EXHIBIT 2.1
PURCHASE AND SALE AGREEMENT*
by and between
BHR TEXAS, L.P.
INTERCONTINENTAL HOTELS GROUP RESOURCES, INC.
CROWNE PLAZA LAX, LLC
CROWNE PLAZA HILTON HEAD HOLDING COMPANY
HOLIDAY PACIFIC PARTNERS LIMITED PARTNERSHIP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ HOTEL INC.
STAYBRIDGE MARKHAM, INC.
as Seller,
and
HPT IHG-2 PROPERTIES TRUST
as Buyer
December 17, 2004
* Composite version of Purchase and Sale Agreeement reflecting amendments
through the date of filing.
Table of Contents
Page
1. Deadlines and Definitions................................................1
1.1 Deadlines.......................................................2
1.2 Definitions.....................................................2
2. Purchase and Sale........................................................2
3. Purchase Price...........................................................2
3.1 Reserved........................................................2
3.2 Purchase Price..................................................2
3.3 Purchase Price Allocation.......................................2
3.4 Liability for GST and RST.......................................3
3.5 Exception.......................................................3
4. Buyer's Due Diligence and Inspection Rights; Termination Right...........3
4.1 Review of Property and Property Documents.......................3
4.2 Guidelines for Inspection Rights................................4
4.3 Title and Survey Examination....................................4
4.4 As-Is, Where-Is, With All Faults Sale...........................5
4.5 Termination Right...............................................6
5. Covenants................................................................6
5.1 Seller's Covenants: Effective Date to Closing Date..............6
5.2 Seller's Covenants After the Closing Date.......................9
5.3 Bulk Sales......................................................9
5.4 Approvals and Notifications.....................................9
6. Closing.................................................................10
6.1 Closing Mechanics..............................................10
6.2 Seller's Deliveries............................................10
6.3 Buyer's Deliveries.............................................14
7. Prorations, Credits and Closing Costs...................................14
7.1 Proration Items................................................14
7.2 Closing Statement and Schedules................................15
7.3 Seller's Closing Costs.........................................15
7.4 Buyer's Closing Costs..........................................15
7.5 Goods and Services Tax Election................................16
8. Representations and Warranties..........................................16
8.1 Seller's Representations and Warranties........................16
8.2 Reserved.......................................................22
8.3 Claims of Breach Prior To Closing..............................22
8.4 Survival and Limits On Buyer's Claims..........................23
8.5 Buyer's Representations and Warranties.........................23
8.6 Reserved.......................................................24
9. Casualty and Condemnation...............................................24
9.1 Major Event....................................................24
9.2 Closing Despite Casualty/Condemnation..........................25
10. Other Conditions to Closing.............................................25
10.1 Conditions to Buyer's Obligations..............................25
10.2 Conditions to Seller's Obligations.............................26
10.3 Waiver of Conditions...........................................26
10.4 Additional Austin, InterContinental Closing Conditions.........26
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Table of Contents
(continued)
Page
10.5 Additional Atlanta, GA Holiday Inn Closing Conditions..........27
11. Transaction Issues: Brokers, Confidentiality and Indemnity..............27
11.1 Brokers........................................................27
11.2 Publicity......................................................27
11.3 Indemnity......................................................28
11.4 Employment Indemnity...........................................28
12. Default At or Prior to Closing..........................................29
12.1 Buyer Default..................................................29
12.2 Seller Default.................................................29
13. Notices.................................................................30
14. General Provisions......................................................31
14.1 Execution Necessary............................................31
14.2 Counterparts...................................................31
14.3 Successors and Assigns.........................................31
14.4 Governing Law..................................................31
14.5 Entire Agreement...............................................32
14.6 Time is of the Essence.........................................32
14.7 Interpretation.................................................32
14.8 Survival.......................................................32
14.9 Further Assurances.............................................32
14.10 Exclusive Application..........................................32
14.11 Partial Invalidity.............................................33
14.12 No Implied Waiver..............................................33
14.13 Rights Cumulative..............................................33
14.14 Attorney's Fees................................................33
14.15 Waiver of Jury Trial...........................................33
14.16 Facsimile Signatures...........................................33
14.17 No Recordation.................................................33
14.18 Maximum Aggregate Liability....................................34
14.19 Exhibits and Schedules.........................................34
14.20 Jurisdiction...................................................34
14.21 Interpretation of Agreement after Initial Closing Date.........34
14.22 Currency.......................................................34
14.23 SEC Matters....................................................35
14.24 Planning Act...................................................35
14.25 Management Agreement...........................................35
15. Additional Termination Rights...........................................35
16. Retention of Hotel Employees............................................35
17. On-Going Management of Hotel............................................35
18. Reserved................................................................36
19. Additional Disclosure Items.............................................36
19.1 Industrial Revenue Bond........................................36
19.2 Collective Bargaining Agreement................................36
20. Limitation of Liability.................................................36
21. Nonliability of Trustees................................................36
22. Monies from Seller......................................................37
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List of Schedules and exhibits
Schedules
Schedule Document Reference Paragraph
-------- -------- -------------------
A Definitions
Seller's Reps And Warranties
----------------------------
8.1(D) Pending or Threatened Litigation Paragraph 8.1(D)
8.1(E) List of Leases Paragraph 8.1(E)
8.1(F) Conditions Materially Affecting The Property Paragraph 8.1(F)
8.1(G) Conditions Materially Affecting Utilities And Services Paragraph 8.1(G)
8.1(H) Violation of Laws Relating To Zoning, Construction, Health Paragraph 8.1(H)
And Fire Safety, Etc.
