounting principles, as
adopted in the United States of America, consistently applied.
1.41 "GOVERNMENT AGENCIES" shall mean any court, agency, authority, board
(including, without limitation, environmental protection, planning and zoning,
and the Puerto Rico Tourism
- 7 -
Company), bureau, commission, department, office or instrumentality of any
nature whatsoever of any governmental or quasi-governmental unit of the United
States, or any State, municipality, county or any political subdivision of any
of the foregoing, whether now or hereafter in existence, having jurisdiction
over Tenant or the Property or any portion thereof or the Hotel operated
thereon.
1.42 "GUARANTOR" shall have the meaning given to the term "Guarantor"
under the Guaranty.
1.43 "GUARANTY" shall mean the Guaranty Agreement of even date herewith
made by IHG for the benefit of, INTER ALIA, Landlord, as the same may be
amended, supplemented or replaced from time to time.
1.44 "HAZARDOUS SUBSTANCES" shall mean any substance:
(a) the presence of which requires or may hereafter require
notification, investigation or remediation under Applicable Law; or
(b) which is or becomes defined as a "hazardous waste," "hazardous
material" or "hazardous substance" or "pollutant" or "contaminant" under
Applicable Law including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. Section
9601 et seq.) and the Resource Conservation and Recovery Act (42 U.S.C.
Section 6901 et seq.) and the regulations promulgated thereunder; or
(c) which is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic or otherwise hazardous and is or
becomes regulated by any Government Agencies; or
(d) the presence of which on the Property, or any portion thereof,
causes or materially threatens to cause an unlawful nuisance upon the
Property, or any portion thereof, or to adjacent properties or poses or
materially threatens to pose a hazard to the Property, or any portion
thereof, or to the health or safety of persons; or
(e) without limitation, which contains gasoline, diesel fuel or
other petroleum hydrocarbons or volatile organic compounds; or
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(f) without limitation, which contains polychlorinated biphenyls
(PCBs) or asbestos or urea formaldehyde foam insulation; or
(g) without limitation, which contains or emits radioactive
particles, waves or material; or
(h) without limitation, which constitutes materials that are now or
may hereafter be subject to regulation pursuant to the Medical Waste
Tracking Act of 1988 or any requirement promulgated by any Government
Agencies.
1.45 "HOTEL" shall mean the hotel being operated on the Property.
1.46 "HOTEL MORTGAGE" shall mean any first mortgage, first deed-of-trust
or first deed to secure debt and other related security documents granted in
connection therewith now or hereafter granted by Landlord to secure a loan to,
or other debt of, Landlord or its Affiliated Persons which is made by an
institutional lender, investment bank, publicly traded investment fund or other
similar Person regularly making loans secured by hotels or incurred in
connection with the issuance of a mortgage backed security, which loan or debt
provides for (i) level payments of interest and principal and (ii) amortization
and other terms which are commercially reasonable.
1.47 "HOTEL MORTGAGEE" shall mean the holder of the Hotel Mortgage.
1.48 "IHG" shall mean InterContinental Hotels Group PLC, its successors
and assigns.
1.49 "IMPOSITIONS" shall mean collectively, all taxes (including, without
limitation, all taxes imposed under the laws of any State, as such laws may be
amended from time to time, and all ad valorem, sales and use, or similar taxes
as the same relate to or are imposed upon Landlord (or its shareholders), Tenant
or the business conducted upon the Property), assessments (including, without
limitation, all assessments for public improvements or benefit, whether or not
commenced or completed prior to the date hereof), water, sewer or other rents
and charges, excises, tax levies, fees (including, without limitation, license,
volume of business taxes, permit, inspection, authorization and similar fees),
and all other governmental charges, in each case whether general or special,
ordinary or extraordinary, or foreseen or unforeseen, of every character in
respect of the Property or the business conducted
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thereon by Tenant (including all interest and penalties thereon due to any
failure in payment by Tenant), which at any time prior to, during or in respect
of the Term hereof may be assessed or imposed on or in respect of or be a lien
upon (a) Landlord's interest in the Property, (b) the Property or any part
thereof or any rent therefrom or any estate, right, title or interest therein,
or (c) any occupancy, operation, use or possession of, or sales from, or
activity conducted on, or in connection with the Property or the leasing or use
of the Property or any part thereof by Tenant; PROVIDED, HOWEVER, the term
"Impositions" shall not include (i) Landlord's Taxes or (ii) any construction
license tax or excise tax attributable to items to be used in or with respect to
Capital Replacements which shall be a part of the cost of Capital Replacements.
1.50 "INSURANCE REQUIREMENTS" shall mean all terms of any insurance
policy required by this Agreement and all requirements of the issuer of any such
policy and all orders, rules and regulations and any other requirements of the
National Board of Fire Underwriters (or any other body exercising similar
functions) binding upon Landlord, Tenant or the Property.
1.51 "INTEREST RATE" shall mean a rate, not to exceed the maximum legal
interest rate, equal to the greater of (i) twelve percent (12%) per annum and
(ii) two and one-half percent (2.5%) per annum in excess of the Disbursement
Rate determined as of the first day that interest accrues on any amount to which
such Interest Rate is to be applied.
1.52 "LAND" shall have the meaning given such term in SECTION 2.1(a).
1.53 "LANDLORD" shall have the meaning given such term in the preambles
to this Agreement and shall also include its permitted successors and assigns.
1.54 "LANDLORD LIENS" shall mean liens on or against the Property or any
payment of Rent (a) which result from any act of, or any Claim against, Landlord
or any owner of a direct or indirect interest in the Property, or which result
from any violation by Landlord of any terms of this Agreement or the Purchase
Agreement, or (b) which result from liens in favor of any taxing authority by
reason of any tax owed by Landlord or any fee owner of a direct or indirect
interest in the Property; PROVIDED, HOWEVER, that "LANDLORD LIENS" shall not
include any lien resulting from any tax for which Tenant is obligated to pay or
indemnify Landlord against until such time as Tenant shall
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have already paid to or on behalf of Landlord the tax or the required indemnity
with respect to the same.
1.55 "LANDLORD'S TAXES" shall mean any of the following, collectively,
(a) any tax based on net income imposed on Landlord or its shareholders, (b) any
gross or net revenue tax of Landlord or its shareholders, (c) any transfer fee
or other tax imposed with respect to the sale, exchange or other disposition by
Landlord of the Property or the proceeds thereof, (d) any single business tax,
gross receipts tax (including, without limitation, the Puerto Rico municipal
license tax), transaction privilege, rent, franchise, capital stock or similar
taxes as the same relate to or are imposed upon Landlord or its shareholders,
(e) any interest or penalties imposed on Landlord as a result of the failure of
Landlord to file any return or report timely and in the form prescribed by law
or to pay any tax or imposition, except to the extent such failure is a result
of a breach by Tenant of its obligations pursuant to SECTION 3.1.3, (f) any
impositions that are enacted or adopted by their express terms as a substitute
for any tax that would not have been payable by Tenant pursuant to the terms of
this Agreement or (g) any impositions imposed as a result of a breach of
covenant or representation by Landlord in any agreement governing Landlord's
conduct or operation or as a result of the gross negligence or willful
misconduct of Landlord; PROVIDED, HOWEVER, the term Landlord Taxes shall not
include any construction license tax or excise tax attributable to items to be
used in or with respect to Capital Replacements which shall be a part of the
cost of Capital Replacements.
1.56 "LEASE YEAR" shall mean any Fiscal Year or portion thereof,
commencing with the 2005 Fiscal Year, during the Term.
1.57 "LEASED IMPROVEMENTS" shall have the meaning given such term in
SECTION 2.1(b).
1.58 "LEASED INTANGIBLE PROPERTY" shall mean the following items of
intangible property: all hotel licensing agreements and other service contracts,
equipment leases, booking agreements and other arrangements or agreements
affecting the ownership, repair, maintenance, management, leasing or operation
of the Property to which Landlord is a party; all books, records and files
relating to the leasing, maintenance, management or operation of the Property
belonging to Landlord; all transferable or assignable permits, certificates of
occupancy, operating permits, sign permits, development rights and approvals,
certificates, licenses, warranties and guarantees, rights to deposits, trade
names, service marks, telephone
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exchange numbers identified with the Property, and all other transferable
intangible property, miscellaneous rights, benefits and privileges of any kind
or character belonging to Landlord with respect to the Property other than
liquor licenses; provided, however, that "Leased Intangible Property" shall not
include items that are acquired by Tenant on and after the date hereof or owned
by Tenant before the date hereof, in either case to the extent not conveyed to
Landlord.
1.59 "LEASED PERSONAL PROPERTY" shall have the meaning given such term in
SECTION 2.1(e).
1.60 "LIEN" shall mean any mortgage, security interest, pledge,
collateral assignment, or other encumbrance, lien or charge of any kind, or any
transfer of property or assets for the purpose of subjecting the same to the
payment of indebtedness or performance of any other obligation in priority to
payment of its general creditors.
1.61 "MANAGED HOTELS" has the meaning given to the term "Hotels" in the
New Management Agreement.
1.62 "MATERIAL REPAIR" shall mean a repair the cost of which exceeds
$250,000; PROVIDED, HOWEVER, on January 1 of each year starting in 2006, said
$250,000 shall be adjusted to reflect the percentage change in the Consumer
Price Index since the prior January 1.
1.63 "MINIMUM RENT" shall mean (i) for the period prior to January 1,
2006, an annual amount equal to Five Million Eight Hundred Twelve Thousand Five
Hundred Dollars ($5,812,500), and (ii) for the period after January 1, 2006, an
annual amount equal to Six Million One Hundred Thirty-One Thousand Two Hundred
Fifty Dollars ($6,131,250).
1.64 "NEW MANAGEMENT AGREEMENT" has the meaning given such term in the
Guaranty.
1.65 "NOI" shall mean, with respect to any property, for any period, the
Gross Operating Profit (as defined in the Uniform System of Accounts) of such
property for such period net of, for such period and such property, real and
personal property taxes and casualty and liability insurance premiums, an
imputed reserve for capital replacements equal to five percent (5%) of gross
revenues and an imputed management fee equal to three percent (3%) of gross
revenues.
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1.66 "NOTICE" shall mean a notice given in accordance with SECTION 20.10.
1.67 "OFFICER'S CERTIFICATE" shall mean a certificate signed by an
officer or other duly authorized individual of the certifying Entity duly
authorized by the board of directors or other governing body of the certifying
Entity.
1.68 "OPERATING COSTS" shall mean, collectively, all reasonable and
customary costs and expenses of the Hotel that are normally charged as an
operating expense under GAAP including, without limitation or duplication:
(a) the cost of Inventories (as defined under the Uniform System of
Accounts), wages, salaries and employee fringe benefits,
advertising and promotional expenses, the cost of personnel
training programs, utility and energy costs, operating licenses and
permits, maintenance costs, and equipment rentals;
(b) all expenditures made for maintenance and repairs to keep the Hotel
in good condition and repair (other than Capital Additions and
other Capital Expenditures);
(c) premiums for insurance required under this Agreement;
(d) the System Fees;
(e) real estate and personal property taxes and expenses;
(f) audit, legal and accounting fees and expenses except to the extent
Tenant is to reimburse Landlord therefor pursuant to SECTION 3.1.2
(f);
(g) rent or lease payments under ground leases or for equipment used at
the Hotel in the operation thereof; and
(h) Minimum Rent, Additional Rent and Additional Charges.
Except as expressly provided herein, Operating Costs shall not include any
fees or charges payable to Tenant, Tenant Manager or any of their Affiliates or
any items corresponding to
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exclusions from Total Hotel Sales (e.g., sales taxes) or items otherwise
expressly excluded from Operating Costs.
1.69 "PARENT" shall mean, with respect to any Person, any Person which
owns directly, or indirectly through one or more Subsidiaries or Affiliated
Persons, fifty percent (50%) or more of the voting or beneficial interest in, or
otherwise has the right or power (whether by contract, through ownership of
securities or otherwise) to control, such Person.
1.70 "PERMITTED ENCUMBRANCES" shall mean all rights, restrictions, and
easements of record set forth on Schedule B to the applicable owner's or
leasehold title insurance policy issued to Landlord or its Affiliate in
connection with the transactions contemplated by the Purchase Agreement with
respect to such Property, plus any other encumbrances as may be "Permitted
Encumbrances" under the Purchase Agreement or as may have been consented to in
writing by Landlord and Tenant from time to time.
1.71 "PERMITTED USE" shall mean, with respect to the Property, any use of
such Property permitted pursuant to SECTION 4.1.1.
1.72 "PERSON" shall mean any individual or Entity, and the heirs,
executors, administrators, legal representatives, successors and assigns of such
Person where the context so admits.
1.73 "PLEDGED HOTELS" shall mean, with respect to any loan or other debt
secured by a Hotel Mortgage, collectively, the hotels which secure such loan or
other debt.
1.74 "POOLED FF&E HOTEL" shall mean the Property and, so long as Landlord
and Portfolio Purchaser are Affiliates of each other, the Managed Hotels,
collectively.
1.75 "PORTFOLIO MANAGER" shall have the meaning given to the term
"Manager" in the New Management Agreement and shall include the "Canadian
Manager" thereunder.
1.76 "PORTFOLIO PURCHASER" shall have the meaning given to the term
"Purchaser" in the New Management Agreement.
1.77 "PORTFOLIO OWNER" shall have the meaning given to the term "Owner"
under the New Management Agreement.
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1.78 "PROPERTY" shall have the meaning given such term in SECTION 2.1.
1.79 "PURCHASE AGREEMENT" shall mean that certain Amended and Restated
Stock Purchase Agreement pursuant to which an Affiliate of Landlord acquired the
stock of the corporation that owns the Hotel from an Affiliate of Tenant.
1.80 "RECORDS" shall have the meaning given such term in SECTION 7.2.
1.81 "RENT" shall mean, collectively, the Minimum Rent, Additional Rent
and Additional Charges.
1.82 "REPAIRS" shall have the meaning given such term in SECTION 5.1.1.
1.83 "SEC" shall mean the United States Securities and Exchange
Commission.
1.84 "SPECIALLY DESIGNATED OR BLOCKED PERSON" shall mean (i) a Person
designated by the US Department of Treasury's Office of Foreign Assets Control
from time to time as a "specially designated national or blocked person" or
similar status, (ii) a Person described in Section 1 of the US Executive Order
13224, issued September 23, 2001, or (iii) a Person otherwise identified by
Government Agencies as a person or entity with which Landlord or Tenant is
prohibited from transacting business. As of the Commencement Date, a list of
such designations and the text of the Executive Order are published at:
▇▇▇.▇▇▇▇▇▇▇.▇▇▇/▇▇▇▇▇▇▇/▇▇▇▇▇▇▇▇▇▇▇/▇▇▇▇.
1.85 "STATE" shall mean the Commonwealth of Puerto Rico.
1.86 "SUBSIDIARY" shall mean, with respect to any Person, any Entity (a)
in which such Person owns directly, or indirectly through one or more
Subsidiaries, twenty percent (20%) or more of the voting or beneficial interest
or (b) which such Person otherwise has the right or power to control (whether by
contract, through ownership of securities or otherwise).
1.87 "SUCCESSOR LANDLORD" shall have the meaning given such term in
SECTION 19.1.
1.88 "SYSTEM FEES" shall mean a reservation and marketing fee of three
percent (3.0%) of rooms revenue, (ii) a Priority Club Fee of four and
three-quarters percent (4.75%) of all qualifying folio revenue at a Hotel to
Priority Club (i.e., the
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loyalty program of the "INTERCONTINENTAL" brand) members, (iii) a Technology Fee
equal to $10.80 per guest room per month, (iv) an e-mail service fee equal to
$15.00 per e-mail user per month and (v) an accounting fee of $15.00 per month
per guest room, which fees shall be subject to increases on the terms and
conditions that the corresponding fees under the New Management Agreement are
subject to increase thereunder.
1.89 "TAX EXEMPTION DECREE" shall mean the concession dated December 15,
2004 and issued by the Puerto Rico Tourism Company to Landlord (or its
predecessor in name), as the same may be amended, replaced, renewed, split,
bifurcated and/or supplemented from time to time.
1.90 "TENANT" shall have the meaning given such term in the preambles to
this Agreement and shall also include its permitted successors and assigns.
1.91 "TENANT MANAGEMENT AGREEMENT" shall mean any management agreement
entered into by Tenant with respect to all or any portion of the Property,
together with all amendments, modifications and supplements thereto.
1.92 "TENANT MANAGER" shall mean any manager under a Tenant Management
Agreement.
1.93 "TENANT'S PERSONAL PROPERTY" shall mean all motor vehicles and
consumable inventory and supplies, furniture, furnishings, movable walls and
partitions, equipment and machinery and all other tangible personal property of
Tenant, if any, acquired by Tenant on and after the date hereof or owned by
Tenant before the date hereof (in each case, if not conveyed to Landlord), and
located at the Property or used in Tenant's business at the Property and all
modifications, replacements, alterations and additions to such personal property
installed at the expense of Tenant, other than any items included within the
definition of Fixtures or Leased Personal Property or which are to be paid for
with amounts in the FF&E Reserve.
1.94 "TERM" shall mean, collectively, the Fixed Term and the Extended
Terms, to the extent properly exercised pursuant to the provisions of SECTION
2.4, unless sooner terminated pursuant to the provisions of this Agreement.
1.95 "TOTAL HOTEL SALES" shall mean for any period all revenues and
receipts of any nature derived directly or indirectly from the Hotel or from the
use or operation thereof, including, without limitation, room sales; food and
beverage
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sales; gaming revenues determined in accordance with industry standards;
telephone, telegraph, fax and internet revenues; rental or other payments from
lessees, sublessees, concessionaires and others occupying or using space or
rendering services at the Hotel (but not the gross receipts of such lessees,
sublessees or concessionaires); and the actual cash proceeds of business
interruption, use, occupancy or similar insurance; PROVIDED, HOWEVER, that Total
Hotel Sales shall not include the following (and there shall be appropriate
deductions made in determining Total Hotel Sales for): gratuities or service
charges in the nature of a gratuity added to a customer's ▇▇▇▇; federal, State
or municipal excise, value added, sales or use taxes, room taxes, or any other
taxes collected directly from patrons or guests or included as part of the sales
price of any goods or services; the State's share of slot machine revenue at the
Hotel; interest received or accrued with respect to the funds in the FF&E
Reserve; any refunds, rebates, discounts and credits of a similar nature, given,
paid or returned in the course of obtaining Total Hotel Sales or components
thereof; insurance proceeds (other than proceeds from business interruption or
other loss of income insurance); condemnation proceeds (other than for a
temporary taking); credits or refunds made to customers, guests or patrons; sums
and credits received by Landlord for lost or damaged merchandise; proceeds from
the sale or other disposition of the Hotel, any part thereof, of FF&E or any
other assets of the Hotel; or proceeds of any financing or re-financing; and any
other matters specifically excluded from Total Hotel Sales pursuant to this
Agreement.
1.96 "UNIFORM SYSTEM OF ACCOUNTS" shall mean the Uniform System of
Accounts for the Lodging Industry, Ninth Revised Edition, 1996, as published by
the Educational Institute of the American Hotel and Motel Association, as it may
be amended from time to time.
1.97 "UNSUITABLE FOR ITS PERMITTED USE" shall mean a state or condition
of the Hotel such that (a) following any damage or destruction to the Hotel, the
Hotel cannot be operated in the good faith judgment of Tenant or Landlord on a
commercially practicable basis and it cannot reasonably be expected to be
restored to substantially the same condition as existed immediately before such
damage or destruction and otherwise as required under SECTION 10.2.4 hereof,
within twelve (12) months following such damage or destruction or such shorter
period of time as to which business interruption insurance is available to cover
Rent and other costs related to the Hotel
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following such damage or destruction, or (b) as the result of a partial taking
by Condemnation, the Hotel cannot be operated, in the good faith judgment of
Tenant or Landlord, on a commercially practicable basis in light of then
existing circumstances.
1.98 "WORK" shall have the meaning given such term in SECTION 10.2.4.
ARTICLE 2
PROPERTY AND TERM
2.1 PROPERTY. Upon and subject to the terms and conditions hereinafter
set forth, Landlord leases to Tenant and Tenant leases from Landlord all of
Landlord's right, title and interest in and to all of the following,
collectively, the "PROPERTY"):
(a) those certain tracts, pieces and parcels of land, as more
particularly described in EXHIBIT A attached hereto and made a part hereof
(the "LAND");
(b) all buildings, structures and other improvements of every kind
including, but not limited to, alleyways and connecting tunnels, sidewalks,
utility pipes, conduits and lines (on-site and off-site), parking areas and
roadways appurtenant to such buildings and structures presently situated
upon the Land (collectively, the "LEASED IMPROVEMENTS");
(c) all easements, rights and appurtenances relating to the Land and
the Leased Improvements;
(d) all equipment, machinery, fixtures, and other items of property,
now or hereafter permanently affixed to or incorporated into the Leased
Improvements, including, without limitation, all furnaces, boilers,
heaters, electrical equipment, heating, plumbing, lighting, ventilating,
refrigerating, incineration, air and water pollution control, waste
disposal, air-cooling and air-conditioning systems and apparatus, sprinkler
systems and fire and theft protection equipment, all of which, to the
maximum extent permitted by law, are hereby deemed by the parties hereto to
constitute real estate, together with all replacements, modifications,
alterations and additions thereto, but specifically excluding all items
included within the category of Tenant's Personal Property (collectively,
the "FIXTURES");
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(e) all machinery, equipment, furniture, furnishings, moveable walls
or partitions, computers or trade fixtures or other personal property of
any kind or description used or useful in Tenant's business on or in the
Leased Improvements, and located on or in the Leased Improvements, and all
modifications, replacements, alterations and additions to such personal
property, except items, if any, included within the category of Fixtures,
but specifically excluding all items included within the category of
Tenant's Personal Property (collectively, the "LEASED PERSONAL PROPERTY");
(f) all of the Leased Intangible Property; and
(g) any and all leases of space in the Leased Improvements.
2.2 CONDITION OF PROPERTY. Tenant acknowledges receipt and delivery of
possession of the Property and Tenant accepts the Property in its "as is"
condition, subject to the rights of parties in possession, the existing state of
title, including all covenants, conditions, restrictions, reservations, mineral
leases, easements and other matters of record or that are visible or apparent on
the Property, all Applicable Law, and such other matters which would be
disclosed by an inspection of the Property and the record title thereto or by an
accurate survey thereof. TENANT REPRESENTS THAT IT HAS INSPECTED THE PROPERTY
AND ALL OF THE FOREGOING AND HAS FOUND THE CONDITION THEREOF SATISFACTORY AND IS
NOT RELYING ON ANY REPRESENTATION OR WARRANTY OF LANDLORD OR LANDLORD'S AGENTS
OR EMPLOYEES WITH RESPECT THERETO AND TENANT WAIVES ANY CLAIM OR ACTION AGAINST
LANDLORD IN RESPECT OF THE CONDITION OF THE PROPERTY. LANDLORD MAKES NO WARRANTY
OR REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF THE PROPERTY OR ANY PART
THEREOF, EITHER AS TO ITS FITNESS FOR USE, DESIGN OR CONDITION FOR ANY
PARTICULAR USE OR PURPOSE OR OTHERWISE, AS TO THE QUALITY OF THE MATERIAL OR
WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING AGREED THAT ALL SUCH RISKS ARE
TO BE BORNE BY TENANT. Tenant knowingly and expressly waives the warranties
against latent and hidden defects implied by the Civil Code of Puerto Rico upon
lessors of real property with respect to the lease of real property, including,
but not limited to warranties for hidden defects implied under Articles 1363(2)
and 1373 of the Civil Code of Puerto Rico.
2.3 FIXED TERM. The initial term of this Agreement (the "FIXED TERM")
shall commence on the Commencement Date and shall expire December 31, 2029.
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2.4 EXTENDED TERM. Provided the term of the New Management Agreement is
simultaneously extended in accordance with the terms of the New Management
Agreement, the Term may be extended, at Tenant's option, for up to two (2)
consecutive periods (collectively, the "EXTENDED TERMS") of fifteen (15) years
each pursuant to a written notice to Landlord given at least two (2) years prior
to the then Expiration Date. If Tenant fails to give notice of its election not
to exercise either of its options to extend the Term on or before the date which
is the day prior to the date that is two (2) years prior to the then Expiration
Date or if the Portfolio Manager fails to give notice of its election not to
exercise either of its options to extend the term of the New Management
Agreement on or before the date which is the day prior to the date that is two
(2) years prior to the then Expiration Date, Tenant shall be deemed to have
exercised the applicable extension option.
Each Extended Term shall commence on the day succeeding the expiration of
the Fixed Term or the preceding Extended Term, as the case may be. All of the
terms, covenants and provisions of this Agreement shall apply to each such
Extended Term, except that Tenant shall have no right to extend the Term beyond
the expiration of the Extended Terms. If Tenant shall give Notice that it elects
not to extend the Term in accordance with this SECTION 2.4, this Agreement shall
automatically terminate at the end of the Term then in effect and Tenant shall
have no further option to extend the Term of this Agreement. Otherwise, the
extension of this Agreement shall be automatically effected without the
execution of any additional documents; it being understood and agreed, however,
that Tenant and Landlord shall execute such documents and agreements as either
party shall reasonably require to evidence the same.
If Tenant gives notice of its election not to extend the Term or if the
Portfolio Manager gives notice of its election not to extend the term of the New
Management Agreement, or if Tenant shall have no further right to extend the
Term, then at any time during the last two years of the Term, Landlord may
terminate this Agreement and the Term on not less than thirty (30) days' prior
written notice.
