EXHIBIT 2.2
EXECUTION COPY
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CONTRACT FOR PURCHASE AND SALE OF HOTEL
between
ZETA MYSTIC HOTEL, INC.
as Seller
and
AMERICAN GENERAL HOSPITALITY OPERATING PARTNERSHIP, L.P.
as Buyer
Dated November 26, 1997
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TABLE OF CONTENTS
Page
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ARTICLE I
Definitions
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SECTION 1.01. Definitions........................................... 1
SECTION 1.02. Definitions Generally................................. 7
ARTICLE II
Purchase and Sale; Assumption of Liabilities
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SECTION 2.01. Purchase and Sale..................................... 8
SECTION 2.02. Assumed Liabilities................................... 8
ARTICLE III
Purchase Price
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SECTION 3.01. Deposit............................................... 9
SECTION 3.02. Cash to Close......................................... 9
ARTICLE IV
Seller's Deliveries; Buyer's Due Diligence
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SECTION 4.01. Property Records...................................... 10
SECTION 4.02. Inspection of Hotel; Confidentiality Agreements....... 10
SECTION 4.03. Access to Hotel....................................... 13
ARTICLE V
Seller's Representations
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SECTION 5.01. Representations of Seller............................. 16
SECTION 5.02. Survival of Representations and Covenants............. 19
SECTION 5.03. No Reliance on Documents.............................. 19
SECTION 5.04. Disclaimers........................................... 20
SECTION 5.05. Effect of Disclaimers................................. 21
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ARTICLE VI
Covenants and Affirmative Obligations
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SECTION 6.01. Maintenance of Property................................ 21
SECTION 6.02. Assumed Contracts...................................... 22
SECTION 6.03. No Further Encumbrances................................ 22
SECTION 6.04. Compliance with Obligations............................ 22
SECTION 6.05. Notice of Change in Governmental Requirements.......... 22
SECTION 6.06. Insurance.............................................. 22
SECTION 6.07. Restaurant Lease....................................... 22
SECTION 6.08. Management Agreements.................................. 22
SECTION 6.09. Cooperation............................................ 23
SECTION 6.10. Seller's Indemnity..................................... 23
SECTION 6.11. Buyer's Indemnity...................................... 23
SECTION 6.12. Indemnity Procedures Relating to Third Party Claims;
Exclusivity........................................... 23
SECTION 6.13. Indemnity Fund......................................... 24
SECTION 6.14. Hotel Employees........................................ 25
ARTICLE VII
Conditions
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SECTION 7.01. Conditions to Buyer's Obligation to Close.............. 27
SECTION 7.02. Failure of Buyer's Conditions.......................... 27
SECTION 7.03. Conditions to Seller's Obligations to Close............ 28
SECTION 7.04. Failure of Seller's Conditions......................... 28
ARTICLE VIII
Closing................................. 28
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ARTICLE IX
Closing Documents
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SECTION 9.01. Seller's Closing Documents............................ 29
SECTION 9.02. Buyer's Closing Documents............................. 30
ARTICLE X
Closing Procedure
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SECTION 10.01. Transfer of Funds..................................... 30
SECTION 10.02. Delivery of Documents................................. 30
SECTION 10.03. Disbursement of Funds and Documents................... 31
ARTICLE XI
Prorations and Closing Costs
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SECTION 11.01. Prorations............................................ 31
SECTION 11.02. Seller's Closing Costs................................ 35
SECTION 11.03. Buyer's Closing Costs................................. 35
SECTION 11.04. Accounts Payable...................................... 36
ARTICLE XII
Possession; Risk of Loss..................... 36
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ARTICLE XIII
Condemnation and Damage by Casualty
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SECTION 13.01. Condemnation.......................................... 36
SECTION 13.02. Damage by Casualty.................................... 37
ARTICLE XIV
Default
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SECTION 14.01. Buyer's Default; Liquidated Damages................... 38
SECTION 14.02. Seller's Default...................................... 38
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ARTICLE XV
Real Estate and Other Commissions and Fees.............................. 39
ARTICLE XVI
Notices............................. 40
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ARTICLE XVII
Assignment............................ 40
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ARTICLE XVIII
Escrow Agent
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SECTION 18.01. Duties and Authorization.............................. 40
SECTION 18.02. Liability............................................. 41
SECTION 18.03. Hold Harmless......................................... 42
SECTION 18.04. FDIC Coverage......................................... 42
ARTICLE XIX
Buyer's Representations
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SECTION 19.01. Organization and Corporate Authority.................. 42
SECTION 19.02. Resources............................................. 43
ARTICLE XX
Miscellaneous
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SECTION 20.01. Counterparts.......................................... 43
SECTION 20.02. Section and Paragraph Headings........................ 43
SECTION 20.03. Amendment............................................. 43
SECTION 20.04. Attorneys' Fees....................................... 43
SECTION 20.05. Governing Law......................................... 43
SECTION 20.06. Entire Contract....................................... 43
SECTION 20.07. Time of the Essence................................... 43
SECTION 20.08. Computation of Time................................... 44
SECTION 20.09. Successors and Assigns................................ 44
SECTION 20.10. No Party Draftsman.................................... 44
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SECTION 20.11. No Third Party Benefitted............................. 44
SECTION 20.12. Public Announcements.................................. 44
SECTION 20.13. Recordation........................................... 45
EXHIBIT A Title Description
EXHIBIT B Intentionally Omitted
EXHIBIT C Assumed Contracts
EXHIBIT D Intentionally Omitted
EXHIBIT E Litigation
EXHIBIT F Form of Letter of Credit
This CONTRACT FOR PURCHASE AND SALE OF HOTEL (this
"Contract") is made and entered into as of November 26, 1997 (the
"Effective Date"), between ZETA MYSTIC HOTEL, INC., a Delaware
corporation (the "Seller") and AMERICAN GENERAL HOSPITALITY
OPERATING PARTNERSHIP, L.P., a Delaware limited partnership (the
"Buyer").
In consideration of the mutual agreements herein set forth, the
parties hereto agree as follows:
ARTICLE I
Definitions
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SECTION 1.01. Definitions. The following terms when used in this
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Contract shall have the following meanings:
Affiliate. With respect to any Person, means any other Person
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directly or indirectly controlling, controlled by or under common control with
such specified Person or which is a director, officer, general partner or
managing member of such specified Person.
Assignment. The Assignment and ▇▇▇▇ of Sale which conveys all of the
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Seller's right, title and interest in and to the Assumed Contracts (other than
those terminated at Buyer's request pursuant to Section 2.02(a)) and Personal
Property to Buyer or its designee, subject only to Permitted Exceptions and
Permitted Liens.
Assumed Contracts. All service contracts, real property leases,
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equipment, vehicle or other personal property leases, installment sales
contracts, sales and purchase orders, maintenance agreements and other
agreements relating to the Property or the use and operation of the Hotel to the
extent listed on the attached Exhibit C (as such Exhibit may be supplemented
from time to time in accordance with Section 4.01), but excluding the Management
Agreement.
Attorneys' Fees. All reasonable fees and disbursements charged by
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attorneys or law firms for legal services and the services of any paralegals,
legal assistants or law clerks, including without limitation fees
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charged for representation in negotiations, at the trial level and in all
appeals.
Buyer's Address. American General Hospitality Operating Partnership,
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L.P., ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (Telephone:
(▇▇▇) ▇▇▇-▇▇▇▇; Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇); Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇
▇. ▇▇▇▇▇.
Buyer's Attorney. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ at the following address:
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Battle ▇▇▇▇▇▇ LLP, Park Avenue Tower, ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
(Telephone: (▇▇▇) ▇▇▇-▇▇▇▇; Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇).
Cash to Close. The Purchase Price plus all of Buyer's closing costs
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specified herein, subject to the adjustments and prorations set forth herein.
Closing. The delivery of the Deed and Assignment to Buyer
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concurrently with the delivery of the Purchase Price to Seller and the
consummation of the transaction contemplated hereby.
Closing Date. The date of consummation of the transaction
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contemplated hereby in accordance with the terms of this Contract; provided,
however, that in no event shall the Closing Date occur later than the date set
forth in Article VIII hereof.
Commission. The U.S. Securities and Exchange Commission.
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Control. With respect to any Person, the power to direct the
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management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" shall have correlative meanings.
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Deed. The special warranty deed (or equivalent) by which Seller
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conveys its interest in the Land, together with the related Improvements
thereon, to Buyer, subject to Permitted Exceptions and Permitted Liens.
Deposit. At Buyer's sole option, and subject to any election of Buyer
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to increase the Deposit pursuant to Article VIII, either (i) a Letter of Credit
in the face amount of $200,000 or (ii) the sum of $200,000 cash, together with
all interest earned on said sum while it is held in escrow by Escrow Agent in
accordance with this Contract. Except as specifically provided herein, any
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interest earned on the Deposit shall be paid to Buyer at Closing.
Effective Date. The date of this Contract as set forth in the
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preamble hereof.
ERISA. Employee Retirement Income Security Act of 1974, as amended
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from time to time.
Escrow Agent. The Title Company.
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Governmental Authority. Any Federal, state, county, municipal or
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other governmental department, entity, authority, commission, board, bureau,
court, agency or any instrumentality of any of them.
Governmental Requirement. Any law, statute, code, ordinance, rule,
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regulation, permit, certificate, license, authorization, agreement or
requirement now existing of any Governmental Authority.
Hazardous Material. Any flammable or explosive materials, petroleum
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or petroleum products, oil, crude oil, natural gas or synthetic gas usable for
fuel, radioactive materials, asbestos, polychlorinated biphenyls (PCB's),
dioxin, urea formaldehyde, hazardous wastes or substances or toxic wastes or
substances, including, without limitation, any substances now or hereafter
defined as or included in the definition of "hazardous substances", "hazardous
wastes", "hazardous materials", "toxic materials" or "toxic substances" under
any applicable Governmental Requirement.
Hotel. The hotel known as "The Lodge at the Seaport" located in
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Mystic, Connecticut, consisting of all right, title and interest of the Seller
in and to the Land, Improvements and Personal Property.
Improvements. All structures, fixtures or other improvements on, over
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or beneath the Land.
I.R.C. The Internal Revenue Code of 1986, as amended from time to
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time.
Land. The real property upon which the Hotel is located, as more
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particularly described in Exhibit A.
Letter of Credit. An irrevocable letter of credit naming Seller as
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payee, in substantially the form of Exhibit F.
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Management Agreement. The management agreement with the Manager
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relating to the Hotel as in effect on the date hereof.
Manager. American General Hospitality Operating Partnership, L.P.
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Material Damage. Unrepaired damage as a result of fire or other
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casualty to the Hotel with an aggregate cost to repair of 15% of the Purchase
Price.
Material Portion. Any portion of the Hotel which, if removed, would
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result in a decrease in value of the Hotel of more than 15% of the Purchase
Price.
Permitted Exceptions. The title exceptions described in the title
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report delivered as part of the Property Records if not objected to in writing
by Buyer prior to the end of the Review Period, subject to the provisions of
Section 4.02(b).
Permitted Investments. Investments in (i) United States government
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securities or securities of agencies of the United States government which are
guaranteed by the United States government and having a maturity of one year or
less; (ii) certificates of deposit, banker's acceptances and time deposits and
money market deposit accounts issued or offered by commercial banks having a
combined capital and surplus in excess of $1 billion organized under the laws of
the United States or any political subdivision thereof and having a maturity of
one year or less; (iii) commercial or finance company paper of companies
organized under the laws of any state of the United States or any political
subdivision thereof having a rating assigned to such commercial paper of one of
the two highest unsecured debt ratings by Standard & Poor's Corporation or
▇▇▇▇▇'▇ Investors Service, Inc. and having a maturity of one year or less; (iv)
repurchase obligations with respect to any security described in clause (i)
above entered into with a depository or trust company; or (v) such other
investments upon such terms as Buyer and Seller may agree upon in writing.
Permitted Liens. To the extent not included in the definition of
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Permitted Exceptions, all liens, security interests, claims, charges and
encumbrances (i) pertaining to the Assumed Contracts or (ii) for Taxes which are
not due and payable or which may thereafter be paid without penalty.
Person. Any individual, trustee, corporation, general or limited
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partnership, limited liability
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partnership, limited liability company, joint venture, joint stock company,
bank, firm, governmental agency, trust, association, organization or
unincorporated entity of any kind or nature whatsoever.
Personal Property. All items of personal property located on the Land
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or owned by Seller and used in connection with the operation of the Hotel, but
excluding therefrom any Third Party Property. Such items of personal property
shall include, but not be limited to: (i) all fixtures, furnishings, building
materials, machinery, equipment, telephones, televisions, computers, glass,
tools, silver, china, glassware, utensils, towels, linens, signs, transferable
licenses and permits, telephone numbers, trade names (but excluding any trade
names of any former franchisors of the Hotel or any other third party), motor
vehicles, inventories, food and beverages in process and all other articles of
personal property now or hereafter attached or appurtenant to the Land or the
Improvements or used in connection with the use or operation thereof, including
any Property Records, drawings, as-built plans and specifications and all
permits and warranties in the possession of the Seller and (ii) all attachments,
appliances, fittings, lighting fixtures, doors, cabinets, elevators, flagpoles,
sprinkler, plumbing, heating, air conditioning, electrical, ventilating,
lighting, incinerating, vacuum cleaning, refrigerating and cooling systems,
vaults, safes, carpets and floor coverings, together with all parts and supplies
pertaining thereto.
Property. Collectively, all the Seller's right, title and interest in
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and to the Land, Improvements and Personal Property (including, without
limitation, the Hotel).