8.1(I) Unpaid (Delinquent) Taxes or Special Assessments Paragraph 8.1(I)
8.1(K-1) Hazardous Materials Paragraph 8.1(K-1)
8.1(M) Material Defects In Property Paragraph 8.1(M)
8.1(N) Unpaid Taxes Paragraph 8.1(N)
8.1(O) Unobtained Licenses And Permits Paragraph 8.1(O)
8.1(R) Violation Of Laws Paragraph 8.1(R)
8.1(T) Material Defaults With Respect To Permitted Title Exceptions Paragraph 8.1(T)
8.1(W) Information With Respect To Leases And Ground Leases Paragraph 8.1(W)
8.1(Z) Toronto InterContinental Hotel Employment Matters Paragraph 8.1(Z)
Exhibits
Exhibit Document Reference Paragraph
------- -------- -------------------
A-1 Houston InterContinental Hotel Schedule A
A-2 Austin InterContinental Hotel Schedule A
A-3 White Plains Crowne Plaza Hotel Schedule A
A-4 Redondo Beach Crowne Plaza Hotel Schedule A
A-5 Los Angeles Crowne Plaza Hotel Schedule A
▇-▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ Hotel Schedule A
A-7 Atlanta Airport Holiday Inn Hotel Schedule A
A-8 Memphis Holiday Inn Hotel Schedule A
A-9 Anaheim Holiday Inn Hotel Schedule A
A-10 Anaheim Staybridge Suites Hotel Schedule A
A-11 Markham Staybridge Suites Hotel Schedule A
A-12 Toronto InterContinental Hotel Schedule A
A-13 General property descriptions, title holder and allocation of Schedule A, Paragraph 6.2(R),
purchase price (for all Hotels) Paragraph 9.1
B-1 Special Warranty Deed Paragraph 6.2(A)
B-2 Assignment of Ground Lease Paragraph 6.2(A)
C-1 ▇▇▇▇ of Sale (Hotel) Paragraph 6.2(B)
C-2 ▇▇▇▇ of Sale (Personal Property) Paragraph 6.2(B)
D Assignment and Assumption of Leases Paragraph 6.2(C)
E Assignment of Contracts, Warranties and Other Interests Paragraph 6.2(D)
F-1 Notice of Sale (to the Tenants) Paragraph 6.2(E)
F-2 Notice of Assignment (to service contract providers) Paragraph 6.2(E)
G-1 Non-Foreign Certificate (Domestic) Paragraph 6.2(F)
G-2 Non-Foreign Certificate (Canadian) Paragraph 6.2(F)
H Affidavit of Title Paragraph 6.2(G)
I Closing Statement Agreement Paragraph 6.2(H)
J Authority Certificate Paragraph 6.2(I)
K Certificate of Reaffirmation Paragraph 6.2(J)
L-1 Tenant Estoppel Certificate Paragraphs 5.1.9, 6.2(T)
Exhibit Document Reference Paragraph
------- -------- -------------------
L-2 Landlord Consent and Estoppel Certificate Paragraph 5.1.9, Paragraph 6.2(R)
▇-▇ ▇▇▇▇▇▇▇ InterContinental Hotel Consent and Paragraph 5.1.9, Paragraph 6.2(R)
Estoppel Certificate
M IHG Parent Guaranty Schedules A, 6.2(P), Schedule A
N List of Contracts Schedule A, Paragraph 8.1(E)
O Reserved
P Management Agreement Schedule A, Paragraph 6.2(N),
Paragraph 17
Q HPT Guaranty Paragraph 6.3(F). Schedule A
R Amendment to Management Agreement Paragraph 10.4.2
S IHG Press Releases/Public Announcements Paragraph 11.2
T-1 Registrable Form of Transfer of Registered Paragraph 6.2(A-2)
Owner's interest in the Staybridge Suites Hotel
T-2 Conveyance of Staybridge Markham, Inc.'s Beneficial Interest in Paragraph 6.2(A-2)
the Toronto Staybridge Suites Hotel
T-3 Authorization of Transfer with respect to transfer Paragraph 6.2(A-2)
of Registered Owner's interest in the Toronto
Staybridge Suites Hotel by applicable Canadian Seller
T-4 Registrable Form of Assignment and Assumption Agreement with Paragraph 6.2(A-2)
respect to the Toronto InterContinental Hotel Ground Lease
T-5 Conveyance of ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Hotel Inc.'s Beneficial Interest Paragraph 6.2(A-2)
under the Toronto InterContinental Hotel Ground Lease
T-6 Authorization and Direction with respect to Paragraph 6.2(A-2)
transfer of Registered Tenant's leasehold interest
in the Toronto InterContinental Hotel Ground Lease
T-7 Assignment and Assumption Agreement with respect to the Toronto
Paragraph 6.2(A-2) InterContinental Hotel Ground Lease among Buyer,
Seller and lessor
U GST Indemnity Paragraph 6.3(G)
V Ground Leases Schedule A
W Reliance Letter Paragraph 10.1 D
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is made and entered
into as of December, 17, 2004 (the "Effective Date"), by and between BHR TEXAS,
L.P., a Delaware limited partnership, INTERCONTINENTAL HOTELS GROUP RESOURCES,
INC., a Delaware corporation, CROWNE PLAZA LAX, LLC, a California limited
liability company, CROWNE PLAZA HILTON HEAD HOLDING COMPANY, a Delaware
corporation, HOLIDAY PACIFIC PARTNERS LIMITED PARTNERSHIP, a Delaware limited
partnership, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ hotel inc., an Ontario corporation, and staybridge
markham, inc., an Ontario corporation (such parties are referred to individually
and collectively, as the context may require, as "Seller"), and hpt ihg-2
Properties Trust, a Maryland real estate investment trust ("Buyer").
R E C I T A L S:
WHEREAS, Seller is the owner (or ground lessee, as applicable) of the
following hotels: (i) InterContinental Hotel in Houston, Texas, (ii)
InterContinental Hotel in Austin, Texas, (iii) Crowne Plaza Hotel in White
Plains, New York, (iv) Crowne Plaza Hotel in Redondo Beach, California, (v)
Crowne Plaza Hotel in Los Angeles, California, (vi) Crowne Plaza Hotel in Hilton
Head, South Carolina, (vii) Holiday Inn Hotel in Atlanta, Georgia, (viii)
Holiday Inn Hotel in Memphis, Tennessee, (ix) Holiday Inn Hotel in Anaheim,
California, and (x) Staybridge Suites Hotel in Anaheim, California, (xi)
Staybridge Suites Hotel in ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, and (xii) InterContinental
Hotel in ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ . The land on which the foregoing hotels are
located is more particularly described on Exhibits A-1 through A-12
(collectively, the "Land");
WHEREAS, certain summary information for each aforementioned hotel
(individually a "Hotel" and collectively, the "Hotels") is set forth on Exhibit
A-13;
WHEREAS, Buyer desires to acquire the Property from Seller for the
aggregate purchase price of Three Hundred Thirty-One Million and No/100 Dollars
($331,000,000.00), subject to the terms and conditions hereinafter set forth (
"Aggregate Purchase Price") and Seller desires to convey the Property to Buyer
all upon the terms and conditions hereinafter set forth;
WHEREAS, except as provided herein, Buyer and Seller acknowledge that
the Property is to be conveyed in its entirety, in accordance with the terms
hereof and individual Hotels may not be excluded from this transaction by either
party. Any termination of this Agreement by Buyer or Seller as provided herein
shall be effective as to all the Hotels and all Property.
NOW, THEREFORE, for and in consideration of the promises, covenants,
representations and warranties hereinafter set forth, the sum of Ten Dollars
($10.00) and other good and valuable consideration in hand paid by Seller to
Buyer and by Buyer to Seller upon the execution of this Agreement, the receipt
and sufficiency of which are hereby acknowledged by each of the parties hereto,
the parties hereto hereby agree as follows:
1. Deadlines and Definitions.
1.1 Deadlines. Wherever used in this Agreement, the following
terms shall have the meanings set forth below:
"Closing Deadline" shall mean:
(A) Subject to the terms of Paragraph 6, for the initial Closing,
the earlier of (i) the date that is thirty (30) days after the date that all the
closing conditions set forth in Paragraph 10 are satisfied or would be satisfied
(unless waived by the appropriate party) concurrently with such Closing; and
(ii) March 31, 2005; and
(B) with respect to any Hotels not purchased at the time of the
initial Closing and the Austin, TX InterContinental Hotel, June 1, 2005.