ARTICLE 3
RENT
3.1 RENT. Tenant shall pay, in lawful money of the United States of
America which shall be legal tender for the payment of public and private debts,
without offset, abatement, demand or
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deduction (unless otherwise expressly provided in this Agreement), Minimum Rent
and Additional Rent to Landlord and Additional Charges to the party to whom such
Additional Charges are payable, during the Term. All payments to Landlord shall
be made by wire transfer of immediately available federal funds or by other
means acceptable to Landlord in its sole discretion. Rent for any partial Fiscal
Month shall be prorated on a per diem basis.
3.1.1 MINIMUM RENT.
(a) PAYMENTS. Minimum Rent shall be paid in advance on the first
Business Day of each Fiscal Month; PROVIDED, HOWEVER, that the first
payment of Minimum Rent shall be payable on the Commencement Date (and, if
applicable, such payment shall be prorated as provided in the last sentence
of the first paragraph of SECTION 3.1).
(b) ADJUSTMENTS OF MINIMUM RENT FOLLOWING DISBURSEMENTS UNDER
SECTIONS 5.1.3 (b), 10.2.3 or 11.2. Effective on the date of each
disbursement to pay for the cost of any repairs, maintenance, renovations
or replacements pursuant to SECTIONS 5.1.3 (b), 10.2.3 or 11.2, the annual
Minimum Rent shall be increased by a PER ANNUM amount equal to the
Disbursement Rate times the amount so disbursed. If any such disbursement
is made during any month on a day other than the first Business Day of a
Fiscal Month, Tenant shall pay to Landlord on the first Business Day of the
immediately following Fiscal Month (in addition to the amount of Minimum
Rent payable with respect to such Fiscal Month, as adjusted pursuant to
this paragraph (b)) the amount by which Minimum Rent for the preceding
Fiscal Month, as adjusted for such disbursement on a per diem basis,
exceeded the amount of Minimum Rent paid by Tenant for such preceding
Fiscal Month.
3.1.2 ADDITIONAL RENT.
(a) AMOUNT. Tenant shall pay additional rent ("ADDITIONAL RENT")
with respect to the Property with respect to each Lease Year beginning with
the 2007 Lease Year, in an amount, not less than zero, equal to seven and
one-half percent (7.5%) of Excess Total Hotel Sales for such Property.
(b) FISCAL MONTH INSTALLMENTS. Installments of Additional Rent for
each Lease Year or portion thereof
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shall be calculated and paid with respect to each Fiscal Month in arrears
on the twenty-fifth day of the succeeding Fiscal Month, based on Total
Hotel Sales for the year-to-date as of the last day of the preceding month
and the Total Hotel Sales for the year-to-date for the corresponding period
during the Base Year. On or before the twenty-fifth (25th) day after the
end of each Fiscal Month, Tenant shall furnish Landlord with detailed
operating statements setting forth the results of operations at the Hotel
with respect to such month and year-to-date showing Total Hotel Sales,
rooms revenues, revenue per available room, occupancy percentage and
average daily rate, Operating Costs, deposits to, and expenditures from,
the FF&E Reserve and Additional Rent together with a Financial Officer's
Certificate. Such statements may be provided electronically to Landlord.
(c) YEAR END STATEMENTS. Not less than ten (10) days prior to the
date on which Landlord or any of its Affiliates are required to file
audited financial statements with the SEC (but in all events on or before
February 15 of each year), Tenant shall deliver to Landlord a Financial
Officer's Certificate setting forth for the prior Lease Year Total Hotel
Sales, Operating Costs, the calculation of Additional Rent and deposits to,
and expenditures from, the FF&E Reserve together with an Agreed Upon
Procedure Letter with respect thereto. The cost of obtaining such letter
shall be an Operating Cost.
(d) RECONCILIATION. If any amounts due to Landlord as shown in a
Financial Officer's Certificate or audit provided pursuant to SECTIONS
3.1.2 (f) or 5.3 exceed the amounts previously paid with respect thereto to
Landlord, Tenant shall pay such excess to Landlord at such time as the
Financial Officer's Certificate or audit is delivered, together with
interest at the Interest Rate from the date due. (Any such interest which
accrues after the day that is ten (10) Business Days after the date on
which such Financial Officer's Certificate is delivered or is due and any
such interest which results from Tenant's willful understatement of amounts
due to Landlord shall not be Operating Costs.) If Additional Rent due as
shown in a Financial Officer's Certificate or audit is less than the amount
previously paid with respect thereto to Landlord, Landlord shall be
entitled to retain the same but Tenant shall be credited such overpayment
against the next installment of Additional Rent. In no event shall (i) any
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amount previously deposited in the FF&E Reserve be withdrawn therefrom or
(ii) the amount of Minimum Rent be subject to adjustment pursuant to this
SECTION 3.1.2 (d).
(e) ADDITIONAL INFORMATION. In addition, Tenant shall provide
Landlord with information relating to the Hotel, Tenant and its Affiliates
that (i) may be required in order for Landlord or its Affiliates to prepare
financial statements in accordance with GAAP or to comply with Applicable
Law including, without limitation, any applicable tax or securities laws
and regulations and the SEC's interpretation thereof, (ii) may be required
for Landlord or any of its Affiliates to prepare tax returns, or (iii) is
of the type that Tenant or its Affiliated Persons customarily prepares for
other hotel owners or itself.
(f) AUDIT. At Landlord's election and at Landlord's cost except as
otherwise provided herein, a certified audit of the Hotel's operations may
be performed annually, and after the Expiration Date, by a nationally
recognized, independent certified public accounting firm appointed by
Landlord. In the event that Landlord elects to have such an audit
performed, Landlord must give notice of its election within twelve (12)
months after its receipt of the applicable year-end Financial Officer's
Certificate corresponding to such Lease Year and given pursuant to SECTION
3.1.2 (c). Any dispute concerning the correctness of an audit shall be
settled by Arbitration. Tenant shall pay the cost of any audit revealing an
understatement of Additional Rent by more than three percent (3%) in the
aggregate, and such cost shall not be an Operating Cost. In the event that
either no notice of audit is given within said twelve (12) months, or no
audit is in fact commenced within eighteen (18) months after receipt of
such year-end Financial Officer's Certificate, such operating statement
will constitute the final statement for that Fiscal Year, deemed to have
been approved by Landlord.
(g) In the event that this Agreement is terminated by Landlord
pursuant to SECTION 12.1, then all of Tenant's Personal Property shall
immediately and automatically be transferred to Landlord and become,
without the requirement of any action or undertaking by any party,
Landlord's sole property and shall remain upon the Property and/or the
Hotel and be surrendered with the Property and/or the Hotel without
disturbance, molestation or injury.
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(h) SURVIVAL. The terms of this SECTION 3.1.2 shall survive the
expiration or earlier termination of the Term.
3.1.3 ADDITIONAL CHARGES. In addition to the Minimum Rent and
Additional Rent payable hereunder, Tenant shall pay, or cause to be paid, to the
appropriate parties and discharge as and when due and payable the following
(collectively, "ADDITIONAL CHARGES"):
(a) IMPOSITIONS. Subject to ARTICLE 8 relating to permitted
contests, all Impositions before any fine, penalty, interest or cost (other
than any opportunity cost as a result of a failure to take advantage of any
discount for early payment) may be added for non-payment, such payments to
be made directly to the taxing authorities (or other payees) where
feasible, and shall promptly, upon request, furnish to Landlord copies of
official receipts or other reasonably satisfactory proof evidencing such
payments. If any such Imposition may, at the option of the taxpayer,
lawfully be paid in installments (whether or not interest shall accrue on
the unpaid balance of such Imposition), Tenant may exercise the option to
pay the same (and any accrued interest on the unpaid balance of such
Imposition) in installments and, in such event, shall pay such installments
during the Term as the same become due and before any fine, penalty,
premium, further interest or cost may be added thereto. Where Tenant's
direct payment of Impositions (and the filings therefor) are not feasible,
Landlord shall cooperate with Tenant to effect the payment of such
Impositions (and make the filings therefor), it being understood that the
amount of any such Imposition remains Tenant's responsibility and Landlord
is only cooperating to assist in remitting such amount; Tenant, at its
expense, shall to the extent required or permitted by Applicable Law,
prepare and file all other tax returns and reports in respect of any other
Imposition as may be required. Landlord shall, at its expense and to the
extent required or permitted by Applicable Law, prepare and duly and timely
file all tax returns and pay all taxes due in respect of Landlord's Taxes
(other than those with respect to Impositions) as may be required by
Government Agencies, so as to avoid the imposition of any fine, penalty,
interest or cost (other than any opportunity cost as a result of a failure
to take advantage of any discount for early payment). Provided no Event of
Default shall have occurred and be continuing, notwithstanding any
provision
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of this agreement or any other agreement including, without limitation, the
Purchase Agreement, to the contrary, if any refund shall be due from any
taxing authority in respect of any Imposition paid by Tenant, the same
shall be paid over to or retained by Tenant. Landlord and Tenant shall,
upon request of the other, provide such data as is maintained by the party
to whom the request is made with respect to the Property as may be
necessary to prepare any required returns and reports. In the event
Government Agencies classify the Property covered by this Agreement as
personal property, Tenant shall file all personal property tax returns in
such jurisdictions where it may legally so file. Each party shall, to the
extent it possesses the same, provide the other, upon request, with cost
and depreciation records necessary for filing returns for the Property so
classified as personal property. Where Landlord is legally required to file
personal property tax returns for property covered by this Agreement,
Landlord shall provide Tenant with copies of assessment notices in
sufficient time for Tenant to file a protest. All Impositions assessed
against such personal property shall be (irrespective of whether Landlord
or Tenant shall file the relevant return) paid by Tenant not later than the
last date on which the same may be made without interest or penalty,
subject to the provisions of ARTICLE 8. Landlord and Tenant shall, upon the
other's request, consult with each other in order to avoid the imposition
of withholding taxes upon either party, the Property or otherwise
concerning the operation thereof.
Landlord shall give prompt Notice to Tenant of all Impositions
payable by Tenant hereunder of which Landlord at any time has knowledge;
PROVIDED, HOWEVER, that Landlord's failure to give any such notice shall in
no way diminish Tenant's obligation hereunder to pay such Impositions. To
the extent Landlord is legally required to file a tax return for an
Imposition and Tenant is not permitted under Applicable Law to make such
filing, Landlord shall provide Tenant with a copy of the return in
sufficient time for Tenant to pay the Imposition; PROVIDED, HOWEVER, that
Landlord's failure to provide such copy shall in no way diminish Tenant's
obligation hereunder to pay such Impositions.
(b) UTILITY CHARGES. All charges for electricity, power, gas, oil,
water and other utilities used in connection with the Property.
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(c) INSURANCE PREMIUMS. All premiums for the insurance coverage
required to be maintained pursuant to ARTICLE 9.
(d) OTHER CHARGES. All other amounts, liabilities and obligations,
including, without limitation, all amounts payable under any equipment
leases and all agreements to indemnify Landlord under SECTIONS 4.3.2 and
9.7.
(e) TAX EXEMPTION DECREE EXPENDITURES. Notwithstanding any provision
of this Agreement or any other agreement including, without limitation, the
Purchase Agreement, to the contrary, any amounts required to be expended or
invested under any of the Tax Exemption Decree, the Puerto Rico Tourism
Development Act of 1993 or the regulations thereunder on (i) promotion,
publicity, marketing for the Hotel; (ii) compliance with adequate safety,
health, sanitation and protection standards for guests at the Hotel; (iii)
personnel training and retraining; (iv) handicapped facilities for the
Hotel; (v) conservation, improvement and maintenance of the Hotel and of
the environmental and aesthetic infrastructure; or (vi) any similar
purposes or activity. If the Tax Exemption Decree, the Puerto Rico Tourism
Development Act of 1993 or the regulations thereunder preclude Tenant from
complying with the terms of the foregoing, then Landlord and Tenant shall
negotiate in good faith an amendment to this Agreement to deal with such
eventuality with the intent that SECTION 3.3 be given full effect and that
all Rents and other amounts payable by Tenant hereunder qualify as "rents
from real property" within the meaning of Section 856(d) of the Code.
Nothing contained in this SECTION 3.1.3 (e) is intended to, nor shall,
limit Tenant's rights under SECTIONS 5.1.2 OR 5.1.3.
3.1.4 REIMBURSEMENT FOR ADDITIONAL CHARGES. If Tenant pays or causes
to be paid property taxes or similar or other Additional Charges attributable to
periods after the end of the Term, whether upon expiration or sooner termination
of this Agreement (other than termination by reason of an Event of Default),
Tenant may, within a reasonable time after the end of the Term, provide Notice
to Landlord of its estimate of such amounts. Landlord shall promptly reimburse
Tenant for all payments of such taxes and other similar Additional Charges that
are attributable to any period after the Term of this Agreement.
3.2 LATE PAYMENT OF RENT, ETC. If any installment of Minimum Rent shall
not be paid within twenty-five (25) days
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after its due date or if any Additional Rent or Additional Charges (but only as
to those Additional Charges which are payable directly to Landlord) shall not be
paid within ten (10) days after its due date, Tenant shall pay Landlord, on
demand, as Additional Charges, a late charge (to the extent permitted by law)
computed at the Interest Rate on the amount of such installment, from the due
date of such installment to the date of payment thereof.
In the event of any failure by Tenant to pay any Additional Charges when
due, Tenant shall promptly pay and discharge, as Additional Charges, every fine,
penalty, interest and cost which is added for non-payment or late payment of
such items. Landlord shall have all legal, equitable and contractual rights,
powers and remedies provided either in this Agreement or by statute or otherwise
in the case of non-payment of the Additional Charges as in the case of
non-payment of the Minimum Rent and Additional Rent.
3.3 NET LEASE. The Rent shall be absolutely net to Landlord so that this
Agreement shall yield to Landlord the full amount of the installments or amounts
of the Rent throughout the Term, subject to any other provisions of this
Agreement which expressly provide otherwise including any provisions for
adjustment or abatement of such Rent.
3.4 NO TERMINATION, ABATEMENT, ETC. Except as otherwise specifically
provided in this Agreement, each of Landlord and Tenant, to the maximum extent
permitted by law, shall remain bound by this Agreement in accordance with its
terms and shall not take any action without the consent of the other to modify,
surrender or terminate this Agreement. In addition, except as otherwise
expressly provided in this Agreement, Tenant shall not seek, or be entitled to,
any abatement, deduction, deferment or reduction of the Rent, or set-off against
the Rent, nor shall the respective obligations of Landlord and Tenant be
otherwise affected by reason of: (a) any damage to or destruction of the
Property or any portion thereof from whatever cause or any Condemnation; (b) the
lawful or unlawful prohibition of, or restriction upon, Tenant's use of the
Property, or any portion thereof, or the interference with such use by any
Person or by reason of eviction by paramount title; (c) any claim which Tenant
may have against Landlord by reason of any default or breach of any warranty by
Landlord under this Agreement or any other agreement between Landlord and
Tenant, or to which Landlord and Tenant are parties; (d) any bankruptcy,
insolvency, reorganization, composition, readjustment, liquidation, dissolution,
winding up or other proceedings affecting Landlord
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or any assignee or transferee of Landlord; or (e) any other cause whether
similar or dissimilar to any of the foregoing, except as otherwise specifically
provided in this Agreement.
3.5 WAIVER. Tenant hereby waives all rights arising from any occurrence
whatsoever, which may now or hereafter be conferred upon it by law (a) to
modify, surrender or terminate this Agreement or quit or surrender the Property
or any portion thereof, or (b) which would entitle Tenant to any abatement,
reduction, suspension or deferment of the Rent or other sums payable or other
obligations to be performed by Tenant hereunder. The obligations of Tenant
hereunder shall be separate and independent covenants and agreements, and the
Rent and all other sums payable by Tenant hereunder shall continue to be payable
in all events unless the obligations to pay the same shall be terminated
pursuant to the express provisions of this Agreement.
ARTICLE 4
USE OF THE PROPERTY
4.1 PERMITTED USE.
4.1.1 PERMITTED USE. Tenant shall, at all times during the Term,
subject to temporary periods for the repair of damage caused by casualty or
Condemnation, continuously use and operate the Property as full service luxury
resort hotel and casino and any uses incidental thereto. Tenant shall not use or
permit to be used the Property or any portion thereof for any other use without
the prior written consent of Landlord, which approval shall not be unreasonably
withheld, delayed or conditioned. Tenant shall not change the brand of the Hotel
without Landlord's prior written consent, it being agreed that, on the
Commencement Date, the Hotel shall be operated under the "INTERCONTINENTAL"
brand. No use shall be made or permitted to be made of the Property and no acts
shall be done thereon which will cause the cancellation of any insurance policy
covering such Property or any part thereof (unless another adequate policy is
available), nor shall Tenant sell or otherwise provide or permit to be kept,
used or sold in or about the Property any article which may be prohibited by law
or by the standard form of fire insurance policies, or any other insurance
policies required to be carried hereunder, or fire underwriter's regulations.
Tenant shall, at its sole cost, comply with all Insurance Requirements.
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4.1.2 NECESSARY APPROVALS. Tenant shall proceed with all due
diligence and exercise reasonable efforts to obtain and maintain all approvals
necessary to use and operate, for its Permitted Use, the Property and the Hotel
located thereon under Applicable Law.
4.1.3 LAWFUL USE, ETC. Tenant shall not use or suffer or permit the
use of the Property or Tenant's Personal Property, if any, for any unlawful
purpose. Tenant shall not, and shall direct the Tenant Manager not to, commit or
suffer to be committed any waste on the Property, or in the Hotel, nor shall
Tenant cause or permit any unlawful nuisance thereon or therein. Tenant shall
not, and shall direct the Tenant Manager not to, suffer nor permit the Property,
or any portion thereof, to be used in such a manner as (i) may materially and
adversely impair Landlord's title thereto or to any portion thereof, or (ii) may
reasonably allow a claim or claims for adverse usage or adverse possession by
the public, as such, or of implied dedication of the Property or any portion
thereof.
4.2 COMPLIANCE WITH LEGAL/INSURANCE REQUIREMENTS, ETC. Subject to the
provisions of ARTICLE 8 and SECTION 5.1.3 (b), Tenant, at its sole expense,
shall (i) comply with all Applicable Law and Insurance Requirements in respect
of the use, operation, maintenance, repair, alteration and restoration of the
Property and with the terms of any ground lease, sublease or parking lease
affecting the Property, (ii) perform all obligations of the landlord under any
sublease affecting the Property and (iii) procure, maintain and comply with all
licenses, permits and other authorizations and agreements required for any use
of the Property and Tenant's Personal Property, if any, then being made, and for
the proper erection, installation, operation and maintenance of the Property or
any part thereof.
4.3 ENVIRONMENTAL MATTERS.
4.3.1 RESTRICTION ON USE, ETC. During the Term and any other time
that Tenant shall be in possession of the Property, Tenant shall not store on,
release or spill upon, dispose of or transfer to or from the Property any
Hazardous Substance. During the Term and any other time that Tenant shall be in
possession of the Property, Tenant shall maintain (and shall direct the Tenant
Manager to maintain) the Property at all times free of any Hazardous Substance
except for those which are customarily used at other hotels like the Hotel and
are in compliance with all Environmental Laws. Tenant shall promptly: (a) upon
receipt of notice or knowledge and shall direct the
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Tenant Manager upon receipt of notice or knowledge promptly to, notify Landlord
in writing of any material change in the nature or extent of Hazardous
Substances at the Property, (b) transmit to Landlord a copy of any report which
is required to be filed with respect to the Property pursuant to the Emergency
Planning and Community Right-to-Know Act or any other Environmental Law, (c)
transmit to Landlord copies of any citations, orders, notices or other
governmental communications received by Tenant or its agents or representatives
with respect to Hazardous Substances or violations or alleged violations of
Environmental Law (collectively, an "ENVIRONMENTAL NOTICE"), which Environmental
Notice requires a written response or any action to be taken and/or if such
Environmental Notice gives notice of and/or presents a material risk of any
material violation of any Environmental Law and/or presents a material risk of
any material cost, expense, loss or damage, (d) subject to the provisions of
ARTICLE 8, observe and comply with all Environmental Laws relating to the use,
storage, maintenance and disposal of Hazardous Substances and all orders or
directives from any official, court or agency of competent jurisdiction relating
to the use, storage or maintenance or requiring the removal, treatment,
containment or other disposition of Hazardous Substances, and (e) pay or
otherwise dispose of any fine, charge or Imposition related to Hazardous
Substances or violations of Environmental Law.
If, at any time prior to the termination of this Agreement, Hazardous
Substances (other than those permitted under this Agreement) are discovered on
the Property, Tenant shall take all actions and incur any and all expenses, as
are required by any Governmental Agency and by Environmental Law, (i) to clean
up and remove from and about the Property all Hazardous Substances thereon, (ii)
to contain and prevent any further discharge, release or threat of discharge or
release of Hazardous Substances on or about the Property and (iii) to use good
faith efforts to eliminate any further discharge, release or threat of discharge
or release of Hazardous Substances on or about the Property.
4.3.2 INDEMNIFICATION OF LANDLORD. Tenant shall protect, indemnify
and hold harmless Landlord and each Hotel Mortgagee, their trustees, officers,
agents, employees and beneficiaries, and any of their respective successors or
assigns with respect to this Agreement (collectively, the "INDEMNITEES" and,
individually, an "INDEMNITEE") for, from and against any and all debts, liens,
claims, obligations, liabilities, sanctions, losses, causes of action,
administrative orders or
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notices, costs, fines, penalties or expenses (including, without limitation,
reasonable attorney's and technical consultant's fees and expenses) imposed
upon, incurred by or asserted against any Indemnitee resulting from, either
directly or indirectly, the presence during the Term (or any other time Tenant
shall be in possession of the Property) in, upon, over or under the Land, soil,
surface water or ground water of the Property or any properties surrounding the
Property of any Hazardous Substances in violation of any Environmental Law or
otherwise. Tenant's duty herein includes, but is not limited to, costs
associated with personal injury or property damage claims as a result of the
presence prior to the expiration or sooner termination of the Term and the
surrender of the Property to Landlord in accordance with the terms of this
Agreement of Hazardous Substances in, upon, over or under the Land, soil,
surface water or ground water of the Property in violation of any Environmental
Law or otherwise. Upon Notice from Landlord or any other of the Indemnitees,
Tenant shall undertake the defense, at Tenant's sole cost and expense, of any
indemnification duties set forth herein, in which event Tenant shall not be
liable for payment of any duplicative attorneys' fees incurred by any
Indemnitee.
Tenant shall, upon demand, pay to Landlord, as an Additional Charge, any
cost, expense, loss or damage (including, without limitation, reasonable
attorneys' fees) incurred by Landlord and arising from a failure of Tenant to
observe and perform the requirements of this SECTION 4.3, which amounts shall
bear interest from the date incurred until paid by Tenant to Landlord at the
Interest Rate.
4.3.3 SURVIVAL. The provisions of this SECTION 4.3 shall survive the
expiration or sooner termination of this Agreement.
ARTICLE 5
MAINTENANCE AND REPAIRS
5.1 MAINTENANCE AND REPAIR.
5.1.1 TENANT'S GENERAL OBLIGATIONS. Subject to SECTION 6.1 hereof,
Tenant shall, at its sole cost and expense (except as expressly provided in
SECTION 5.1.3 (b)), keep the Property and all private roadways, sidewalks and
curbs appurtenant thereto (and Tenant's Personal Property) in good order and
repair, reasonable wear and tear excepted (whether or not the need for such
repairs occurs as a result of Tenant's
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use, any prior use, Insurance Requirements, the elements or the age of the
Property or Tenant's Personal Property or any portion thereof), and shall
promptly make all repairs, corrections, maintenance, alterations, improvements,
renovations, installations, renewals and additions (collectively, "REPAIRS")
thereto of every kind and nature, whether interior or exterior, structural or
nonstructural, ordinary or extraordinary, foreseen or unforeseen or arising by
reason of a condition existing prior to the commencement of the Term (concealed
or otherwise). All Repairs shall be made in a good, workmanlike manner,
consistent with industry standards for like hotels and casinos in like locales,
in accordance with all applicable federal, State, territorial and local
statutes, ordinances, codes, rules and regulations relating to any such work.
Tenant shall not take or omit to take any action, the taking or omission of
which would materially and adversely impair the value or the usefulness of the
Property or any material part thereof for its Permitted Use.
Any and all alterations, additions, improvements, and fixtures which may be made
or installed by either the Landlord or the Tenant upon the Property and/or the
Hotel and which in any manner are attached to the floors, walls or ceilings
(including, without limitation, any linoleum or other floor covering of similar
character which may be cemented or otherwise adhesively affixed to the floor,
and any electrical, plumbing, heating, ventilating and/or air conditioning
system and equipment), shall, upon the termination or expiration of this
Agreement, immediately and automatically be transferred to Landlord and become,
without the requirement of any action or undertaking by any party, Landlord's
sole property and shall remain upon the Property and/or the Hotel and be
surrendered with the Property and/or the Hotel as a part thereof without
disturbance, molestation or injury.
5.1.2 FF&E RESERVE.
(a) The FF&E Reserve, all amounts deposited therein, and all Capital
Replacements shall belong to Landlord.
(b) Beginning on February 25, 2007 and on the twenty-fifth day of
every month thereafter, Tenant shall transfer into the FF&E Reserve an
amount equal to the Applicable Percentage of Total Hotel Sales for the
prior month.