Property Records. Each of the following, to the extent such are in
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the possession of Seller or the Manager:
(a) all operating statements (including income and expense statements)
and financial statements (for the calendar years 1995 and 1996 and 1997 to
date), existing operating and capital expenditure budgets and other books
and records for the Property, including all guest registration cards, guest
transcripts, guest histories and all other available guest information;
(b) all engineering and architectural plans, specifications and
drawings and as-built plans pertaining to the Property;
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(c) all advance reservations and trade-out agreements for hotel rooms,
meetings, conventions and the use of facilities for banquets, parties,
affairs and the like which extend to a period beyond the Closing Date;
(d) copies of all assignable guarantees and warranties issued or made
in connection with the construction, improvement, alteration, equipment and
repair of any Improvements;
(e) copies of all certificates of occupancy, licenses, permits,
authorizations and approvals required by law for the current operation of
the Property, and issued by all Governmental Authorities having
jurisdiction, and copies of all certificates issued by the local board of
fire underwriters (or other body exercising similar functions);
(f) copies of all Assumed Contracts;
(g) all existing environmental audits, engineering reports, ADA
compliance reports, similar studies, notices and information concerning the
condition of the Improvements and any Hazardous Material on or about the
Property;
(h) copies of all existing title reports, surveys and engineering and
structural reports in respect of the Property;
(i) 1997 and (if available) 1998 capital and operating budgets;
(j) samples of all material marketing brochures;
(k) copies of all risk management reports available from the Manager;
and
(l) any leases of adjacent land or facilities in connection with the
Hotel.
Purchase Price. Five million six hundred thousand Dollars
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($5,600,000).
REIT. American General Hospitality Corporation, a Maryland
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corporation.
Restaurant Lease. That certain lease dated as of March 25, 1965, as
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amended, relating to the restaurant portion of the Property.
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Seller's Address. ZETA Mystic Hotel, Inc., c/o Financial Security
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Assurance Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ (Telephone:
(▇▇▇) ▇▇▇-▇▇▇▇); Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇); Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇.
Seller's Attorney. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ at the following address:
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Cravath, Swaine & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ (Telephone:
(▇▇▇) ▇▇▇-▇▇▇▇; Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇).
Tax. Any tax, governmental fee or other like assessment or charge of
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any kind whatsoever relating to real or personal property (excluding, however,
any sales, use or occupancy taxes), together with any interest or any penalty,
addition to tax or additional amount imposed by any Governmental Authority
responsible for the imposition of any such tax, fee assessment, or charge.
Termination Date. The date 365 days from the Closing Date.
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Third Party Property. All items of personal property located at the
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Hotel which are (i) owned by space lessees under space leases listed on Exhibit
C, employees, guests or any other person pursuant to any Assumed Contract, (ii)
leased pursuant to any equipment leases or vehicle leases with respect to the
Hotel listed on Exhibit C, or (iii) items that are subject to the rights of the
Manager under the Management Agreement, provided that the aggregate value of all
such items described in this clause (iii) does not exceed $10,000.
Title Company. Lawyers Title Insurance Corporation, c/o ▇▇▇▇▇▇▇ ▇.
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Gallinar, Adams, Gallinar & Iglesias, P.A., ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (Telephone: (▇▇▇) ▇▇▇-▇▇▇▇; Telecopy (▇▇▇) ▇▇▇-▇▇▇▇).
SECTION 1.02. Definitions Generally. Definitions in this Contract
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apply equally to both the singular and plural forms of the defined terms. The
words "include" and "including" shall be deemed to be followed by the phrase
"without limitation" when such phrase does not otherwise appear. The terms
"herein", "hereof" and "hereunder" and other words of similar import refer to
this Contract as a whole and not to any particular article, section, paragraph,
subdivision, clause, exhibit or schedule. All article, section, paragraph,
subdivision, clause, exhibit or schedule references not attributed to a
particular document shall be references to such parts of this Contract.
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ARTICLE II
Purchase and Sale; Assumption of Liabilities
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SECTION 2.01. Purchase and Sale. On the terms and subject to the
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conditions set forth herein, Seller agrees to sell and convey the Property to
Buyer and Buyer agrees to purchase and acquire the Property from Seller.
SECTION 2.02. Assumed Liabilities. (a) Buyer shall assume as of the
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Closing Date and shall pay, perform and discharge when due, and shall indemnify
Seller and its Affiliates against and hold them harmless from, all obligations
and liabilities of whatever kind and nature, primary or secondary, direct or
indirect, absolute or contingent, known or unknown, arising out of or
attributable to the ownership or operation of the Property (including the use or
operation of the Hotel) on or after the Closing Date (the "Assumed
Liabilities"), including, without limitation, the following:
(i) all obligations and liabilities under the Assumed Contracts
accruing from and after the Closing Date;
(ii) all liabilities to customers with respect to all unrefunded cash
deposits paid by such customers to Seller prior to the Closing Date and
paid by Seller to Buyer (or credited against the Purchase Price) pursuant
to Section 11.01 hereof;
(iii) all claims, obligations and liabilities relating to the use or
operation of the Hotel or arising out of events occurring at the Property
at any time on or after the Closing Date; and
(iv) all obligations and liabilities with respect to Taxes relating
to the Property with respect to any period that is not a Pre-Closing Tax
Period; provided, however, that the Buyer will not assume liability for any
Taxes relating to the Property with respect to any Pre-Closing Tax Period
except as set forth in Section 11.01 of this Contract. A "Pre-Closing Tax
Period" shall mean all taxable periods ending on or before the Closing Date
and the portion ending on the Closing Date of any taxable period that
includes (but does not end on) such day. In the case of any taxable period
that includes (but does not end on) the Closing Date (a "Straddle Period"):
(i) real, personal and intangible property Taxes ("Property Taxes")
relating to the Property with respect to the Pre-Closing Tax
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Period shall be equal to the amount of the Property Taxes for the entire
Straddle Period multiplied by a fraction, the numerator of which is the
number of days in the Pre-Closing Tax Period and the denominator of which
is the number of days in the applicable Straddle Period, and (ii) Taxes
(other than Property Taxes) relating to the Property with respect to the
Pre-Closing Tax Period shall be computed as if such taxable period ended as
of the close of business on the Closing Date.
On or prior to the expiration of the Review Period, Buyer may elect to require
that Seller terminate as of the Closing Date any Assumed Contracts (it being
acknowledged that any Assumed Contracts that by their terms will expire between
the Effective Date and the Closing Date will be renewed by the Seller to the
extent required by Sections 6.01 and 6.02); provided, however, that Buyer shall
be responsible for paying on the Closing Date all termination fees, penalties
and other sums required in connection with such terminations, and the Cash to
Close shall be adjusted accordingly.
(b) Buyer's obligations under this Section 2.02 will not be subject
to offset or reduction by reason of any actual or alleged breach of any
representation, warranty or covenant contained in this Contract or any document
delivered in connection herewith or any right or alleged right to
indemnification hereunder.
ARTICLE III
Purchase Price
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The Purchase Price shall be paid as follows:
SECTION 3.01. Deposit. No later than December 2, 1997, Buyer shall
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deliver to Escrow Agent the Deposit, together with a completed and executed W-9
Form for the Buyer. Provided that Buyer has not terminated this Contract
pursuant to Section 4.02(b) on or before the last day of the Review Period (as
defined below), the Deposit shall become nonrefundable to Buyer except as
expressly set forth in Section 7.02, Article XIII or Article XIV hereof.
SECTION 3.02. Cash to Close. The Cash to Close shall be paid to
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Escrow Agent in accordance with the closing procedure hereinafter set forth.
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ARTICLE IV
Seller's Deliveries; Buyer's Due Diligence
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SECTION 4.01. Property Records. Seller has delivered or made
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available to Buyer (including through granting Buyer access to the Hotel) the
Property Records; provided, however, if Seller obtains or becomes aware of any
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additional Property Records, Seller shall deliver or make available such
additional Property Records to Buyer as soon as practicable but in any event not
less than five (5) days prior to the end of the Review Period, and such records
shall thereupon become, and be deemed to be part of, the Property Records and
all of Seller's representations herein shall be deemed to include such Property
Records; provided further, that all Property Records in the possession or
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control of Manager or an Affiliate thereof shall be deemed to have been
delivered by Seller.
SECTION 4.02. Inspection of Hotel; Confidentiality Agreements. (a)
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During the period from the Effective Date through and including December 15,
1997 (the "Review Period"), Buyer and Buyer's agents and representatives shall
be given reasonable access to the Hotel (including Property Records located
thereat) during normal business hours and shall have the right to physically
inspect the Property and to conduct, at Buyer's sole cost and expense, soil
tests and other nondestructive inspections, provided that such tests and
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inspections shall be (i) coordinated with Seller in advance, (ii) performed by
Persons reasonably satisfactory to Seller and who shall have obtained or be
otherwise covered by adequate insurance for any costs, losses or damages arising
while on the Property and (iii) performed in a manner that does not unreasonably
interfere with the use and occupancy of the Hotel by the Seller, by guests or
patrons of the Hotel, or by tenants. In the event that the Closing does not
occur for any reason, Buyer shall have the obligation promptly to restore (at
Buyer's expense) the Property to the condition existing prior to Buyer's entry
(other than changes in the condition of the Property not caused by Buyer's
entry), which obligation shall survive any termination of this Contract. Buyer
covenants and agrees that the Property shall not be damaged or impaired in any
way as the result of its activities on the Hotel's premises, and hereby agrees
to indemnify and hold the Seller and its Affiliates harmless from and against
any claims, causes of action, damages and expenses (including Attorneys' Fees)
to the extent incident to, resulting from or in any way arising out of (i)
Buyer's presence (or the presence of Buyer's agents or representatives) in, on
or about the Property, or (ii) out of any
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test or inspection conducted by Buyer on the Property. Such indemnity shall
survive the Closing or any termination of this Contract and not be merged
therein.
(b) Buyer shall have until the end of the Review Period to notify
Seller in writing of (i) any objections relating to the Property that Buyer has
discovered as a result of Buyer's inspections pursuant to Section 4.02(a) or
Buyer's review of the Property Records, or (ii) its election to terminate this
Contract, which it may exercise in its sole and absolute discretion. If, on or
before the end of the Review Period, Buyer shall notify Seller of any such
objections, Seller may elect to cure such objections within 10 days after the
date on which it received notice of Buyer's objections and, following such
election, shall use reasonable efforts to cure such objections no more than 90
days following such election, or shall deliver notice to Buyer that it will not
cure. If Seller shall have so elected to cure such objections, but shall not
have cured such objections within such 90 days (the "Cure Period") to Buyer's
reasonable satisfaction or shall have delivered notice to Buyer that it will not
cure, Buyer may terminate this Contract by written notice to Seller and Escrow
Agent at any time within 10 days after the expiration of the Cure Period or its
receipt of Seller's notice that it will not cure, as the case may be. If Buyer
fails to notify Seller and Escrow Agent of any such objections or its election
to terminate this Contract on or before the end of the Review Period, or if
Buyer fails to notify Seller and Escrow Agent that it is not satisfied with the
cure of any such objections within 10 days after the Cure Period or of its
election to terminate this Contract within 10 days after its receipt of Seller's
notice that it will not cure, Buyer shall be deemed to have approved all such
matters and to have waived its right to terminate this Contract under this
Section 4.02. If Buyer terminates this Contract pursuant to this Section,
Seller shall be entitled to retain (and, to the extent it has not already done
so, Buyer shall return to Seller) all Property Records, including all reports
and studies prepared by third parties relating to the Property resulting from
the inspection of the Property and all documents delivered to Buyer pursuant to
Section 4.01 hereof. The Deposit shall be returned to Buyer by Escrow Agent
within two (2) business days after any such termination and neither party shall
have any further rights or obligations to the other, except for the indemnity
set forth in Section 4.02(a). If Buyer does not terminate this Contract as
provided herein, Buyer shall be deemed to have waived the right to terminate
this Contract under this Section and shall be deemed to have accepted and
approved the condition of the Property, subject to the remaining
12
terms of this Contract, and the Deposit shall become nonrefundable to Buyer,
subject only to Section 7.02, Article XIII and Article XIV hereof.
Notwithstanding the foregoing, Seller shall be obligated to remove (i) to the
extent objected to by Buyer prior to the end of the Review Period, any
objections to title in the nature of mortgages, liens or judgments (other than
those created pursuant to Assumed Contracts) ("Objections to Title") that can be
removed upon payment of a liquidated sum of money and that are shown on title
report delivered as a Property Record, (ii) mortgages and mechanics liens
discovered after the date of such title report that are the result of acts of
the Seller and (iii) other Objections to Title discovered after the date of such
title report that can be removed upon payment of a liquidated sum of money;
provided, however, that in no-------- -------event shall Seller be obligated to
expend more than $40,000 in the aggregate to remove objections of the type
described in clause (iii).
(c) Except to the extent otherwise provided herein, required by law
or advised by counsel to be required by law, until the consummation of the
transaction contemplated by this Contract, the parties hereto shall hold, and
shall cause each of their respective Affiliates to hold, all information and
documents obtained in connection with the transaction contemplated hereby
confidential including any oral and written information concerning the Seller
and the Property received from the Seller or from a third party at the direction
of the Seller (collectively, the "Due Diligence Material"). The Due Diligence
Material shall not be disclosed, discussed or made known without the prior
written consent of the Seller, except to the employees or boards of directors of
Buyer, the REIT, or any of their Affiliates, to Buyer's prospective lenders and
their counsel, to any hotel franchisors, any marketing company employed to do
feasibility studies, or any investment banking, accounting, legal or other
professional advisers, or to any environmental or engineering consultants with
whom Buyer desires to consult in connection with the transaction contemplated
hereby. If the transaction contemplated hereby is not consummated for any
reason whatever, each party hereto shall, as soon as practicable, return all
such information and documents (and any copies thereof in such party's
possession) to such other party hereto. Notwithstanding the foregoing, it is
acknowledged that the REIT may sell shares to the general public and that in
connection therewith, the REIT has the absolute and unbridled right to market
such securities and prepare and file all necessary or reasonably required
registration statements and other papers, documents and instruments necessary or
reasonably required in the REIT's judgment, and
13
that of its attorneys and underwriters, to file a registration statement with
respect to its shares with the Commission and/or similar state authorities and
to cause same to become effective and to disclose therein and thus to its
underwriters, to the Commission and/or to similar state authorities and to the
public all of the terms, conditions and provisions of this Contract, as well as
various documents delivered to the REIT and/or Buyer pursuant to this Contract.