"Due Diligence Deadline" shall mean January 14, 2005.
1.2 Definitions. In addition, wherever used in this Agreement, the
terms set forth on Schedule A shall have the meanings set forth on Schedule A.
2. Purchase and Sale. Seller agrees to convey, transfer and assign, and
Buyer, and/or its permitted designee, agrees to acquire, accept and assume, the
Property, on the terms, conditions and provisions set forth in this Agreement.
3. Purchase Price. The Aggregate Purchase Price, subject to the
prorations and credits set forth herein, shall be $331,000,000.00 and shall be
due and payable as follows:
3.1 Reserved.
3.2 Purchase Price.
(a) Subject to the terms hereof, including, without limitation,
Paragraph 6, on the applicable Closing Date, Buyer shall pay to Seller the total
allocated values of such Hotels as such value is set forth on Exhibit A-13 (the
total of all such values set forth on Exhibit A-13 is referred to as the
"Purchase Price") that are transferred on such date to Buyer, subject to the
application of the Deposit (to the extent made hereunder) against the Purchase
Price, and such other credits, prorations and adjustments set forth herein, in
cash by federal reserve bank wire transfer to such account and bank as Seller
shall designate in writing to Buyer at or prior to Closing.
(b) Buyer shall pay Twenty-Five Million and No/100 Dollars
($25,000,000.00) ("Additional Purchase Price") to Seller in cash by federal
reserve bank wire transfer to such account and bank as Seller shall designate in
writing to Buyer in installments as follows: (i) $10,000,000.00 on December 31,
2005, (ii) $10,000,000.00 on December 31, 2006, (iii) $5,000,000.00 on December
31, 2007.
3.3 Purchase Price Allocation.
(a) The Purchase Price shall be allocated among the Real Property and
Personal Property for tax and financial accounting purposes in accordance with
Exhibit A-13. Buyer and Seller shall file, and shall cause their respective
affiliates to file, all tax returns (including amended returns and claims for
refunds) and information reports in a manner consistent with such Exhibit A-13.
(b) Each Seller hereby appoints BHR Texas, L.P., acting by or through
any one or more of its duly authorized officers, as their representative (the
"Seller Representative") to act for them with respect to all matters relating to
this Agreement, including without limitation (a)
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waiver of one or more of the conditions set forth in paragraph 10 and (b) the
amendment or modification of this Agreement or any other Closing Document. The
appointment of the Seller Representative is coupled with an interest, is
irrevocable and shall not be revoked by, and shall survive, the liquidation,
dissolution or bankruptcy of any Seller. The Purchase Price and such Additional
Purchase Price (after giving effect to all adjustments and allocations as are
provided) shall be paid to the Seller Representative or as it may direct on
behalf of and for the benefit of all of Sellers. The Seller Representative in
turn will remit to each other Seller hereunder so much thereof as each such
other Seller may be entitled. Buyer shall have no responsibility with respect to
the allocation of distribution of the Purchase Price or such Additional Purchase
Price among or to the Sellers except for the payment thereof to the Seller
Representative.
3.4 Liability for GST and RST. Subject to Paragraph 3.5 and
Paragraph 7.3, in addition to the Purchase Price, Buyer shall pay all goods and
services tax ("GST") imposed pursuant to the Excise Tax Act (Canada) and Ontario
retail sales tax ("RST") imposed pursuant to the Retail Sales Tax Act (Ontario),
that are applicable to the sale and transfer of the Toronto InterContinental
Hotel and Toronto Staybridge Suites Hotel and the other Property relating
thereto (the "Canadian Property"). Subject to Paragraph 3.5 and Paragraph 7.3,
Buyer shall pay all applicable GST to the Canadian Seller on Closing by
certified cheque or bank draft. Buyer shall pay any applicable RST directly to
the relevant provincial tax authority and shall provide evidence thereof
satisfactory to the Canadian Seller.
3.5 Exception. Buyer shall not be required to pay GST to the
Canadian Seller in accordance with Paragraph 3.4 on the sale and transfer of any
real property (namely, the Toronto InterContinental Hotel and Toronto Staybridge
Suites Hotel but excluding the Property relating thereto) if Buyer provides the
Canadian Seller on or before the Closing Date with a certificate of Buyer, in a
form reasonably acceptable to the Canadian Seller, confirming among other things
that Buyer is registered for the purposes of the Excise Tax Act (Canada) on the
Closing Date; that Buyer is holding the Canadian Property for its own account
and not in trust for or as agent for another party; and an indemnity whereby
Buyer agrees to indemnify and save harmless the applicable Canadian Seller from
and against any and all losses, costs, damages and liabilities that may be
suffered or incurred by the applicable Canadian Seller as a result of Buyer's
failure to register for the purposes of the GST imposed under the Excise Tax Act
(Canada) or Buyer's failure to perform its obligations under such Act in
connection with purchase of the Canadian Property.
4. Buyer's Due Diligence and Inspection Rights; Termination Right.
4.1 Review of Property and Property Documents. Until Closing, and
subject to the terms of Paragraph 4.2, Seller shall provide Buyer and Buyer's
Representatives with access to the Property and the Property Documents, wherever
located, upon reasonable prior notice at reasonable times during business hours,
with the right and license to conduct Due Diligence with respect to the
Property. Subject to Paragraphs 7.3 and 7.4, Buyer covenants and agrees that it
will inspect the Hotels at its sole cost and expense and will not allow any
liens to attach against the Hotels as a result of its Due Diligence. If Buyer or
Seller Terminates this Agreement, then upon written request from Seller, Buyer
shall endeavor to deliver promptly to Seller (at no cost to Buyer) copies of all
Buyer's Diligence Reports in its possession (except for such materials which
Buyer deems confidential or proprietary), but with no liability for the
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accuracy thereof and no representation that Seller or any other party may rely
thereon. Seller represents that it has not altered or intentionally withheld any
part of the Property Documents delivered to Buyer.