(c) Not less than sixty (60) days prior to the first day of each
Fiscal Year after the 2005 Fiscal Year, Tenant shall submit to Landlord for
Landlord's approval a proposed estimate of expenditures from the FF&E
Reserve for the
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ensuing full or partial Fiscal Year, as the case may be (the "FF&E
ESTIMATE"). If Landlord fails to disapprove of a proposed FF&E Estimate
within thirty (30) days after the submission thereof to Landlord for its
approval, the same shall be deemed approved. Together with each such FF&E
Estimate, Tenant shall provide to Landlord a proposed five-year capital
plan for the Hotel for Landlord's review and approval. Tenant will provide
Landlord with the material data and information utilized in preparing the
FF&E Estimates or any revisions thereof. Tenant will not be deemed to have
made any guaranty, warranty or representation whatsoever in connection with
the FF&E Estimates, except that the proposed FF&E Estimates reflect
Tenant's best professional estimates of the matters they describe. The FF&E
Estimate for the 2005 Fiscal Year shall have been delivered by Tenant to
Landlord on or before the Commencement Date.
(d) In the event Landlord disapproves or raises any objections to
the proposed FF&E Estimate, or any portion thereof, or any revisions
thereto, Landlord and Tenant shall cooperate with each other in good faith
to resolve the disputed or objectionable items. If Landlord disapproves of
a proposed FF&E Estimate, Landlord will disapprove on a specific
line-by-line basis to the extent reasonably practical. Any dispute with
respect to a proposed FF&E Estimate which is not resolved by the parties
within thirty (30) days after the submission thereof to Landlord shall be
resolved by Arbitration.
(e) All expenditures from the FF&E Reserve shall be (as to both the
amount of each such expenditure and the timing thereof) both reasonable and
necessary, given the objective that the Hotel will be maintained and
operated to a standard comparable to competitive hotels. All amounts from
the FF&E Reserve shall be paid to Persons who are not Affiliated Persons of
Tenant without markup or allocated internal costs by Tenant or its
Affiliated Persons except that Tenant may use Affiliated Persons to provide
goods and services if Landlord has granted its prior written approval
thereof.
(f) Tenant shall, consistent with the FF&E Estimate approved by
Landlord, from time to time make expenditures from the FF&E Reserve to pay
for Capital Replacements made during the Term. Tenant shall not materially
deviate from the FF&E Estimate approved by Landlord without the prior
approval of Landlord, except in the case of emergency where
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immediate action is necessary to prevent imminent harm to person or
property. Notwithstanding anything in this Agreement to the contrary, no
additional cost or expense shall be incurred or paid in connection with any
Capital Replacements made during the last two (2) years of the Term to the
extent attributable solely to complying with the InterContinental brand
standards.
(g) Any amounts remaining in the FF&E Reserve at the close of each
Lease Year will be carried forward and retained in the FF&E Reserve. Any
and all portions of the Hotel which are scrapped or removed in connection
with the making of any major or non-major repairs, renovations, additions,
alterations, improvements, removals or replacements shall be disposed of by
Tenant and any net proceeds thereof shall be deposited in the FF&E Reserve
and not included in Total Hotel Sales. In addition, any proceeds from the
sale of FF&E no longer necessary to the operation of the Hotel shall be
added to the FF&E Reserve.
(h) Subject to the terms of SECTION 5.1.2 (j), Tenant shall be the
only party entitled to withdraw funds from the FF&E Reserve until a Default
shall occur.
(i) Upon the expiration or earlier termination of the Term, Tenant
shall disburse to Landlord, or as Landlord shall direct, all amounts
remaining in the FF&E Reserve after payments of all expenses on account of
Capital Replacements appropriately incurred by Tenant during the Term.
(j) So long as the Managed Hotels are Pooled FF&E Hotels, it is
understood and agreed that funds deposited in the FF&E Reserve pursuant to
this Agreement and the Reserve Account under New Management Agreement shall
be maintained and used on a consolidated basis such that all amounts to be
deposited in the FF&E Reserve and such Reserve Account shall be deposited
in a single account and Portfolio Manager and Tenant may apply any funds
therein to any of the Pooled FF&E Hotels in accordance with the terms of
this Agreement and the New Management Agreement.
(k) Notwithstanding anything contained herein to the contrary, if
Landlord advises Tenant that in Landlord's opinion, the fair market value
of all personal property of Landlord at, about or which forms a part of the
Property is equal to or exceeds thirteen and one half percent (13.5%) of
the fair market value of the Property, Tenant and its
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Affiliates shall not use funds from the FF&E Reserve or which are required
to be expended pursuant to any purchase agreement to purchase additional
personal property for use at, about or as part of the Property without
Landlord's prior written consent, which consent may be granted or withheld
in Landlord's sole and absolute judgment.
5.1.3 LANDLORD'S OBLIGATIONS.
(a) Except as otherwise expressly provided in this Agreement,
Landlord shall not, under any circumstances, be required to build or
rebuild any improvement on the Property, or to make any repairs,
replacements, alterations, restorations or renewals of any nature or
description to the Property, whether ordinary or extraordinary, structural
or nonstructural, foreseen or unforeseen, or to make any expenditure
whatsoever with respect thereto, or to maintain the Property in any way.
Except as otherwise expressly provided in this Agreement, Tenant hereby
waives, to the maximum extent permitted by law, the right to make repairs
at the expense of Landlord pursuant to any law in effect on the date hereof
or hereafter enacted. Landlord shall have the right to give, record and
post, as appropriate, notices of nonresponsibility under any mechanic's
lien laws now or hereafter existing.
(b) Subject to the terms of SECTION 5.1.3 (c), if funds in the FF&E
Reserve shall be insufficient for necessary and permitted expenditures
thereof and the amount of such expenditures exceeds the amount on deposit
in the FF&E Reserve, Tenant may, at its election, give Landlord Notice
thereof, which Notice shall set forth, in reasonable detail, the nature of
the required Capital Replacement, the estimated cost thereof and such other
information with respect thereto as Landlord may reasonably require.
Provided that no Default shall have occurred and be continuing and Tenant
shall otherwise comply with the applicable provisions of ARTICLE 6,
Landlord shall, within twenty (20) Business Days after such Notice, subject
to and in accordance with the applicable provisions of ARTICLE 6, disburse
such required funds to Tenant for deposit in the FF&E Reserve and, upon
such disbursement, the Minimum Rent shall be adjusted as provided in
SECTION 3.1.1 (b). Tenant shall include a good faith projection of funds
required pursuant to this SECTION 5.1.3 (b) in the FF&E Estimate.
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(c) Unless and until the Affiliates of Portfolio Manager which sold
the Pooled FF&E Hotels to the Portfolio Purchaser and the stock of Landlord
to the Portfolio Purchaser have expended $25,000,000 (net of any applicable
value added tax that is refundable) of their own funds to make Capital
Replacements at the Pooled FF&E Hotels, Landlord shall have no obligation
to make or to cause its Affiliates to make any advances to the FF&E Reserve
pursuant to SECTION 5.1.3 (b).
5.1.4 NONRESPONSIBILITY OF LANDLORD, ETC. All materialmen,
contractors, artisans, mechanics and laborers and other persons contracting with
Tenant with respect to the Property, or any part thereof, are hereby charged
with notice that liens on the Property or on Landlord's interest therein are
expressly prohibited and that they must look solely to Tenant to secure payment
for any work done or material furnished to Tenant or for any other purpose
during the term of this Agreement.
Nothing contained in this Agreement shall be deemed or construed in any way
as constituting the consent or request of Landlord, express or implied, by
inference or otherwise, to any contractor, subcontractor, laborer or materialmen
for the performance of any labor or the furnishing of any materials for any
alteration, addition, improvement or repair to the Property or any part thereof
or as giving Tenant any right, power or authority to contract for or permit the
rendering of any services or the furnishing of any materials that would give
rise to the filing of any lien against the Property or any part thereof nor to
subject Landlord's estate in the Property or any part thereof to liability under
any mechanic's lien law of any State in any way, it being expressly understood
Landlord's estate shall not be subject to any such liability.
5.2 TENANT'S PERSONAL PROPERTY. Tenant shall provide and maintain
throughout the Term all such Tenant's Personal Property as shall be necessary in
order to operate in compliance with all Applicable Laws and Insurance
Requirements and otherwise in accordance with customary practice in the industry
for the Permitted Use.
5.3 AT END OF TERM.
5.3.1 YIELD UP. Upon the expiration or sooner termination of this
Agreement:
(a) Tenant shall vacate and surrender the Property to Landlord in
substantially the same condition in which the
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Property was in on the Commencement Date, except as repaired, rebuilt,
restored, altered or added to as permitted or required by the provisions of
this Agreement, reasonable wear and tear (and casualty damage and
Condemnation, in the event that this Agreement is terminated following a
casualty or Condemnation in accordance with ARTICLE 10 or ARTICLE 11)
excepted.
(b) Within sixty (60) days following the effective date of such
expiration or earlier termination, Tenant will submit to Landlord an
audited final accounting of Total Hotel Sales, Additional Rent and deposits
to and withdrawals from the FF&E Reserve and all accounts between Landlord
and Tenant through the effective date of such expiration or earlier
termination, the cost of which audit shall be shared equally by Tenant and
Landlord and shall not be an Operating Cost and shall be performed by Ernst
& Young or another accounting firm selected by Tenant and approved by
Landlord. Said final accounting shall be accompanied by a Financial
Officer's Certificate and will promptly be submitted by Tenant to Landlord
for its approval. Landlord shall not unreasonably withhold or delay its
approval of the final accounting and any such disapproval shall contain
reasonably detailed explanation for disapproval. Within thirty (30) days
after delivery of such final accounting, the parties will make appropriate
adjustments to any amounts previously paid or due under this Agreement.
(c) On the effective date of such expiration or earlier termination,
Tenant will deliver to Landlord all Records of the Hotel, provided that
Tenant may retain copies of any of the same for Tenant's records.
Notwithstanding the foregoing, Tenant will not be required to deliver to
Landlord any information or materials (including, without limitation,
software, database, manuals and technical information) which are
proprietary property of Tenant.
(d) On the effective date of such expiration or earlier termination,
Tenant will deliver (and cause Tenant Manager to deliver) any and all keys
or other access devices of the Property to Landlord.
(e) On the effective date of such expiration or earlier termination,
Tenant will assign to Landlord or its designee, and Landlord or such
designee will assume, all booking, reservation, service and operating
contracts
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relating exclusively to the occupancy or operation of the Hotel and entered
into in the ordinary course of business by Tenant. Landlord agrees to
indemnify and hold Tenant harmless from liability or other obligations
under any such agreements relating to acts or occurrences, including
Landlord's or such designee's failure to perform, on or after the effective
date of such assignment.
(f) Tenant will assign (and will cause Tenant Manager to assign) to
Landlord or its designee any assignable licenses and permits pertaining to
the Property and will otherwise reasonably cooperate with Landlord as may
be necessary for the transfer of any and all licenses and permits
pertaining to the Property or the Hotel to Landlord or Landlord's designee.
(g) Tenant shall release and transfer to Landlord any funds of
Landlord which are held or controlled by Tenant or Tenant Manager.
(h) Landlord shall have the right to operate the Hotel without
modifying the structural design of same and without making any Material
Repair, notwithstanding the fact that such design or certain features
thereof may be proprietary to Tenant or its Affiliates and/or protected by
trademarks or service marks held by Tenant or an Affiliate, provided that
such use shall be confined to the Hotel. Further, provided that the Hotel
then satisfies the InterContinental brand standards (unless the Hotel fails
to satisfy such brand standards due to a breach hereof by Tenant), Landlord
shall be entitled (but not obligated) to operate the Hotel under the
InterContinental name for a period of one (1) year following such
termination or expiration in consideration for which Landlord shall pay the
then standard franchise and system fees for such brand and comply with the
other applicable terms and conditions of the form of franchise agreement
then being entered into with respect to Intercontinental hotels.
(i) Tenant shall transfer (and shall cause Tenant Manager to
transfer) to Landlord the telephone numbers used in connection with the
operation of the Hotel (but not the InterContinental brand generally).
(j) Tenant shall, and shall cause Tenant Manager to, cooperate with
Landlord's or its designee's efforts to engage employees of the Hotel.
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(k) If requested by Landlord prior to such expiration or earlier
termination of this Agreement, Tenant shall (or shall cause Tenant Manager
to) continue to manage under the InterContinental brand after such
expiration or earlier termination for up to one (1) year, on such
reasonable terms (which shall include an agreement to reimburse Tenant (or
Tenant Manager, as the case may be) for its reasonable out-of-pocket costs
and expenses, and reasonable administrative costs and a management fee of
three percent (3%) of Total Hotel Sales) with respect to which Landlord and
Tenant shall reasonably agree.
5.3.2 PURCHASE RIGHTS. Subject to SECTION 3.1.2 (g) and SECTION
5.1.1, Landlord shall have the option, to be exercised within thirty (30) days
after the expiration or termination of this Agreement, to purchase Tenant's
Personal Property for an amount equal to the then net market value thereof
(which shall be (i) the current replacement cost thereof as determined by
agreement of the parties or, (ii) in the absence of such agreement, an amount
determined by appraisal, less accumulated depreciation on Tenant's books
pertaining thereto), subject to, and with appropriate price adjustments for, all
equipment leases, conditional sale contracts, UCC-1 financing statements and
other encumbrances to which such personal property is subject.
5.3.3 SURVIVAL. The provisions of this SECTION 5.3 shall survive the
expiration or earlier termination of this Agreement.
5.4 TENANT MANAGEMENT AGREEMENT. Tenant shall not, without Landlord's
prior written consent (which consent shall not be unreasonably withheld, delayed
or conditioned), enter into, or amend or modify the provisions of any Tenant
Management Agreement. Any Tenant Management Agreement shall be subordinate to
this Agreement and shall provide, INTER ALIA, (a) that all amounts due from
Tenant to the Tenant Manager shall be subordinate to all amounts due from Tenant
to Landlord (provided that, as long as no Event of Default has occurred and is
continuing, Tenant may pay all amounts due to a Tenant Manager pursuant to a
Tenant Management Agreement) and (b) for termination thereof, at Landlord's
option, upon the termination of this Agreement. Tenant shall not take any
action, grant any consent or permit any action under any Tenant Management
Agreement which might have a material adverse effect on Landlord, without the
prior written consent of Landlord, which consent shall not be unreasonably
withheld, delayed or conditioned.
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ARTICLE 6
IMPROVEMENTS, ETC.
6.1 MATERIAL REPAIRS. Except as set forth in SECTION 6.2, prior to
making any Material Repair, Tenant shall submit, to Landlord in writing, a
proposal setting forth, in reasonable detail, the proposed Material Repair and
shall provide to Landlord such plans and specifications, and such permits,
licenses, contracts and such other information concerning the same as Landlord
may reasonably request. Landlord shall have twenty (20) Business Days to approve
or disapprove all materials submitted to Landlord, in connection with any such
proposal; provided, however, (i) Landlord may not withhold its approval of a
Material Repair with respect to such items as are (A) required in order for the
Hotel to comply with applicable InterContinental brand standards consistently
applied to InterContinental hotels generally (except during the last two (2)
years of the Term) or the requirements of this Agreement; or (B) required by
reason of or under any Insurance Requirement or Applicable Law, or otherwise
required for the continued safe and orderly operation of the Hotel and (ii)
Landlord's approval shall not be required with respect to the cost of any
proposed Material Repair if the same is set forth as a separate line item in the
then applicable approved FF&E Estimate. If Landlord fails to disapprove of such
Material Repair within such twenty (20) Business Days, Landlord shall be deemed
to have approved same.
6.2 EMERGENCY EXPENDITURES. In the event that a condition should exist
in or about the Hotel of an emergency nature or in violation of Applicable Law
or any Insurance Requirements, including structural conditions, which requires
immediate repair necessary to prevent imminent danger or damage to persons or
property, Tenant is hereby authorized to take all steps and to make all
expenditures necessary to repair and correct any such condition, regardless of
whether provisions have been made in the applicable FF&E Estimate for any such
expenditures or if sufficient funds exist in the FF&E Reserve. Upon the
occurrence of such an event or condition, Tenant will communicate to Landlord
all available information regarding such event or condition as soon as
reasonably possible and will take reasonable steps to obtain Landlord's approval
before incurring such expenses. Expenditures under this SECTION 6.2 shall be
paid from the FF&E Reserve to the extent such expenditure is properly considered
a Capital Replacement.
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6.3 NO TIE-IN. No Capital Replacement shall be made which would tie-in
or connect the Hotel with any other improvements on property adjacent to the
Hotel (and not part of the Land) including, without limitation, tie-ins of
buildings or other structures or utilities (other than connections to public or
private utilities) without the prior written approval of Landlord, which
approval may be granted or withheld in Landlord's sole and absolute discretion.
ARTICLE 7
LIENS
7.1 LIENS. Subject to ARTICLE 8, Tenant shall not, directly or
indirectly, create or allow to remain and shall promptly discharge, at its
expense, any lien, encumbrance, attachment, title retention agreement or claim
upon the Property or Tenant's leasehold interest therein or any attachment,
levy, claim or encumbrance in respect of the Rent, other than (a) Permitted
Encumbrances, (b) restrictions, liens and other encumbrances which are consented
to in writing by Landlord, (c) liens for those taxes of Landlord which Tenant is
not required to pay hereunder, (d) subleases permitted by ARTICLE 15, (e) liens
for Impositions so long as the same are not yet due and payable, (f) liens of
mechanics, laborers, materialmen, suppliers or vendors incurred in the ordinary
course of business that are not yet due and payable, (g) the Hotel Mortgage or
other liens which are the responsibility of Landlord pursuant to the provisions
of ARTICLE 19 and (h) Landlord Liens and any other voluntary liens created by
Landlord.
7.2 LANDLORD'S LIEN. In addition to any statutory landlord's lien and in
order to secure payment of the Rent and all other sums payable hereunder by
Tenant, and to secure payment of any loss, cost or damage which Landlord may
suffer by reason of Tenant's breach of this Agreement, Tenant hereby grants unto
Landlord, to the maximum extent permitted by Applicable Law, a security interest
in and an express contractual lien upon Tenant's Personal Property (except motor
vehicles and liquor and casino licenses and permits), and Tenant's interest in
all ledger sheets, files, records, documents and instruments (including, without
limitation, computer programs, tapes and related electronic data processing)
relating to the operation of the Hotel (the "RECORDS") and all proceeds
therefrom, subject to any Permitted Encumbrances; and such Tenant's Personal
Property shall not be removed from the Property at any time when a Default has
occurred and is continuing.
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Upon Landlord's request, Tenant shall execute and deliver to Landlord
financing statements in form sufficient to perfect the security interest of
Landlord in Tenant's Personal Property and the proceeds thereof in accordance
with Applicable Law. During the continuance of a Default, Tenant hereby grants
Landlord an irrevocable limited power of attorney, coupled with an interest, to
execute all such financing statements in Tenant's name, place and stead. The
security interest herein granted is in addition to any statutory lien for the
Rent.
ARTICLE 8
PERMITTED CONTESTS
Tenant shall have the right to contest the amount or validity of any
Imposition or Applicable Law concerning the Property by appropriate legal
proceedings, conducted in good faith and with due diligence, provided that (a)
the foregoing shall in no way be construed as relieving, modifying or extending
Tenant's obligation to pay any Claims as finally determined, (b) such contest
shall not cause Landlord or Tenant to be in default under any mortgage or deed
of trust encumbering the Property or any interest therein or result in or
reasonably be expected to result in a lien attaching to the Property, (c) no
part of the Property nor any Rent therefrom shall be in any immediate danger of
sale, forfeiture, attachment or loss, (d) Tenant shall indemnify and hold
harmless Landlord from and against any cost, claim, damage, penalty or
reasonable expense, including reasonable attorneys' fees, incurred by Landlord
in connection therewith or as a result thereof and (e) Landlord is not exposed
to any risk for criminal or civil liability. Landlord agrees to join in any such
proceedings if required legally to prosecute such contest, provided that
Landlord shall not thereby be subjected to any liability therefor (including,
without limitation, for the payment of any costs or expenses in connection
therewith). If Tenant shall fail (x) to pay or cause to be paid any Claims when
finally determined, (y) to provide reasonable security therefor or (z) to
prosecute or cause to be prosecuted any such contest diligently and in good
faith, Landlord may, upon reasonable notice to Tenant (which notice shall not be
required if Landlord shall reasonably determine that the same is not
practicable), pay such charges, together with interest and penalties due with
respect thereto, and Tenant shall reimburse Landlord therefor, upon demand, as
Additional Charges.
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ARTICLE 9
INSURANCE AND INDEMNIFICATION
9.1 GENERAL INSURANCE REQUIREMENTS. Tenant shall, at all times during
the Term and at any other time Tenant shall be in possession of the Property,
keep the Property, and all property located therein or thereon, insured against
the risks and in the amounts as follows and shall maintain, with respect to the
Property, the following insurance:
(a) "Special Form" property insurance, including insurance against
loss or damage by fire, vandalism and malicious mischief, terrorism (if
available on commercially reasonable terms), earthquake, explosion of steam
boilers, pressure vessels or other similar apparatus, now or hereafter
installed in the Hotel, with equivalent coverage as that provided by the
usual extended coverage endorsements, in an amount equal to one hundred
percent (100%) of the then full replacement cost of the property requiring
replacement (excluding foundations) from time to time, including an
increased cost of construction endorsement;
(b) Business interruption and blanket earnings plus extra expense
under a rental value insurance policy or endorsement covering risk of loss
during the lesser of the first twelve (12) months of reconstruction or the
actual reconstruction period necessitated by the occurrence of any of the
hazards described in subparagraph (a) above, in such amounts as may be
customary for comparable properties managed or leased by Tenant or its
Affiliates in the surrounding area and in an amount sufficient to prevent
Landlord from becoming a co-insurer;
(c) Commercial general liability insurance, including bodily injury
and property damage (on an occurrence basis and on a 1993 ISO CGL form or
on a form customarily maintained by similarly situated hotels, including,
without limitation, broad form contractual liability, independent
contractor's hazard and completed operations coverage, aggregate limit as
applicable) in an amount not less than Two Million Dollars ($2,000,000) per
occurrence and umbrella coverage of all such claims in an amount not less
than Fifty Million Dollars ($50,000,000) per occurrence;
(d) Flood insurance (if the Hotel is located in whole or in part
within an area identified as an area having
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special flood hazards and in which flood insurance has been made available
under the National Flood Insurance Act of 1968, as amended, or the Flood
Disaster Protection Act of 1973, as amended (or any successor acts
thereto)) and insurance against such other hazards and in such amounts as
may be available under the National Flood Insurance Program and customary
for comparable properties in the area;
(e) Worker's compensation insurance coverage provided by the Puerto
Rico State Insurance Fund for all persons employed by Tenant at the Hotel
with statutory limits and otherwise with limits of and provisions in
accordance with the requirements of applicable local, territorial, State
and federal law.
(f) Employment practices liability insurance with limits of Twenty
Five Million Dollars ($25,000,000); and
(g) Such additional insurance as may be required, from time to time
by (i) Applicable Law, (ii) any Hotel Mortgagee or (iii) which is otherwise
reasonably required upon advance notice to Tenant given in accordance with
the terms hereof.
9.2 REPLACEMENT COST. "REPLACEMENT COST" as used herein, shall mean the
actual replacement cost of the property requiring replacement from time to time,
including an increased cost of construction endorsement, less exclusions
provided in the standard form of fire insurance policy. In the event either
party believes that the then full replacement cost has increased or decreased at
any time during the Term, such party, at its own cost, shall have the right to
have such full replacement cost redetermined by an independent accredited
appraiser approved by the other, which approval shall not be unreasonably
withheld or delayed. The party desiring to have the full replacement cost so
redetermined shall forthwith, on receipt of such determination by such
appraiser, give Notice thereof to the other. The determination of such appraiser
shall be final and binding on the parties hereto until any subsequent
determination under this SECTION 9.2, and Tenant shall forthwith conform the
amount of the insurance carried to the amount so determined by the appraiser.
9.3 WAIVER OF SUBROGATION. Landlord and Tenant agree that (insofar as
and to the extent that such agreement may be effective without invalidating or
making it impossible to secure insurance coverage from responsible insurance
companies doing business in the State) with respect to any property loss which
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is covered by insurance then being carried by Landlord or Tenant, respectively,
the party carrying such insurance and suffering said loss releases the other of
and from any and all claims with respect to such loss; and they further agree
that their respective insurance companies shall have no right of subrogation
against the other on account thereof, even though extra premium may result
therefrom. In the event that any extra premium is payable by Tenant as a result
of this provision, Landlord shall not be liable for reimbursement to Tenant for
such extra premium.
9.4 FORM SATISFACTORY, ETC. All insurance policies and endorsements
required pursuant to this ARTICLE 9 shall be fully paid for, nonassessable and
be issued by insurance carriers authorized to do business in the State, having a
general policy holder's rating of no less than B++ in Best's latest rating
guide. All such policies described in SECTIONS 9.1(a) through (d) shall include
no deductible in excess of Two Hundred Fifty Thousand Dollars ($250,000) and,
with the exception of the insurance described in SECTIONS 9.1(e), shall name
Landlord and the Hotel Mortgagee as additional insureds, as their interests may
appear. All loss adjustments shall be payable as provided in ARTICLE 10, except
that losses under SECTIONS 9.1(c) and 9.1(e) shall be payable directly to the
party entitled thereto. Tenant shall cause all insurance premiums to be paid and
shall deliver policies or certificates thereof to Landlord prior to their
effective date (and, with respect to any renewal policy, prior to the expiration
of the existing policy). All such policies shall provide Landlord (and the Hotel
Mortgagee if required by the same) thirty (30) days prior written notice of any
material change or cancellation of such policy. In the event Tenant shall fail
to effect such insurance as herein required, to pay the premiums therefor or to
deliver such policies or certificates to Landlord or the Hotel Mortgagee at the
times required, Landlord shall have the right, upon Notice to Tenant, but not
the obligation, to acquire such insurance and pay the premiums therefor, which
amounts shall be payable to Landlord, upon demand, as Additional Charges,
together with interest accrued thereon at the Interest Rate from the date such
payment is made until the date repaid.