SECTION 4.03. Access to Hotel. Buyer shall have the following access
----------------
to the Hotel:
(a) Oversight. After the Review Period, Buyer and Buyer's authorized
----------
representatives and employees shall have the right, at Buyer's sole cost, risk
and expense, from time to time to enter upon and pass through the Hotel during
normal business hours and to establish and maintain an oversight operation with
respect to the Hotel prior to the Closing Date. Personnel from such oversight
operation shall have reasonable access during normal business hours to all
books, records and other information in the possession or control of Seller or
its agents concerning the Hotel and shall have the right (at Buyer's expense) to
establish duplicate books and records in order to effect a smooth transition in
the ownership and management of the Hotel; provided, however, that Buyer and its
oversight operation and employees (a) shall not unreasonably interfere with the
normal management and operation of the Hotel, (b) shall hold all information
acquired from such books and records confidential in accordance with the
provisions of this Contract, (c) shall repair any damage to the physical
condition of the Hotel caused by Buyer or its agents in any such oversight
operation, and (d) shall not assume, or be deemed to have assumed, management
responsibilities prior to Closing by virtue of such oversight operation. Buyer
shall indemnify Seller from and against any and all loss, damage, liability,
cost or expense resulting from the violation or breach of any of the covenants
set forth in clauses (a) through (d) of the preceding sentence. Nothing
contained herein is deemed to create a right of the Buyer to terminate this
Contract after the Review Period.
(b) Access to Records and Financial Information. (i) Buyer and
--------------------------------------------
Buyer's authorized representatives and employees shall have the right, at
Buyer's sole cost, risk and expense, from time to time to enter upon and pass
through the Hotel during normal business hours and upon reasonable notice to
Seller to examine and inspect all of the then existing books, records, surveys,
plans, specifications, permits, certificates of occupancy and other
14
files that are relevant to the management, ownership, operation, use, occupancy,
construction or leasing of the Hotel, are in Seller's possession or control, and
have not been otherwise provided to Buyer as required elsewhere herein.
(ii) Seller agrees to cooperate with Buyer to obtain any information
needed from Seller to enable Buyer and the REIT to file any necessary tax
returns.
(iii) Without limiting the foregoing and in addition thereto, for the
period of time commencing on the date of this Contract and continuing through
the second anniversary of the Closing Date, Seller shall, from time to time,
upon reasonable advance notice from Buyer, provide Buyer and its designated
accountants and employees with access to all financial information in its
possession pertaining to the period of Seller's ownership of the Property, which
information is relevant and reasonably necessary, in the opinion of Buyer's
outside, third party accountants, to enable Buyer, the REIT and their
accountants to prepare financial statements in compliance with any or all of (i)
Rule 3-14 of Regulation S-X of the Commission, (ii) any other rule issued by the
Commission and applicable to Buyer or the REIT and (iii) any registration
statement, report or disclosure statement filed with the Commission by, or on
behalf of, Buyer or the REIT; provided, however, that in any such event(s),
Buyer shall reimburse Seller for third party, out-of-pocket costs and expenses
that Seller incurs in order to comply with the foregoing requirements. Seller
acknowledges and agrees that the following is a representative description of
the information and documentation that Buyer, the REIT and their accountants'
may require to be provided (to the extent in the Seller's possession or control
as of the date of this Contract and not turned over to Buyer or the REIT, or
their respective Affiliates at Closing) in order to comply with clauses (i),
(ii) or (iii) of the previous sentence:
(1) applicable rent rolls for the eleven (11) calendar months
immediately preceding the calendar month in which the Closing occurs;
(2) Seller's internally-prepared operating statements;
(3) applicable leases;
(4) Seller's budgeted annual and monthly income and expenses, and
actual annual and monthly income and expenses;
15
(5) Seller's cash receipt journals and bank statements for the
Property;
(6) Seller's general ledgers with respect to the Property;
(7) Seller's schedule of expense reimbursements required under
applicable leases in effect on the Closing Date, if one exists;
(8) Seller's schedule, if one exists, of those items of repairs and
maintenance performed by, or at the direction of Seller, during the
Seller's final fiscal year in which the Seller owned and operated the
Property (the "Final Fiscal Year");
(9) Seller's schedule, if one exists, of those capital improvements
and fixed asset additions made by, or at the direction of, Seller during
the Final Fiscal Year;
(10) Seller's invoices with respect to expenditures made during the
Final Fiscal Year; and
(11) access (during normal and customary business hours) to
responsible personnel to answer accounting questions.
(iv) Prior to the end of the Review Period, Seller shall also provide
to Buyer's representatives a representation letter, as prescribed by generally
accepted auditing standards promulgated by the Auditing Standards Division of
the American Institute of Certified Public Accountants, signed by individuals(s)
responsible for Seller's financial reporting sufficient to enable Buyer's
accountants to render an opinion on the financial statements related to the
Hotel, such letter to be in a form which shall be reasonably agreed to by Seller
and Buyer on or prior to the expiration of the Review Period.
(v) To the extent that the financial statements previously provided
by Seller for the current year do not include any period up to and including the
Closing Date, Seller shall, within twenty-five (25) days after the Closing Date,
provide Buyer with monthly unaudited compilation financial statements, including
balance sheets, general ledger and income statements applicable to such period
inclusive of the Closing Date. From the date hereof until the Closing Date,
Seller shall deliver to Buyer each week upon receipt of a copy of the weekly
status report for the Hotel.
16
ARTICLE V
Seller's Representations
------------------------
SECTION 5.01. Representations of Seller. Seller represents and
-------------------------
warrants to Buyer as of the date hereof as follows (to the extent that such
representations and warranties are expressly qualified by reference to the
Seller's knowledge (or similar reference), then, unless otherwise indicated,
such reference shall be to the current, actual knowledge of ▇▇▇▇ ▇▇▇▇▇▇▇▇,
without any inquiry other than (i) of the general manager of the Hotel and (ii)
of ▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇):
(a) Seller's Existence. Seller is a corporation duly organized,
-------------------
validly existing and in good standing under the laws of the State of Delaware,
and is not a foreign entity, foreign corporation, foreign partnership, foreign
trust or foreign estate (as those terms are defined in Section 1445 of the
I.R.C.).
(b) Authority. Seller has the corporate power and authority to
----------
execute, deliver and perform this Contract and the other documents and
agreements contemplated hereby; Seller has duly authorized the execution and
delivery of this Contract and the performance of its obligations hereunder;
subject to obtaining the consents required hereunder, if any, and except for the
rights of the lessee under the Restaurant Lease, the entry into, the performance
of, or compliance with this Contract by Seller will not, to Seller's knowledge,
result in any violation of, default under, or acceleration of any obligation
under any existing partnership agreement, mortgage indenture, agreement, note,
contract, permit, judgment, decree, order, restrictive covenant, statute, rule
or regulation applicable to Seller or the Hotel.
(c) Litigation. Except as set forth on Exhibit E, there are no
-----------
actions, suits, proceedings or investigations (including condemnation
proceedings) that are material in relation to the Hotel pending or, to Seller's
knowledge, threatened against the Property and Seller is not aware of any facts
which might result in any such action, suit or proceeding.
(d) Hazardous Material. Except for (i) those matters specified in
-------------------
Seller's existing environmental reports which form a part of the Property
Records and (ii) the handling, use and storage of Hazardous Material in the
ordinary course of operating the Hotel, which in each
17
instance has been and shall be in material compliance with all applicable
Governmental Requirements, Seller (A) has no knowledge of any discharge, spill,
or disposal of any Hazardous Material on or under the Property and (B) has
received no written notice from any Governmental Authority of any violations of
Governmental Requirements regarding Hazardous Materials concerning the Property
or any portion thereof.
(e) No Rights To Purchase. Except for the rights of the lessee under
----------------------
the Restaurant Lease, no other Person has any right of first refusal or option
to acquire Seller's Property or any portion thereof or lease any space therein.
(f) Assumed Contracts. Other than the Management Agreement, the
------------------
schedule of Assumed Contracts attached to this Contract as Exhibit C, as such
Exhibit may be supplemented from time to time in accordance with Section 4.01
(true, accurate and complete copies of which are included in the Property
Records), constitutes a list of all of the agreements, leases or other contracts
affecting the Property and there are no other agreements, leases or other
contracts with respect to the Property. Except as set forth herein or as
provided in any Exhibit hereto, Seller has neither received nor delivered any
written notice that any party is currently in material default under any Assumed
Contract and to Seller's knowledge, no event has occurred or circumstance exists
which, with the giving of notice or passage of time, would constitute a material
default thereunder. Seller has received no notice that any party to any Assumed
Contract intends to cancel or terminate such Assumed Contract. Seller shall not
assign any Assumed Contract or any claim, right or benefit arising thereunder or
resulting therefrom if an attempted assignment thereof, without the consent of a
third party thereto, would constitute a breach or other contravention of such
Assumed Contract or in any way adversely affect the rights of Buyer or Seller.
Seller and Buyer will use commercially reasonable good faith efforts (but
without any payment of money by Seller or Buyer other than incidental out-of-
pocket expenses related thereto) to obtain any required consent of the other
parties to any such Assumed Contract for the assignment thereof, or any claim,
right or benefit arising thereunder or resulting therefrom, to Buyer as Buyer
may reasonably request.
(g) Financial Statements. The financial statements for the Hotel
---------------------
delivered to Buyer, for the current year and each of the two years prior to the
date of this Contract, were prepared in accordance with generally accepted
accounting principles consistently applied in all
18
material respects or the Uniform System of Account for Hotels. To Seller's
knowledge, the financial statements referred to in this Section 5.01(g) present
fairly the financial condition and results of operations of the Hotel as of the
dates thereof.
(h) Notices. Seller has received no written notice from any
--------
Governmental Authority, any insurer or any other party (i) that either the
Property or the use or operation thereof is currently in violation of any zoning
or other land use regulations, (ii) that Seller is currently in violation, or
with the passage of time will be in violation, of the requirements of any
ordinance, law, regulation or order of any Governmental Authority affecting the
Property or that any investigation has commenced or is contemplated regarding
any such possible violation, or (iii) asserting that Seller is required to
perform work at the Property or obtain any permit, license, certificate or
authority to cure or avoid any such violation; provided that Seller shall not be
--------
deemed to have breached any of the above representations or warranties unless
the applicable violation is material in relation to the Hotel.
(i) Parties in Possession. Other than (i) guests in the Hotel and
----------------------
(ii) as described in the Property Records (including lessees under leases
included therein), there are no parties other than Seller in possession of any
portion of the Land or Improvements as lessees, tenants at sufferance or
trespassers. There are no leases or licenses for the use of adjacent land or
facilities in connection with the operation of the Hotel.
(j) Commitments to Governmental Authorities. Except as set forth in
----------------------------------------
the Property Records (i) no commitments relating to the Property that are
material in relation to the Hotel have been made to any Governmental Authority,
utility company, school board, church or other religious body or any homeowner
or homeowners association, merchant's association or any other organization,
group or individual which would impose an obligation upon Buyer or its
successors or assigns to make any contribution or dedication of money or land or
to construct, install or maintain any improvements of a public or private nature
on or off the Land and (ii) no Governmental Authority has imposed, or to the
knowledge of Seller has threatened to impose, any requirement that is material
in relation to the Hotel that the owner of the Land pay directly or indirectly
any special fees or contributions or incur any expenses or obligations in
connection the Land.
19
(k) Ownership of Property. Seller owns good and insurable title to
----------------------
the Land and Improvements, subject only to Permitted Liens and Permitted
Exceptions. Except as otherwise shown on Exhibit C, all of the Personal
Property has been fully paid for and is owned by Seller free and clear of all
liens and encumbrances, in each case subject only to Permitted Liens and
Permitted Exceptions.
(l) No Franchise Agreement. There is no franchise agreement
-----------------------
currently in effect for the Hotel.
(m) ERISA. Seller is not an "employee benefit plan" within the
------
meaning of Section 3(3) of ERISA or an entity whose assets include plan assets
within the meaning of Department of Labor Regulation Section 2510.3-101. The
consummation of the transaction contemplated by this Contract will not result in
a "prohibited transaction" within the meaning of Section 4975(c) of the I.R.C.
or Section 406 of ERISA.
(n) No Employees. No employees employed in connection with the Hotel
-------------
are employed by Seller and there are no union contracts or other employment
agreements covering any such employees binding on Seller or the Hotel.
SECTION 5.02. Survival of Representations and Covenants. The
------------------------------------------
representations and warranties of the Buyer and Seller set forth in this
Contract shall survive until the Termination Date. Except as expressly provided
in this Contract, all of the covenants and agreements of Buyer and Seller set
forth in this Contract shall expressly survive for an indefinite period after
the Closing and shall specifically not merge into the Closing and the delivery
of the Deed and the Assignment.
SECTION 5.03. No Reliance on Documents. Except as expressly stated
-------------------------
in this Contract, Seller makes no representation or warranty as to the truth,
accuracy or completeness of any materials, data or information delivered by
Seller to Buyer in connection with the transaction contemplated hereby. Buyer
acknowledges and agrees that all materials, data and information delivered by
Seller (or its brokers, agents, representatives or advisors) to Buyer in
connection with the transaction contemplated hereby are provided to Buyer as a
convenience only and that any reliance on or use of such materials, data or
information by Buyer shall be at the sole risk of Buyer, except as otherwise
expressly stated herein. Without limiting the generality of the foregoing
provisions, Buyer acknowledges and agrees that (a) any environmental or other
report with respect to the Property which is delivered by Seller to
20
Buyer shall be for general informational purposes only, (b) Buyer shall not have
any right to rely on any such report delivered by Seller to Buyer, but rather
will rely on its own inspections and investigations of the Property and any
reports commissioned by Buyer with respect thereto, and (c) none of the Seller,
its Affiliates or the Person which prepared any such report delivered by Seller
to Buyer shall have any liability to Buyer for any inaccuracy in or omission
from any such report.