4.2 Guidelines for Inspection Rights. Buyer's rights to conduct
Due Diligence shall be subject to the following further requirements: (a) Due
Diligence must not unreasonably interfere with the operation or management of
the Hotels or unreasonably disturb the rights of guests or Tenants; (b) Buyer
must provide Seller with at least twenty-four (24) hours prior written notice of
its intent to perform Due Diligence on the Property and Seller shall have the
right to have a representative of Seller present during any such entry upon the
Property by Buyer or Buyer's Representatives; (c) Buyer shall not contact any
Tenant, Hotel contractor, Hotel guest, or Hotel Employee without Seller's prior
written consent, which consent shall not be unreasonably withheld or delayed;
(d) Seller or its designated representative shall have the right to pre-approve
(which approval shall not be unreasonably withheld or delayed), and be present
during, any physical testing of the Property; (e) Buyer shall immediately return
the Property to the condition existing prior to any tests and inspections; (f)
Due Diligence activities may not unreasonably affect the appearance of the
Hotels in any way; and (g) Buyer may not conduct any invasive sampling, boring,
testing, or analysis of soils, surface water or groundwater at the Property
without first having obtained prior written approval of Seller, which approval
shall not be unreasonably withheld or delayed. Prior to such time as Buyer or
any of Buyer's Representatives enter the Property, Buyer shall (i) obtain
policies of general liability insurance which insure Buyer and Buyer's
Representatives with liability insurance limits of not less than $1,000,000
combined single limit for personal injury and property damage and name Seller as
additional insureds and which are with such insurance companies, provide such
coverages and carry such other limits as Seller shall reasonably require, and
(ii) provide Seller with certificates of insurance evidencing that Buyer has
obtained the aforementioned policies of insurance. Notwithstanding any provision
in this Agreement to the contrary, except in connection with the preparation of
a so-called "Phase I" environmental report with respect to the Property or the
issuance of a standard "zoning letter" with respect to the Property, Buyer shall
not contact any governmental official or representative regarding hazardous
materials on, or the environmental condition of, the Property, or the status of
compliance of the Property with zoning, building code or similar Laws, without
Seller's prior written consent thereto, which consent shall not be unreasonably
withheld or delayed.
4.3 Title and Survey Examination. Seller, on or prior to the date
hereof, has delivered to Buyer a copy of Seller's most recent Survey of the
Property, and a Title Commitment.
A. Title and Survey Objections. Buyer shall have until the Due
Diligence Deadline to notify Seller in writing of any Title Objections. If Buyer
fails to notify Seller of any Title Objections on or before such date, then,
notwithstanding any other provisions set forth herein, such failure to notify
Seller shall constitute a waiver of such right to object to such matters
existing as of the Effective Date and disclosed in the Title Commitment or
Survey. Seller shall notify Buyer within three (3) Business Days of its receipt
of such notice if Seller has elected to Remove any such Title Objections. If
Seller fails to respond within such timeframe, Seller shall be deemed to have
declined to remove such Title Objections (other than Required
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Removal Items). If Seller does not covenant in writing to Buyer that Seller will
Remove the Title Objections prior to Closing (other than Required Removal
Items), Buyer shall have until five (5) days prior to the Closing Date to elect
in writing, either to (a) Terminate this Agreement, and thereafter the parties
shall have no further rights or obligations hereunder, except for those which
expressly survive any such termination, or (b) waive its Title Objections (other
than Required Removal Items) and proceed with the transaction pursuant to the
remaining terms and conditions of this Agreement. If Buyer fails to give Seller
notice of its election by such time, it shall be deemed to have elected to
Terminate this Agreement. Any such Title Objection so waived by Buyer shall be
deemed to constitute a Permitted Title Exception and the Closing shall occur as
herein provided without any reduction of or credit against the Aggregate
Purchase Price.
B. Cure of Title Matters. At Closing, if this Agreement is not
Terminated as permitted herein, Seller shall Remove or cause to be Removed any
Title Objections to the extent (and only to the extent) that the same constitute
Required Removal Items.
C. Buyer's Right To Terminate. If Seller fails to Remove any
Title Objection (other than Required Removal Items) prior to Closing that it has
agreed to remove pursuant to subsection (A) above, then Buyer shall be able to
Terminate this Agreement by written notice to Seller on or prior to the Closing
Date and thereafter the parties shall have no further rights or obligations
hereunder, except for those which expressly survive any such termination.
D. Pre-Closing "Gap" Defects. Whether or not Buyer shall have
furnished to Seller any notice of Title Objections before the Due Diligence
Deadline, Buyer may at or prior to Closing notify Seller in writing of any
defects in the Title Commitment or Survey appearing in the Title Commitment or
Survey for the first time at any time after the Effective Date. With respect to
any Title Objections set forth in such notice, Buyer shall have the same rights
as those which apply to any notice of defects in title resulting from a notice
of title defects by Buyer on or before the Due Diligence Deadline and Seller
shall have the same rights and obligations to cure the same at or prior to
Closing. If necessary, the date for Closing shall be extended by written notice
from Seller to Buyer (by not more than fifteen (15) days) to allow Seller to
cure such pre-closing "gap" defects.
4.4 As-Is, Where-Is, With All Faults Sale. (a) EXCEPT AS OTHERWISE
EXPRESSLY PROVIDED IN THIS AGREEMENT OR ANY DOCUMENTS TO BE EXECUTED AND
DELIVERED BY SELLER AT THE CLOSING, SELLER DISCLAIMS THE MAKING OF ANY
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, REGARDING THE PROPERTY OR
MATTERS AFFECTING THE PROPERTY, WHETHER MADE BY SELLER, ON ITS BEHALF OR
OTHERWISE INCLUDING, WITHOUT LIMITATION, THE PHYSICAL CONDITION OF THE PROPERTY,
TITLE TO OR THE BOUNDARIES OF THE REAL PROPERTY, PEST CONTROL MATTERS, SOIL
CONDITIONS, THE PRESENCE, EXISTENCE OR ABSENCE OF HAZARDOUS WASTES, TOXIC
SUBSTANCES OR OTHER ENVIRONMENTAL MATTERS, COMPLIANCE WITH BUILDING, HEALTH,
SAFETY, LAND USE AND ZONING LAWS, REGULATIONS AND ORDERS, STRUCTURAL AND OTHER
ENGINEERING CHARACTERISTICS, TRAFFIC PATTERNS, MARKET DATA, ECONOMIC CONDITIONS
OR PROJECTIONS, THE FITNESS OF THE PROPERTY FOR USE AS A HOTEL, THE FINANCIAL
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PERFORMANCE OR POTENTIAL OF THE PROPERTY AND ANY OTHER INFORMATION PERTAINING TO
THE PROPERTY OR THE MARKET AND PHYSICAL ENVIRONMENTS IN WHICH THEY ARE LOCATED.
BUYER ACKNOWLEDGES (I) THAT BUYER HAS ENTERED INTO THIS AGREEMENT WITH THE
INTENTION OF MAKING AND RELYING UPON ITS OWN INVESTIGATION OR THAT OF THIRD
PARTIES WITH RESPECT TO THE PHYSICAL, ENVIRONMENTAL, FINANCIAL, ECONOMIC AND
LEGAL CONDITION OF THE PROPERTIES; AND (II) THAT BUYER IS NOT RELYING UPON ANY
STATEMENTS, REPRESENTATIONS OR WARRANTIES OF ANY KIND, OTHER THAN THOSE
SPECIFICALLY SET FORTH IN THIS AGREEMENT OR IN ANY DOCUMENT TO BE EXECUTED AND
DELIVERED TO BUYER AT THE CLOSING, MADE BY SELLER. BUYER FURTHER ACKNOWLEDGES
THAT IT HAS NOT RECEIVED FROM OR ON BEHALF OF SELLER ANY ACCOUNTING, TAX, LEGAL,
ARCHITECTURAL, ENGINEERING, PROPERTY MANAGEMENT OR OTHER ADVICE WITH RESPECT TO
THIS TRANSACTION AND IS RELYING SOLELY UPON THE ADVICE OF THIRD PARTY
ACCOUNTING, TAX, LEGAL, ARCHITECTURAL, ENGINEERING, PROPERTY MANAGEMENT AND
OTHER ADVISORS. SUBJECT TO THE PROVISIONS OF THIS AGREEMENT, BUYER SHALL
PURCHASE THE PROPERTY IN THEIR "AS IS" CONDITION ON THE CLOSING DATE.