9.5 BLANKET POLICY. Notwithstanding anything to the contrary contained
in this ARTICLE 9, Tenant's obligation to maintain the insurance herein required
may be brought within the coverage of a so-called blanket policy or policies of
insurance carried and maintained by Tenant, provided, that (a) the coverage
thereby afforded will not be reduced or diminished from
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that which would exist under a separate policy meeting all other requirements of
this Agreement, and (b) the requirements of this ARTICLE 9 are otherwise
satisfied.
9.6 NO SEPARATE INSURANCE. Tenant shall not take out separate insurance,
concurrent in form or contributing in the event of loss with that required by
this ARTICLE 9, or increase the amount of any existing insurance by securing an
additional policy or additional policies, unless all parties having an insurable
interest in the subject matter of such insurance, including Landlord and all
Hotel Mortgagees, are included therein as additional insureds and the loss is
payable under such insurance in the same manner as losses are payable under this
Agreement. In the event Tenant shall take out any such separate insurance or
increase any of the amounts of the then existing insurance, Tenant shall give
Landlord prompt Notice thereof.
9.7 INDEMNIFICATION OF LANDLORD. Notwithstanding the existence of any
insurance provided for herein and without regard to the policy limits of any
such insurance, Tenant shall protect, indemnify and hold harmless Landlord for,
from and against all liabilities, obligations, claims, damages, penalties,
causes of action, costs and reasonable expenses (including, without limitation,
reasonable attorneys' fees), to the maximum extent permitted by law, imposed
upon or incurred by or asserted against Landlord by reason of (a) any accident,
injury to or death of persons or loss of or damage to property occurring on or
about the Property or adjoining sidewalks or rights of way, (b) any past,
present or future use, misuse, non-use, condition, management, maintenance or
repair by Tenant or anyone claiming under Tenant of the Property or Tenant's
Personal Property or any litigation, proceeding or claim by governmental
entities or other third parties to which Landlord is made a party or participant
relating to the Property or Tenant's Personal Property or such use, misuse,
non-use, condition, management, maintenance, or repair thereof including,
failure to perform obligations (other than Condemnation proceedings to which
Landlord is made a party), (c) any Impositions that are the obligations of
Tenant to pay pursuant to the applicable provisions of this Agreement (except if
and to the extent such Imposition results from Landlord's willful failure to
comply with the terms of SECTION 20.20), (d) any failure on the part of Tenant
or anyone claiming under Tenant to perform or comply with any of the terms of
this Agreement. Tenant, at its expense, shall contest, resist and defend (x) any
such claim, action or proceeding asserted or instituted against
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Landlord or may compromise or otherwise dispose of the same, with Landlord's
prior written consent (which consent may not be unreasonably withheld, delayed
or conditioned), (y) the termination or non-renewal of any ground, underlying or
parking lease due to any act or omission of Tenant and (z) the loss or
non-renewal of the Tax Exemption Decree due to any act or omission of Tenant.
The obligations of Tenant under this SECTION 9.7 are in addition to the
obligations set forth in SECTION 4.3 and shall survive the expiration or sooner
termination of this Agreement.
ARTICLE 10
CASUALTY
10.1 INSURANCE PROCEEDS. Except as provided in the last clause of this
sentence, all proceeds payable by reason of any loss or damage to the Property,
or any portion thereof, and insured under any policy of insurance required by
ARTICLE 9 (other than the proceeds of any business interruption insurance) shall
be paid directly to Landlord (subject to the provisions of SECTION 10.2) and all
loss adjustments with respect to losses payable to Landlord shall require the
prior written consent of Landlord, which consent shall not be unreasonably
withheld, delayed or conditioned. If Tenant is required to reconstruct or repair
the Property as provided herein, such proceeds shall be paid out by Landlord
from time to time for the reasonable costs of reconstruction or repair of such
Property necessitated by such damage or destruction, subject to and in
accordance with the provisions of SECTION 10.2.4. Provided no Default or Event
of Default has occurred and is continuing, any excess proceeds of insurance
remaining after the completion of the restoration shall be paid to Tenant. In
the event that the provisions of SECTION 10.2.1 are applicable, the insurance
proceeds shall be retained by the party entitled thereto pursuant to SECTION
10.2.1.
10.2 DAMAGE OR DESTRUCTION.
10.2.1 DAMAGE OR DESTRUCTION OF PROPERTY. If, during the Term, the
Property shall be totally or partially destroyed and the Hotel located thereon
is thereby rendered Unsuitable for Its Permitted Use, (i) Tenant may, by the
giving of Notice thereof to Landlord, within sixty (60) days after the date of
such casualty, terminate this Agreement or (ii) Landlord may terminate this
Agreement on not less than sixty days' written notice to Tenant. If this
Agreement is terminated by reason of or in connection with any casualty, the
insurance proceeds shall
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be allocated equitably by agreement of Landlord and Tenant, or, if Landlord and
Tenant fail to agree within a reasonable time, by Arbitration.
10.2.2 PARTIAL DAMAGE OR DESTRUCTION. If, during the Term, the
Property shall be totally or partially destroyed but the Hotel is not rendered
Unsuitable for Its Permitted Use, Tenant shall promptly restore the Hotel as
provided in SECTION 10.2.4 unless this Agreement is terminated as to the Hotel
as provided in SECTION 10.2.3.
10.2.3 INSUFFICIENT INSURANCE PROCEEDS. If this Agreement is not
otherwise terminated pursuant to this ARTICLE 10 and the cost of the repair or
restoration of the Property exceeds the amount of net insurance proceeds
received by Landlord and Tenant on account of such casualty, Tenant shall give
Landlord Notice thereof which notice shall set forth in reasonable detail the
nature of such deficiency and whether Tenant shall pay and assume the amount of
such deficiency (Tenant having no obligation to do so, except that, if Tenant
shall elect to make such funds available, the same shall become an irrevocable
obligation of Tenant pursuant to this Agreement). In the event Tenant shall
elect not to pay and assume the amount of such deficiency, Landlord shall have
the right (but not the obligation), exercisable at Landlord's sole election by
Notice to Tenant, given within sixty (60) days after Tenant's notice of the
deficiency, to elect to make available for application to the cost of repair or
restoration the amount of such deficiency; PROVIDED, HOWEVER, in such event,
upon any disbursement by Landlord thereof, the Minimum Rent shall be adjusted as
provided in SECTION 3.1.1 (b). In the event that neither Landlord nor Tenant
shall elect to make such deficiency available for restoration, either Landlord
or Tenant may terminate this Agreement by Notice to the other, whereupon, this
Agreement shall terminate and insurance proceeds shall be distributed as
provided in SECTION 10.2.1. It is expressly understood and agreed, however,
that, notwithstanding anything in this Agreement to the contrary, Tenant shall
be strictly liable and solely responsible for the amount of any deductible and
shall, upon any insurable loss, pay over the amount of such deductible to
Landlord at the time and in the manner herein provided for payment of the
applicable proceeds to Landlord.
10.2.4 DISBURSEMENT OF PROCEEDS. In the event Tenant is required to
restore the Property pursuant to SECTION 10.2 and this Agreement is not
terminated as to the Property pursuant to this ARTICLE 10, Tenant shall commence
promptly and continue diligently to perform the repair and restoration of the
Property
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(hereinafter called the "WORK"), so as to restore the Property in material
compliance with Applicable Law and so that such Property shall be, to the extent
practicable, substantially equivalent in value and general utility to its
general utility and value immediately prior to such damage or destruction.
Subject to the terms hereof, Landlord shall advance the insurance proceeds and
any additional amounts payable by Landlord pursuant to SECTION 10.2.3 or
otherwise deposited with Landlord to Tenant regularly during the repair and
restoration period so as to permit payment for the cost of any such restoration
and repair. Any such advances shall be made not more than monthly within ten
(10) Business Days after Tenant submits to Landlord a written requisition and
substantiation therefor on AIA Forms G702 and G703 (or on such other form or
forms as may be reasonably acceptable to Landlord). Landlord may, at its option,
condition advancement of such insurance proceeds and other amounts on (i) the
absence of any Event of Default, (ii) its approval of plans and specifications
of an architect satisfactory to Landlord (which approval shall not be
unreasonably withheld, delayed or conditioned), (iii) general contractors'
estimates, (iv) architect's certificates, (v) unconditional lien waivers of
general contractors, if available, (vi) evidence of approval by all governmental
authorities and other regulatory bodies whose approval is required, (vii) if
Tenant has elected to advance deficiency funds pursuant to SECTION 10.2.3,
Tenant depositing the amount thereof with Landlord and (viii) such other
certificates as Landlord may, from time to time, reasonably require.
Landlord's obligation to disburse insurance proceeds under this ARTICLE 10
during the last two (2) years of the Term (including any automatic renewals
thereof) shall be subject to the release of such proceeds by the Hotel Mortgagee
to Landlord. If the Hotel Mortgagee shall be unwilling to disburse insurance
proceeds in accordance with the terms of this Agreement, Tenant shall have the
right, by the giving of Notice thereof to Landlord within ten (10) Business Days
after Tenant learns of such unwillingness, to treat the Property as rendered
Unsuitable for Its Permitted Use for purposes of SECTION 10.2.1. Tenant's
obligation to restore the Property pursuant to this ARTICLE 10 shall be subject
to the release of available insurance proceeds by the applicable Hotel Mortgagee
to Landlord or directly to Tenant.
10.3 DAMAGE NEAR END OF TERM. Notwithstanding any provisions of SECTIONS
10.1 or 10.2 to the contrary, if damage to or destruction of the Property occurs
during the last two (2)
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years of the Term (including any automatic Extended Terms) and if such damage or
destruction cannot reasonably be expected to be fully repaired and restored
prior to the date that is twelve (12) months prior to the end of the Term, the
provisions of SECTION 10.2.1 shall apply as if such Property had been totally or
partially destroyed and the Hotel thereon rendered Unsuitable for Its Permitted
Use.
10.4 TENANT'S PROPERTY. All insurance proceeds payable by reason of any
loss of or damage to any of Tenant's Personal Property shall be paid to Tenant
and, to the extent necessary to repair or replace Tenant's Personal Property in
accordance with SECTION 10.5, Tenant shall hold such proceeds in trust to pay
the cost of repairing or replacing damaged Tenant's Personal Property.
10.5 RESTORATION OF TENANT'S PROPERTY. If Tenant is required to restore
the Property as hereinabove provided and this Agreement is not terminated as to
such Property pursuant to the terms of ARTICLE 10, Tenant shall either (a)
restore all alterations and improvements made by Tenant and Tenant's Personal
Property, or (b) replace such alterations and improvements and Tenant's Personal
Property with improvements or items of the same or better quality and utility in
the operation of such Property.
10.6 NO ABATEMENT OF RENT. Except as expressly provided herein, this
Agreement shall remain in full force and effect and Tenant's obligation to make
all payments of Rent and to pay all other charges as and when required under
this Agreement shall remain unabated during the Term notwithstanding any damage
involving the Property (provided that Landlord shall credit against such
payments any amounts paid to Landlord as a consequence of such damage under any
business interruption insurance obtained by Tenant hereunder). The provisions of
this ARTICLE 10 shall be considered an express agreement governing any cause of
damage or destruction to the Property and, to the maximum extent permitted by
law, no local or State statute, laws, rules, regulation or ordinance in effect
during the Term which provide for such a contingency shall have any application
in such case.
10.7 WAIVER. Tenant hereby waives any statutory rights of termination
which may arise by reason of any damage or destruction of the Property, or any
portion thereof.
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ARTICLE 11
CONDEMNATION
11.1 TOTAL CONDEMNATION, ETC. If either (i) the whole of the Property
shall be taken by Condemnation or (ii) a Condemnation of less than the whole of
the Property renders the Property Unsuitable for Its Permitted Use, this
Agreement shall terminate, and Tenant and Landlord shall seek the Award for
their interests as provided in SECTION 11.6.
11.2 PARTIAL CONDEMNATION. In the event of a Condemnation of less than
the whole of the Property such that such Property is still suitable for its
Permitted Use, Tenant shall commence promptly and continue diligently to restore
the untaken portion of the applicable Leased Improvements so that such Leased
Improvements shall constitute a complete architectural unit of the same general
character and condition (as nearly as may be possible under the circumstances)
as such Leased Improvements existing immediately prior to such Condemnation, in
material compliance with all Applicable Law, subject to and unless this
Agreement is terminated pursuant to the provisions of this SECTION 11.2. If the
cost of the repair or restoration of the affected Property exceeds the amount of
the Award, Tenant shall give Landlord Notice thereof which notice shall set
forth in reasonable detail the nature of such deficiency and whether Tenant
shall pay and assume the amount of such deficiency (Tenant having no obligation
to do so, except that if Tenant shall elect to make such funds available, the
same shall become an irrevocable obligation of Tenant pursuant to this
Agreement). In the event Tenant shall elect not to pay and assume the amount of
such deficiency, Landlord shall have the right (but not the obligation),
exercisable at Landlord's sole election by Notice to Tenant given within sixty
(60) days after Tenant's Notice of the deficiency, to elect to make available
for application to the cost of repair or restoration the amount of such
deficiency; PROVIDED, HOWEVER, in such event, upon any disbursement by Landlord
thereof, the Minimum Rent shall be adjusted as provided in SECTION 3.1.1 (b). In
the event that neither Landlord nor Tenant shall elect to make such deficiency
available for restoration, either Landlord or Tenant may terminate this
Agreement and the entire Award shall be allocated as set forth in SECTION 11.6.
Subject to the terms hereof, Landlord shall contribute to the cost of
restoration that part of the Award necessary to complete such repair or
restoration, together with severance and other damages awarded for the taken
Leased Improvements and any
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other amounts deposited with or payable by Landlord, to Tenant regularly during
the restoration period so as to permit payment for the cost of such repair or
restoration. Landlord may, at its option, condition advancement of such Award
and other amounts on (i) the absence of any Event of Default, (ii) its approval
of plans and specifications of an architect satisfactory to Landlord (which
approval shall not be unreasonably withheld, delayed or conditioned), (iii)
general contractors' estimates, (iv) architect's certificates, (v) unconditional
lien waivers of general contractors, if available, (vi) evidence of approval by
all governmental authorities and other regulatory bodies whose approval is
required, (vii) if Tenant has elected to advance deficiency funds pursuant to
the preceding paragraph, Tenant depositing the amount thereof with Landlord and
(viii) such other certificates as Landlord may, from time to time, reasonably
require. Landlord's obligation under this SECTION 11.2 to disburse the Award and
such other amounts shall be subject to (x) the collection thereof by Landlord
and (y) during the last two (2) years of the Term (including any exercised
renewals thereof), the release of such Award by the applicable Hotel Mortgagee.
If the Hotel Mortgagee shall be unwilling to disburse Award proceeds in
accordance with the terms of this Agreement, Tenant shall have the right, by the
giving of Notice thereof to Landlord within ten (10) Business Days after Tenant
learns of such unwillingness, to treat the Property as rendered Unsuitable for
Its Permitted Use for purposes of SECTION 11.1. Tenant's obligation to restore
the Property shall be subject to the release of the Award by the applicable
Hotel Mortgagee to Landlord or directly to Tenant.
11.3 ABATEMENT OF RENT. Other than as specifically provided in this
Agreement, this Agreement shall remain in full force and effect and Tenant's
obligation to make all payments of Rent and to pay all other charges as and when
required under this Agreement shall remain unabated during the Term
notwithstanding any Condemnation involving the Property, or any portion thereof.
The provisions of this ARTICLE 11 shall be considered an express agreement
governing any Condemnation involving the Property and, to the maximum extent
permitted by law, no local or State statute, law, rule, regulation or ordinance
in effect during the Term which provides for such a contingency shall have any
application in such case.
11.4 TEMPORARY CONDEMNATION. In the event of any temporary Condemnation
of the Property or Tenant's interest therein, this Agreement shall continue in
full force and effect and Tenant shall continue to pay, in the manner and on the
terms herein
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specified, the full amount of the Rent. Tenant shall continue to perform and
observe all of the other terms and conditions of this Agreement on the part of
the Tenant to be performed and observed. Provided no Event of Default has
occurred and is continuing, the entire amount of any Award made for such
temporary Condemnation allocable to the Term, whether paid by way of damages,
rent or otherwise, shall be paid to Tenant. Tenant shall, promptly upon the
termination of any such period of temporary Condemnation, at its sole cost and
expense, restore the Property to the condition that existed immediately prior to
such Condemnation, in material compliance with Applicable Law, unless such
period of temporary Condemnation shall extend beyond the expiration of the Term,
in which event Tenant shall not be required to make such restoration.
11.5 CONDEMNATION NEAR END OF TERM. Notwithstanding any provisions of
SECTIONS 11.2 or 11.3 to the contrary, if Condemnation of the Property occurs
during the last two (2) years of the Term (including any automatic Extended
Terms) and if restoration cannot reasonably be expected to be completed prior to
the date that is twelve (12) months prior to the end of the Term, the provisions
of SECTION 11.1 shall apply as if such Property had been totally or partially
taken and the Hotel thereon rendered Unsuitable for Its Permitted Use.
11.6 ALLOCATION OF AWARD. Except as provided in SECTION 11.4, in any
Condemnation proceedings, Landlord and Tenant shall each seek its own Award in
conformity herewith, at its own expense.
ARTICLE 12
DEFAULTS AND REMEDIES
12.1 EVENTS OF DEFAULT. The occurrence of any one or more of the
following events shall constitute an "EVENT OF DEFAULT" hereunder:
(a) Subject to any applicable notice or cure provisions, Tenant's
failure to make any payment of the Minimum Rent, Additional Rent or
Additional Charges due to Landlord or Tenant's failure to pay any other
Additional Charges or any other sum (including, but not limited to, funding
of the FF&E Reserve) payable hereunder which has a material effect on the
operation of the Property; or
(b) Tenant's failure to maintain the insurance coverages required
under ARTICLE 9; or
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(c) Tenant's default in the due observance or performance of any of
the terms, covenants or agreements contained herein to be performed or
observed by it (other than as specified in clauses (a) and (b) above) and
such default shall continue for a period of thirty (30) days after Notice
thereof from Landlord to Tenant; PROVIDED, HOWEVER, that if such default is
susceptible of cure but such cure cannot be accomplished with due diligence
within such period of time and if, in addition, Tenant commences to cure or
cause to be cured such default within thirty (30) days after Notice thereof
from Landlord and thereafter prosecutes the curing of such default with all
due diligence, such period of time shall be extended to such period of time
(not to exceed an additional one (1) year in the aggregate) as may be
necessary to cure such default with all due diligence; or
(d) Tenant's initiation or maintenance of any claim or action
against Landlord in respect of the condition of the Property; or
(e) The termination of the New Management Agreement pursuant to
Section 5.1 or Section 10.3 thereof; or
(f) The occurrence of a Manager Event of Default under the New
Management Agreement.
So long as an Event of Default shall be outstanding, Landlord, in addition
to all other remedies available to it, may terminate this Agreement by giving
Notice thereof to Tenant and upon the expiration of the time, if any, fixed in
such Notice, this Agreement shall terminate and all rights of Tenant under this
Agreement with respect thereto shall cease. Landlord shall have and may exercise
all rights and remedies available at law and in equity to Landlord as a result
of Tenant's breach of this Agreement.
Upon the occurrence of an Event of Default, Landlord may, in addition to
any other remedies provided herein, enter upon the Property or any portion
thereof and take possession of any and all of Tenant's Personal Property, if
any, and the Records, without liability for trespass or conversion (Tenant
hereby waiving any right to notice or hearing prior to such taking of possession
by Landlord) and sell the same at public or private sale, after giving Tenant
reasonable Notice of the time and place of any public or private sale, at which
sale Landlord or its assigns may purchase all or any portion of Tenant's
Personal Property, if any, unless otherwise prohibited by law. Unless
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otherwise provided by law and without intending to exclude any other manner of
giving Tenant reasonable notice, the requirement of reasonable Notice shall be
met if such Notice is given at least ten (10) days before the date of sale. The
proceeds from any such disposition, less all expenses incurred in connection
with the taking of possession, holding and selling of such property (including,
reasonable attorneys' fees), shall be applied as a credit against the
indebtedness which is secured by the security interest granted in SECTION 7.2.
Any surplus shall be paid to Tenant or as otherwise required by law and Tenant
shall pay any deficiency to Landlord, as Additional Charges, upon demand.
12.2 REMEDIES. None of (a) the termination of this Agreement pursuant to
SECTION 12.1, (b) the repossession of the Property or any portion thereof, (c)
the failure of Landlord to re-let the Property or any portion thereof, nor (d)
the reletting of all or any of portion of the Property, shall relieve Tenant of
its accrued liability or obligations which by their terms survive hereunder, all
of which shall survive any such termination, repossession or re-letting. In the
event of any such termination, Tenant shall forthwith pay to Landlord all Rent
due and payable with respect to the Property through and including the date of
such termination. Thereafter, Tenant, until the end of what would have been the
Term of this Agreement in the absence of such termination, and whether or not
the Property or any portion thereof shall have been re-let, shall be liable to
Landlord for, and shall pay to Landlord, as current damages, the Rent
(Additional Rent to be reasonably calculated by Landlord based on historical
Total Hotel Sales) and other charges which would be payable hereunder for the
remainder of the Term had such termination not occurred, less the net proceeds,
if any, of any re-letting of the Property, after deducting all reasonable
expenses in connection with such reletting, including, without limitation, all
repossession costs, brokerage commissions, legal expenses, attorneys' fees,
advertising, expenses of employees, alteration costs and expenses of preparation
for such reletting. Tenant shall pay such current damages to Landlord monthly on
the days on which the Minimum Rent would have been payable hereunder if this
Agreement had not been so terminated.
Upon such termination, whether or not Landlord shall have collected any
such current damages, Landlord shall be entitled to liquidated damages.
Landlord's right to receive liquidated damages has been agreed to due to the
uncertainty, difficulty and/or impossibility of ascertaining the actual damages
suffered
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by Landlord. Further, if not for Landlord's right to receive such liquidated
damages, Landlord's Affiliated Person would not have entered into the Purchase
Agreement and Landlord would not have entered into this Agreement. TENANT HEREBY
ACKNOWLEDGES AND AGREES THAT SUCH LIQUIDATED DAMAGES ARE NOT A PENALTY, BUT ARE
TO COMPENSATE LANDLORD AND ITS AFFILIATES FOR THE EXPENSE AND LOST EARNINGS
WHICH MAY RESULT FROM ARRANGING SUBSTITUTE MANAGEMENT AND/OR TENANCY FOR THE
HOTEL AS WELL AS TO COMPENSATE FOR PRICE PAID FOR THE HOTEL BY LANDLORD'S
AFFILIATED PERSON. Such liquidated damages shall be equal to all accrued but
unpaid amounts due to Landlord hereunder up until the date of termination, plus
the Outstanding Balance (as defined in the Guaranty). Landlord shall be entitled
to interest, at the Interest Rate, on such liquidated damages from the date of
such termination until the date of payment of such damages and interest. Except
with respect to Landlord's rights and remedies for any breach or violations by
Tenant of the terms of SECTION 5.3 and ARTICLE 13, Landlord shall look solely to
any collateral hereafter pledged securing Tenant's obligations hereunder for
satisfaction of any claim of Landlord against Tenant hereunder; PROVIDED,
HOWEVER, nothing contained herein is intended to, nor shall, limit or reduce the
obligations of the Guarantor under the Guaranty or limit Landlord's rights with
respect thereto.
In case of any Event of Default, re-entry, expiration and dispossession by
summary proceedings or otherwise, Landlord may (a) relet the Property or any
part or parts thereof, either in the name of Landlord or otherwise, for a term
or terms which may at Landlord's option, be equal to, less than or exceed the
period which would otherwise have constituted the balance of the Term and may
grant concessions or free rent to the extent that Landlord considers advisable
and necessary to relet the same, and (b) may make such reasonable alterations,
repairs and decorations in the Property or any portion thereof as Landlord, in
its sole and absolute discretion, considers advisable and necessary for the
purpose of reletting the Property; and the making of such alterations, repairs
and decorations shall not operate or be construed to release Tenant from
liability hereunder as aforesaid. Landlord shall in no event be liable in any
way whatsoever for any failure to relet all or any portion of the Property, or,
in the event that the Property is relet, for failure to collect the rent under
such reletting. To the maximum extent permitted by law, Tenant hereby expressly
waives any and all rights of redemption granted under any present or future laws
in the event of Tenant being evicted or dispossessed, or in the event of
Landlord obtaining possession of the Property, by reason of the occurrence and
continuation of
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an Event of Default hereunder. Landlord covenants and agrees, in the event of
any termination of this Agreement as a result of an Event of Default, to use
reasonable efforts to mitigate its damages.