SECTION 5.04. DISCLAIMERS. EXCEPT AS EXPRESSLY SET FORTH IN THIS
------------
CONTRACT, IT IS UNDERSTOOD AND AGREED THAT SELLER IS NOT MAKING AND HAS NOT AT
ANY TIME MADE ANY WARRANTIES OR REPRESENTATIONS OF ANY KIND OR CHARACTER,
EXPRESSED OR IMPLIED, WITH RESPECT TO THE PROPERTY, INCLUDING, BUT NOT LIMITED
TO, ANY WARRANTIES OR REPRESENTATIONS AS TO HABITABILITY, MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE, TITLE, ZONING, TAX CONSEQUENCES, LATENT OR
PATENT PHYSICAL OR ENVIRONMENTAL CONDITION, UTILITIES, OPERATING HISTORY OR
PROJECTIONS, VALUATION, GOVERNMENTAL APPROVALS, THE COMPLIANCE OF THE PROPERTY
WITH GOVERNMENTAL LAWS (INCLUDING, WITHOUT LIMITATION, ACCESSIBILITY FOR
HANDICAPPED PERSONS), THE TRUTH, ACCURACY OR COMPLETENESS OF ANY PROPERTY
RECORDS OR ANY OTHER INFORMATION PROVIDED BY OR ON BEHALF OF SELLER TO BUYER, OR
ANY OTHER MATTER OR THING REGARDING THE PROPERTY. BUYER ACKNOWLEDGES AND AGREES
THAT UPON THE CLOSING SELLER SHALL SELL AND CONVEY TO BUYER AND BUYER SHALL
ACCEPT THE PROPERTY "AS IS, WHERE IS, WITH ALL FAULTS", EXCEPT TO THE EXTENT
EXPRESSLY PROVIDED OTHERWISE IN THIS CONTRACT. BUYER HAS NOT RELIED AND WILL
NOT RELY ON, AND SELLER IS NOT LIABLE FOR OR BOUND BY ANY EXPRESSED OR IMPLIED
WARRANTIES, GUARANTIES, STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING TO
THE PROPERTY OR RELATING THERETO (INCLUDING SPECIFICALLY, WITHOUT LIMITATION,
INFORMATION DISTRIBUTED WITH RESPECT TO THE PROPERTY) MADE OR FURNISHED BY
SELLER, THE MANAGER OF THE PROPERTY, OR ANY REAL ESTATE BROKER OR AGENT
REPRESENTING OR PURPORTING TO REPRESENT SELLER, TO WHOMEVER MADE OR GIVEN,
DIRECTLY OR INDIRECTLY, ORALLY OR IN WRITING, UNLESS SPECIFICALLY SET FORTH IN
THIS CONTRACT. BUYER REPRESENTS TO SELLER THAT BUYER HAS CONDUCTED, OR WILL
CONDUCT PRIOR TO CLOSING, SUCH INVESTIGATIONS OF THE PROPERTY, INCLUDING BUT NOT
LIMITED TO, THE PHYSICAL AND ENVIRONMENTAL CONDITIONS THEREOF, AS BUYER DEEMS
NECESSARY TO SATISFY ITSELF AS TO THE CONDITION OF THE PROPERTY AND THE
EXISTENCE OR NONEXISTENCE OR CURATIVE ACTION TO BE TAKEN WITH RESPECT TO ANY
HAZARDOUS OR TOXIC SUBSTANCES ON OR DISCHARGED FROM THE PROPERTY, AND WILL RELY
SOLELY UPON SAME AND NOT UPON ANY INFORMATION PROVIDED BY OR ON BEHALF OF SELLER
OR ITS AGENTS OR EMPLOYEES WITH RESPECT THERETO, OTHER THAN SUCH
REPRESENTATIONS, WARRANTIES AND COVENANTS OF
21
SELLER AS ARE EXPRESSLY SET FORTH IN THIS CONTRACT. EXCEPT AS OTHERWISE
EXPRESSLY PROVIDED HEREIN TO THE CONTRARY, UPON CLOSING, BUYER SHALL ASSUME THE
RISK THAT ADVERSE MATTERS, INCLUDING, BUT NOT LIMITED TO, CONSTRUCTION DEFECTS
AND ADVERSE PHYSICAL AND ENVIRONMENTAL CONDITIONS, MAY NOT HAVE BEEN REVEALED BY
BUYER'S INVESTIGATIONS, AND BUYER, UPON CLOSING, SHALL BE DEEMED TO HAVE WAIVED,
RELINQUISHED AND RELEASED SELLER (AND SELLER'S OFFICERS, DIRECTORS, TRUSTEES,
SHAREHOLDERS, EMPLOYEES AND AGENTS) FROM AND AGAINST ANY AND ALL CLAIMS,
DEMANDS, CAUSES OF ACTION (INCLUDING CAUSES OF ACTION IN TORT), LOSSES, DAMAGES,
LIABILITIES, COSTS AND EXPENSES (INCLUDING ATTORNEYS' FEES AND COURT COSTS) OF
ANY AND EVERY KIND OR CHARACTER, KNOWN OR UNKNOWN, WHICH BUYER MIGHT HAVE
ASSERTED OR ALLEGED AGAINST SELLER (AND SELLER'S OFFICERS, DIRECTORS, TRUSTEES,
SHAREHOLDERS, EMPLOYEES AND AGENTS) AT ANY TIME BY REASON OF OR ARISING OUT OF
ANY LATENT OR PATENT CONSTRUCTION DEFECTS OR PHYSICAL CONDITIONS, VIOLATIONS OF
ANY APPLICABLE LAWS (INCLUDING, WITHOUT LIMITATION, ANY ENVIRONMENTAL LAWS) AND
ANY AND ALL OTHER ACTS, OMISSIONS, EVENTS, CIRCUMSTANCES OR MATTERS REGARDING
THE PROPERTY. BUYER AGREES THAT SHOULD ANY CLEANUP, REMEDIATION OR REMOVAL OF
HAZARDOUS SUBSTANCES OR OTHER ENVIRONMENTAL CONDITIONS ON THE PROPERTY BE
REQUIRED AFTER THE DATE OF CLOSING, SUCH CLEAN-UP, REMOVAL OR REMEDIATION SHALL
BE THE RESPONSIBILITY OF AND SHALL BE PERFORMED AT THE SOLE COST AND EXPENSE OF
BUYER.
SECTION 5.05. Effect of Disclaimers. Seller and Buyer acknowledge
----------------------
that the compensation to be paid to Seller for the Property has been determined
based upon the fact that the Property is being sold subject to the provisions of
Sections 5.02, 5.03 and 5.04.
ARTICLE VI
Covenants and Affirmative Obligations
-------------------------------------
SECTION 6.01. Maintenance of Property. From and after the Effective
------------------------
Date, Seller shall not perform any construction or removal of any of the
Improvements, or make any other change or improvement on or about the Property,
except in accordance with its 1997 capital or operating budget, without the
prior written consent of Buyer. Between the Effective Date and the Closing
Date, Seller shall maintain and operate the Property in substantially the same
condition and manner as the Property is now maintained and operated by Seller
(giving effect to seasonal fluctuations). The Personal Property located at the
Hotel as of the Closing Date will be substantially similar to that located at
the Hotel on the Effective Date, subject only to any changes
22
arising from Hotel operations conducted in the ordinary course of business. All
building supplies, maintenance materials, food and beverage in process, linens
and equipment, if any, located at the Property on the Closing Date will be
delivered and transferred to the Buyer.
SECTION 6.02. Assumed Contracts. After the Effective Date, other
------------------
than agreements terminable without penalty on no more than 30 days' notice,
Seller shall not enter into any new Assumed Contract or extend, replace, renew
or terminate any Assumed Contract without the prior written consent of Buyer,
such consent of Buyer not to be unreasonably withheld.
SECTION 6.03. No Further Encumbrances. After the Effective Date,
------------------------
Seller shall not create or incur any mortgage, lien, pledge or other encumbrance
affecting the Property other than the exceptions set forth on the title report
or title commitment comprising part of the Property Records and Permitted Liens
and Permitted Exceptions.
SECTION 6.04. Compliance with Obligations. Seller will perform all of
----------------------------
its material obligations under the Assumed Contracts and will comply in all
material respects with all Governmental Requirements affecting the Property and
the use thereof until the Closing Date.
SECTION 6.05. Notice of Change in Governmental Requirements. Seller
----------------------------------------------
shall, upon notice, or upon becoming aware of any such changes, notify Buyer
promptly of any change in any applicable Governmental Requirements which might
affect the value or use of the Property to Buyer in a manner that is material in
relation to the Hotel.
SECTION 6.06. Insurance. Seller shall maintain in full force and
----------
effect all of its existing insurance (or renew such insurance on substantially
similar terms) until the Closing Date.
SECTION 6.07. Restaurant Lease. Seller shall use commercially
-----------------
reasonable good faith efforts (without the payment of any money) to obtain and
deliver to Buyer an estoppel certificate relating to the Restaurant Lease in the
form contemplated by such lease, or, if no such form is contemplated, in the
form reasonably agreed upon by Buyer and Seller.
SECTION 6.08. Management Agreement. Buyer acknowledges that the
---------------------
Management Agreement will be terminated by Seller at or prior to Closing.
23
SECTION 6.09. Cooperation. Except as otherwise expressly provided
------------
for herein, Buyer and Seller shall use commercially reasonable efforts to make
or file all required notifications and to obtain all consents, approvals and
authorizations which must be obtained in order to consummate the transaction
contemplated hereby. Each party hereto shall give to the other parties its full
and complete cooperation in giving such notices or obtaining such consents,
approvals and authorizations. Each party covenants and agrees to promptly
furnish to the other all information and data in the furnishing party's
possession requested in writing by the requesting party which the furnishing
party has the right to disclose and which is reasonable or necessary in order to
assist the requesting party to give the necessary notices or secure the permits,
licenses and approvals required as contemplated by this Contract.
SECTION 6.10. Seller's Indemnity. Subject to the terms of Sections
-------------------
5.02, 5.03 and 5.04, Seller agrees to indemnify and hold Buyer and its
Affiliates harmless from all liabilities, losses, damages, costs and expenses
(including Attorneys' Fees) which the Buyer or any of its Affiliates may suffer
or incur by reason of any action or claim arising from acts or omissions of
Seller prior to the Closing Date in connection with the Property or the use or
operation of the Hotel and all liabilities in respect of the Property or the
operation of the Hotel that are not Assumed Liabilities or Seller's failure to
fulfill any of its obligations set forth in this Contract.
SECTION 6.11. Buyer's Indemnity. Buyer agrees to indemnify and hold
------------------
Seller and its Affiliates harmless from all liabilities, losses, damages, costs
and expenses (including Attorneys' Fees) which Seller or any of its Affiliates
may suffer or incur by reason of any action or claim arising on or after the
Closing Date from acts or omissions of Buyer or otherwise arising out of the
Property or the use or operation of the Hotel on or after the Closing Date,
including Buyer's failure to discharge any of the Assumed Liabilities, Buyer's
failure to fulfill any of its obligations set forth in this Contract, or
Seller's incurrence of any costs related to the expiration or termination of any
Assumed Contract made pursuant to Buyer's request under the provisions of
Section 2.02(a).
SECTION 6.12. Indemnity Procedures Relating to Third Party Claims;
----------------------------------------------------
Exclusivity. (a) Any party seeking indemnification under Section 6.10 or 6.11
------------
(the "Indemnified Party") agrees to give prompt notice to the party against whom
indemnity is sought (the "Indemnifying Party") of the
24
assertion of any claim, or the commencement of any suit, action or proceeding,
in respect of which indemnity may be sought under Section 6.10 or 6.11. The
Indemnifying Party may, and at the request of the Indemnified Party shall,
participate in and control the defense of any such claim, suit, action or
proceeding at its own expense. The Indemnifying Party shall not be liable under
Section 6.10 or 6.11 for any settlement effected without its consent of any
claim, suit, action or proceeding in respect of which indemnity may be sought
hereunder.
(b) After the Closing, this Section 6.12 will provide (subject to
Section 6.13) the exclusive procedures for indemnification for any liabilities,
losses, damages, costs, losses or expenses to third parties arising out of this
Contract, the Property, the business conducted at the Hotel or the transaction
contemplated hereby.
SECTION 6.13. Indemnity Fund. At the Closing, Seller shall deposit
---------------
with the Escrow Agent $150,000 (together with all investment earnings thereon,
the "Indemnity Fund"), which shall be held by Escrow Agent in a segregated
account and shall be invested only in Permitted Investments. The $150,000
amount deposited shall at all times be comprised, at Seller's sole discretion,
of (a) cash or (b) subject to any modification of the escrow provisions set
forth in this Section as may be reasonably required by Buyer, unconditional,
irrevocable letters of credit issued by a Person reasonably acceptable to Buyer,
and having terms, conditions and an expiration date reasonably acceptable to
Buyer. In the event Buyer makes a claim or demand under this Contract or any
other agreement entered into between Seller and Buyer at Closing, and the Seller
does not dispute such claim or demand, or is determined to be liable pursuant to
such claim or demand by a court of competent jurisdiction or otherwise in a
mutually acceptable dispute resolution forum (after the expiration of all
applicable and available appeal periods or the earlier resolution of such
appeals), then if Seller fails promptly to pay such claim or demand, Escrow
Agent promptly upon the receipt of notice shall pay such claim or demand in
full, in any event not to exceed the available funds in the Indemnity Fund. On
the Termination Date the Escrow Agent promptly shall return all remaining funds
or letters of credit in the Indemnity Fund to Seller; provided, however, that if
-------- -------
on or before the Termination Date, Buyer shall have either commenced litigation
to enforce the terms of its rights hereunder or provided notice to Escrow Agent
setting forth in reasonable detail the facts and circumstances of any claim,
liability, cost or expense to which Buyer is entitled to indemnification
hereunder, the terms of this Section
25
shall be extended until the final resolution of such litigation, including any
appeal, provided that all amounts or letters of credit remaining in the
Indemnity Fund at such time in excess of the amount of the alleged claim,
liability, cost or expense (plus reasonable estimated Attorneys' Fees) or demand
shall be returned to the Seller on the Termination Date. Buyer agrees that its
sole remedy and recourse with respect to any claims arising under or in
connection with this Contract that Buyer elects to pursue after the Closing
shall be made pursuant to this Section 6.13.