(b) BUYER ACKNOWLEDGES THAT, TO THE EXTENT REQUIRED TO BE OPERATIVE,
THE DISCLAIMERS OF WARRANTIES CONTAINED IN THIS PARAGRAPH 4.4 ARE "CONSPICUOUS"
DISCLAIMERS FOR PURPOSES OF ANY APPLICABLE LAW, RULE, REGULATION OR ORDER.
4.5 Termination Right. If Buyer, in its sole and absolute
discretion, determines not to proceed with the Transaction or is not satisfied
with any matters relating to the Property, Buyer may Terminate this Agreement by
written notice to Seller at any time on or prior to the Due Diligence Deadline.
If Buyer does not timely exercise such right to Terminate this Agreement, then
Buyer shall be deemed to have accepted the condition of the Property (subject to
Seller's compliance with the representations, warranties and covenants of this
Agreement, and the conditions set forth in Paragraph 10) and shall thereafter
have no right to Terminate this Agreement on account of such Due Diligence
termination right under this Paragraph 4.5. If after the Due Diligence Deadline
Buyer conducts further Due Diligence, Buyer acknowledges and agrees that Buyer
shall have no further right to terminate this Agreement with respect to such
further Due Diligence or otherwise in accordance with this Paragraph 4.5 after
the Due Diligence Deadline.
5. Covenants.
5.1 Seller's Covenants: Effective Date to Closing Date. Seller
agrees that between the Effective Date and the Closing Date:
5.1.1 No Alteration of Title Seller shall not transfer or
alter or encumber in any way Seller's title to the Real Property as it exists as
of the Effective Date without written notice to, and the prior written consent
of, Buyer. If Buyer fails to object in writing to any such proposed instrument
within five (5) Business Days after receipt of the aforementioned notice, Buyer
shall be deemed to have approved the proposed instrument.
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Buyer's consent shall not be unreasonably withheld or delayed with respect to
any such instrument that is proposed by Seller.
5.1.2 New Leases and Modifications to Existing Leases. If
Seller desires to (i) enter into any new Lease, (ii) cancel, modify, amend,
extend or renew any existing Lease, (iii) consent to any assignment or sublease
in connection with any Lease, (iv) accept any prepayment of rent thereunder
(more than thirty (30) days in advance), or (v) take any other material action
with respect to any Lease, Seller shall deliver to Buyer written notice of such
action, which notice shall contain information regarding the proposed action
that Seller believes is reasonably necessary to enable Buyer to make informed
decisions with respect to the advisability of the proposed action. Seller shall
not be entitled to take such action without Buyer's prior written consent, which
consent will not be unreasonably withheld, conditioned or delayed (and if no
response by Buyer is made within five (5) Business Days after Buyer's receipt of
such request and all documents related thereto, such consent shall be deemed to
have been granted). Seller shall promptly provide Buyer with true, correct and
complete copies of any Lease, modification, or amendment entered into by Seller.
Notwithstanding any provision of this Agreement to the contrary, without any
requirement for notice or consent from Buyer, Seller may, but shall not be
obligated to, take any action with respect to any Lease that the Manager may,
without the consent of Owner, take under the Management Agreement.
5.1.3 Contracts. If Seller desires to (i) enter into any
new Contracts, (ii) cancel, modify, amend, extend or renew any existing
Contracts, (iii) waive any default under or accept any surrender of any
Contracts, or (iv) take any other material action with respect to any Contract,
Seller shall deliver to Buyer written notice of such action, which notice shall
contain information regarding the proposed action that Seller believes is
reasonably necessary to enable Buyer to make informed decisions with respect to
the advisability of the proposed action. Except for Contracts that can be
terminated, without penalty, upon thirty (30) days (or less) written notice from
the owner of the Property, Seller shall not be entitled to take such action
without Buyer's prior written consent, which consent will not be unreasonably
withheld, conditioned or delayed (and if no response by Buyer is made within
five (5) Business Days after Buyer's receipt of such request and all documents
related thereto, such consent shall be deemed to have been granted); upon
delivery of such written consent, such Contract or modification thereof shall
thereupon be included within the definition of "Contracts" set forth herein.
Seller shall promptly provide Buyer with true, correct and complete copies of
any Contract, modification, or amendment entered into by Seller. Notwithstanding
any provision of this Agreement to the contrary, without any requirement for
notice or consent from Buyer, Seller may, but shall not be obligated to, take
any action with respect to any Contracts that the Manager may, without the
consent of Owner, take under the Management Agreement.
5.1.4 Reserved.
5.1.5 Tax Appeals. Seller, or Manager on its behalf, shall
have the right to continue and to control the progress of and to make all
decisions with respect to any contest of the real estate taxes and personal
property taxes for the Property due and payable during the Closing Tax Year and
all prior Tax Years. Buyer shall have the right to control the progress of and
to make all decisions with respect to any tax contest of the real estate taxes
and personal property taxes for the Property due and payable during all Tax
Years subsequent to the Closing
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Tax Year. All real estate and personal property tax refunds and credits received
after Closing with respect to the Property for the Closing Tax Year shall be
applied in accordance with the terms and provisions of the Management Agreement.
Buyer and Seller agree to cooperate with each other and to execute any and all
documents reasonably requested in furtherance of the foregoing. The provisions
of this Paragraph 5.1.5 shall survive the Closing. Notwithstanding the
foregoing, Seller shall not conduct any such contest unless the requirements
applicable to Manager's ability to make a similar contest under the Management
Agreement are satisfied.
5.1.6 Personal Property. Seller shall not remove any of the
Property, including Personal Property, from the Real Property nor use any of the
Personal Property prior to the Closing Date except such use thereof as is normal
and customary in the operation and maintenance of the Property.
5.1.7 Intellectual Property. In the absence of an express
assignment of any Leases, licenses, permits, Contracts, or other Interests, no
Leases, licenses, permits, Contracts, or Other Interests shall be transferred or
assigned to Buyer at Closing. Buyer also acknowledges that Seller and the Seller
Parties are subject to the Management Agreement, retaining all right, title and
interest in and to all their respective intellectual property rights that may be
used within or comprise any part of the Property except as may be specifically
licensed to Buyer pursuant to a separate license agreement with Seller or in
accordance with the terms of the Management Agreement.