12.3 WAIVER. To the maximum extent permitted by Applicable Law, each of
the parties hereto waives its rights to trial by jury with respect to this
Agreement or matters arising in connection herewith. FURTHER TO THE FOREGOING,
IF THIS AGREEMENT IS TERMINATED PURSUANT TO SECTIONS 12.1 OR 12.2, TENANT
WAIVES, TO THE EXTENT PERMITTED BY LAW, (i) ANY RIGHT TO A TRIAL BY JURY IN THE
EVENT OF SUMMARY PROCEEDINGS TO ENFORCE THE REMEDIES SET FORTH IN THIS ARTICLE
12, AND (ii) THE BENEFIT OF ANY LAWS NOW OR HEREAFTER IN FORCE EXEMPTING
PROPERTY FROM LIABILITY FOR RENT OR FOR DEBT.
12.4 APPLICATION OF FUNDS. Any payments received by Landlord under any of
the provisions of this Agreement during the existence or continuance of any
Event of Default (and any payment made to Landlord rather than Tenant due to the
existence of any Event of Default) shall be applied to Tenant's current and past
due obligations under this Agreement in such order as Landlord may determine or
as may be prescribed by the laws of the State.
12.5 LANDLORD'S RIGHT TO CURE TENANT'S DEFAULT. If an Event of Default
shall have occurred and be continuing, Landlord, after Notice to Tenant (which
Notice shall not be required if Landlord shall reasonably determine immediate
action is necessary to protect person or property), without waiving or releasing
any obligation of Tenant and without waiving or releasing any Event of Default,
may (but shall not be obligated to), at any time thereafter, make such payment
or perform such act for the account and at the expense of Tenant, and may, to
the maximum extent permitted by law, enter upon the Property or any portion
thereof for such purpose and take all such action thereon as, in Landlord's sole
and absolute discretion, may be necessary or appropriate therefor. No such entry
shall be deemed an eviction of Tenant. All reasonable costs and expenses
(including, without limitation, reasonable attorneys' fees) incurred by Landlord
in connection therewith, together with interest thereon (to the extent permitted
by law) at the Interest Rate from the date such sums are paid by Landlord until
repaid, shall be paid by Tenant to Landlord, on demand.
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ARTICLE 13
HOLDING OVER
Any holding over by Tenant after the expiration or sooner termination of
this Agreement shall be treated as a daily tenancy at sufferance at a rate equal
to two (2) times the Minimum Rent and other charges herein provided (prorated on
a daily basis). Tenant shall also pay to Landlord all damages (direct or
indirect) sustained by reason of any such holding over. Otherwise, such holding
over shall be on the terms and conditions set forth in this Agreement, to the
extent applicable. Nothing contained herein shall constitute the consent,
express or implied, of Landlord to the holding over of Tenant after the
expiration or earlier termination of this Agreement.
ARTICLE 14
LANDLORD'S DEFAULT
If Landlord shall default in the performance or observance of any of its
covenants or obligations set forth in this Agreement or any obligation of
Landlord, if any, under any agreement affecting the Property, the performance of
which is not Tenant's obligation pursuant to this Agreement, and any such
default shall continue for a period of five (5) Business Days after Notice
thereof with respect to monetary defaults and twenty (20) Business Days after
Notice thereof with respect to non-monetary defaults from Tenant to Landlord and
any applicable Hotel Mortgagee, or such additional period as may be reasonably
required to correct the same provided Landlord is proceeding with due diligence
to correct the same, then Tenant may declare the occurrence of a "Landlord
Default" by a second Notice to Landlord and to the Hotel Mortgagee and Tenant
shall have the right to institute forthwith any and all proceedings permitted by
law or equity (provided they are not specifically barred under the terms of this
Agreement), including, without limitation, actions for specific performance
and/or damages; provided, however, except as may be expressly provided in this
Agreement, Tenant shall have no right to terminate this Agreement for any
default by Landlord hereunder and no right, for any such default, to offset or
counterclaim against any Rent or other charges due hereunder. In the event
Landlord wrongfully terminates this Agreement or if Tenant terminates this
Agreement pursuant to any right to do so contained herein as a result of
Landlord's breach, then, subject to Tenant's mitigation obligations, Tenant
shall be entitled to recover as
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part of its damages for such wrongful termination an amount equal to the damages
suffered by Tenant on account of terminating the employment of on-site employees
of the Hotel in connection therewith.
If Landlord shall in good faith dispute the occurrence of any Landlord
Default and Landlord, before the expiration of the applicable cure period, shall
give Notice thereof to Tenant, setting forth, in reasonable detail, the basis
therefor, no Landlord Default shall be deemed to have occurred and Landlord
shall have no obligation with respect thereto until final adverse, determination
thereof.
ARTICLE 15
SUBLETTING AND ASSIGNMENT
15.1 SUBLETTING AND ASSIGNMENT. Except as provided in SECTIONS 15.3 and
15.5, Tenant shall not, without Landlord's prior written consent (which consent
may be given or withheld in Landlord's sole and absolute discretion), assign,
mortgage, pledge, hypothecate, encumber or otherwise transfer this Agreement or
sublease (which term shall be deemed to include the granting of concessions,
licenses and the like but shall not be deemed to include the lodging of hotel
guests consistent with the Permitted Use), all or any part of the Property or
suffer or permit this Agreement or the leasehold estate created hereby or any
other rights arising under this Agreement to be assigned, transferred,
mortgaged, pledged, hypothecated or encumbered, in whole or in part, whether
voluntarily, involuntarily or by operation of law, or permit the use or
operation of the Property by anyone other than Tenant, or the Property to be
offered or advertised for assignment or subletting. For purposes of this SECTION
15.1, an assignment of this Agreement shall be deemed to include any transaction
which results in Tenant no longer being an Affiliated Person of Guarantor or
pursuant to which all or substantially all of Tenant's assets are transferred to
any Person who is not an Affiliated Person of Guarantor.
If this Agreement is assigned or if the Property or any part thereof are
sublet (or occupied by anybody other than Tenant and its employees or hotel
guests), then Landlord may collect the rents from such assignee, subtenant or
occupant, as the case may be, and apply the net amount collected to the Rent
herein reserved, but no such collection shall be deemed a waiver of the
provisions set forth in this SECTION 15.1, the acceptance by Landlord of such
assignee, subtenant or occupant, as the case may be, as a tenant, or a release
of Tenant from the future
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performance by Tenant of its covenants, agreements or obligations contained in
this Agreement.
No subletting or assignment shall in any way impair the continuing primary
liability of Tenant hereunder (unless Landlord and Tenant expressly otherwise
agree that Tenant shall be released from all obligations hereunder), and no
consent to any subletting or assignment in a particular instance shall be deemed
to be a waiver of the prohibition set forth in this SECTION 15.1. No assignment,
subletting or occupancy shall affect any Permitted Use; any subletting,
assignment or other transfer of Tenant's interest under this Agreement in
contravention of this SECTION 15.1 shall be voidable at Landlord's option.
15.2 REQUIRED SUBLEASE PROVISIONS. Any sublease of all or any portion of
the Property entered into on or after the date hereof shall provide (a) that it
is subject and subordinate to this Agreement and to the matters to which this
Agreement is or shall be subject or subordinate; (b) that in the event of
termination of this Agreement or reentry or dispossession of Tenant by Landlord
under this Agreement, Landlord may, at its option, terminate such sublease or
take over all of the right, title and interest of Tenant, as sublessor under
such sublease, and such subtenant shall, at Landlord's option, attorn to
Landlord pursuant to the then executory provisions of such sublease, except that
neither Landlord nor the Hotel Mortgagee, as holder of a mortgage or as Landlord
under this Agreement, if such mortgagee succeeds to that position, shall (i) be
liable for any act or omission of Tenant under such sublease, (ii) be subject to
any credit, counterclaim, offset or defense which theretofore accrued to such
subtenant against Tenant, (iii) be bound by any previous modification of such
sublease not consented to in writing by Landlord or by any previous prepayment
of more than one (1) month's rent, (iv) be bound by any covenant of Tenant to
undertake or complete any construction of the Property or any portion thereof,
(v) be required to account for any security deposit of the subtenant other than
any security deposit actually delivered to Landlord by Tenant, (vi) be bound by
any obligation to make any payment to such subtenant or grant any credits,
except for services, repairs, maintenance and restoration provided for under the
sublease that are performed after the date of such attornment, (vii) be
responsible for any monies owing by Tenant to the credit of such subtenant
unless actually delivered to Landlord by Tenant, or (viii) be required to remove
any Person occupying any portion of the Property; and (c) in the event that such
subtenant receives
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a written Notice from Landlord or the Hotel Mortgagee stating that an Event of
Default has occurred and is continuing, such subtenant shall thereafter be
obligated to pay all rentals accruing under such sublease directly to the party
giving such Notice or as such party may direct. All rentals received from such
subtenant by Landlord or the Hotel Mortgagee, as the case may be, shall be
credited against the amounts owing by Tenant under this Agreement and such
sublease shall provide that the subtenant thereunder shall, at the request of
Landlord, execute a suitable instrument in confirmation of such agreement to
attorn. An original counterpart of each such sublease or any assignment hereof,
duly executed by Tenant and such subtenant or assignee, as the case may be, in
form and substance reasonably satisfactory to Landlord, shall be delivered
promptly to Landlord and (a) in the case of an assignment, the assignee shall
assume in writing and agree to keep and perform all of the terms of this
Agreement on the part of Tenant to be kept and performed and shall be, and
become, jointly and severally liable with Tenant for the performance thereof and
(b) in case of either an assignment or subletting, Tenant shall remain primarily
liable, as principal rather than as surety, for the prompt payment of the Rent
and for the performance and observance of all of the covenants and conditions to
be performed by Tenant hereunder.
The provisions of this SECTION 15.2 shall not be deemed a waiver of the
provisions set forth in the first paragraph of SECTION 15.1.
15.3 PERMITTED SUBLEASE. Notwithstanding the foregoing, including,
without limitation, SECTION 15.2, but subject to the provisions of SECTION 15.4
and any other express conditions or limitations set forth herein, Tenant may, in
each instance after Notice to Landlord, sublease space at the Property for
newsstand, car rental agency, business services office, gift shop, parking
garage, health club, restaurant, bar or commissary purposes or other concessions
in furtherance of the Permitted Use, so long as such subleases (a) do not have a
term in excess of the shorter of five (5) years or the remaining Term, (b) do
not demise, (i) in the aggregate, in excess of Five Thousand (5,000) square feet
of the Hotel, or (ii) for any single sublease, in excess of One Thousand (1,000)
square feet of the Hotel, (c) will not violate or affect any Applicable Law or
any Insurance Requirement, (d) Tenant shall provide such additional insurance
coverage applicable to the activities to be conducted in such subleased space as
Landlord and the Hotel Mortgagee may reasonably require, and (e) not less than
twenty (20) days prior
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to the date on which Tenant proposes to enter into any sublease or concession,
Tenant shall provide a copy thereof to Landlord.
15.4 SUBLEASE LIMITATION. For so long as Landlord or any Affiliated
Person as to Landlord shall seek to qualify as a "real estate investment trust"
under the Code, anything contained in this Agreement to the contrary
notwithstanding, Tenant shall not sublet or otherwise enter into any agreement
with respect to the Hotel on any basis such that in the opinion of the Landlord
the rental or other fees to be paid by any sublessee thereunder would be based,
in whole or in part, on either (i) the income or profits derived by the business
activities of such sublessee, or (ii) any other formula such that any portion of
such sublease rental would fail to qualify as "rents from real property" within
the meaning of Section 856(d) of the Code, or any similar or successor provision
thereto.
15.5 PERMITTED ASSIGNMENTS. Tenant shall have the right, without
Landlord's consent but subject to SECTION 20.23, to assign its interest in this
Agreement (a) to IHG or any Affiliate of IHG, (b) in connection with a merger,
corporate restructuring or consolidation of IHG or a sale of all or
substantially all of the assets of IHG and (c) in connection with a sale of all
or substantially all of the assets (including associated management agreements)
owned by IHG and its Affiliates relating to the InterContinental brand. At
Landlord's election, Tenant shall assign this Agreement to any Person who is not
an Affiliate of IHG that acquires all or substantially all of the assets of IHG
relating to the InterContinental brand and shall cause such Person to assume all
of Tenant's obligations thereafter accruing hereunder.
15.6 SALE BY LANDLORD. Landlord shall not sell or otherwise transfer the
Property other than to an Affiliated Person of Landlord or in connection with a
sale or transfer of all the Managed Hotels permitted pursuant to the terms of
the New Management Agreement.
ARTICLE 16
ESTOPPEL CERTIFICATES
At any time and from time to time, but not more than a reasonable amount of
times per year, upon not less than ten (10) Business Days prior Notice by either
party, the party receiving such Notice shall furnish to the other an Officer's
Certificate certifying that this Agreement is unmodified and in full force
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and effect (or that this Agreement is in full force and effect as modified and
setting forth the modifications), the date to which the Rent has been paid, that
no Default or an Event of Default has occurred and is continuing or, if a
Default or an Event of Default shall exist, specifying in reasonable detail the
nature thereof, and the steps being taken to remedy the same, and such
additional information as the requesting party may reasonably request. Any such
certificate furnished pursuant to this ARTICLE 16 may be relied upon by the
requesting party, its lenders and any prospective purchaser or mortgagee of the
Property or the leasehold estate created hereby.
ARTICLE 17
LANDLORD'S RIGHT TO INSPECT
Tenant shall permit Landlord and its authorized representatives to inspect
the Property during usual business hours upon not less than twenty-four (24)
hours' Notice and to make such repairs as Landlord is permitted or required to
make pursuant to the terms of this Agreement, provided that any inspection or
repair by Landlord or its representatives will not unreasonably interfere with
Tenant's use and operation of the Property and further provided that in the
event of an emergency, as determined by Landlord in its reasonable discretion,
prior Notice shall not be necessary.
ARTICLE 18
EASEMENTS
18.1 GRANT OF EASEMENTS. Provided no Event of Default has occurred and is
continuing, Landlord will join in granting and, if necessary, modifying or
abandoning such rights-of-way, easements and other interests as may be
reasonably requested by Tenant for ingress and egress, and electric, telephone,
gas, water, sewer and other utilities so long as:
(a) the instrument creating, modifying or abandoning any such
easement, right-of-way or other interest is satisfactory to and approved by
Landlord (which approval shall not be unreasonably withheld, delayed or
conditioned); and
(b) Landlord receives an Officer's Certificate from Tenant stating
(i) that such grant, modification or abandonment is not detrimental to the
proper conduct of business on such Property, (ii) the consideration, if
any,
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being paid for such grant, modification or abandonment (which consideration
shall be paid by Tenant), (iii) that such grant, modification or
abandonment does not impair the use or value of such Property for the
Permitted Use, and (iv) that, for as long as this Agreement shall be in
effect, Tenant will perform all obligations, if any, of Landlord under any
such instrument.
18.2 EXERCISE OF RIGHTS BY TENANT. So long as no Event of Default has
occurred and is continuing, Tenant shall have the right to exercise all rights
of Landlord under the Easement Agreements and, in connection therewith, Landlord
shall execute and promptly return to Tenant such documents as Tenant shall
reasonably request. Tenant shall perform all obligations of Landlord under the
Easement Agreements.
18.3 PERMITTED ENCUMBRANCES. Any agreements entered into in accordance
with SECTION 18.1 shall be deemed a Permitted Encumbrance.
ARTICLE 19
HOTEL MORTGAGES
19.1 LANDLORD MAY GRANT LIENS. Landlord shall be entitled to encumber the
Hotel and the Property with one or more Hotel Mortgages which are expressly
subordinate to this Agreement and/or with one or more Hotel Mortgages in
accordance with the following terms and conditions:
(a) The loan or other debt secured by such Hotel Mortgage shall
not be cross-collateralized with other property or hotels which are not
managed or franchised by Tenant, IHG or their respective Affiliated
Persons;
(b) the principal amount secured by such Hotel Mortgage shall not
exceed the sum of seventy five percent (75%) (or, if less than four (4)
Pooled FF&E Hotels secure such principal amount, sixty five percent (65%))
of the sum of the fair market values, as of the date of the granting of
such Hotel Mortgage, of the Pledged Hotels and the other properties
securing such principal amount;
(c) as of the date of the granting of such Hotel Mortgage, the
Debt Service Coverage Ratio associated with such loan or debt secured
thereby shall not be less than (i) 1.4 if fewer than four (4) Pooled FF&E
Hotels secure
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such loan or other debt or (ii) 1.3 if four (4) or more Pooled FF&E Hotels
secure such loan or other debt; and
(d) the holder of such Hotel Mortgage shall execute and deliver to
Tenant (Tenant agreeing to likewise execute and deliver to such holder) a
so-called subordination, non-disturbance and attornment agreement which
shall provide that:
(i) this Agreement and Tenant's rights hereunder are subject and
subordinate to the Hotel Mortgage, the lien thereof, the rights of the
holder thereof and to any and all advances made thereunder, interest
thereon or costs incurred in connection therewith;
(ii) so long as this Agreement is in full force and effect and
there exists no Event of Default, Tenant's rights under this Agreement
shall not be disturbed by reason of such subordination or by reason of
foreclosure of such Hotel Mortgage or receipt of deed in lieu of
foreclosure;
(iii) Tenant shall attorn to the holder or the purchaser at any such
foreclosure or the grantee of any such deed (each, a "SUCCESSOR LANDLORD");
(iv) in the event of such attornment, the terms of this Agreement
binding on Landlord and Tenant shall continue in full force and effect as a
direct agreement between such Successor Landlord and Tenant, upon all the
terms, conditions and covenants set forth herein, except that the Successor
Landlord shall not be (A) bound by any payment of Rent in advance of when
due; (B) bound by any amendment or modification of this Agreement made
after the date that Tenant first had written notice of such Hotel Mortgage
without the consent of the holder thereof; (C) liable in any way to Tenant
for any act or omission, neglect or default on the part of Landlord under
this Agreement; (D) obligated to perform any work or improvements to be
done by Landlord or to make any advances except for those advances to be
made pursuant to SECTION 5.1.3 (b) from and after the date on which such
Successor Landlord acquired the Hotel; or (E) subject to any counterclaim
or setoff which theretofore accrued to Tenant against Landlord;
(v) in the event of a casualty or Condemnation affecting the Hotel
which does not result in the
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termination of this Agreement with respect to the Hotel, the net insurance
proceeds or Award shall be applied to the restoration of the Hotel as
herein provided;
(vi) such other terms as are customary for similar agreements; and
(vii) if the Portfolio Owner exercises its right under the New
Management Agreement to cause the Pledged Hotels which are Managed Hotels
to be managed pursuant to a separate management agreement pursuant to the
terms of Section 4.3(b) of the New Management Agreement, the parties shall
make appropriate allocations in the FF&E Reserve and any outstanding
advances made by Landlord, Tenant or their respective Affiliated Person so
that the obligations allocable to the Pooled FF&E Hotels subject to a Hotel
Mortgage shall not be due from the other Pooled FF&E Hotels and VICE VERSA.
Without the consent of Tenant, the holder of any Hotel Mortgage shall have
the right to elect to be subject and subordinate to this Agreement, such
subordination to be effective upon such terms and conditions as such holder
may direct which are not inconsistent with the provisions hereof.
Tenant shall be entitled to pay any overdue regularly scheduled payments of
interest and principal on any Hotel Mortgage encumbering the Hotel and offset
amounts so paid against the Rent due hereunder.
19.2 NOTICE TO MORTGAGEE AND SUPERIOR LANDLORD. Subsequent to the receipt
by Tenant of Notice from Landlord as to the identity of the Hotel Mortgagee, no
Notice from Tenant to Landlord as to a default by Landlord under this Agreement
shall be effective with respect to the Hotel Mortgagee unless and until a copy
of the same is given to the Hotel Mortgagee at the address set forth in the
above described Notice, and the curing of any of Landlord's defaults within the
applicable notice and cure periods set forth in ARTICLE 14 by the Hotel
Mortgagee shall be treated as performance by Landlord.
ARTICLE 20
MISCELLANEOUS
20.1 LIMITATION ON PAYMENT OF RENT. All agreements between Landlord and
Tenant herein are hereby expressly limited so that in no contingency or event
whatsoever, whether by reason of acceleration of Rent, or otherwise, shall the
Rent or any other
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amounts payable to Landlord under this Agreement exceed the maximum amount
permissible under Applicable Law, the benefit of which may be asserted by Tenant
as a defense, and if, from any circumstance whatsoever, fulfillment of any
provision of this Agreement, at the time performance of such provision shall be
due, shall involve transcending the limit of validity prescribed by law, or if
from any circumstances Landlord should ever receive as fulfillment of such
provision such an excessive amount, then, IPSO FACTO, the amount which would be
excessive shall be applied to the reduction of the installment(s) of Minimum
Rent next due and not to the payment of such excessive amount. This provision
shall control every other provision of this Agreement and any other agreements
between Landlord and Tenant.
20.2 NO WAIVER. No failure by Landlord or Tenant to insist upon the
strict performance of any term hereof or to exercise any right, power or remedy
consequent upon a breach thereof, and no acceptance of full or partial payment
of Rent during the continuance of any such breach, shall constitute a waiver of
any such breach or of any such term. To the maximum extent permitted by law, no
waiver of any breach shall affect or alter this Agreement, which shall continue
in full force and effect with respect to any other then existing or subsequent
breach.
20.3 REMEDIES CUMULATIVE. To the maximum extent permitted by law, each
legal, equitable or contractual right, power and remedy of Landlord or Tenant,
now or hereafter provided either in this Agreement or by statute or otherwise,
shall be cumulative and concurrent and shall be in addition to every other
right, power and remedy and the exercise or beginning of the exercise by
Landlord or Tenant (as applicable) of any one or more of such rights, powers and
remedies shall not preclude the simultaneous or subsequent exercise by Landlord
of any or all of such other rights, powers and remedies.
20.4 SEVERABILITY. Any clause, sentence, paragraph, section or provision
of this Agreement held by a court of competent jurisdiction to be invalid,
illegal or ineffective shall not impair, invalidate or nullify the remainder of
this Agreement, but rather the effect thereof shall be confined to the clause,
sentence, paragraph, section or provision so held to be invalid, illegal or
ineffective, and this Agreement shall be construed as if such invalid, illegal
or ineffective provisions had never been contained therein.
20.5 ACCEPTANCE OF SURRENDER. No surrender to Landlord of this Agreement
or of the Property or any part thereof, or of any
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interest therein, shall be valid or effective unless agreed to and accepted in
writing by Landlord and no act by Landlord or any representative or agent of
Landlord, other than such a written acceptance by Landlord, shall constitute an
acceptance of any such surrender.
20.6 NO MERGER OF TITLE. It is expressly acknowledged and agreed that it
is the intent of the parties that there shall be no merger of this Agreement or
of the leasehold estate created hereby by reason of the fact that the same
Person may acquire, own or hold, directly or indirectly, this Agreement or the
leasehold estate created hereby and the fee estate or ground landlord's interest
in the Property.
20.7 CONVEYANCE BY LANDLORD. If Landlord or any successor owner of all or
any portion of the Property shall convey all or any portion of the Property in
accordance with the terms hereof other than as security for a debt, and the
grantee or transferee of such of the Property shall expressly assume all
obligations of Landlord hereunder arising or accruing from and after the date of
such conveyance or transfer, Landlord or such successor owner, as the case may
be, shall thereupon be released from all future liabilities and obligations of
Landlord under this Agreement with respect to such of the Property arising or
accruing from and after the date of such conveyance or other transfer and all
such future liabilities and obligations shall thereupon be binding upon the new
owner.
20.8 QUIET ENJOYMENT. Upon Tenant's payment of the Rent reserved herein,
Tenant shall peaceably and quietly have, hold and enjoy the Property for the
Term, free of hindrance or molestation by Landlord or anyone claiming by,
through or under Landlord, but subject to (a) any Hotel Mortgage or otherwise
permitted to be created by Landlord hereunder, (b) all Permitted Encumbrances,
(c) liens as to obligations of Landlord that are either not yet due or which are
being contested in good faith and by proper proceedings, provided the same do
not materially interfere with Tenant's ability to operate the Hotel and (d)
liens that have been consented to in writing by Tenant. Except as otherwise
provided in this Agreement, no failure by Landlord to comply with the foregoing
covenant shall give Tenant any right to cancel or terminate this Agreement or
▇▇▇▇▇, reduce or make a deduction from or offset against the Rent or any other
sum payable under this Agreement or to fail to perform any other obligation of
Tenant hereunder.
20.9 RECORDATION OF LEASE. This Agreement shall be recorded in the form
of a Deed of Lease, a memorandum of lease
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or such other abbreviated form as may be recordable at the Puerto Rico Registry
of Property.
20.10 NOTICES.
(a) Any and all notices, demands, consents, approvals, offers,
elections and other communications required or permitted under this
Agreement shall be deemed adequately given if in writing and the same shall
be delivered either in hand, by telecopier with written acknowledgment of
receipt, or by mail or Federal Express or similar expedited commercial
carrier, addressed to the recipient of the notice, postpaid and registered
or certified with return receipt requested (if by mail), or with all
freight charges prepaid (if by Federal Express or similar carrier).
(b) All notices required or permitted to be sent hereunder shall be
deemed to have been given for all purposes of this Agreement upon the date
of acknowledged receipt, in the case of a notice by telecopier, and, in all
other cases, upon the date of receipt or refusal, except that whenever
under this Agreement a notice is either received on a day which is not a
Business Day or is required to be delivered on or before a specific day
which is not a Business Day, the day of receipt or required delivery shall
automatically be extended to the next Business Day.