SECTION 6.14. Hotel Employees. Seller agrees that Buyer will in no
----------------
way be liable for any employees, or for any employment agreements or union
contracts with respect to employees, working at the Hotel (the "Hotel
Employees"), other than termination or severance payments, if any, due to a
Hotel Employee arising solely as a result of a termination of such Hotel
Employee. In particular, Seller will not, and will not authorize the Manager
to, between the date hereof and the date of Closing, enter into any employment
or union contracts or agreements that will be binding on Buyer, the entity to
which Buyer leases the Hotel ("Lessee") or any manager retained by the Lessee to
manage the Hotel ("New Manager") on or after the Closing. None of Buyer, Lessee
and New Manager will be obligated to pay any amount to or on behalf of any Hotel
Employees for any period prior to Closing. None of Buyer, Lessee and New
Manager shall have any liability (accrued or unaccrued) under any pension,
welfare or profit sharing plan that Seller or Manager or any other party may
have established with respect to any Hotel Employees. Seller shall pay at
Closing all accrued (whether earned or unearned) salaries, wages, bonuses,
profit-sharing, and other compensation, vacation, sick leave, worker's
compensation, and welfare benefits, deferred compensation, savings, pension,
profit sharing, 401K, retirement plan and insurance and other benefits through
the day preceding the Closing Date of all Hotel Employees, whether or not
employed by whichever of Buyer, Lessee or New Manager shall be the employer from
and after the Closing Date (the "New Employer"), and for all liabilities of
whatever kind with respect to all Hotel Employees who are not employed by the
New Employer (except as specifically set forth in this Section with respect to
(i) termination or severance payments, if any, due to a Hotel Employee arising
solely as a result of a termination of such Hotel Employee and (ii) matters as
to which Buyer has agreed to indemnify Seller). Without limiting the generality
of the foregoing, Seller shall be responsible for all obligations under group
health plan continuation coverage rules under part 6 of Title I of ERISA and
26
Section 4980B of the I.R.C. for all existing and former Hotel Employees and
their beneficiaries who become entitled to such coverage on or before the
Closing Date. Seller hereby indemnifies, defends and saves harmless Buyer with
respect to the foregoing. Seller shall terminate or cause the Manager to
terminate the Hotel Employees effective as of 11:59 p.m. on the day before the
Closing Date (it being understood that if for any reason the Closing does not
occur, such termination shall be deemed to be rescinded ab initio) and to pay to
-- ------
such employees all amounts owed to such employees including amounts owed on
account of accrued and unpaid benefits including earned and/or accrued vacation
pay and sick leave. Seller shall be responsible for and shall pay any sums due
and owing for any multiemployer withdrawal liability under Title IV of ERISA
incurred as a result of sale of the Hotel. Buyer shall cause the New Employer
to rehire any or all of those Hotel Employees it desires to hire effective as of
12:01 a.m. on the Closing Date (it being understood that if for any reason the
Closing does not occur, such rehiring shall be deemed void ab initio) upon such
-- ------
terms as such New Employer may elect. Neither Buyer, nor Lessee, nor New Manager
nor their respective Affiliates shall have any obligation to hire any or all of
the Hotel Employees, provided that if the failure to hire less than all of the
Hotel Employees or the hiring of Hotel Employees on different terms results in a
violation of, or causes the applicability of, the Worker Adjustment and
Retraining Notification Act, 29 U.S.C. (S) 2101 et. seq. (the "WARN Act"), Buyer
shall be responsible for all claims, damages and penalties under the WARN Act
and shall indemnify Seller from and against any liability or expense relating to
the WARN Act. Buyer shall be responsible for all employee obligations in
respect of the rehired Hotel Employees accruing from and after such rehiring.
Seller hereby agrees that neither it nor its Affiliates shall induce or cause
any Hotel Employee to be hired by any Affiliate of Seller. Seller and Buyer
shall indemnify and hold the other (and their respective lessees and managing
agents) harmless from and against any loss, cost, expense (including reasonable
Attorneys' Fees and disbursements actually incurred), damage or liability any
such party may suffer by reason of the other's default under this Section.
27
ARTICLE VII
Conditions
----------
SECTION 7.01. Conditions to Buyer's Obligation to Close. Buyer shall
------------------------------------------
not be obligated to consummate the Closing unless and until each of the
following conditions are either fulfilled or waived in writing by Buyer:
(a) Delivery of Documents. Seller shall be prepared to deliver all
----------------------
instruments and documents to be delivered by Seller at the Closing pursuant
to Sections 9.01 and 10.02 of this Contract.
(b) Representations and Warranties; Compliance with Covenants.
----------------------------------------------------------
Seller's representations and warranties contained in Section 5.01 shall be
true and correct in all material respects as of the Closing Date subject,
however, to facts disclosed on supplements to Exhibit C delivered in
accordance with Section 4.01 (which supplements, upon their delivery to
Buyer in accordance with Section 4.01, shall for all purposes of this
Contract constitute part of Exhibit C). Seller shall have performed in all
material respects all covenants, agreements and obligations required by
this Contract to be performed or complied with by Seller prior to the
Closing Date.
(c) Right of First Refusal. The lessee under the Restaurant Lease
-----------------------
shall not have purchased the Property pursuant to its right of first
refusal set forth in the Restaurant Lease.
(d) Management Agreement. Seller shall have terminated the
---------------------
Management Agreement.
(e) Title Policy. The Title Company shall be prepared to issue its
-------------
title policy insuring title to the Property, free and clear of all matters
except Permitted Liens and Permitted Exceptions.
SECTION 7.02. Failure of Buyer's Conditions. If any of the
------------------------------
conditions to Buyer's obligations have not been satisfied (or deemed satisfied)
on or before the Closing Date other than solely as a result of Seller's failure
to comply with its obligations hereunder for a period in excess of 30 days after
receipt of notice from Buyer of such failure (in which case, the provisions of
Section 14.02 shall be applicable), and Buyer is otherwise in material
compliance with the terms hereof, Buyer may exercise the remedy granted pursuant
to Section 14.02(i) hereof.
28
SECTION 7.03. Conditions to Seller's Obligation to Close. Seller
-------------------------------------------
shall not be obligated to consummate the Closing unless and until each of the
following conditions are either fulfilled or waived by Seller:
(a) Representations and Warranties; Compliance With Covenants.
----------------------------------------------------------
Buyer's representations and warranties contained in Article XIX shall be
true and correct in all material respects as of the Closing Date. Buyer
shall have performed in all material respects all covenants, agreements and
obligations required by this Contract to be performed or complied with by
Buyer prior to the Closing Date.
(b) Delivery of Documents and Cash to Close. Buyer shall be prepared
----------------------------------------
to deliver all Cash to Close and all instruments and documents to be
delivered by Buyer at the Closing pursuant to Sections 9.01, 9.02, 10.01
and 10.02 of this Contract.
(c) Right of First Refusal. The lessee under the Restaurant Lease
-----------------------
shall not have purchased the Property pursuant to its right of first
refusal set forth in the Restaurant Lease.
SECTION 7.04. Failure of Seller's Conditions. If any of the
-------------------------------
conditions to Seller's obligations have not been satisfied on or before the
Closing Date as a result of Buyer's failure to comply with any of its
obligations hereunder for a period of 30 days after receipt of notice from
Seller of such failure, and Seller is otherwise in material compliance with the
terms hereof, Seller may terminate this Contract and receive the Deposit as
liquidated damages pursuant to Section 14.01 hereof.
ARTICLE VIII
Closing
-------
Subject to all of the provisions of this Contract, Buyer and Seller
shall close the transaction contemplated hereby as soon as practicable following
the satisfaction or waiver of the conditions to Closing set forth herein on a
date set forth in a written notice from Buyer to Seller at least 14 days prior
to such date, provided that in no event shall the Closing Date occur after
--------
January 30, 1998, unless such Closing Date is extended pursuant to the following
sentence, pursuant to the Cure Period provided for in Section 4.02 or pursuant
to Section 13.02. At Buyer's election, the Closing Date may be extended from
January 30,
29
1998 to February 16, 1998; provided, however, that by January 15, 1998 Buyer
-------- -------
shall have (i) given Seller written notice of such election and (ii) increased
the Deposit to $300,000. The Closing shall take place on the Closing Date at
10:00 a.m. in New York, New York at the offices of Seller's Attorney, or at such
other location mutually agreed upon by the parties.
ARTICLE IX
Closing Documents
-----------------
SECTION 9.01. Seller's Closing Documents. At Closing, Seller shall
---------------------------
execute and deliver the following documents ("Seller's Closing Documents") in
accordance with Section 10.02:
(a) Deeds and Assignment. The Deed, the Assignment and required
---------------------
transfer tax forms and affidavits, which shall be duly executed and
acknowledged by Seller so as to convey to Buyer (or its designee) good and
insurable title to the Property described therein free and clear of all
liens, encumbrances and other conditions of title other than the Permitted
Exceptions and Permitted Liens.
(b) Seller's Affidavit. An affidavit and "gap undertakings" from
-------------------
Seller in form and content reasonably satisfactory to Buyer and the Title
Company to facilitate the deletion of those standard exceptions on the
Title Company's related title insurance commitment which may be deleted
solely by delivery of an affidavit.
(c) Closing Statement. A closing statement setting forth the
------------------
Purchase Price and all credits, adjustments and prorations between Buyer
and Seller, and the net Cash to Close due from Buyer.
(d) Authorizing Resolutions. Certificates of such resolutions in
------------------------
form and content as the Title Company may reasonably request evidencing
Seller's existence, power and authority to consummate the transaction
herein contemplated, including copies of all corporate organizational
documents or other reasonable evidence of corporate authority.
(e) FIRPTA. A FIRPTA Non-Foreign Transferor Certificate in
-------
accordance with Section 1445 of the I.R.C. from Seller.
30
(f) Property Records. The originals, if available, otherwise copies,
-----------------
of each of the Property Records to the extent not otherwise covered in this
Section.
(g) Vehicle Titles. The necessary certificates of title duly
---------------
endorsed for transfer together with any required affidavits and other
documentation necessary for the transfer of title from Seller to Buyer of
any motor vehicles owned by Seller and used in connection with the Hotel's
operations.
(h) Certificate Regarding Representations and Warranties. A
-----------------------------------------------------
certificate of Seller certifying to Buyer that the representations and
warranties of Seller set forth herein are true and correct in all material
respects as of the Closing Date as if made on such date, subject, however,
to facts disclosed on supplements to Exhibit C delivered in accordance with
Section 4.01.
SECTION 9.02. Buyer's Closing Documents. At Closing, Buyer shall
--------------------------
execute and deliver the following documents ("Buyer's Closing Documents") in
accordance with Section 10.02:
(a) Assumption Documents. All documents under this Article IX to be
---------------------
executed by Buyer.
(b) Resolutions. Certificate of resolutions of Buyer in form and
------------
content as the Title Company may reasonably request evidencing authorizing
the entering into and execution of this Contract and the consummation of
the transaction contemplated hereby.
ARTICLE X
Closing Procedure
-----------------
The Closing shall proceed in the following manner:
SECTION 10.01. Transfer of Funds. Buyer shall pay the Cash to Close
------------------
to the Escrow Agent by wire transfer to a depository designated by the Escrow
Agent.
SECTION 10.02. Delivery of Documents. Seller shall deliver Seller's
----------------------
Closing Documents and Buyer shall deliver Buyer's Closing Documents to the
Escrow Agent.
31
SECTION 10.03. Disbursement of Funds and Documents. When Seller and
------------------------------------
Buyer have delivered all documents and funds to Escrow Agent as provided in
Sections 10.01 and 10.02 and when the Title Company is prepared to issue its
title policy in the form required hereby, then the Escrow Agent shall (a)
disburse the Purchase Price to Seller, subject to adjustments and prorations
hereunder and less any closing costs or other sums due hereunder from Seller,
(b) return the Deposit to Buyer, record the Deed and deliver all the Seller's
Closing Documents to Buyer (c) deliver all the Buyer's Closing Documents to
Seller and (d) pay all of the closing costs and other sums due to third parties
hereunder, to the extent set forth on any closing statement executed by Seller
and Buyer at or prior to the Closing.
ARTICLE XI
Prorations and Closing Costs
----------------------------
SECTION 11.01. Prorations. Except as otherwise specified in clause
-----------
(a) below, the following items shall be prorated at the Closing as of midnight
preceding the Closing Date, without duplication:
(a) Certain costs and expenses relating to the Property shall be
adjusted as of the Closing Date between Seller and Buyer (the "Closing Date
------------
Adjustments"). The Closing Date Adjustments shall constitute a composite
-----------
accounting of the different items described below in this Section. The intent
is to credit or charge, as the case may be, Seller with all revenues and
expenses respecting the Property which are attributable to operations before the
Closing Date and to credit or charge, as the case may be, Buyer with all such
revenues and expenses attributable to operations on and after the Closing Date.
Unless otherwise provided for herein, all revenues and expenses shall be
separately accounted for as between Seller and Buyer as of 12:01 a.m. on the
Closing Date. No later than 90 days after the Closing Date (or with respect to
real estate taxes, 30 days from the date that the amounts such taxes are
determinable), Seller and Buyer shall review all the amounts and calculations
made in respect of the Closing Date Adjustments and any final corrections shall
be made to the Closing Date Adjustments, and Seller and Buyer at that time shall
settle any funds owed to each other. The following items shall be accounted for
in calculating the Closing Date Adjustments as between Seller and Buyer:
32
(i) Prepaid charges and fees for licenses and permits or for other
items transferred by Seller to Buyer shall be prorated as between Seller
and Buyer.
(ii) Prepaid rents and all room and other deposits and advance
payments under booking arrangements and trade-out agreements for use of
Seller's Property facilities after the Closing Date shall be credited to
Buyer.