5.1.8 Liquor License. The liquor licenses for the Hotels
are personal to Seller and will not be assigned to Buyer except to the extent
required by law for the Hotels to continue to have such licenses. Manager will
be responsible to apply for and obtain any liquor licenses for the Property from
the applicable local and/or provincial and state authorities and otherwise be
liable for and conduct in accordance with applicable law all liquor operations
at the Property on and after the Closing Date in accordance with the terms and
provisions of the Management Agreement.
5.1.9 Tenant Estoppels; Ground Lease Estoppels. Seller
shall use reasonable efforts to obtain from each tenant under the Leases an
estoppel certificate duly executed by and delivered by such tenant in the form
of Exhibit L-1 with respect to each of the Leases (the "Estoppel Certificate")
and as otherwise required pursuant to the terms of such Leases. Seller shall use
reasonable efforts to obtain, and subject to the provisions of Paragraph 6.2(R),
(a) from each ground lessor under the Ground Leases (other than with respect to
the Ground Lease relating to the Toronto InterContinental Hotel) an estoppel
certificate duly executed and delivered by such lessor in the form of Exhibit
L-2, and as otherwise required pursuant to the terms of such Ground Leases; and
(b) with respect to the Ground Lease relating to the Toronto InterContinental
Hotel a consent and estoppel certificate duly executed and delivered by the
lessor in the form of Exhibit L-3, or such other form satisfactory to Buyer
acting reasonably (collectively, the Ground Lease Estoppel Certificate"). To the
extent that any such form is not attached hereto, the parties shall promptly
endeavor after the Effective Date to reach mutual agreement on such forms that
will be delivered at Closing.
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5.1.10 Change in Brands. Seller shall not change, and it
shall cause its affiliates not to change, the Brand (as defined in the
Management Agreement) now in effect with respect to any Hotel.
5.2 Seller's Covenants After the Closing Date. On and after the
Closing Date, Seller agrees that it shall, or cause its affiliates to, do the
following:
5.2.1 Capital Expenditures. On or before the fifth
anniversary of the Initial Closing Date, Seller shall undertake, Capital
Replacements (as such term is used in either the Management Agreement or the PR
Lease, as the case may be) equal to or in excess of $25,000,000 in the aggregate
at one or more of the Hotels (or at the PR Hotel) pursuant to a "scope of work"
report prepared by Seller and delivered to Buyer prior to such expenditures
(such work to be determined in Seller's discretion and otherwise subject to the
Management Agreement and the PR Lease other than the requirement that such work
be set forth in any Capital Replacements Budget (delivered pursuant to the
Management Agreement) or the FF&E Estimate (delivered pursuant to the PR Lease).
Any default of Buyer in funding its obligations under Paragraph 3.2(b) shall
suspend Seller's obligations under this Paragraph 5.2.1 for so long as such
default continues.
5.2.2 Furniture, Fixture and Equipment Percentage. Seller
shall, and shall cause its affiliates to, comply with Section 5.2(g) of the
Management Agreement.
5.3 Bulk Sales. Buyer waives compliance by the Canadian Sellers
with the provisions of the Bulk Sales Act (Ontario). The applicable Canadian
Sellers shall indemnify and hold Buyer and its shareholders, directors,
officers, employees, agents and representatives harmless of and from, and will
pay for any loss, liability, damage or expense (including legal fees and
expenses) suffered by, imposed upon or asserted against it or any of them as a
result of, in respect of, connected with, or arising out of, under, or pursuant
to the failure of the parties to comply with the Bulk Sales Act (Ontario) in
respect of the transaction of purchase and sale contemplated under this
Agreement relating to the Toronto InterContinental Hotel or Toronto Staybridge
Suites Hotel, as applicable.
5.4 Approvals and Notifications. Each of Buyer and Seller, as
applicable, will, as promptly as practicable after the execution of this
Agreement (i) make, or cause to be made, all such filings and submissions to any
Governmental Authority as may be required or desirable (in Buyer or Seller's
respective discretion) to consummate the purchase and sale of the Property in
accordance with the terms of this Agreement, and (ii) use its commercially
reasonable efforts to take, or cause to be taken, all other actions which are
necessary or advisable (in Buyer or Seller's respective discretion) in order for
Buyer or Seller to fulfill its obligations under this Agreement. Each of Buyer
and Seller will coordinate and cooperate with the other in exchanging such
information and supplying such assistance as may be reasonably requested in
connection with the foregoing including, without limitation, providing copies of
notices and information supplied to or filed with any Governmental Authority
(except for notices and information which Buyer or Seller, as the case may be,
acting reasonably, considers highly confidential and sensitive which may be
filed on a confidential basis, but which may be shared with Buyer's or Seller's,
as the case may be, outside legal counsel or as otherwise provided in
-▇-
▇▇▇▇▇▇▇▇▇ 11.2 or which constitute Confidential Materials), and all notices and
correspondence received from any Governmental Authority.
6. Closing. Subject to the satisfaction (or waiver) of the conditions
precedent set forth in Paragraphs 10.1 and 10.2 with respect to all Hotels, with
respect to the Austin, TX InterContinental Hotel, Paragraph 10.4, and with
respect to the Atlanta, GA Holiday Inn, Paragraph 10.5, the time and place of
initial Closing shall be held at 9:00 a.m. eastern standard time at or through
the offices of Buyer's attorneys on the Closing Date specified by Buyer to
Seller on not less than five (5) Business Days prior written notice or such
other time and location mutually agreed to by the parties. Buyer shall have the
right to extend the Closing Deadline by exercising the Extension Option (with
respect to all Hotels, other than the Austin, TX InterContinental Hotel). The
term, "Extension Option" as used herein shall mean the option of Buyer to extend
the Closing Deadline through March 31, 2005 upon (i) giving the Seller written
notice of the exercise of such option not less than five (5) Business Days prior
to the applicable Closing Deadline, and (ii) posting the Deposit in accordance
with the terms of Paragraph 18.
6.1 Closing Mechanics. Closing shall be conducted through escrow
with the Closing Agent using an escrow procedure mutually acceptable to both
Seller and Buyer, or, if either Buyer or Seller determines in good faith that
such an escrow Closing is not practical, through a so-called "New York style"
closing (in which authorized representatives of Seller and Buyer attend the
Closing). Seller and Buyer agree to execute and deliver into escrow on the day
prior to the Closing Date (or, if applicable, execute at a "pre-closing" at
10:00 a.m. Eastern Time on the last Business Day prior to the Closing Date but
not deliver until the "New York style" closing) all Closing Documents with
funding and release to occur on the Closing Date. Upon Closing, Buyer shall
deliver to Seller the total allocated value of the Hotels being purchased on
such date (as such value is set forth on Exhibit A-13 hereof) and the other
items required of Buyer as elsewhere set forth herein, and Seller shall deliver
to Buyer possession of the Property, subject only to the Permitted Title
Exceptions, and the other items required of Seller as elsewhere set forth
herein.