(c) All such notices shall be addressed, if to Landlord:
c/o
Hospitality Properties Trust
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇
[Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇]
with a copy to:
▇▇▇▇▇▇▇▇ & Worcester LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Esq.
[Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇]
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if to Tenant to:
c/o InterContinental Hotels Group
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇
[Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇]
with a copy to: InterContinental Hotels Group
Resources, Inc.
c/o Six Continents Hotels, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel - Operations
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇ & Bird LLP
One Atlantic Center
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
(d) By notice given as herein provided, the parties hereto and their
respective successor 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.
20.11 TRADE AREA RESTRICTION. Notwithstanding anything to the contrary in
this Agreement, prior to the fifth (5th) anniversary of the Commencement Date,
neither Tenant nor any Affiliated Person as to Tenant will acquire, own, manage,
operate or open any hotel as an "InterContinental" hotel nor shall Tenant or any
such Affiliated Person authorize a third party to operate or open any hotel as
an "InterContinental" hotel within the restricted area depicted on EXHIBIT B
unless such hotel (i) is owned or leased by Landlord or its Affiliate, (ii) is
owned, operated, managed, franchised or under development on the Commencement
Date and has been specifically approved by Landlord in writing at or prior to
the time of the execution of the Purchase Agreement or replaces any such hotel,
provided such replacement hotel is not first opened after such time and does not
have more than ten percent (10%) more guest
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rooms than the original hotel which it replaces, or (iii) is part of an
acquisition by Tenant or its Affiliates of an interest (including an interest as
a franchisor) in a chain or group of not less than five (5) comparable full
service hotels (such acquisition to occur in a single transaction or a series of
related transactions). The terms of this SECTION 20.11 shall apply only to
"InterContinental" hotels and shall not in any way restrict the ownership,
management, franchising or operation of other brands or flags of any hotels
owned or operated by Tenant or its Affiliates within the State.
20.12 CONSTRUCTION. Anything contained in this Agreement to the contrary
notwithstanding, all claims against, and liabilities of, Tenant or Landlord
arising prior to any date of termination or expiration of this Agreement with
respect to the Property shall survive such termination or expiration. In no
event shall Landlord be liable for any consequential damages suffered by Tenant
as the result of a breach of this Agreement by Landlord. Neither this Agreement
nor any provision hereof may be changed, waived, discharged or terminated except
by an instrument in writing signed by the party to be charged. All the terms and
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns. Each term or
provision of this Agreement to be performed by Tenant shall be construed as an
independent covenant and condition. Time is of the essence with respect to the
provisions of this Agreement. Except as otherwise set forth in this Agreement,
any obligations of Tenant (including without limitation, any monetary, repair
and indemnification obligations) and Landlord shall survive the expiration or
sooner termination of this Agreement.
20.13 COUNTERPARTS; HEADINGS. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original, but which, when
taken together, shall constitute but one instrument and shall become effective
as of the date hereof when copies hereof, which when taken together bear the
signatures of each of the parties hereto, shall have been signed. Headings in
this Agreement are for purposes of reference only and shall not limit or affect
the meaning of the provisions hereof.
20.14 APPLICABLE LAW, ETC. This Agreement shall be interpreted, construed,
applied and enforced in accordance with the laws of the Commonwealth of Puerto
Rico applicable to contracts between residents of Puerto Rico which are to be
performed entirely within Puerto Rico, regardless of (i) where this Agreement is
executed or delivered; or (ii) where any
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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 Puerto Rico; or
(vii) any combination of the foregoing. Notwithstanding the foregoing, the laws
of the State shall apply to the perfection and priority of liens upon and the
disposition of the Property.
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
Commonwealth of Puerto Rico as is provided by law; and the parties consent to
the jurisdiction of said court or courts located in the Commonwealth of Puerto
Rico and to service of process by registered mail, return receipt requested, or
by any other manner provided by law.
20.15 RIGHT TO MAKE AGREEMENT. Each party warrants, with respect to
itself, that neither the execution of this Agreement, nor the consummation of
any transaction contemplated hereby, shall violate any provision of any law, or
any judgment, writ, injunction, order or decree of any court or governmental
authority having jurisdiction over it; nor result in or constitute a breach or
default under any indenture, contract, other commitment or restriction to which
it is a party or by which it is bound; nor require any consent, vote or approval
which has not been given or taken, or at the time of the transaction involved
shall not have been given or taken. Each party covenants that it has and will
continue to have, throughout the term of this Agreement and any extensions
thereof, the full right to enter into this Agreement and perform its obligations
hereunder.
20.16 NONRECOURSE. Nothing contained in this Agreement shall be construed
to impose any liabilities or obligations on Tenant's or Landlord's shareholders,
officers, directors, agents or employees (or any shareholders, officers,
directors, agents or employees of any of the foregoing) for the performance of
the obligations of Landlord or Tenant hereunder.
20.17 ATTORNEYS' FEES. If any lawsuit or arbitration or other legal
proceeding arises in connection with the
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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.
20.18 SECURITIES FILINGS. Tenant shall cooperate with Landlord in
connection with the preparation of any documents Landlord or a Landlord
Affiliated Party files under the United States Securities Act of 1933 or the
United States Securities Exchange Act of 1934 and shall use commercially
reasonable efforts to provide Landlord with financial statements and other
financial information that Landlord requests relating to periods prior to the
Commencement Date and to obtain consents from Tenant's independent accountants
in connection therewith.
20.19 ARBITRATION.
(a) Whenever in this Agreement it is provided that a dispute is to
be resolved by an Arbitration, such dispute shall be finally resolved
pursuant to an arbitration before a panel of three (3) arbitrators who will
conduct the arbitration proceeding in accordance with the provisions of
this Agreement and the rules of the American Arbitration Association.
Unless otherwise mutually agreed by Tenant and Landlord, the arbitration
proceedings will be conducted in
New York,
New York. All arbitrators
appointed by or on behalf of either party shall be independent persons with
recognized expertise in the operation of hotels of similar size and class
as the Hotel with not less than five (5) years' experience in the hotel
industry. The party desiring arbitration will give Notice to that effect to
the other party, specifying in such Notice the name, address and
professional qualifications of the person designated as arbitrator on its
behalf. Within fifteen (15) days after service of such Notice, the other
party will give Notice to the party desiring such arbitration specifying
the name, address and professional qualifications of the person designated
to act as arbitrator on its behalf. The two arbitrators will, within
fifteen (15) days thereafter, select a third, neutral arbitrator. As soon
as possible after the selection of the third arbitrator, and no later than
fifteen (15) days thereafter, the parties will submit their positions on
each disputed item in writing to the three arbitrators. The decision of the
arbitrators so chosen shall be given within a period of twenty (20) days
after the appointment of such third arbitrator. The
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arbitrators must, by majority vote, agree upon and approve the substantive
position of either Tenant or Landlord with respect to each disputed item,
and are not authorized to agree upon or impose any other substantive
position which has not been presented to the arbitrators by Tenant or
Landlord. It is the intention of the parties that the arbitrators rule only
on the substantive positions submitted to them by the parties and the
arbitrators are not authorized to render rulings which are a compromise as
to any such substantive position. A decision in which any two (2)
arbitrators so appointed and acting hereunder concur in writing with
respect to each disputed item shall in all cases be binding and conclusive
upon Tenant or Landlord and a copy of said decision shall be forwarded to
the parties. The parties will request that the arbitrators assess the costs
and expenses of the Arbitration and their fees against the parties based on
a finding as to which parties substantive positions were not upheld.
Otherwise the fees and expenses of the arbitration will be treated as an
Operating Cost and paid by Tenant unless otherwise determined by the
arbitrators.
(b) If the party receiving a request for Arbitration fails to
appoint its arbitrator within the time above specified, or if the two
arbitrators so selected cannot agree on the selection of the third
arbitrator within the time above specified, then either party, on behalf of
both parties, may request such appointment of such second or third
arbitrator, as the case may be, by application to any judge of any court in
New York County, New York of competent jurisdiction upon ten (10) days'
prior Notice to the other party of such intent.
(c) If there shall be a dispute with respect to whether a party has
unreasonably withheld, conditioned or delayed its consent with respect to a
matter for which such party has agreed herein not to unreasonably withhold
its consent, such dispute shall be resolved by Arbitration.
20.20 TAX EXEMPTION DECREE. Without limiting Tenant's obligations
hereunder or at law with respect to the Tax Exemption Decree, Landlord shall use
commercially reasonable efforts not to violate the requirements of the Tax
Exemption Decree imposed on Landlord. Except as contemplated in the Purchase
Agreement, neither Tenant nor Landlord shall amend, modify or otherwise alter
the Tax Exemption Decree without the consent of the other, which consent shall
not be unreasonably withheld. Tenant and Landlord shall each comply with any
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reasonable request made by the other to execute and deliver any document which
may be necessary or convenient (i) to maintain the Tax Exemption Decree in full
force and effect, (ii) to give effect to the terms of SECTION 3.1.3 (e) and
allocate as much as practicable the responsibility for the obligations described
in such Section to Tenant's portion of the Tax Exemption Decree, and (iii) so
that the Tax Exemption Decree does not impose any obligation or other term upon
Landlord which (after giving effect to the terms of this Agreement) would
adversely affect the qualification of the Rent and other amounts payable by
Tenant hereunder as "rents from real property" within the meaning of Section
856(d) of the Code. Tenant shall be and remain an "exempt business" as defined
in Section 2(m) of the Puerto Rico Tourism Development Act of 1993.
20.21 COOPERATION. Landlord and Tenant agree, upon request of the other,
to use commercially reasonable efforts to (a) obtain any certificate or other
document from any Governmental Agency (including, but not limited to, tax
exemptions or concessions under the Tax Exemption Decree) as may be necessary to
mitigate, reduce or eliminate any Imposition or Landlord Tax that could be
imposed and (b) mitigate the effects of the expiration or termination of the Tax
Exemption Decree not due to the fault of the requesting party.
20.22 PRIVATE LETTER RULING. As soon as practicable after the date hereof,
Landlord shall apply to the Internal Revenue Service for a private letter ruling
to the effect that the Additional Rent reserved hereunder qualifies as "rents
from real property" within the meaning of Section 856(d) of the Code. If
Landlord does not obtain a favorable letter ruling to such effect within six (6)
months after the date hereof, then Landlord and Tenant shall renegotiate, in
good faith, the provisions hereof relating to Additional Rent so that the same
qualifies as "rents from real property" within the meaning of Section 856(d) of
the Code with the intent that Landlord receive approximately the same level of
overall Additional Rent as would have obtained if the Additional Rent provisions
were not renegotiated.
20.23 AFFILIATED MANAGER. For so long as Landlord or any Affiliated Person
as to Landlord shall seek to qualify as a "real estate investment trust" under
the Code, Tenant: (i) shall remain taxable under the Code as an association
taxable as a corporation; (ii) shall not become a direct or indirect subsidiary
of InterContinental Hotels Group Resources, Inc. or of any Portfolio Manager;
(iii) shall not permit either InterContinental Hotels Groups Resources, Inc. or
any Portfolio
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Manager to become its direct or indirect subsidiary; and (iv) shall not be
reorganized, restructured, combined, merged or amalgamated with any Affiliated
Person (as to Tenant) in such manner that any such Affiliated Person would, or
in Landlord's judgment could be expected to, adversely affect (including, e.g.,
by application of any Person's actual "disregarded entity" status under the
Code) any status such Affiliated Person (as to Tenant) may have as a Code
Section 856(d)(9)(A) "eligible independent contractor" at a Code Section
856(d)(9)(D) "qualified lodging facility" owned or leased by Landlord (or any
Affiliated Person as to Landlord).
[Signature page follows]
- 76 -
IN WITNESS WHEREOF, the parties have executed this Agreement as a sealed
instrument as of the date above first written.
LANDLORD:
HPT IHG PR, INC.
By:
-----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
President
TENANT:
INTERCONTINENTAL HOTELS (PUERTO
RICO) INC.
By:
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
COMMONWEALTH OF MASSACHUSETTS
COUNTY OF SUFFOLK
On this ____ day of February, 2005, before me, the undersigned notary public,
personally appeared ▇▇▇▇ ▇. ▇▇▇▇▇▇, President of HPT IHG PR, INC., a Puerto Rico
corporation, proved to me through satisfactory evidence of identification, which
was _______________________ (state form of identification), to be the person
whose name is signed on the preceding or attached document, and acknowledged to
me that he signed it voluntarily for its stated purpose.
-------------------------------------------
(affix official signature and seal of
notary)
COMMONWEALTH OF MASSACHUSETTS
COUNTY OF SUFFOLK
On this ____ day of February, 2005, before me, the undersigned notary public,
personally appeared ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President of INTERCONTINENTAL HOTELS
(PUERTO RICO) INC., a Puerto Rico corporation, proved to me through satisfactory
evidence of identification, which was _______________________ (state form of
identification), to be the person whose name is signed on the preceding or
attached document, and acknowledged to me that he signed it voluntarily for its
stated purpose.
-------------------------------------------
(affix official signature and seal of
notary)
TABLE OF CONTENTS
EXHIBIT A
THE LAND
-i-
TABLE OF CONTENTS
(continued)
EXHIBIT B
TRADE AREA RESTRICTION
-ii-
TABLE OF CONTENTS
Page
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ARTICLE 1 DEFINITIONS..........................................................1
1.1 Additional Charges.................................................1
1.2 Additional Rent....................................................1
1.3 Affiliate or Affiliated Person.....................................2
1.4 Agreed Upon Procedure Letter.......................................2
1.5 Agreement..........................................................3
1.6 Applicable Law.....................................................3
1.7 Applicable Percentage..............................................3
1.8 Arbitration........................................................3
1.9 Award..............................................................3
1.10 Base Total Hotel Sales.............................................4
1.11 Base Year..........................................................4
1.12 Business Day.......................................................4
1.13 Capital Addition...................................................4
1.14 Capital Expenditure................................................4
1.15 Capital Replacements...............................................4
1.16 Claim..............................................................4
1.17 Code...............................................................4
1.18 Commencement Date..................................................5
1.19 Condemnation.......................................................5
1.20 Condemnor..........................................................5
1.21 Consumer Price Index...............................................5
1.22 Debt Service Coverage Ratio........................................5
1.23 Default............................................................5
1.24 Disbursement Rate..................................................5
1.25 Easement Agreement.................................................5
1.26 Entity.............................................................6
1.27 Environment........................................................6
1.28 Environmental Laws.................................................6
1.29 Event of Default...................................................6
1.30 Excess Total Hotel Sales...........................................6
1.31 Expiration Date....................................................7
1.32 Extended Terms.....................................................7
1.33 FF&E Estimate......................................................7
1.34 FF&E Reserve.......................................................7
1.35 Financial Officer's Certificate....................................7
1.36 Fiscal Month.......................................................7
1.37 Fiscal Year........................................................7
1.38 Fixed Term.........................................................7
1.39 Fixtures...........................................................7
1.40 GAAP...............................................................7
1.41 Government Agencies................................................7
1.42 Guarantor..........................................................8
1.43 Guaranty...........................................................8
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TABLE OF CONTENTS
(continued)
Page
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1.44 Hazardous Substances...............................................8
1.45 Hotel..............................................................9
1.46 Hotel Mortgage.....................................................9
1.47 Hotel Mortgagee....................................................9
1.48 IHG................................................................9
1.49 Impositions........................................................9
1.50 Insurance Requirements............................................10
1.51 Interest Rate.....................................................10
1.52 Land..............................................................10
1.53 Landlord..........................................................10
1.54 Landlord Liens....................................................10
1.55 Lease Year........................................................11
1.56 Leased Improvements...............................................11
1.57 Leased Intangible Property........................................11
1.58 Leased Personal Property..........................................12
1.59 Lien..............................................................12
1.60 Managed Hotels....................................................12
1.61 Material Repair...................................................12
1.62 Minimum Rent......................................................12
1.63 New Management Agreement..........................................12
1.64 NOI...............................................................12
1.65 Notice............................................................13
1.66 Officer's Certificate.............................................13
1.67 Operating Costs...................................................13
1.68 Parent............................................................14
1.69 Permitted Encumbrances............................................14
1.70 Permitted Use.....................................................14
1.71 Person............................................................14
1.72 Pledged Hotels....................................................14
1.73 Pooled FF&E Hotel.................................................14
1.74 Portfolio Manager.................................................14
1.75 Portfolio Purchaser...............................................14
1.76 Portfolio Owner...................................................14
1.77 Property..........................................................15
1.78 Purchase Agreement................................................15
1.79 Records...........................................................15
1.80 Repairs...........................................................15
1.81 Rent..............................................................15
1.82 SEC...............................................................15
1.83 Specially Designated or Blocked Person............................15
1.84 State.............................................................15
1.85 Subsidiary........................................................15
1.86 Successor Landlord................................................15
1.87 System Fees.......................................................15
-ii-
TABLE OF CONTENTS
(continued)
Page
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1.88 Tax Exemption Decree..............................................16
1.89 Tenant............................................................16
1.90 Tenant Management Agreement.......................................16
1.91 Tenant Manager....................................................16
1.92 Tenant's Personal Property........................................16
1.93 Term..............................................................16
1.94 Total Hotel Sales.................................................16
1.95 Uniform System of Accounts........................................17
1.96 Unsuitable for Its Permitted Use..................................17
1.97 Work..............................................................18
ARTICLE 2 PROPERTY AND TERM...................................................18
2.1 Property..........................................................18
2.2 Condition of Property.............................................19
2.3 Fixed Term........................................................19
2.4 Extended Term.....................................................20
ARTICLE 3 RENT................................................................20
3.1 Rent..............................................................20
3.2 Late Payment of Rent, Etc.........................................26
3.3 Net Lease.........................................................27
3.4 No Termination, Abatement, Etc....................................27
3.5 Waiver............................................................28
ARTICLE 4 USE OF THE PROPERTY.................................................28
4.1 Permitted Use.....................................................28
4.2 Compliance with Legal/Insurance Requirements, Etc.................29
4.3 Environmental Matters.............................................29
ARTICLE 5 MAINTENANCE AND REPAIRS.............................................31
5.1 Maintenance and Repair............................................31
5.2 Tenant's Personal Property........................................36
5.3 At End Of Term....................................................36
5.4 Tenant Management Agreement.......................................39
ARTICLE 6 IMPROVEMENTS, ETC...................................................40
6.1 Material Repairs..................................................40
6.2 Emergency Expenditures............................................40
6.3 No Tie-In.........................................................41
ARTICLE 7 LIENS...............................................................41
7.1 Liens.............................................................41
7.2 Landlord's Lien...................................................41
ARTICLE 8 PERMITTED CONTESTS..................................................42
ARTICLE 9 INSURANCE AND INDEMNIFICATION.......................................43
9.1 General Insurance Requirements....................................43
9.2 Replacement Cost..................................................44
9.3 Waiver of Subrogation.............................................44
9.4 Form Satisfactory, Etc............................................45
9.5 Blanket Policy....................................................45
-iii-
TABLE OF CONTENTS
(continued)
Page
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9.6 No Separate Insurance.............................................46
9.7 Indemnification of Landlord.......................................46
ARTICLE 10 CASUALTY............................................................47
10.1 Insurance Proceeds................................................47
10.2 Damage or Destruction.............................................47
10.3 Damage Near End of Term...........................................49
10.4 Tenant's Property.................................................50
10.5 Restoration of Tenant's Property..................................50
10.6 No Abatement of Rent..............................................50
10.7 Waiver............................................................50
ARTICLE 11 CONDEMNATION........................................................51
11.1 Total Condemnation, Etc...........................................51
11.2 Partial Condemnation..............................................51
11.3 Abatement of Rent.................................................52
11.4 Temporary Condemnation............................................52
11.5 Condemnation Near End of Term.....................................53
11.6 Allocation of Award...............................................53
ARTICLE 12 DEFAULTS AND REMEDIES...............................................53
12.1 Events of Default.................................................53
12.2 Remedies..........................................................55
12.3 Waiver............................................................57
12.4 Application of Funds..............................................57
12.5 Landlord's Right to Cure Tenant's Default.........................57
ARTICLE 13 HOLDING OVER........................................................58
ARTICLE 14 LANDLORD'S DEFAULT..................................................58
ARTICLE 15 SUBLETTING AND ASSIGNMENT...........................................59
15.1 Subletting and Assignment.........................................59
15.2 Required Sublease Provisions......................................60
15.3 Permitted Sublease................................................61
15.4 Sublease Limitation...............................................62
15.5 Permitted Assignments.............................................62
15.6 Sale by Landlord..................................................62
ARTICLE 16 ESTOPPEL CERTIFICATES...............................................62
ARTICLE 17 LANDLORD'S RIGHT TO INSPECT.........................................63
ARTICLE 18 EASEMENTS...........................................................63
18.1 Grant of Easements................................................63
18.2 Exercise of Rights by Tenant......................................64
18.3 Permitted Encumbrances............................................64
ARTICLE 19 HOTEL MORTGAGES.....................................................64
19.1 Landlord May Grant Liens..........................................64
19.2 Notice to Mortgagee and Superior Landlord.........................66
ARTICLE 20 MISCELLANEOUS.......................................................66
20.1 Limitation on Payment of Rent.....................................66
20.2 No Waiver.........................................................67
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TABLE OF CONTENTS
(continued)
Page
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20.3 Remedies Cumulative...............................................67
20.4 Severability......................................................67
20.5 Acceptance of Surrender...........................................67
20.6 No Merger of Title................................................68
20.7 Conveyance by Landlord............................................68
20.8 Quiet Enjoyment...................................................68
20.9 Recordation of Lease..............................................68
20.10 Notices...........................................................69
20.11 Trade Area Restriction............................................70
20.12 Construction......................................................71
20.13 Counterparts; Headings............................................71
20.14 Applicable Law, Etc...............................................71
20.15 Right to Make Agreement...........................................72
20.16 Nonrecourse.......................................................72
20.17 Attorneys' Fees...................................................72
20.18 Securities Filings................................................73
20.19 Arbitration.......................................................73
20.20 Tax Exemption Decree..............................................74
20.21 Cooperation.......................................................75
20.22 Private Letter Ruling.............................................75
20.23 Affiliated Manager................................................75
-v-
EXHIBIT C
INDEMNIFICATION AGREEMENT
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this "AGREEMENT"), is made as of this __day
of February __, 2005, by SIX CONTINENTS INTERNATIONAL HOLDINGS B.V., a
Netherlands closed limited liability company ("SELLER"), HOLIDAY HOSPITALITY
FRANCHISING, INC., a Delaware corporation ("HHF"), and HPT IHG-2 PROPERTIES
TRUST, a Maryland real estate investment trust ("BUYER").
W I T N E S S E T H:
WHEREAS, Seller owns all of the issued and outstanding shares of common
stock, with a par value of $100 per share (the "COMPANY SHARES"), of Crowne
Plaza (Puerto Rico), Inc., a corporation organized under the laws of the
Commonwealth of Puerto Rico (the "COMPANY");
WHEREAS, the Company is the owner of the InterContinental San ▇▇▇▇ Resort
and Casino in San ▇▇▇▇, Puerto Rico (the "HOTEL"), and certain other related
assets;
WHEREAS, all of the Company Shares are being sold pursuant to an Amended
and Restated
Stock Purchase Agreement between Buyer and Seller dated as of
February __, 2005 (the "PR PURCHASE AGREEMENT");
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. DEFINITIONS. All capitalized terms used in this Agreement, but not
otherwise defined shall have the meaning ascribed to such terms in the PR
Purchase Agreement. In addition, the following definitions shall apply for
purposes of this Agreement:
"AFFILIATE" with respect to a person, means a person that controls, is
controlled by or is under common control with such person.
"BENEFIT ARRANGEMENT" means an employment, severance or similar contract,
arrangement or policy (written or oral) and each plan or arrangement providing
for severance, insurance coverage (including any self-insured arrangements),
workers' compensation, disability benefits, supplemental unemployment benefits,
vacation benefits, pension or retirement benefits or for deferred compensation,
profit-sharing, bonuses, phantom stock, stock options, stock appreciation rights
or other forms of incentive compensation or post-retirement insurance,
compensation or benefits that (i) is not an Employee Plan, (ii) is entered into,
maintained or contributed to, as the case may be, by the Company or any of its
ERISA Affiliates and (iii) covers any Employee or former Employee of the
Company.
"CLOSING TAX YEAR" shall mean the tax year in which the Closing Date
occurs.
"CODE" means the Internal Revenue Code of 1986, as amended, and the rules
and regulations thereunder, all as from time to time in effect, and any
successor laws thereto.
"DAMAGES" means Liens, damages, losses, Liabilities, obligations,
settlement payments, penalties, assessments, citations, directives, claims,
litigation, demands, defenses, judgments, suits, proceedings, costs,
disbursements or expenses of any kind or of any nature whatsoever (including,
without limitation, attorneys', consultants' and experts' fees and disbursements
incurred in investigating, defending against, settling or prosecuting any claim,
litigation or proceeding or in seeking payment of amounts owed under this
Agreement).
"EMPLOYEE" means any employee of the Company.
"EMPLOYEE PLAN" means each "employee benefit plan," as such term is defined
in Section 3(3) of ERISA, that (i) is subject to any provision of ERISA, (ii) is
maintained or contributed to by the Company or any of its ERISA Affiliates, and
(iii) covers any Employee or former Employee of the Company.
"ENVIRONMENT" means any and all environmental media, including without
limitation ambient air, surface water, ground water, drinking water supply, land
surface or subsurface, soil or strata, and also means any indoor location.