(iii) With regard to food (other than food in process including mini-
bars and gift shops) and non-alcoholic and alcoholic beverages (other than
opened containers and unopened containers outside of storage areas), Buyer
shall be charged with the costs of all food and non-alcoholic and alcoholic
beverages at Seller's Property at Seller's cost based upon an inventory of
such items performed jointly by Buyer and Seller as of 12:01 a.m. on the
Closing Date.
(iv) All charges and prepayments relating to the Assumed Contracts
which are assumed by Buyer shall be separately accounted for as between
Seller and Buyer as of 12:01 a.m. on the Closing Date.
(v) All cash in the operating accounts for the Hotel (it being
understood that such accounts refer to "house banks" and not bank accounts)
shall be paid over to Buyer at Closing and Seller shall receive a credit
therefor in the Closing Date Adjustments.
(vi) With regard to the booking of guest rooms and the provision of
other services at the Property, the parties agree that Seller shall be
entitled to all of the revenue generated by such operations through and
including the night before the Closing Date; provided that Buyer shall be
--------
entitled to one-half of such revenue (including applicable sales Tax) for
the night before the Closing Date. Seller shall receive a credit, without
duplication, for all accounts receivable (other than for the guests' stay
that includes the night prior to Closing) with respect to hotel guests then
in occupancy, net of any travel agent commissions, credit card commissions
or other similar costs to collect such revenue. Except as expressly
provided for in this subsection (vi), Seller shall own and be entitled to
all collections with respect to accounts receivable for the period prior to
the Closing Date. Buyer agrees, on a prompt, but no less frequent than
monthly, basis, to deliver to Seller any payments and back-up received or
generated with respect to
33
Seller's accounts receivable. The parties acknowledge that if Buyer
receives a payment from a party which does not specify the invoice being
paid, then such payment shall be applied, to the extent such payment is not
identifiable to a particular invoice, first to the oldest past due sums due
Seller from such party, if any, provided, however, that payments made (i)
in respect of airline accounts will be applied only to amounts owed that
are less than 180 days past due and (ii) all payments made in respect of
any other accounts will be applied only to amounts owed that are less than
90 days past due. Buyer has no obligation nor responsibility to collect
said accounts receivable, however, Buyer will cooperate with Seller in such
collection and shall give Seller rights to inspect Buyer's books and
records at reasonable times with respect to such accounts receivable.
(vii) With respect to baggage, personal property, laundry, valet
packages and other property of Hotel guests checked or left in the care of
Seller by transient hotel guests or tenants prior to the Closing (all of
which, except for any items locked in the Hotel's safe deposit boxes as to
which Seller or Manager cannot reasonably gain access shall be inventoried
on the Closing Date) Buyer shall be responsible from and after the Closing
Date for all such property.
(b) Subject to Section 2.02(a)(iv), Seller shall pay or credit
against the Purchase Price any of the following that are a lien on the Land or
Improvements: all unpaid sales, occupancy, personal property or real estate
Taxes for years prior to Closing, together with any interest and penalties
relating to any of the foregoing.
(c) Seller shall notify the utility companies servicing the Property
prior to Closing that billing to Seller for such utilities shall be discontinued
at the end of the day preceding the Closing Date, and Buyer shall arrange with
such utilities to have such ▇▇▇▇▇▇▇▇ for utility services charged to Buyer from
and after the Closing Date and Seller shall be entitled to the refunds of all
deposits therefor. Seller shall pay all charges with respect to such utilities
for the period prior to the Closing Date and utility charges since the date of
the last billing will be adjusted at Closing as of the Closing Date on the basis
of the last ▇▇▇▇ so rendered, with subsequent adjustment, if any, when final
bills are rendered.
34
(d) If there is a water meter on the Property, Seller shall furnish,
at the Closing or as soon thereafter as practicable, a reading to a date not
more than 30 days prior to the Closing Date, and the unfixed meter charge, the
unfixed sewer rent and/or unfixed water charges, if any, based thereon for the
intervening time shall be apportioned on the basis of such last reading, subject
to adjustment upon receipt of the actual meter charge and sewer rent.
(e) Other costs, expenses and charges which are a lien or may become
a lien against the Seller's Property and are of such a type as are usually
involved in and adjusted with regard to property similar to and located in the
locale of the Property, including Taxes in accordance with Section 2.02(a)(iv).
Prorations hereunder shall, where applicable, be made on the basis of a 365-day
year and, for any month, on the basis of the number of days elapsed. If any of
the foregoing cannot be apportioned at the Closing because of the unavailability
of the amounts which are to be prorated, unless otherwise provided for herein, a
reasonable estimation of the amount of such items shall be placed in escrow with
the Title Company, and such items shall be prorated as soon as practicable after
the Closing Date.
(f) To the fullest extent permitted by applicable law, any
controversy, claim or dispute arising out of or relating to the prorations set
forth in this Section 11.01, including any dispute concerning the scope of this
clause (f), shall be resolved exclusively by the final and binding decision of
the Accountants as set forth herein. In the case of a dispute with respect to
such matters, either Seller or Buyer may submit such matter to arbitration which
shall be conducted by the Accountants. The "Accountants" shall be one of three
(3) firms of certified public accountants of recognized international standing
in the hotel industry. Until otherwise agreed to by the parties, the three (3)
firms shall be ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, Coopers & ▇▇▇▇▇▇▇ L.L.P. and ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ PC, notwithstanding any existing relationships which may exist between
Seller and such accounting firms or Buyer and such accounting firms. The party
(i.e., either Seller or Buyer) desiring to submit any matter to arbitration
----
hereunder shall do so by written notice to the other party, which notice shall
set forth the items to be arbitrated and such party's choice of one of the three
(3) accounting firms. The party receiving such notice shall within fifteen (15)
days after receipt of such notice either approve such choice, or designate one
of the remaining two (2) firms by written notice back to the first party, and
the first party shall within fifteen (15) days after receipt of such notice
either approve such choice or disapprove the same. If both parties shall have
approved
35
one of the three (3) firms under the preceding sentence, then such firm shall be
the "Accountants" for the purposes of arbitrating the dispute; if the parties
are unable to agree on an accounting firm, then the third firm, which was not
designated by either party, shall be the "Accountants" for such purpose. The
Accountants shall be required to render a decision in accordance with the
procedures described below within fifteen (15) days after being notified of
their selection. The fees and expenses of the Accountants will be paid by the
non-prevailing party. In all arbitration proceedings submitted to the
Accountants, the Accountants shall be required to agree upon and approve the
substantive position advocated by Buyer or Seller with respect to each disputed
item. Any decision rendered by the Accountants that does not reflect the
position advocated by Buyer or Seller shall be beyond the scope of authority
granted to the Accountants and, consequently, may be overturned by either party.
All proceedings by the Accountants shall be conducted in accordance with the
Uniform Arbitration Act, except to the extent the provisions of such act are
modified by this Contract or the mutual agreement of the parties. Unless
otherwise agreed, all arbitration proceedings shall be conducted at the Hotel
with respect to which the dispute arose.
SECTION 11.02. Seller's Closing Costs. Seller shall pay for the
-----------------------
following items prior to or at the time of Closing:
(a) 50% of all transfer taxes, sales taxes, conveyance fees, recording
costs and other documentary stamp tax related to the transfer of the
Property;
(b) 50% of the premium and other costs and fees payable in connection
with an Owner's Title Insurance Policy obtained by Buyer and issued by the
Title Company covering the Land and the Improvements related thereto, plus
the cost of all endorsements thereto;
(c) One-half of all escrow fees and costs; and
(d) Seller's Attorneys' Fees.
SECTION 11.03. Buyer's Closing Costs. Buyer shall pay for the
----------------------
following items prior to or at the time of Closing:
(a) 50% of the transfer taxes, sales taxes conveyance fees, recording
costs and documentary stamp tax related to the transfer of the Property;
36
(b) 50% of the premium and other costs and fees payable in connection
with an Owner's Title Insurance Policy obtained by Buyer and issued by the
Title Company covering all the Land and the Improvements related thereto,
plus the cost of all endorsements thereto;
(c) The costs and fees payable in connection with any surveys, or
updates of surveys, relating to the Property;
(d) One-half of all escrow fees and costs; and
(e) Buyer's Attorneys' Fees.
SECTION 11.04. Accounts Payable. Seller shall retain and be
-----------------
responsible for the payment of all accounts payable, liabilities and obligations
relating to the Property (including the Hotel) accrued prior to and as of the
Closing and payable after the Closing. Buyer shall be responsible for the
particular accounts payable, liabilities and obligations relating to the
Property (including the Hotel) accruing on or after the Closing.
ARTICLE XII
Possession; Risk of Loss
------------------------
Buyer shall be granted full possession of the Property at Closing
subject to (i) tenant's rights under any space leases of the Property (or any
portion thereof) assumed by Buyer, (ii) guests in occupancy and (iii) Permitted
Liens and Permitted Exceptions. All risk of loss with respect to the Property
shall pass to Buyer on and as of the Closing Date.
ARTICLE XIII
Condemnation and Damage by Casualty
-----------------------------------
SECTION 13.01. Condemnation. In the event of the institution of any
-------------
proceedings by any Governmental Authority which shall relate to the proposed
taking of any Material Portion of the Hotel by eminent domain prior to Closing,
or in the event of the taking of any Material Portion of the Hotel by eminent
domain prior to Closing, Seller shall promptly notify Buyer and Buyer shall
thereafter have the right and option to terminate this Contract by giving Seller
and the Escrow Agent written notice of Buyer's election to
37
terminate within 30 days after receipt by Buyer of the notice from the Seller.
Seller hereby agrees to furnish Buyer with written notice of a proposed
condemnation within two business days after Seller's receipt of such
notification. Should Buyer terminate this Contract pursuant to this Section
13.01, the Escrow Agent shall return to Buyer its Deposit and, except as
otherwise provided for in this Contract, the parties hereto shall be released
from their respective obligations and liabilities hereunder. Should Buyer elect
not to terminate this Contract with respect to such Hotel, the parties hereto
shall proceed to Closing and the affected Seller shall assign all of its right,
title and interest in all awards in connection with such taking or takings to
Buyer.
SECTION 13.02. Damage by Casualty. (a) If, after the Effective Date
-------------------
but prior to the Closing Date, any damage other than Material Damage occurs from
fire, windstorm or other casualty to the Property, and if the sum of (i) the
insurance proceeds paid or payable with respect to such damage (other than
business interruption insurance for periods prior to the Closing Date) plus (ii)
the amount of any deductible or co-payment amount under the related insurance
policy or policies plus (iii) such amounts, if any, as Seller may in its sole
discretion elect to pay to Buyer or credit to Buyer at Closing is sufficient to
restore the Hotel to the condition it was in immediately prior to the occurrence
of such casualty plus the costs of any interruption of business at its Hotel
that will extend beyond the Closing Date, then (1) Buyer shall be required to
close this transaction in accordance with the Contract, (2) Seller shall assign
unto Buyer any and all insurance proceeds paid or payable with respect to such
damage (other than business interruption insurance for periods prior to the
Closing Date), and (3) Buyer shall receive at Closing a credit in the amount of
any deductible or co-payment amount under the related policy or policies plus
such other amounts, if any, described in clause (iii) of this sentence. In such
event, Seller shall have no additional obligation if such insurance proceeds are
insufficient or unavailable to repair such damage.
(b) If, prior to Closing, there is any Material Damage to the Hotel
and such Material Damage is, in the reasonable estimation of Seller, capable of
restoration within one year following the occurrence of such Material Damage,
Seller may elect within 30 days of the date of such Material Damage to terminate
this Contract, and if Seller makes such election, neither Buyer nor Seller shall
have any further obligation or liability under this Contract. If Seller does
not elect to terminate this Contract, the
38
Closing shall be extended to the date (not to exceed one year from the date of
Seller's election) necessary to enable Seller to restore the Hotel to the
condition it was in immediately prior to the occurrence of such Material Damage.
If prior to Closing there is any Material Damage to the Hotel and such Material
Damage is not, in the reasonable estimation of Seller, capable of restoration
within one year following the occurrence of such Material Damage, neither Buyer
nor Seller shall have any further obligation or liability to the other under
this Contract.
ARTICLE XIV
Default
-------
SECTION 14.01. Buyer's Default; Liquidated Damages. In the event
------------------------------------
that the transaction fails to close solely due to Buyer's failure to comply with
its obligations hereunder (after giving effect to the cure period in Section
7.04), the Deposit (including any interest earned thereon) shall be immediately
paid to Seller by the Escrow Agent and Buyer shall have no further rights with
respect thereto. Buyer recognizes that the Property will be removed from the
market during the existence of this Contract and, if Buyer fails to perform its
obligations hereunder, Seller shall be entitled to compensation for the
detriment caused thereby. However, Buyer and Seller agree that it is extremely
difficult and impractical to ascertain the extent of the detriment and, to avoid
such difficulties, Buyer and Seller agree that Seller shall be entitled to
retain the Deposit (including any interest earned thereon) as liquidated damages
(and not as a penalty) in accordance with this Section 14.01. All parties agree
that such amount stated as liquidated damages shall be in lieu of any other
relief to which Seller might otherwise be entitled by virtue of this Contract or
by operation of law.
SECTION 14.02. Seller's Default. In the event that the transaction
-----------------
fails to close solely due to the failure of Seller to comply with its
obligations hereunder (after giving effect to the cure period in Section 7.02)
or a material breach of its representations or warranties hereunder, Buyer shall
have the right to either (i) terminate this Contract and receive a refund of the
Deposit (ii) commence an action for the specific performance of this Contract or
(iii) in the case of a prior sale or encumbrance of the Hotel by Seller to any
Person other than Buyer or its successors or permitted assigns in breach of this
Contract or in the case of any wilful or knowing material breach by Seller of
its representations, warranties
39
or covenants hereunder, Buyer shall also be entitled to seek damages. Except as
provided in the preceding clause (iii), Buyer hereby waives any right to ▇▇▇
Seller for damages for any default by Seller hereunder, but if the Closing
occurs, subject to the provisions of Section 6.13 such waiver shall not apply to
damages to which Buyer may be entitled hereunder by reason of any breach by
Seller of any of its representations, warranties or covenants hereunder which
survive the Closing and that first became known to Buyer after Closing.