6.2 Seller's Deliveries. At Closing, Seller shall deliver or cause
to be delivered to Buyer, or, at Buyer's direction, the Manager, the following
(each of which shall be in form and substance reasonably satisfactory to Buyer):
A. Deed or Assignment of Ground Lease. A Special Warranty Deed
(or Canadian equivalent) in the form of Exhibit B-1 for the Real Property owned
in fee by Seller (or in such form as may be customary for use in such
jurisdiction and otherwise acceptable to Buyer) and an Assignment of Ground
Lease in the form of Exhibit B-2 for the Real Property leased by Seller, except
the Toronto InterContinental Hotel and the Toronto Staybridge Suites Hotel, for
which the transfer, Assignment of Ground Lease and the related documentation
with respect to the transfer of the legal and beneficial interests in such Real
Property shall be in the forms prescribed in Paragraph 6.2(A-2) herein (or in
such form as may be customary for use in such jurisdiction and otherwise
acceptable to Buyer). With respect to each of the foregoing Exhibits to the
extent that no such form of Exhibit is attached hereto, the parties shall
promptly endeavor
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after the Effective Date to reach mutual agreement on such form that will be
delivered at Closing.
A-2 Transfers and Assignments Regarding Canadian Hotels.
With respect to the Toronto Staybridge Suites Hotel (i) a registrable form of
transfer of InterContinental Hotels Group (Canada) Inc.'s registered legal
interest in the subject Real Property to a New Brunswick nominee corporation to
be designated by Buyer (the "Nominee"), in the form of Exhibit T-1; (ii) a
conveyance of Staybridge Markham, Inc.'s beneficial interest in the subject Real
Property to Buyer in the form of Exhibit T-2; and (iii) an Authorization and
Direction from Staybridge Markham, Inc. to InterContinental Hotels Group
(Canada) Inc. authorizing the transfer of its legal interest in the subject Real
Property to Buyer in the form of Exhibit T-3. With respect to the leasehold
interest under the Ground Lease of the underlying Real Property comprising the
Toronto InterContinental Hotel (i) a registrable form of Assignment and
Assumption Agreement by and between Inter-Continental Holdings (Canada) Inc. and
the Nominee in the form of Exhibit T-4; (ii) a conveyance of ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Hotel Inc.'s beneficial interest under the aforementioned Ground Lease to Buyer
in the form of Exhibit T-5; (iii) an Authorization and Direction from ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ Hotel Inc. to Inter-Continental Holdings (Canada) Inc. authorizing the
assignment of its registrable interest under the Lease to the Nominee in the
form of Exhibit T-6; and (iv) an Assignment and Assumption Agreement among City
of Toronto, Buyer, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Hotel Inc. and Inter-Continental Holdings
(Canada) Inc. as contemplated in the aforementioned ground lease, in the form of
Exhibit T-7 (and Buyer agrees to execute and deliver all of such documents on
Closing each of which shall be substantially in the form attached hereto or as
otherwise satisfactory to Buyer acting reasonably). With respect to each of the
foregoing Exhibits to the extent that any of the foregoing forms of Exhibit is
not attached hereto, the parties shall promptly endeavor after the Effective
Date to reach mutual agreement on such form that will be delivered at Closing.
B. ▇▇▇▇ of Sale. A ▇▇▇▇ of Sale for each Hotel and certain
Personal Property related thereto substantially in the forms of Exhibit C-1 and
Exhibit C-2 (provided however if no such form is attached hereto, the parties
shall promptly endeavor after the Effective Date to reach mutual agreement on
such form that will be delivered at Closing), duly executed and delivered by
Seller.
C. Assignment of Leases. An Assignment and Assumption of Leases
for each Hotel in the form of Exhibit D, (provided however if no such form is
attached hereto, the parties shall promptly endeavor after the Effective Date to
reach mutual agreement on such form that will be delivered at Closing), duly
executed and delivered by Seller.
D. Assignment of Contracts, Warranties and Other Interests. An
Assignment and Assumption of Contracts, Warranties and Other Interests for each
Hotel in the form of Exhibit E (provided however if no such form is attached
hereto, the parties shall promptly endeavor after the Effective Date to reach
mutual agreement on such form that will be delivered at Closing), duly executed
and delivered by Seller.
E. Notices of Assignment and Assumption. If applicable, a written
notice in the form of Exhibit F-1, a copy of which shall be sent to each Tenant
under a Lease (the "Tenant Notice"), and a written notice in the form of Exhibit
F-2 to each party to a Contract (the
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"Contract Notice"), (provided however if no such form is attached hereto, the
parties shall promptly endeavor after the Effective Date to reach mutual
agreement on such form that will be delivered at Closing).
F. Withholding and Tax Certificates. For each Seller, regarding
all Hotels in the United States owned by it, a certificate in the form of
Exhibit G-1 with respect to Section 1445 of the Internal Revenue Code stating
whether or not Seller is a foreign person as defined in said Section 1445 and
applicable regulations thereunder, and regarding all Hotels owned by each
Canadian Seller in Canada, a statutory declaration in the form of Exhibit G-2
with respect to Section 116 of the Income Tax Act (Canada) stating whether or
not the Canadian Seller is a non-resident of Canada within the meaning of said
Section 116. With respect to each of the foregoing Exhibits to the extent that
any of the foregoing forms of Exhibit is not attached hereto, the parties shall
promptly endeavor after the Effective Date to reach mutual agreement on such
form that will be delivered at Closing.
G. Affidavit of Title/Gap Indemnity. An Affidavit of Title for
each Hotel with respect to liens and title matters in substantially the form of
Exhibit H, or in such other form as may be required by the Title Company.
H. Closing Statement. A Closing Statement Agreement in the form
of Exhibit I attached hereto and incorporated herein by this reference (provided
however if no such form is attached hereto, the parties shall promptly endeavor
after the Effective Date to reach mutual agreement on such form that will be
delivered at Closing). Seller and Buyer shall authorize and instruct the Closing
Agent to file, as the "reporting person," Internal Revenue Service Form 1099-B
("Proceeds from Real Estate, Broker, and Barter Exchange Transactions"), if and
as required by Section 6045(d) of the Code.
I. Evidence of Authority. For each entity holding title to the
Hotels and the Manager, evidence that Seller and the Manager have the requisite
power and authority to execute and deliver, and perform under, this Agreement
and all Closing Documents, consisting of a certificate of an Assistant Secretary
of Seller and/or Manager, as the case may be, with respect to the authority to
act on behalf of Seller or Manager of the individual executing on behalf of
Seller or Manager all documents contemplated by this Agreement, in the form of
Exhibit J (provided however if no such form is attached hereto, the parties
shall promptly endeavor after the Effective Date to reach mutual agreement on
such form that will be delivered at Closing).
J. Reaffirmation. A reaffirmation of the representations,
warranties and covenants set forth in Paragraph 8 hereof in the form of Exhibit
K (provided however if no such form is attached hereto, the parties shall
promptly endeavor after the Effective Date to reach mutual agreement on such
form that will be delivered at Closing).