"ENVIRONMENTAL LAW" means any and all federal, state, Commonwealth of
Puerto Rico, local and foreign statutes, laws (including common or case law),
regulations, ordinances, rules, judgments, judicial decisions, orders, decrees,
codes, plans, injunctions, or governmental restrictions, whether now existing or
hereafter enacted, issued or promulgated, relating to the protection of human
health or safety or the Environment or to emissions, discharges or Releases of
any Hazardous Substance into the Environment, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, management or handling of any Hazardous Substance or the containment,
removal or remediation thereof.
"ENVIRONMENTAL LIABILITIES" means any and all liabilities arising in
connection with or in any way relating to the Property, whether contingent or
fixed, actual or potential, known or unknown, which arise under or relate to
matters governed by Environmental Law and arise from or relate in any way to
actions occurring or conditions existing on or before the Closing Date,
including without limitation, the disposal of Hazardous Substances generated at
or transported from the Property.
"ENVIRONMENTAL PERMITS" means any and all governmental permits, licenses,
concessions, grants, franchises, agreements, authorizations, registrations,
notices of intent or other governmental approvals or filings issued or required
under any Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA AFFILIATE" of any entity means any other entity that, together with
such entity, would be treated as a single employer under Section 414 of the Code
or Section 4001 of ERISA.
"HAZARDOUS SUBSTANCE" shall have the meaning ascribed to such term in the
Hotel Lease Agreement.
- 2 -
"INDEMNIFIED PARTIES" means the Buyer,
Hospitality Properties Trust, a
Maryland real estate investment trust, the Company (following the Closing), each
of their respective Affiliates, each of their respective shareholders,
directors, trustees, officers, employees and agents, and the successors and
assigns of any of them; and "Indemnified Party" shall mean any one of the
Indemnified Parties.
"INDEMNIFYING PARTIES" means Seller and HHF.
"PRE-CLOSING TAX CONTEST" has the meaning set forth in Section 4.3B hereof.
"STRADDLE PERIOD" has the meaning set forth in Section 4.1B hereof.
"RELEASE" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, or disposing into
the Environment (including, without limitation, the abandonment or discarding of
barrels, containers, and other closed receptacles containing any Hazardous
Substance).
"TAX" and "TAXES" means any and all federal, state, Commonwealth of Puerto
Rico, local or non-U.S. taxes, fees, levies, duties, tariffs, imposts, and other
similar charges on or with respect to net income, alternative or add-on minimum,
gross income, gross receipts, sales, use, ad valorem, franchise, capital,
paid-up capital, profits, greenmail, license, withholding, payroll, employment,
excise, severance, stamp, occupation, premium, property, environmental, Code
Section 59A or windfall profit tax, custom, duty, value added, volume of
business or other tax, governmental fee or other like assessment or charge of
any kind whatsoever, together with any interest or any penalty, addition to tax
or additional amount imposed by any governmental entity responsible for the
imposition of any such tax.
"TAX YEAR" shall mean the year period commencing on January 1 of each
calendar year and ending on December 31 of each calendar year
"TAX CONTEST" has the meaning set forth in Section 4.3A hereof.
"TAX RETURNS" means any return, claim, election, information return,
declaration, report, statement and other document required to be filed in
respect of Taxes, including all schedules and attachments thereto, and including
all amendments thereof.
"TAX AUTHORITY" means any governmental authority responsible for the
imposition or collection of any Tax.
"TRANSFER TAXES" has the meaning set forth in Section 4.4 hereof.
"TRANSFERRED EMPLOYEES" means those employees of the Company that were
transferred, or were to be transferred, out of the Company to an Affiliate of
Seller in connection with the transactions contemplated by the PR Purchase
Agreement.
"THIRD PARTY CLAIM" means (i) any governmental claim (including by any Tax
Authority), suit, order, request, investigation, demand, administrative or
judicial enforcement action, notice,
- 3 -
order or proceeding or (ii) any lawsuit, claim of action or demand by any
individual, entity or other person against any of the Indemnified Parties
alleging facts that if true would give rise to indemnification under this
Agreement.
2. INDEMNIFICATION. Subject to any limitations set forth herein, the
Indemnifying Parties, on a joint and several basis, covenant and agree, at their
sole cost and expense, to indemnify, defend and hold harmless each Indemnified
Party against and from any and all Damages which may at any time be imposed
upon, incurred by or asserted or awarded against such Indemnified Party, and
arising directly or indirectly from or out of, or relating to:
(A) any Environmental Liabilities;
(B) any claim by a Transferred Employee or any former Employee of the
Company, or any other person on behalf of such employees based on
events that occurred prior to the Closing;
(C) any claims or Liabilities regarding any Employee Plan or Benefit
Arrangement of the Company in existence at any point prior to the
Closing;
(D) any breach by Seller of any representation and warranty or covenant
set forth in the PR Purchase Agreement or in any certificate,
instrument or documents delivered to Buyer under the terms of the PR
Purchase Agreement;
(E) the violation by the Company (prior to the Closing) or Seller or any
of their respective employees, agents, contractors and
representatives of any applicable law, judgment or decree; including
without limitation any Environmental Law, Environmental Permit or
any other laws, regulations or ordinances applicable to the Property
or any of the operations of the Hotel (including the casino located
at the Hotel);
(F) the operation and use of the Hotel prior to Closing;
(G) any Property sold or transferred by the Company prior to the
Closing;
(H) any indemnification claims made by former officers, directors,
agents or employees of the Company based upon events that occurred
prior to the Closing;
(I) any other claims or any litigation (including threatened litigation)
based upon events that occurred prior to the Closing, whether or not
the claims or litigation are based on events that occurred prior to
the Company's ownership of the Property and regardless of when
commenced; and
(J) any and all other Liabilities (1) incurred by the Company prior to
the Closing or (2) that relate to the Property as a result of events
occurring prior to the Closing (even if relating to a previous owner
of the Property), regardless of its nature, whether or not in the
ordinary course of business.
- 4 -
In the event that the Indemnifying Parties shall be obligated to indemnify
the Indemnified Parties pursuant to this Section 2, the Indemnifying Parties
shall, upon payment of such indemnity in full, be subrogated to all rights of
the Indemnified Party with respect to the Damages to which such indemnification
relates.
3. PROCEDURES. (a) If any of the Indemnified Parties shall claim a
right to payment pursuant to this Agreement with respect to which there has been
no Third Party Claim, such Indemnified Party shall send written notice of such
claim to the Indemnifying Parties specifying the basis for such claim. As
promptly as possible after the Indemnified Parties have given such notice, a
representative of the Indemnified Parties and a representative of the
Indemnifying Parties shall establish the merits and amount of such claim (by
mutual agreement) and, within five Business Days of the final determination of
the merits and amount of such claim, the Indemnifying Parties shall pay the
Indemnified Parties the amount of such claim.
(b) Any Indemnified Party shall give prompt notice to the Indemnifying
Parties of the assertion or commencement of any Third Party Claim; PROVIDED that
no delay on the part of the Indemnified Party in notifying the Indemnifying
Parties shall relieve the Indemnifying Parties of any liability or obligation
hereunder except to the extent that the Indemnifying Parties have been
materially prejudiced thereby. Except as otherwise provided herein, the
Indemnifying Parties shall exclusively control the defense of any Third Party
Claim at their own expense. The Indemnifying Parties shall not be liable under
Section 2 for any settlement of any Third Party Claim effected by any
Indemnified Party without their consent. The Indemnifying Parties shall not
consent to the entry of any judgment or enter into any settlement with respect
to any Third Party Claim without the consent of the Indemnified Parties unless
such settlement includes an unconditional release by all parties to the
settlement of the Indemnified Parties and no relief, monetary or otherwise, is
required of the Indemnified Parties. Notwithstanding the foregoing, whether or
not the Indemnifying Parties assume the defense of a Third Party Claim, if an
Indemnified Party determines in good faith that a Third Party Claim is likely to
materially adversely affect it or its business (it being understood that any
Third Party Claim related to Taxes shall be deemed to have a material adverse
effect on the Indemnified Party and its business) in a manner that may not be
adequately compensated by money damages, then such Indemnified Party may, by
written notice to the Indemnifying Parties, assume the exclusive right to
defend, compromise, or settle such Third Party Claim against it and the
Indemnifying Parties shall be liable for any such settlement and related
Damages. The party controlling the defense of any Third Party Claim shall keep
the other party advised of the status of such action, suit or proceeding and the
defense thereof and shall consider in good faith recommendations made by the
other party with respect thereto. In the case of a Third Party Claim, the
Indemnified Parties and the Indemnifying Parties shall reasonably cooperate to
mitigate and resolve such claim.
4. CERTAIN TAX MATTERS. Notwithstanding anything contained in this
Agreement or the PR Purchase Agreement to the contrary this Section 4 shall be
the sole provision governing indemnities for Tax matters under this Agreement
and the PR Purchase Agreement and shall survive the Closing.
4.1 TAX INDEMNITY.
- 5 -
A. The Indemnifying Parties hereby indemnify the Indemnified Parties
against, and agree to hold them harmless from, any and all Damages with respect
to the following Taxes (without duplication and whether or not disclosed on
Schedule 8.1(I) or Schedule 8.1(N) of the PR Purchase Agreement): (i) Taxes
imposed on or with respect to Company with respect to Tax periods ending on or
before the Closing Date; (ii) with respect to the Straddle Period, Taxes imposed
on or with respect to the Company that are allocable, pursuant to Section 4.1B,
to the portion of such period ending on and including the Closing Date; (iii)
Taxes imposed on or with respect to Seller, Buyer or the Company with respect to
the transactions contemplated in Paragraph 5.1(K) of the PR Purchase Agreement;
(iv) any misrepresentation, inaccuracy or breach of representation and warranty
made by the Company pursuant to Paragraph 8.1(N) of the PR Purchase Agreement
(without regard to any materiality qualifications therein); (v) Taxes for which
the Seller is responsible under Section 4.4 hereof; and (vi) Taxes on or with
respect to the Company or the Company's property or the Company's shareholders
resulting from the "built-in-gain" provisions of Section 1397 (or any successor
provisions thereto) of the PR Code or the recapture provisions of Sections 1117
and/or 1118 (or any successor provisions thereto) of the PR Code and the
distribution of the earnings resulting from such provisions (or any successor
provisions thereto) to the Company's shareholders.
B. In the case of any Tax period that includes but does not end on the
Closing Date (a "STRADDLE PERIOD"), Taxes of the Company for the Straddle Period
shall be allocated to the portion of the Straddle Period ending on the Closing
Date using an interim-closing-of-the-books method assuming that such Tax period
ended at the close of the Closing Date, except that (i) exemptions, allowances
or deductions that are allowed on an annual basis shall be apportioned on a
per-diem basis, (ii) ad valorem real estate, real property, personal property,
intangibles and other similar Taxes and any sales Taxes with respect to rental
payments for the Closing Tax Year (regardless of the year for which such taxes
are assessed) shall be prorated as follows. All installments of special
assessments due and payable prior to the Closing Date shall be apportioned to
the period ending on the Closing Date and all installments of special
assessments due and payable on and after the Closing Date shall be allocated to
the period commencing after the Closing Date; provided, however, that the
Indemnifying Parties shall not be required by the foregoing to pay any
installments of special assessments which have not been confirmed or which
relate to projects that have not been completed on the Effective Date. If tax
bills for the Closing Tax Year are not available on the Closing Date, taxes
shall be prorated at Closing based upon the tax bills for the previous Tax Year,
or, if available, based upon the current assessed valuation and current millage
rates, and in such event Seller and Buyer shall re-prorate the Taxes as actual
or final tax bills for the current year are available. If the Property has been
assessed for property tax purposes at such rates as would result in reassessment
(such as an "escape assessment" or "roll-back taxes") based upon the change in
use, occupancy or ownership of the Property on or after the Closing Date, the
Indemnifying Parties hereby agree to pay all such Taxes and to indemnify and
save the Indemnified Parties harmless from and against all Liabilities for such
Taxes.
C. Whenever an Indemnifying Party shall be required to pay Buyer an
amount due pursuant to this Section 4, such payment shall be made at least two
days before the Buyer is required to pay the related Tax liability.
- 6 -
4.2 TAX RETURNS
A. Except as provided in Section 4.4, Seller shall prepare and file (or
cause to be prepared and filed) in a timely manner all Tax Returns relating to
the Company for any Tax period that ends on or before the Closing Date. With
respect to any Tax Return required to be filed hereunder by the Seller after the
date of this Agreement, Seller shall provide Buyer with a copy of such completed
Tax Return, at least 20 days prior to the due date (including any extension
thereof) for the filing of such Tax Return, and Buyer shall have the right to
review and comment on such Tax Return and statement within 10 days of receiving
such Tax Return from Seller. Seller shall consider in good faith Buyer's
comments in preparing the final version of such Tax Return that is filed. Except
as provided in the Hotel Lease Agreement, Buyer shall prepare and file (or cause
to be prepared and filed) in a timely manner all other Tax Returns relating to
the Company for Tax periods ending after the Closing Date (including any
Straddle Period). Any such Tax Returns prepared by Buyer shall, to the extent
permitted by applicable law, be prepared on a basis consistent with previous Tax
Returns. With respect to any Tax Return required to be filed hereunder by the
Buyer after the Closing Date, and as to which an amount of Tax is allocable to
Seller under Section 4.1 hereof, Buyer shall provide Seller with a copy of such
completed Tax Return and a statement setting forth the amount of Tax shown on
such Tax Return that is allocable to Seller pursuant to Section 4.1 hereof, at
least 20 days prior to the due date (including any extension thereof) for the
filing of such Tax Return, and Seller shall have the right to review and comment
on such Tax Return and statement within 10 days of receiving such Tax Return
from Buyer; provided, however, Buyer's failure to timely provide Seller with the
foregoing draft Tax Returns and information shall not relieve Seller of its
obligations under Section 4.1 unless Seller is materially prejudiced thereby.
Buyer shall consider in good faith Seller's comments in preparing the final
version of such Tax Return that is filed.
B. In furtherance of Sections 4.1 and 4.2A hereof (i) Seller shall pay
or cause to be paid when due and payable all Taxes with respect to the Company
for any Tax period ending on or before the Closing Date and any Taxes described
in Section 4.1A(iii) hereof, and (ii) except as provided in the Hotel Lease
Agreement, Buyer shall pay or cause to be paid when due and payable (x) all
Taxes with respect to the Company for any Tax period beginning after the Closing
Date, and (y) all Taxes with respect to the Company for any Straddle Period
(subject to its right of indemnification from Seller by the date set forth in
Section 4.1C for Taxes attributable to Seller for such Straddle Period pursuant
to Section 4.1B).
C. Seller and Buyer shall cooperate (and Buyer shall cause the Company
to cooperate), and shall cause their respective representatives to cooperate, in
preparing and filing all Tax Returns, including maintaining and making available
to each other on a mutually convenient basis all records necessary in connection
with Taxes and in resolving all disputes and audits with respect to all Tax
periods relating to Taxes. From and after the Closing Date, Seller and Buyer
(including their Affiliates and successors) shall (i) retain and maintain all
such records including (but not limited to) all Tax Returns, schedules and work
papers, records and other documents in its possession relating to Tax matters of
the Company for each Tax period first ending after the Closing Date and for all
prior Tax periods, until the later of (x) the expiration of the statute of
limitations of the Tax periods to which such Tax Returns and other documents
- 7 -
relate, without regard to extensions except to the extent notified by the other
party in writing of such extensions for the respective Tax periods, plus 30
days, or (y) six years following the due date (without extension) for such Tax
Returns, plus 30 days, and (ii) allow Seller and Buyer and their agents and
representatives (and agents or representatives of any of their Affiliates), upon
reasonable notice and at mutually convenient times to inspect, review and make
copies of such records (at the expense of the party requesting the records) as
Seller and Buyer may deem reasonably necessary or appropriate from time to time.
4.3 TAX CONTESTS.
A. After the Closing Date, either of Seller or Buyer shall notify the
other upon receipt of written notice of the commencement of any Tax audit,
inquiry, assessment, or administrative or judicial proceeding (a "TAX CONTEST")
that, if determined adversely to the taxpayer or after the lapse of time, could
be grounds for indemnification under Section 4.1. Such notice shall be in
writing and shall contain factual information (to the extent known to the
notifying party) describing the asserted Tax liability in reasonable detail and
shall include copies of any notice or other document received from any Tax
authority in respect of any such asserted Tax liability. Notwithstanding the
foregoing, any delay or failure by Seller or Buyer to give notice to the other
as required by this Section 4.3A shall not relieve either Seller or Buyer of its
obligations under Section 4.1 or Section 4.2 unless the obligated party is
materially prejudiced thereby.
B. If such Tax Contest involves Taxes of the Company for a Tax period
ending on or before the Closing Date (a "PRE-CLOSING TAX CONTEST") for which
Seller is liable (taking into consideration any indemnification obligations
pursuant to this Agreement), Seller may elect to control, at its own expense,
such Pre-Closing Tax Contest; provided, however, that if the resolution of such
Tax Contest could be expected to impact in any manner the Tax liability or Tax
Return of the Company, Buyer or any Affiliate for any taxable period ending
after the Closing Date (i) Seller shall allow the Buyer to participate in any
such Pre-Closing Tax Contest at the Buyer's sole expense and (ii) Seller shall
keep Buyer reasonably informed with respect to the commencement, status and
nature of any such Pre-Closing Tax Contest involving any Tax liability of the
Company or Buyer. In any event, neither the Buyer nor the Seller may settle or
compromise such Pre-Closing Tax Contest without the consent of the other party,
which consent shall not be unreasonably withheld, conditioned or delayed.
C. Notwithstanding the foregoing, with respect to Tax Contests relating
to a Straddle Period, each of the Buyer and Seller may participate and jointly
control at their own expense the Tax Contest; provided, however, that neither
party shall settle or compromise such Tax Contest without the consent of the
other party, which consent shall not unreasonably be withheld, conditioned or
delayed. The principle set forth in the preceding sentence shall govern also for
purposes of deciding any issue that must be decided jointly (in particular,
choice of judicial forum).
D. Notwithstanding the foregoing provisions of this Section 4.3, Seller
shall have the right to continue and to control the progress of and to make all
decisions with respect to any contest of the real estate Taxes and personal
property Taxes for the Property due and payable for
- 8 -
any period ending prior to or on the Closing Date. Lessee shall have such right
with respect to the Straddle Period and periods beginning on or after the
Closing Date to the extent so provided in the Hotel Lease Agreement. Buyer and
Seller agree to cooperate with each other and to execute any and all documents
reasonably requested in furtherance of any Tax exemption or abatement requests
or opportunities pending or potentially available to benefit the operation
and/or ownership of the Hotel.
4.4 TRANSFER TAXES. Notwithstanding any other provision of this
Agreement or the PR Purchase Agreement to the contrary, all transfer,
documentary, sales, use, stamp, registration and other such Taxes incurred in
connection with the transactions contemplated by the PR Purchase Agreement
(collectively, "TRANSFER TAXES") shall be paid one-half by the Seller and
one-half by the Buyer, except for any such Transfer Taxes resulting from the
transfer of assets and liabilities from the Company pursuant to Paragraph 5.1(K)
of the PR Purchase Agreement, which shall be paid by Seller. Seller shall, at
its own expense, file all necessary Tax Returns with respect to all such
Transfer Taxes, and, to the extent required by applicable Law, Buyer shall join
in the execution of any such Tax Returns. Seller shall provide the Buyer with
copies of such Tax Returns at least 20 days prior to the last date for timely
filing of such Tax Returns (giving effect to any valid extensions thereof).
Buyer shall have the right to review and comment on such Tax Returns within 10
days of receiving them from Seller. Seller agrees to consider in good faith
Buyer's comments in preparing the final version of the Tax Returns that are
filed.
4.5 TAX REFUNDS. Any refunds or credits of Taxes shall be for the
account of the party responsible under this Section 4 for bearing the Taxes that
generated such refund or such credit (taking into account any reimbursement of a
party paying such Taxes in the first instance). Each of Seller and Buyer agrees
to notify the other promptly in writing if it or any of its Affiliates receives
a refund or a credit to which the other party is entitled pursuant to the
preceding sentence, and to pay promptly such notified party in cash the amount
of such refund or credit.
4.6 MISCELLANEOUS.
A. The parties agree to treat all payments made under this Agreement or
in connection with any breach of the PR Purchase Agreement as adjustments to the
Purchase Price for all Tax purposes.
B. Buyer and Seller agree, upon request of the other, to use their best
efforts to obtain any certificate or other document from any governmental
authority as may be necessary to mitigate, reduce or eliminate any Tax that
could be imposed (including, but not limited to, with respect to the
transactions contemplated hereby).
C. Buyer and Seller agree that Buyer may, at Buyer's sole option and
discretion, make an election under Code Section 338(g) (and any corresponding
election under U.S., state or local tax law) with respect to the purchase of the
stock of Company hereunder. Seller agrees to reasonably cooperate, and to cause
its Affiliates to reasonably cooperate, in making such election and assist in
providing any required notice, including but not limited to notice under
Treasury Regulation Section 1.338-2(e)(4).
- 9 -
4.7 AMENDED TAX RETURNS. Buyer shall not amend, and shall not permit any
of its Affiliates to amend, any Tax Return with respect to Tax periods ending on
or before the Closing Date without the prior written consent of Seller.
5. NO LIMITATION BY DUE DILIGENCE. The indemnification provided by this
Agreement shall be available regardless of the fact that Buyer conducted due
diligence on the Company and its properties prior to the consummation of the
transactions contemplated by the PR Purchase Agreement and shall be available
even if Buyer becomes aware before the Closing of any facts or events that
result in an indemnification claim being made in the future.
6. AUTHORITY. Each of the Indemnifying Parties represents and warrants
that (i) it has all requisite power and authority to execute, deliver and
perform its obligations under this Agreement and (ii) this Agreement has been
duly and validly authorized, executed and delivered by such Indemnifying Party
and constitutes a valid and legally obligation of such Indemnifying Party,
enforceable in accordance with its terms.
7. CONFLICTING TERMS. The Indemnifying Parties acknowledge that certain
provisions in this Agreement and the PR Purchase Agreement may be inconsistent
or may conflict with one another. In the event of an inconsistency or conflict
between the terms of this Agreement and the terms of the PR Purchase Agreement,
the terms of this Agreement shall control. The remedies provided by this
Agreement are in addition to and not limited by the rights set forth in the PR
Purchase Agreement.
8. TERM; CERTAIN LIMITATIONS. The obligations of the Indemnifying
Parties and the rights of the Indemnified Parties shall continue in force and
effect, in the case of claims made pursuant to Section 3(a) and Section 3(b)
arising under Section 2(D), for the period such representation, warranty or
covenant survives, as set forth in Section 8.4 of the PR Purchase Agreement, and
in the case of all other claims, whether made pursuant to Section 3(a) or
Section 3(b) arising under any other provision of Section 2 or under Section 4,
for so long as a Third Party Claim could be made if based on the facts giving
rise to the claim; provided, however, that any Damages for which an Indemnified
Party is paid under the terms of Section 2(D) on account of the breach of any
representations of Seller under the PR Purchase Agreement that, pursuant to the
terms thereof, survive only for one year after the closing thereunder shall be
subject to and apply towards the Seller's Liability Limit as set forth in clause
(iii) of Paragraph 14.18 of the Purchase and Sale Agreement.
Notwithstanding the foregoing, with respect to claims arising under Section
2(D) due to the breach of Seller's Warranties under Sections 8.1(X), 8.1(BB) and
8.1(CC) of the PR Purchase Agreement that are first asserted after the thirtieth
anniversary of the date hereof and any corresponding claims under the PR
Purchase Agreement, the Indemnified Parties shall look solely to any collateral
hereafter pledged securing Seller's obligations hereunder for satisfaction of
such claim; PROVIDED, HOWEVER, nothing contained herein is intended to, nor
shall it, limit or reduce the rights of Buyer's affiliate under the Management
Agreement (as defined in the Purchase and Sale Agreement) or of the Company
under the Hotel Lease Agreement or limit or reduce the obligations of the any
guarantor of either of either such agreement.
- 10 -
9. DELAY. No delay on the Indemnified Parties' part in exercising any
right, power or privilege under this Agreement shall operate as a waiver of any
privilege, power or right hereunder.
10. RELEASES. Any one or more of the Indemnifying Parties or any other
party liable upon or in respect of this Agreement may be released without
affecting the liability of any party not so released.
11. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original. Said counterparts shall
constitute but one and the same instrument and shall be binding upon each of the
undersigned individually as fully and completely as if all had signed but one
instrument so that the joint and several liability of each of the undersigned
hereunder shall be unaffected by the failure of any of the undersigned to
execute any or all of the said counterparts.
12. NOTICES. All notices, approvals, requests, demands and other
communications hereunder shall be in writing and shall be given and effective in
accordance with the PR Purchase Agreement.
13. AMENDMENTS. No provision of this Agreement may be changed, waived,
discharged or terminated orally, by telephone or by any other means except by an
instrument in writing signed by all of the parties hereto.
14. ASSIGNMENT. Without the prior written consent of Buyer in each
instance, no Indemnifying Party may assign, transfer or set over to another, in
whole or in part, all or any part of its or their duties and obligations
hereunder, including, but not limited to, performance of and compliance with
conditions hereof.