ARTICLE XV
Real Estate and Other Commissions and Fees
------------------------------------------
Seller and Buyer each represent and warrant to the other that there
are no brokers, salespersons, advisors or finders involved in this transaction
by reason of agreement with such representing party, except for ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ pursuant to an agreement with Seller. The provisions of this Article
shall survive the Closing or termination of this Contract.
Seller agrees to, and hereby does, indemnify and save harmless Buyer
and its Affiliates and their respective successors and assigns against and from
any loss, liability or expense, including Attorneys' Fees, arising out of any
claim or claims for commissions or other compensation for bringing about this
Contract or the transaction contemplated hereby, or advice in connection
herewith, made by any broker, finder, consultant or like agent if such claim or
claims made by any such broker, finder, consultant or like agent are based in
whole or in part on any agreements entered into with Seller or its
representatives for a commission or other compensation. Buyer agrees to, and
hereby does, indemnify and save harmless Seller, its Affiliates and their
respective successors and assigns against and from any loss, liability or
expense, including Attorneys' Fees, arising out of any claim or claims for
commissions or other compensation for bringing about this Contract or the
transaction contemplated hereby, or advice in connection herewith, made by any
broker, finder, consultant or like agent if such claim or claims by any such
broker, finder, consultant or like agent are based on any agreements entered
into with Buyer or its representatives for a commission or other compensation.
40
ARTICLE XVI
Notices
-------
Any notice, request, demand, instruction or other communication to be
given to any party hereunder, except where required to be delivered at the
Closing, shall be in writing and shall be hand-delivered or sent by Federal
Express or a comparable overnight mail service, or mailed by U.S. registered or
certified mail, return receipt requested, postage prepaid, to Buyer, Seller,
Buyer's Attorney, Seller's Attorney and Escrow Agent at their respective
addresses set forth in Article I of this Contract. Notice shall be deemed to
have been given upon receipt or refusal of delivery of said notice. Notices may
be given by confirmed telecopy provided a hard copy of such notice is sent by
another means in accordance with this Article on the next business day following
such telecopy delivery. The addressees and addresses for the purpose of this
Article may be changed by giving notice. Unless and until such written notice
is received, the last addressee and address stated herein shall be deemed to
continue in effect for all purposes hereunder.
ARTICLE XVII
Assignment
----------
This Contract may be assigned by Buyer without the prior written
consent of Seller; provided, however, that (i) such assignee shall assume the
Assumed Liabilities on the terms and conditions contained herein and shall
otherwise acquire all of the right, title and interest to the Property that
Buyer would have acquired, under the conditions and subject to the obligations
that Buyer would have undertaken and (ii) Buyer shall remain fully liable to
Seller hereunder as if such transfer and assumption were made directly to and by
Buyer.
ARTICLE XVIII
Escrow Agent
------------
SECTION 18.01. Duties and Authorization. The payment of the Deposit,
-------------------------
Cash to Close and all other funds provided hereunder to the Escrow Agent is for
the accommodation of the parties to this Contract. The duties of the Escrow
Agent shall be determined solely by the express provisions of this Contract.
The Escrow Agent shall
41
invest the Deposit (to the extent delivered in cash) as directed in writing by
the Buyer and Seller. If this Contract has been terminated in accordance with
Section 4.02(b), Escrow Agent shall return the Deposit to Buyer within two (2)
business days after such termination without further notice to any party to this
Contract. In the event the Escrow Agent receives a written demand from either
Seller or Buyer for the Deposit after the expiration of the Review Period (which
demand shall include an explanation setting forth the factual basis for such
party's demand for the Deposit), Escrow Agent shall give 10 days written notice
to the other party (i.e., Buyer or Seller) of such demand and of Escrow Agent's
----
intention to remit the Deposit to the party making the demand on the stated
date. If Escrow Agent does not receive a written objection within 10 days after
such notice, the Escrow Agent is hereby authorized to so remit the Deposit. If,
however, the Escrow Agent receives written objection from the other party within
10 days after such notice, the Escrow Agent shall continue to hold the Deposit
until otherwise directed by joint written instructions from Seller and Buyer, or
until a final judgment of an appropriate court or arbitrator is issued. Buyer
and Seller authorize the Escrow Agent, without creating any obligation on the
part of the Escrow Agent, in the event this Contract or the Deposit becomes
involved in litigation, to deposit the Deposit with the clerk of the court in
which the litigation is pending and thereupon the Escrow Agent shall be fully
relieved and discharged of any further responsibility under this Contract. Buyer
and Seller also authorize the Escrow Agent, if it is threatened with litigation,
to interplead all interested parties in any court of competent jurisdiction and
to deposit the Deposit with the clerk of the court and thereupon the Escrow
Agent shall be fully relieved and discharged of any further responsibility
hereunder. Notwithstanding anything to the contrary contained herein, in the
event there is any controversy as to which party is entitled to the Deposit and
all or any portion of the Deposit is comprised of a Letter of Credit, then,
prior to the expiration of any such Letter of Credit, the Escrow Agent shall (i)
instruct Seller to submit a drawing under such Letter of Credit and deposit the
proceeds of such drawing into the escrow or (ii) accept from Buyer a substituted
Letter of Credit which is in the same form and from the same financial
institution as the previously deposited Letter of Credit with an expiration date
no less than six months after the date of replacement.
SECTION 18.02. Liability. The Escrow Agent shall not be liable for
----------
any mistake of fact or error of judgment or any acts or omissions of any kind
unless caused by its own wilful misconduct or negligence. The Escrow Agent
shall
42
be entitled to rely on any instrument or signature reasonably believed by it to
be genuine and may assume that any Person purporting to give any writing, notice
or instruction in connection with this Contract is duly authorized to do so by
the party on whose behalf such writing, notice, or instruction is given.
SECTION 18.03. Hold Harmless. Buyer and Seller will, and hereby
--------------
agree to, jointly and severally, indemnify the Escrow Agent for and hold it
harmless against any loss, liability or expense, including Attorneys' Fees,
incurred on the part of the Escrow Agent arising out of or in connection with
the acceptance of, or the performance of, its duties under this Contract, as
well as the costs and expenses of defending against any claim or liability
arising under this Contract other than as a result of its own wilful misconduct
or negligence. This provision shall survive the Closing or earlier termination
of this Contract.
SECTION 18.04. FDIC Coverage. The parties are informed that the
--------------
Federal Deposit Insurance Corporation (FDIC) coverage applies only to a maximum
amount of One hundred thousand Dollars ($100,000) for each individual depositor,
and that the Escrow Agent assumes no responsibility for any loss occurring which
arises from the fact that the amount held by the Escrow Agent in any account may
cause the aggregate amount of any individual depositor's accounts to exceed One
hundred thousand Dollars ($100,000) and that the excess amount is not insured by
the Federal Deposit Insurance Corporation.
ARTICLE XIX
Buyer's Representations
-----------------------
SECTION 19.01. Organization and Corporate Authority. Buyer
-------------------------------------
represents and warrants to Seller, as of the date hereof and as of the Closing
Date: Buyer is duly organized, validly existing and in good standing under the
laws of the state of its formation; Buyer has the requisite power and authority
to execute, deliver and perform this Contract and the other documents and
agreements contemplated hereby; and Buyer has duly authorized the execution and
delivery of this Contract by the end of the Review Period (assuming this
Contract has not been terminated), the performance of its obligations hereunder
will have been duly authorized; and the entry into, the performance of, or
compliance with this Contract by Buyer will not, to Buyer's knowledge, result in
any violation of, default under, or acceleration of any obligation under any
existing
43
partnership agreement, mortgage indenture, agreement, note, contract, permit,
judgment, decree, order, restrictive covenant, statute, rule or regulation
applicable to Buyer.
SECTION 19.02. Resources. Buyer has or will have by Closing the
----------
requisite cash, cash equivalents, equity commitment or other sources of
financing available to consummate the transaction contemplated hereby.
ARTICLE XX
Miscellaneous
-------------
SECTION 20.01. Counterparts. This Contract may be executed in any
-------------
number of counterparts, any one and all of which shall constitute the contract
of the parties and each of which shall be deemed an original.
SECTION 20.02. Section and Paragraph Headings. The section and
-------------------------------
paragraph headings herein contained are for the purposes of identification only
and shall not be considered in construing this Contract.
SECTION 20.03. Amendment. No modification or amendment of this
----------
Contract shall be of any force or effect unless in writing executed by both
Seller and Buyer.
SECTION 20.04. Attorneys' Fees. If any party obtains a judgment
----------------
against any other party by reason of breach of this Contract, Attorneys' Fees
and costs shall be included in such judgment.
SECTION 20.05. Governing Law. This Contract shall be interpreted in
--------------
accordance with the internal laws of the State of New York both substantive and
remedial, excluding laws governing conflicts of laws.
SECTION 20.06. Entire Contract. This Contract, including all
----------------
Schedules and Exhibits which are incorporated by reference, sets forth the
entire agreement between Seller and Buyer relating to the Property and all
subject matter herein and supersedes all prior and contemporaneous negotiations,
understandings and agreements, written or oral, between the parties.
SECTION 20.07. Time of the Essence. Time is of the essence in the
--------------------
performance of all obligations by Buyer and Seller under this Contract.
44
SECTION 20.08. Computation of Time. Any reference herein to time
--------------------
periods of less than six (6) days shall exclude Saturdays, Sundays and legal
holidays in the computation thereof. Any time period provided for in this
Contract which ends on a Saturday, Sunday or legal holiday shall extend to 5:00
p.m. on the next full business day.
SECTION 20.09. Successors and Assigns. This Contract shall inure to
-----------------------
the benefit of and be binding upon the successors and permitted assigns of the
parties hereto.
SECTION 20.10. No Party Draftsman. This Contract has been drafted
-------------------
jointly by Buyer and Seller and, accordingly, shall not be construed or
interpreted against either Buyer or Seller.
SECTION 20.11. No Third Party Benefitted. This Contract is solely
--------------------------
for the benefit of the parties hereto and there shall be no third party
beneficiaries of the terms hereof.
SECTION 20.12. Public Announcements. Subject to disclosure
---------------------
obligations required by law or advised by its counsel to be required by law,
neither Seller nor any of its Affiliates shall issue any press release or
otherwise make public any information with respect to this Contract or the
transaction contemplated hereby prior to the Closing Date without the prior
written consent of Buyer. Subject to disclosure obligations required pursuant to
securities laws or stock exchange rules or regulations, or otherwise required by
law or advised by its counsel to be required by law, neither Buyer nor any of
its Affiliates shall issue any press release or otherwise make public any
information with respect to this Contract or the transaction contemplated hereby
prior to the expiration of the Review Period without the prior written consent
of the Seller. If a party is required or permitted to issue a press release or
other public announcement pursuant to the foregoing, it shall advise the other
party in advance thereof and use reasonable best efforts to cause a mutually
agreeable release or announcement to be issued; provided, however, that with
-------- -------
respect to any press release, Seller must approve those aspects relating to a
description of Seller or its Affiliates. Until such time as a press release has
been issued by Buyer, neither Seller nor Buyer shall discuss or disclose the
existence of this transaction, the terms of this Contract or the identity of the
parties hereto with any other Person, except for those employees, prospective
lenders, advisors, attorneys, consultants and other professionals required to
implement the terms of this Contract or to assist in Buyer's due diligence and
who have
45
agreed to maintain the confidentiality of the transaction and the information
they receive, and except to the extent required by law or advised by counsel to
be required by law.
SECTION 20.13. Recordation. The parties agree that neither this
------------
Contract nor any memorandum or notice hereof shall be recorded or filed in any
public records. If Buyer violates the terms of this Section, Seller, in
addition to any other rights or remedies it may have, may immediately terminate
this Contract by giving notice to Buyer of its election to do so and, in the
event of such termination, Seller shall be entitled to receive the Deposit
(including any interest earned thereon) from the Escrow Agent as liquidated
damages for Buyer's breach. The provisions of this Section shall survive the
Closing or any termination of this Contract.
46
IN WITNESS WHEREOF, the parties hereto have executed this Contract as
of the day and year first written above.
ZETA MYSTIC HOTEL, INC.,
by /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President
AMERICAN GENERAL HOSPITALITY
OPERATING PARTNERSHIP, L.P.,
by AGH GP, INC., its
general partner
by /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President
THE UNDERSIGNED HEREBY
EXECUTES THIS CONTRACT
TO EVIDENCE ITS AGREEMENT TO ACT
AS ESCROW AGENT HEREUNDER.
LAWYERS TITLE INSURANCE
CORPORATION,
by /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Title Agent
EXHIBIT A
Title Descriptions
------------------
See Attached Exhibit "A"
SCHEDULE A
Hotel and Restaurant Lease:
Beginning at the northeasterly corner of the herein described tract;
Said point of beginning being the intersection of the westerly street line of
▇▇▇▇▇ ▇▇ (▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇) and the southerly line of the State of
Connecticut I-95 ramp, said point of beginning having the coordinates North
197887.23 and East 816661.76 on the Connecticut Coordinate System;
Thence running southerly by and with said ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇, a
distance of 205.00 feet to a spike;
Thence turning an interior angle of 167 degrees 19 feet 10 inches and running
southerly by and with said westerly street line, a distance of 33.26 feet to an
iron pipe;
Thence turning an interior angle of 160 degrees 35 feet 20 inches and running
southerly by and with said westerly street line, a distance of 42.40 feet to an
iron pipe;
Thence turning an interior angle of 199 degrees 31 feet 25 inches and running
southerly by and with said westerly street line, a distance of 7.48 feet to the
southeasterly corner of the herein described tract and the northeasterly corner
of land now or formerly of ▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇;
Thence turning and interior angle of 93 degrees 19 feet 47 inches and running
westerly bounded southerly by said Kauppinen land a distance of 685.28 feet to
a point on a curve in the southerly line of the State of Connecticut I-95 ramp;
Thence turning angle of 33 degrees 30 feet 20 inches to the chord of said curve
and running generally northeasterly by and with said southerly I-95 ramp line
and the arc of said curve deflecting to the right having a radius of 1710.00
feet, a central angle of 14 degrees 43 feet 24 inches, a chord of 438.21 feet,
a tangent of 220.93 feet, a distance of 439.42 to an iron pipe at the end of
said curve;
Thence turning an angle of 172 degrees 38 feet 18 inches from the chord of said
curve and running northeasterly by and with said southerly I-95 ramp line, a
distance of 211.01 feet to a Connecticut Highway Department monument;
Thence turning an interior angle of 129 degrees 17 feet 50 inches and running
southeasterly by and with said I-95 ramp line a distance of 127.15 feet to the
point and place of beginning;
Said last mentioned course forming an interior angle of 123 degrees 57 feet 50
inches with said first mentioned course;
Containing 144,114 square feet (3.31 acres).