15. GOVERNING LAW; JURISDICTION; VENUE. THIS AGREEMENT IS A CONTRACT
UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL, FOR ALL PURPOSES, BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SAID STATE (EXCLUDING
THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). THE PARTIES CONSENT TO THE
JURISDICTION OF ANY OF THE FEDERAL OR STATE COURTS LOCATED IN THE STATE OF NEW
YORK IN CONNECTION WITH ANY SUIT RELATING TO THIS AGREEMENT. THE PARTIES
IRREVOCABLY WAIVE ANY OBJECTION WHICH THEY MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF VENUE OF ANY SUCH ACTION BROUGHT IN THE COURTS REFERRED TO IN THIS
SECTION AND IRREVOCABLY WAIVE AND AGREE NOT TO PLEAD OR CLAIM IN ANY SUCH ACTION
THAT SUCH ACTION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
16. WAIVER OF JURY TRIAL. THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THEIR RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR
CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, ANY RIGHTS
OR OBLIGATIONS HEREUNDER, THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS OR ANY
- 11 -
COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER ORAL OR WRITTEN) OR
ACTIONS OF ANY PARTY, AND AGREE THAT THEY WILL NOT SEEK TO CONSOLIDATE ANY SUCH
ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CAN NOT BE OR HAS NOT BEEN
WAIVED.
17. NONLIABILITY OF TRUSTEES. THE DECLARATION OF TRUST ESTABLISHING
BUYER, COPIES OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE
"DECLARATION"), IS DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF
THE STATE OF MARYLAND, PROVIDES THAT, AND SELLER AND HHF HEREBY AGREE THAT, THE
NAME "HPT IHG-2 PROPERTIES TRUST" REFERS TO THE TRUSTEES UNDER THE DECLARATION
COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO
TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF BUYER SHALL BE HELD TO ANY
PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM
AGAINST, BUYER. ALL PERSONS DEALING WITH BUYER, IN ANY WAY, SHALL LOOK ONLY TO
THE ASSETS OF BUYER, FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY
OBLIGATION.
[remainder of this page intentionally left blank]
- 12 -
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the day and year first written above.
SIX CONTINENTS
INTERNATIONAL HOLDINGS B.V.,
a Netherlands closed limited liability
company
By:
-----------------------------------
Name:
-----------------------------
Title:
-----------------------------
HOLIDAY HOSPITALITY
FRANCHISING, INC.,
a Delaware corporation
By:
-----------------------------------
Name:
-----------------------------
Title:
----------------------------
HPT IHG-2 PROPERTIES TRUST,
a Maryland real estate investment trust
By:
-----------------------------------
Name:
-----------------------------
Title:
----------------------------
EXHIBIT N
FORM OF LETTER REGARDING GUARANTY
[Letterhead of INTERCONTINENTAL HOTELS GROUP PLC]
February __, 2005
To the Beneficiary Parties
referred to below
Ladies and Gentlemen:
Reference is hereby made to that certain Guaranty Agreement (the
"GUARANTY") made and given as of February __, 2005, by INTERCONTINENTAL HOTELS
(PUERTO RICO), INC. a Puerto Rico corporation (the "GUARANTOR"), for the benefit
of HPT TRS IHG-1, INC., a Maryland corporation (together with its successors and
assigns, "TRS1"), HPT TRS IHG-2, INC., a Maryland corporation (together with its
successors and assigns, "TRS2"), HPT IHG PR, INC., a Puerto Rico corporation
(together with its successors and assigns, "LANDLORD") and
HOSPITALITY
PROPERTIES TRUST, a Maryland real estate investment trust (together with its
successors and assigns, "Trust"; and Trust together with the ▇▇▇▇, ▇▇▇▇ and
Landlord, collectively, the "BENEFICIARY PARTIES"). Capitalized terms used but
not otherwise defined herein shall have the meanings ascribed thereto in the
Guaranty.
The undersigned (the "PARENT") hereby unconditionally and irrevocably
undertakes for the benefit of the Beneficiary Parties to cause the due
performance and observance by the Guarantor of all of the terms, covenants,
conditions, agreements and undertakings on the part of the Guarantor to be
performed or observed under the Guaranty in accordance with the terms thereof.
The Parent's obligations under this letter agreement shall terminate and be of
no further force or effect upon the earliest to occur of (i) the expiration of
the New Management Agreement, or (ii) the termination or expiration of the PR
Lease.
The Parent's obligations under this letter agreement shall not be impaired
by any modification, supplement, extension or amendment of the Guaranty, and
this letter agreement shall be binding upon the Parent's successors and assigns.
INTERCONTINENTAL HOTELS
GROUP PLC, a corporation organized and
existing under the laws of the United
Kingdom
By:
--------------------------------------------
Name:
Title:
EXHIBIT O
FORM OF GUARANTY
[PR Tenant Guaranty]
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT (this "AGREEMENT") is made and given as of February
__, 2005, by INTERCONTINENTAL HOTELS (PUERTO RICO) INC. a Puerto Rico
corporation (the "GUARANTOR"), for the benefit of HPT TRS IHG-1, INC., a
Maryland corporation (together with its successors and assigns, "TRS1"), HPT TRS
IHG-2, INC., a Maryland corporation (together with its successors and assigns,
"TRS2"), HPT IHG PR, INC., a Puerto Rico corporation (together with its
successors and assigns, "LANDLORD") and
HOSPITALITY PROPERTIES TRUST, a Maryland
real estate investment trust (together with its successors and assigns, "Trust";
and Trust together with the ▇▇▇▇, ▇▇▇▇ and Landlord, collectively, "HPT").
W I T N E S S E T H :
WHEREAS, it is a condition precedent to Landlord entering into the PR Lease
and TRS2 entering into the New Management Agreement and the consummation of
certain other transactions contemplated by the Transaction Documents that the
Guarantor enter into this Agreement; and
WHEREAS, the transactions contemplated by the PR Lease and the Transaction
Documents are of direct material benefit to the Guarantor;
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the mutual receipt and legal sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
1. CERTAIN TERMS. Capitalized terms used but not defined herein have
the meaning ascribed thereto in the New Management Agreement. The following
terms as used in this Agreement shall have the meanings set forth below:
"ACCOUNTING PRINCIPLES" shall mean generally accepted accounting
principles, as adopted in the United States of America, consistently applied.
"ANNUAL EXCESS PROFITS STATEMENT" shall mean the Available Excess Profits
Statement for any Annual Period.
"AVAILABLE EXCESS PROFITS" shall mean, for any monthly or annual period,
the lesser of (a) Excess Profits for such monthly or annual period or (b) all
accrued but unpaid Guaranteed Obligations.
"AVAILABLE EXCESS PROFITS STATEMENT" shall have the meaning ascribed to
such term in SECTION 9(b).
"EXCESS PROFITS" shall mean the excess, if any, of ▇▇ ▇▇▇▇▇ Revenues over
the sum of contributions to the FF&E Reserve (as defined in the PR Lease) made
pursuant to Section 5.1.2(b) of the PR Lease and PR Operating Costs and Deemed
Management Fees.
"FINANCIAL OFFICER'S CERTIFICATE" shall mean a certificate of the chief
executive officer, chief financial officer or chief accounting officer (or such
officers' authorized designee) of Guarantor, duly authorized, accompanying each
Available Excess Profits Statement required to be delivered by Guarantor
pursuant to Section 9, in which such officer shall certify that such Available
Excess Profits Statement has been properly prepared in accordance with GAAP and
is true, correct and complete in all material respects and fairly presents the
financial information contained therein.
"GUARANTEED OBLIGATIONS" shall mean the Manager's obligations to make
payments of (a) Owner's First Priority as and when due under the New Management
Agreement determined without respect to Gross Revenue thereunder or Operating
Profits thereunder; and (b) any and all liquidated damages due to TRS2 under the
New Management Agreement.
"MANAGER" shall mean IHG Management (Maryland) LLC.
"MANAGEMENT AGREEMENTS" shall have the meaning ascribed to such term in the
Parent Guaranty.
"NEW MANAGEMENT AGREEMENT" shall mean that certain Management Agreement
dated as of the date hereof between TRS2 and Manager, as the same may be
amended, modified, supplemented, or otherwise altered.
"PARENT GUARANTY" shall have the meaning given to the term "Guaranty" in
the New Management Agreement.
"▇▇ ▇▇▇▇▇ REVENUES" shall have the meaning ascribed to the term "Total
Hotel Sales" in the PR Lease.
- 2 -
"PR HOTEL" shall have the meaning ascribed to the term "Hotel" in the PR
Lease.
"PR LEASE" shall mean that certain Lease Agreement of even date herewith
between Landlord and Guarantor as the same may be amended, modified,
supplemented, or otherwise altered.
"PR OPERATING COSTS AND DEEMED MANAGEMENT FEES" shall have the meaning
ascribed to the term "Operating Costs" in the PR Lease, plus a deemed management
fee of 3% of ▇▇ ▇▇▇▇▇ Revenue, but no other management fees.
2. REPRESENTATIONS AND COVENANTS. The Guarantor represents, warrants,
covenants and agrees that:
2.1 VALIDITY OF AGREEMENT. The Guarantor has duly and validly
executed and delivered this Agreement; this Agreement constitutes the legal,
valid and binding obligation of the Guarantor, enforceable against the Guarantor
in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws of general
application affecting the rights and remedies of creditors; and the execution,
delivery and performance of this Agreement have been duly authorized by all
requisite action of the Guarantor and such execution, delivery and performance
by the Guarantor will not 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 of the property or assets
of the Guarantor pursuant to the terms of, any indenture, mortgage, deed of
trust, note, other evidence of indebtedness, agreement or other instrument to
which the Guarantor is a party or by which the Guarantor or any property or
assets of the Guarantor is bound, or violate any provision of law applicable to
the Guarantor, or any order, writ, injunction, judgment or decree of any court
applicable to the Guarantor or any order or other public regulation of any
governmental commission, bureau or administrative agency applicable to the
Guarantor.
2.2 PAYMENT OF EXPENSES. The Guarantor agrees, as principal
obligor and not as guarantor only, to pay to HPT forthwith, upon demand, in
immediately available Federal funds, all costs and expenses (including court
costs and reasonable legal expenses) incurred or expended by HPT in connection
with the enforcement of this Agreement, together with interest at the
- 3 -
Interest Rate on amounts recoverable under this Agreement from the time such
amounts become due until payment.
2.3 LEGAL EXISTENCE. The Guarantor shall do or cause to be done
all things necessary to preserve and keep in full force and effect its corporate
existence. The Guarantor has appointed attorneys ▇▇▇▇▇▇ & Bird LLP, having an
address at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attn:
Managing Partner as its agent for service of process. The Guarantor acknowledges
and agrees that service of process on such agent shall constitute service of
process on Guarantor with respect to any and all claims hereunder, under the
Management Agreements or under any Transaction Document.
3. GUARANTEE.
(a) The Guarantor hereby unconditionally guarantees that the Guaranteed
Obligations shall be paid in full when due and payable subject to any applicable
cure periods, whether upon demand, at the stated or accelerated maturity thereof
or upon any mandatory or voluntary prepayment pursuant to the Management
Agreements, or otherwise.
(b) This guarantee is a guarantee of payment and not of collectibility
and is absolute and in no way conditional or contingent. In case any part of the
Guaranteed Obligations shall not have been paid when due and payable or
performed at the time performance is required, subject to any applicable cure
periods, the Guarantor shall pay or cause to be paid to HPT the amount thereof
as is then due and payable and unpaid (including interest and other charges, if
any, due thereon through the date of payment in accordance with the applicable
provisions of the Transaction Documents) or perform or cause to be performed
such obligations in accordance with the Transaction Documents.
4. UNENFORCEABILITY OF GUARANTEED OBLIGATIONS, ETC. If the Manager is
for any reason under no legal obligation to discharge any of the Guaranteed
Obligations, or if any other moneys included in the Guaranteed Obligations have
become unrecoverable from the Manager by operation of law or for any other
reason, including, without limitation, the invalidity or irregularity in whole
or in part of any Guaranteed Obligation or of the Management Agreements or any
limitation on the liability of the Manager thereunder or any limitation on the
method or terms of payment thereunder which may now or hereafter be caused or
imposed in any manner whatsoever, the guarantees contained in
- 4 -
this Agreement shall nevertheless remain in full force and effect in accordance
with the terms set forth herein and shall be binding upon the Guarantor to the
same extent as if the Guarantor at all times had been the principal debtor and
obligor on all such Guaranteed Obligations.
5. ADDITIONAL GUARANTEES. This Agreement shall be in addition to any
other guarantee or other security for the Guaranteed Obligations and it shall
not be prejudiced or rendered unenforceable by the invalidity of any such other
guarantee or security or by any waiver, amendment, release or modification
thereof.
6. CONSENTS AND WAIVERS, ETC. The Guarantor hereby acknowledges receipt
of correct and complete copies of the Management Agreements and consents to all
of the terms and provisions thereof, as the same may be from time to time
hereafter amended or changed in accordance therewith, and waives, to the extent
the Guarantor lawfully may do so, (a) presentment, demand for payment, and
protest of nonpayment, of any of the Guaranteed Obligations, (b) notice of
acceptance of this Agreement and of diligence, presentment, demand and protest,
(c) notice of any default hereunder and any default, breach or nonperformance
under the Management Agreements or a Manager Event of Default or Manager Default
under the Management Agreements, (d) notice of the terms, time and place of any
private or public sale of collateral held as security for the Guaranteed
Obligations, (e) demand for performance or observance of, and any enforcement of
any provision of, or any pursuit or exhaustion of rights or remedies against the
Manager or any other guarantor of the Guaranteed Obligations, under or pursuant
to the Management Agreements, or any agreement directly or indirectly relating
thereto and any requirements of diligence or promptness on the part of the
holders of the Guaranteed Obligations in connection therewith, and (f) any and
all demands and notices of every kind and description with respect to the
foregoing or which may be required to be given by any statute or rule of law.
7. NO IMPAIRMENT, ETC. The obligations, covenants, agreements and
duties of the Guarantor under this Agreement shall not be affected or impaired
by any assignment or transfer in whole or in part of any of the Guaranteed
Obligations without notice to the Guarantor, or any waiver by HPT or any holder
of any of the Guaranteed Obligations or by the holders of all of the Guaranteed
Obligations of the performance or observance by
- 5 -
the Manager or any other guarantor of any of the agreements, covenants, terms or
conditions contained in the Guaranteed Obligations or the Management Agreements
or any indulgence in or the extension of the time for payment by the Manager or
any other guarantor of any amounts payable under or in connection with the
Guaranteed Obligations or the Management Agreements or any other instrument or
agreement relating to the Guaranteed Obligations or of the time for performance
by the Manager or any other guarantor of any other obligations under or arising
out of any of the foregoing or the extension or renewal thereof, or the
modification or amendment made with or without the consent of the Guarantor of
any duty, agreement or obligation of the Manager or any other guarantor set
forth in any of the foregoing, or the voluntary or involuntary sale or other
disposition of all or substantially all the assets of the Manager or any other
guarantor or insolvency, bankruptcy, or other similar proceedings affecting the
Manager or any other guarantor or any assets of the Manager or any such other
guarantor, or the release or discharge of the Manager or any such other
guarantor from the performance or observance of any agreement, covenant, term or
condition contained in any of the foregoing without the consent of the holders
of the Guaranteed Obligations by operation of law.
8. REIMBURSEMENT, SUBROGATION, ETC. The Guarantor hereby covenants and
agrees that the Guarantor will not enforce or otherwise exercise any rights of
reimbursement, subrogation, contribution or other similar rights against the
Manager or any other person with respect to the Guaranteed Obligations prior to
the irrevocable payment in full of all amounts then due and owing but unpaid
under the Management Agreement, and until the Guaranteed Obligations have been
satisfied in full, the Guarantor shall not have any right of subrogation, and
the Guarantor waives any defense it may have based upon any election of remedies
by HPT which destroys the Guarantor's subrogation rights or the Guarantor's
rights to proceed against the Manager for reimbursement, including, without
limitation, any loss of rights the Guarantor may suffer by reason of any rights,
powers or remedies of the Manager in connection with any anti-deficiency laws or
any other laws limiting, qualifying or discharging the indebtedness to HPT.
Until all obligations of the Manager pursuant to the Management Agreements shall
have been irrevocably paid and satisfied in full, the Guarantor waives any right
to enforce any remedy which HPT now has or may in the future have against the
Manager, any other guarantor or
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any other person and any benefit of, or any right to participate in, any
security whatsoever now or in the future held by HPT.
9. GUARANTY LIMITATIONS. (a) The Guarantor's obligations under SECTION
3 shall terminate upon the date on which the Guaranteed Obligations have been
paid and performed in full and all other obligations of the Guarantor to HPT
under this Agreement have been irrevocably satisfied in full; PROVIDED, HOWEVER,
if at any time, all or any part of any payment applied on account of the
Guaranteed Obligations is or must be rescinded or returned for any reason
whatsoever (including, without limitation, the insolvency, bankruptcy or
reorganization of the Manager), this Agreement, to the extent such payment is or
must be rescinded or returned, shall be deemed to have continued in existence
notwithstanding any such termination. Notwithstanding anything contained in this
Agreement to the contrary, in any given Fiscal Year, the Guarantor's obligations
under SECTION 3 shall not exceed Available Excess Profits for such Fiscal Year.
(b) The Guarantor shall furnish HPT with detailed statements of
Available Excess Profits ( "Available EXCESS PROFITS STATEMENTS") determined in
accordance with the Accounting Principles concurrently with the Guarantor's
delivery of annual and monthly operating and financial statements to Landlord in
accordance with Sections 3.1.2(a) and 3.1.2(b) of the PR Lease. On or before the
date on which an Available Excess Profit Statement is due for any monthly or
annual period, Guarantor shall pay to HPT the Available Excess Profit for such
period that to the extent there are any accrued but unpaid Guaranteed
Obligations as of the last day of the previous month. If the amount of Available
Excess Profits for any Fiscal Year (as finally determined) is less than the
amount paid by the Guarantor to HPT in respect of Guaranteed Obligations during
the applicable Fiscal Year, HPT shall promptly remit the amount of such
deficiency to Guarantor.
(c) Each Available Excess Profits Statement delivered by the Guarantor
to HPT shall be accompanied with a Financial Officer's Certificate. At HPT's
election and at HPT's cost except as otherwise provided herein, a certified
audit of any Annual Excess Profits Statement (and the results of operations
calculations supporting such statement) may be performed by a nationally
recognized, independent certified public accounting firm appointed by HPT. In
the event that HPT elects to have such an audit performed, HPT must give notice
of its election within twelve (12) months after its receipt of the applicable
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Annual Excess Profits Statement. Any dispute concerning the correctness of an
audit shall be settled by arbitration in accordance with the arbitration
provisions of the PR Lease. The Guarantor shall pay the cost of any audit
revealing an understatement of Available Excess Profits by more than three
percent (3%) in the aggregate. In the event that either no notice of audit is
given within said twelve (12) months, or no audit is in fact commenced within
eighteen (18) months after receipt of an Annual Excess Profits Statement, such
Annual Excess Profits Statement shall be deemed accepted by HPT.
10. 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 by hand, by telecopier with written acknowledgment of receipt
(provided a copy thereof is sent by Federal Express or similar expedited
commercial carrier for delivery on the next business day), or Federal Express or
similar expedited commercial carrier, addressed to the recipient of the notice,
postpaid and registered or certified with return receipt requested (if by mail),
or with all freight charges prepaid (if by Federal Express or similar carrier).
(b) All notices required or permitted to be sent hereunder shall be
deemed to have been given for all purposes of this Agreement upon the date of
acknowledged receipt, in the case of a notice by telecopier, and, in all other
cases, upon the date of receipt or refusal, except that whenever under this
Agreement a notice is either received on a day which is not a Business Day or is
required to be delivered on or before a specific day which is not a Business
Day, the day of receipt or required delivery shall automatically be extended to
the next Business Day.
(c) All such notices shall be addressed,
if to HPT to:
c/o
Hospitality Properties Trust
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇
[Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇]
with a copy to:
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▇▇▇▇▇▇▇▇ & Worcester LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Esq.
[Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇]
if to the Guarantor to:
InterContinental Hotels (Puerto Rico) Inc.
▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
ENGLAND
Attn: Company Secretary
Telecopier No. ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
with a copy to:
International Hotels Group, Inc.
▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Vice President, Asset Management
[Telecopier No. ▇▇▇-▇▇▇-▇▇▇▇]
(d) By notice given as herein provided, the parties hereto and their
respective successors and assigns shall have the right from time to time and at
any time during the term of this Agreement to change their respective addresses
effective upon receipt by the other parties of such notice and each shall have
the right to specify as its address any other address within the United States
of America.
11. SUCCESSORS AND ASSIGNS. Whenever in this Agreement, any of the
parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party, including without limitation the holders,
from time to time, of the Guaranteed Obligations; and all representations,
warranties, covenants and agreements by or on behalf of the Guarantor which are
contained in this Agreement shall inure to the benefit of HPT's successors and
assigns, including, without limitation, such holders, whether so expressed or
not.
12. APPLICABLE LAW. Except as to matters regarding the internal affairs
of HPT and issues of or limitations on any personal liability of the
shareholders and trustees of HPT for
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obligations of HPT, as to which the laws of the State of Maryland shall govern,
this Agreement and any other instruments executed and delivered to evidence,
complete or perfect the transactions contemplated hereby shall be interpreted,
construed, applied and enforced in accordance with the laws of New York
applicable to contracts between residents of New York which are to be performed
entirely within New York, regardless of (i) where any such instrument is
executed or delivered; or (ii) where any payment or other performance required
by any such instrument is made or required to be made; or (iii) where any breach
of any provision of any such instrument 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 New York; or (vii) any combination of the foregoing.
All actions and proceedings arising out of or in any way relating to this
Agreement shall be brought, heard, and determined exclusively in an otherwise
appropriate federal or state court located within the State of New York.
Guarantor hereby (i) submits to the exclusive jurisdiction of any New York
federal or state court of otherwise competent jurisdiction for the purpose of
any action or proceeding arising out of or relating to this Agreement and (ii)
voluntarily and irrevocably waives, and agrees not to assert by way of motion,
defense, or otherwise in any such action or proceeding, any claim or defense
that it is not personally subject to the jurisdiction of such a court, that such
a court lacks personal jurisdiction over Guarantor or the matter, that the
action or proceeding has been brought in an inconvenient or improper forum, that
the venue of the action or proceeding is improper, or that this Agreement may
not be enforced in or by such a court. To the maximum extent permitted by
applicable law, Guarantor consents to service of process by registered mail,
return receipt requested, or by any other manner provided by law.
TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES
HERETO WAIVES ITS RIGHTS TO TRIAL BY JURY WITH RESPECT TO THIS AGREEMENT OR ANY
MATTER ARISING IN CONNECTION HEREWITH.
13. MODIFICATION OF AGREEMENT. No modification or waiver of any
provision of this Agreement, nor any consent to any
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departure by the Guarantor therefrom, shall in any event be effective unless the
same shall be in writing and signed by HPT, and such modification, waiver or
consent shall be effective only in the specific instances and for the purpose
for which given. No notice to or demand on the Guarantor in any case shall
entitle the Guarantor to any other or further notice or demand in the same,
similar or other circumstances.
14. WAIVER OF RIGHTS BY HPT. Neither any failure nor any delay on HPT's
part in exercising any right, power or privilege under this Agreement shall
operate as a waiver thereof, nor shall a single or partial exercise thereof
preclude any other or further exercise, or the exercise of any other right,
power or privilege.
15. SEVERABILITY. In case any one or more of the provisions contained in
this Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby, but this Agreement
shall be reformed and construed and enforced to the maximum extent permitted by
applicable law.
16. ENTIRE CONTRACT. This Agreement constitutes the entire agreement
between 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.
17. HEADINGS; COUNTERPARTS. Headings in this Agreement are for purposes
of reference only and shall not limit or otherwise affect the meaning hereof.
This Agreement may be executed in any number of counterparts, each of which
shall be an original, but all of which together shall constitute one instrument,
and in pleading or proving any provision of this Agreement, it shall not be
necessary to produce more than one of such counterparts.
18. REMEDIES CUMULATIVE. No remedy herein conferred upon HPT is intended
to be exclusive of any other remedy, and subject to the limitations set forth in
SECTION 9 above, each and every remedy shall be cumulative and shall be in
addition to every other remedy given hereunder or now or hereafter existing at
law or in equity or by statute or otherwise.
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19. NONLIABILITY OF TRUSTEES. THE DECLARATION OF TRUST ESTABLISHING
TRUST, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE
"DECLARATION"), IS DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF
THE STATE OF MARYLAND, PROVIDES THAT, AND THE GUARANTOR HEREBY AGREES THAT, THE
NAME "
HOSPITALITY PROPERTIES TRUST" REFERS TO THE TRUSTEES UNDER THE DECLARATION
COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO
TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF TRUST SHALL BE HELD TO ANY
PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM
AGAINST, TRUST. ALL PERSONS DEALING WITH TRUST, IN ANY WAY, SHALL LOOK ONLY TO
THE ASSETS OF TRUST FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY
OBLIGATION.
20. EFFECTIVE DATE. This Agreement shall be of no force or effect
unless and until the Effective Date occurs.
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WITNESS the execution hereof under seal as of the date above first written.
INTERCONTINENTAL HOTELS (PUERTO
RICO) INC.
By:
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
ACKNOWLEDGED AND AGREED:
HPT TRS IHG-1, INC.
By:
------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
HPT TRS IHG-2, INC.
By:
------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
HPT IHG PR, INC.
By:
------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
President
HOSPITALITY PROPERTIES TRUST
By:
------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
President
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