Restaurant Lease: All that certain lot, piece or parcel of land situate, lying
and being in the Town of Stonington, County of New London, State of Connecticut,
located at the intersection of Interstate 95 and Route 27 and shown upon map
entitled Town of Stonington Map Showing Land & Rights of Access Acquired from
▇▇▇▇▇ ▇. Sitwick by the State of Connecticut Interstate Route I-95 Scale 1' 40'
October 1961 ▇▇▇▇▇▇ ▇. ▇▇▇▇ Highway Commissioner Rev., on file in the office of
the Town Clerk of the Town of Stonington, and more particularly bounded and
described as follows: Beginning on the northerly line of land formerly of ▇▇▇▇▇
▇. ▇▇▇▇▇▇ and now or formerly of ▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇ on the westerly
highway limit of Route 27, sometimes known as Greenmanville Avenue, and thence
running WESTERLY, by the said northerly line of said ▇▇▇▇▇▇ land seven hundred
(700) feet, more or less, to land of the State of Connecticut known as
Interstate Route 95; and thence turning, by an interior angle of about 38
degrees, running EASTERLY, by said I-95 by a line ninety (90) feet southerly
from as measured radially to the base line of Ramp (E) of said ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇ six hundred forty-three (643) feet, more or less, to a point opposite P.C.
station 22 + 65 + 09; and thence running SOUTHEASTERLY, one hundred thirty (130)
feet, more or less, to a point seventy-five (75) feet westerly as measured at
right angles to the base line of the improvement of Route 27 at station 26; and
thence running SOUTHERLY, two hundred four (204) feet, more or less, to a point
thirty (30) feet westerly from station 28 on said Route 27 as measured at right
angles therefrom; and thence de?eeting about 13 degrees to the right and
continuing southerly by a line thirty (30) feet westerly from and parallel to
the base line of said Route 27 seventy-two (72) feet, more or less, to the point
of beginning & land now or formerly of ▇▇▇▇▇▇ ▇. ▇▇▇▇ a distance of 208.40 feet
to an iron pipe in a stone wall; thence running South 36 degrees 04 feet West
along other land now or formerly of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ a distance of 58.33 feet to
an iron pipe; thence running South 66 degrees 21 feet East along the Northerly
boundary of Plot B on map hereinafter more fully described a distance of 109.84
feet to an iron pipe; thence running South 40 degrees 23 feet East along said
Northerly boundary of Plot B a distance 72.29 feet to an iron pipe on the
Northwesterly side of Boston Post Road; thence running North 49 degrees 43 feet
East along said Northwesterly side of the Boston Post Road a distance of 112.81
feet to an iron pipe; thence running North 40 degrees 17 feet West a distance of
4.92 feet to the point or place of beginning.
EXHIBIT B
Intentionally Omitted.
EXHIBIT C
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ AT THE SEAPORT
MYSTIC, CT
Assumed Contracts
-----------------
1 Lease Agreement dated March 25,
1965, between C & N Company and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Company.
2 First Amendment to Lease dated
June 16, 1969 between The Mystic
Company and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Company.
3 Service Contract dated September
17, 1996 between ▇▇▇▇▇▇ ▇. ▇▇▇▇ &
Company and Zeta Mystic Hotel,
Stonington, CT.
4 Summary of Service Contracts for
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Mystic, CT - see
attached.
--------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
Service Agreements - Mystic
Company Description Terms
--------------------------------------------------------------------------------
ASP Security Fire alarm Inspection Hotel's commitment has been
fulfilled for 1997
--------------------------------------------------------------------------------
Simplex Time Clocks Annual service charge.
Hotel's commitment has been
fulfilled for 1997.
--------------------------------------------------------------------------------
Computel Property Management System $461.00 monthly/30 Day out
--------------------------------------------------------------------------------
▇▇▇▇▇▇▇ & Sons Rubbish Hauling $304.75 monthly/Company is
unable to produce a contract.
▇▇▇▇ has not signed any
documents with this company.
It is assumed that a month to
month relationship exists.
--------------------------------------------------------------------------------
Exit Guide Interstate discount book ad Financial obligations have
been satisfied for 1997.
Hotel's commitment has been
fulfilled.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EXHIBIT D
Intentionally Omitted.
EXHIBIT E
Litigation
----------
---------------------------------------------------------
Property Description of Litigation
---------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Financial Security Assurance
Lodge at the Seaport Inc., et al. v. ELXSI Adv. Pro.
Mystic, Connecticut No. 96/5147A (in In re Livonia
-------------
Realty, Inc., et al., Case Nos.
--------------------
92 B 20547 through 92 B 20551
(ASH), U.S. Bankruptcy Court,
Southern District of New York
(White Plains Division)), on
appeal to U.S. District Court,
Southern District of New York
(White Plains Division), ▇▇ ▇▇▇.
▇▇▇▇ (▇▇), in which plaintiffs
seek declaration that defendant
Mystic restaurant lessee does not
have ownership of free-standing
signs on the Mystic property or
leasehold interests in such
signs' "footprints". Plaintiffs
are currently appealing adverse
Bankruptcy Court ruling.
----------------------------------------------------------
EXHIBIT F
---------
Form of Letter of Credit
------------------------
See attached.
ADDITIONAL ITEMS FOR INCLUSION
IN
BANK ONE LETTER OF CREDIT NO. STI 07460
. Except as stated herein, this undertaking is not subject to any condition
or qualification. Our obligation under this Letter of Credit is our individual
obligation and is in no way contingent upon reimbursement with respect thereto.
. Payment of amounts drawn under this Letter of Credit shall be made by wire
transfer solely to you, as set forth in your draft in the form attached as
Exhibit A, in the amount demanded, not exceeding the face amount of this Letter
of Credit, in immediately available funds, on (I) the date of receipt by us of
the draft in conformity with the terms of this Letter of Credit for such
payment, if presented during business hours no later than 1:00 p.m. (CST) on a
business day, or (II) on the business day next following the date of receipt by
us of such draft if presented during business hours after 1:00 p.m. (CST).
. If a demand for payment made by you hereunder does not, in any instance,
conform to the terms and conditions of this Letter of Credit, we shall give you
prompt notice within one (1) business day that the purported negotiation was not
effected in accordance with the terms and conditions of this Letter of Credit,
stating the reasons therefor and that we are holding any documents at your
disposal or are returning them to you, as we may elect. Upon being notified that
the purported negotiation was not effected in conformity with this Letter of
Credit, you may attempt to correct any such nonconforming demand for payment.
. This credit shall be governed by and construed in accordance with the laws
of the State of ____________.
[LOGO OF BANKONE APPEARS HERE]
--------------------------------------------------------------------------------
BANK ONE, TEXAS, N.A.1717 ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
TELEPHONE: ▇-▇▇▇-▇▇▇-▇▇▇▇
IRREVOCABLE STANDBY LETTER OF CREDIT NO.ST107460
PLACE AND DATE OF ISSUE DATE AND PLACE OF EXPIRY:
DALLAS, TEXAS 11/11/97 03/31/98 IN DALLAS TEXAS
APPLICANT: ADVISING BANK:
AMERICAN GENERAL HOSPITALITY NOT APPLICABLE
OPERATING PARTNERSHIP.LP.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
BENEFICIARY: AMOUNT: USD 2,700,000,00
FINANCIAL SECURITY ASSURANCE INC., TWO MILLION SEVEN HUNDRED
AS AGENT FOR THE VARIOUS PROPERTY OWNERS THOUSAND & NO/100 U.S. DOLLARS
c/o ADAMS, ▇▇▇▇▇▇▇▇ & IGLESIAS
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇. ▇▇▇▇▇
ATTENTION: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
GENTLEMAN:
THIS CREDIT IS AVAILABLE BY BENEFICIARY'S SIGHT DRAFT IN THE FORM OF DRAFT
ATTACHED HERETO AS EXHIBIT A, DRAWN ON BANK ONE, TEXAS N.A WHEN ACCOMPANIES BY
---------
THE ORIGINAL OF THIS CREDIT.
THIS IS A CLEAN LETTER OF CREDIT. NOT OTHER DOCUMENTS ARE REQUIRED.
DRAFT MUST BE MARKED: DRAWN UNDER BANK ONE, TEXAS, N.A. CREDIT NO. 81707460.
WE HEREBY ENGAGE WITH YOU THAT ALL DRAFTS DRAWN UNDER AND IN COMPLIANCE WITH THE
TERMS OF THIS CREDIT WILL BE DULY HONORED IF DRAWN AND PRESENTED FOR PAYMENT AT
THIS OFFICE LOCATED AT ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ATTN:
STANDBY LETTERS OF CREDIT SECTION ON OR BEFORE THE EXPIRATION OF THIS CREDIT:
THIS CREDIT IS SUBJECT TO THE UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY
CREDITS (1993 REVISION) INTERNATIONAL CHAMBER OF COMMERCE, PUBLICATION NO.500.
/s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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AUTHORIZED SIGNATURE
BANK ONE, TEXAS, N.A
ISSUING BANK
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EXHIBIT A
Bank One, Texas, N.A.
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Attn: Standby Letters of Credit Section
Data:
Amount:
Payable at sight by wire transfer to:
(WIRE INSTRUCTIONS)
Financial Security Assurance Inc.
[as Agent for the various property owners]
By: _____________________________________
Name:
Authorized Signatory
Drawn under:
Bank One, Texas, N.A. Credit No. STI07450
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Attn: Standby Letters of Credit Section
EXECUTION COPY
CERTIFICATION OF NONFOREIGN STATUS
(Entity - Transferor)
Section 1445 of the Internal Revenue Code provides that a transferee
(buyer) of a U.S. real property interest must withhold tax if the transferor
(seller) is a foreign person. To inform the transferee (buyer) that withholding
tax is not required upon the disposition of a U.S. real property interest by
ZETA Mystic Hotel, Inc., the undersigned hereby certifies the following:
(a) ZETA Mystic Hotel, Inc. is not a foreign corporation, foreign
partnership, foreign trust, or foreign estate (as those terms are defined
in the Internal Revenue Code and Income Tax Regulations);
(b) ZETA Mystic Hotel, Inc.'s U.S. employer identification number is
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(c) ZETA Mystic Hotel, Inc.'s office address is c/o Financial
Security Assurance Inc. ("FSA"), ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇; and
(d) The address of the real property being transferred is ▇▇▇
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ZETA Mystic Hotel, Inc., understands that this certification may be
disclosed to the Internal Revenue Service by transferee and that any false
statement contained herein could be punished by fine, imprisonment, or both.
____________________
Under penalties of perjury, the undersigned declares that he has
examined this Certification, and, to the best of his knowledge and belief, it is
true, correct
and complete, and he further declares that he has authority to sign this
document on behalf of ZETA Mystic Hotel, Inc.
Dated: February , 1998
ZETA MYSTIC HOTEL, INC.,
by /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
_______________________________
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President
Sworn to before me this
____ day of _______, 1998.
__________________________
Notary Public
AMENDMENT NO. 2, dated as of February 13, 1998 (this "Second Amendment"),
to the Contract for Purchase and Sale of Hotel dated as of November 26, 1997, as
amended by an Amendment No. 1 dated as of December 15, 1997 (as so amended, the
"Contract"), between Zeta Mystic Hotel, Inc. (the "Seller") and American General
Hospitality Operating Partnership, L.P., a Delaware limited partnership (the
"Buyer"). Terms used herein but not otherwise defined have the meanings assigned
to such terms in the Contract.
Recitals
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WHEREAS, pursuant to the Contract, Seller has agreed to sell and Buyer
has agreed to buy the Property; and
WHEREAS Seller and Buyer now desire to amend the Contract to reflect
the provisions set forth herein.
NOW, THEREFORE, in consideration of the mutual agreements contained
herein and for other good and valuable consideration, the adequacy and receipt
of which are hereby acknowledged, the parties hereto agree as follows:
1. Seller and Buyer agree to file Form 8594 under Section 1060 of
the Internal Revenue Code of 1986, as amended, in accordance with that certain
letter agreement among Seller and Buyer dated as of the date hereof.
2. Seller and Buyer acknowledge that they have executed and
delivered an Indemnity Fund Agreement and a letter agreement dated as of the
date hereof with respect to certain claims relating to the Indemnity Fund
established pursuant to Section 6.13 of the Contract.
3. Except as amended hereby, the terms of the Contract shall remain
in full force and effect. This Second Amendment shall be governed by, and
construed under, the internal laws of New York. This Second Amendment may be
executed and delivered by the parties by telecopy and may be signed in any
number of identical counterparts, each set of which executed by all parties
shall be deemed to be an original counterpart, and all such counterparts shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Second
Amendment as of the day and year first written above.
2
ZETA MYSTIC HOTEL, INC.,
by /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President
AMERICAN GENERAL HOSPITALITY
OPERATING PARTNERSHIP, L.P.,
by AGH GP, INC., its general
partner,
by /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice
President
LAWYERS TITLE INSURANCE CORPORATION
by /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Title Agent