K. Transfer Tax Declaration. If applicable, a duly completed real
estate transfer tax declaration or return.
L. Delivery of Keys and Property Documents. The Property
Documents and all keys to the Property or any portion thereof.
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M. Opinions. One or more written opinions from counsel to Seller
in customary form and substance reasonably satisfactory to Buyer, regarding the
authorization, execution, delivery and enforceability of the (i) Management
Agreement, (ii) IHG Parent Guaranty, and (iii) such other opinions as may be
reasonably required by Buyer.
N. Management Agreement. The Management Agreement in the form
attached hereto as Exhibit P, duly executed and delivered by Manager.
O. Retail Sales Tax Clearance Certificates. Certificates of
payment issued by the Minister of Revenue of Ontario under Section 6 of the
Retail Sales Tax Act (Ontario) to the effect that all requisite taxes under such
Act and similar legislation relating to the Toronto InterContinental Hotel and
the Toronto Staybridge Suites Hotel (other than relating to the conveyance and
transfer of the Hotels to the Buyer) have been paid by the applicable Canadian
Seller.
P. IHG Parent Guaranty. The IHG Parent Guaranty in the form
attached hereto as Exhibit M, duly executed and delivered by IHG.
Q. Other Instruments. Such other instruments or documents as may
be reasonably requested by Buyer or the Title Company, or reasonably necessary,
to effect or carry out the purposes of this Agreement, subject to Seller's prior
approval thereof, which approval shall not be unreasonably withheld or delayed.
R. Ground Lease Consent and Estoppel. A Ground Lease Estoppel
Certificate and Consent to Assignment of Ground Lease, duly executed by the
respective lessor in the form of Exhibit L-2 with respect to each of the Ground
Leases and in the form of Exhibit L-3 with respect to the Ground Lease relating
to the Tower InterContinental Hotel; and provided however, to the extent that
Seller is unable or fails to deliver a Ground Lease Estoppel Certificate
relating to a Property (such Property being referred to as "GL Property"),
Seller shall have the right to delay the transfer of such GL Property to Buyer
through June 1, 2005 in order to satisfy such condition. In the event such
Closing with respect to the GL Property occurs on a date other than the Closing
Date, the parties shall agree to amend the Management Agreement to subject such
GL Property to the terms thereof in a manner consistent with the proposed
modifications thereto regarding the addition of the Austin, TX InterContinental
Property on a date other than the Initial Closing Date. After June 1, 2005, to
the extent that Seller is unable or fails to satisfy the foregoing condition,
Buyer, as its sole remedy, shall have the right to Terminate this Agreement as
to such GL Property, and to the extent applicable, the Purchase Price hereunder
shall be adjusted in accordance with the allocated value for such Hotel as set
forth on Exhibit A-13. To the extent that a form is not attached hereto, the
parties shall promptly endeavor after the Effective Date to reach mutual
agreement on such forms that will be delivered Closing.
S. Reserved.
T. Tenant Estoppel Certificates. Tenant Estoppel Certificates
from each of the tenants under the Leases to the extent received by Seller.
U. Reserved.
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V. Reserved.
6.3 Buyer's Deliveries. At the Closing, Buyer shall deliver or
cause to be delivered to Seller the following:
A. Net Purchase Price. The net Purchase Price due at Closing
under this Agreement for the Hotel or Hotels being transferred on such
applicable date.
B. Opinions. One or more written opinions from counsel to Buyer
in customary form and substance reasonably satisfactory to Seller, regarding the
authorization, execution, delivery and enforceability of the (i) Management
Agreement, (ii) HPT Guaranty, and (iii) such other opinions as may be reasonably
required by Seller.
C. Closing Document Counterparts. Executed counterparts of any of
the Closing Documents described in Paragraph 6.2 which are to be signed by
Buyer.
D. Management Agreement; Amendments to Other Management
Agreements. Executed counterparts of the Management Agreement described in
Paragraph 6.2(N), and the amendments to the management agreements described in
Paragraph 6.2(S) above, in each case duly executed and delivered by TRS-1.
E. Other Instruments. Such other instruments or documents as may
be reasonably requested by Seller or the Title Company, or reasonably necessary,
to effect or carry out the purposes of this Agreement, subject to Buyer's prior
approval thereof, which approval shall not be unreasonably withheld or delayed.
F. HPT Guaranty. The HPT Guaranty in the form attached hereto as
Exhibit Q duly executed and delivered by HPT.
G. GST Indemnity. The GST certificate and indemnity contemplated
by Paragraph 3.5 in the form of Exhibit U.
7. Prorations, Credits and Closing Costs.
7.1 Proration Items.
(a) At the Closing, the following adjustments and prorations shall be
computed as of 12:01 a.m. (local time at each Property) on the Closing Date
("Apportionment Time"). All items of revenue, cost and expense with respect to
the period prior to the Apportionment Time shall be for the account of Seller.
All revenues attributable to guests of the Hotels for the night prior to the
Closing Date shall be for the account of Seller. All items of revenue, cost and
expense of such Property with respect to the period from and after the
Apportionment Time shall be for the account of Buyer or its designee. All
adjustments and prorations shall be on an accrual basis in accordance with
generally accepted accounting principles. Seller or its designee shall be
entitled to receive any refunds of any taxes (real, personal or sales) for any
periods prior to Closing, regardless of when received.
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(b) At the Closing, a fair and reasonable estimated accounting of all
adjustments and prorations shall be performed and agreed to by Seller and Buyer.
Subsequent final adjustments and payments (the "True-up") shall be made in cash
or other immediately available funds as soon as practicable after the Closing
Date for the Property based upon an accounting performed by the Seller and
acceptable to Buyer. In the event the parties have not agreed with respect to
the adjustments required to be made pursuant to this Paragraph 7.1 upon
application by any such party, a certified public accountant reasonably
acceptable to the parties hereto shall determine any such adjustments which have
not theretofore been agreed to by the parties hereto. The charges for such
accountant shall be borne equally by the parties to such disputed adjustment.
All adjustments to be made as a result of the final results of the True-up shall
be allocated as set forth above to the party entitled to such adjustment within
thirty (30) days after the final determination thereof. The provisions of
Paragraph 7 shall survive the Closing. Notwithstanding anything contained herein
to the contrary, any amounts owed to Seller under this Paragraph 7 shall not be
paid to Seller. Rather all such amounts shall be credited to Manager's
contribution to Initial Working Capital under the Management Agreement.
7.2 Closing Statement and Schedules. On or before five (5) days
prior to the Closing Date, Seller shall deliver to Buyer a current schedule of
the items and amounts to be prorated or credited as set forth in this Paragraph
7, and a draft closing statement for the Transaction.
7.3 Seller's Closing Costs. Seller shall pay the following: (a)
the fees and expenses of Seller's attorneys, (b) the costs (including recording
costs) of any cure of title defects required of Seller hereunder, (c) the
commission due any Broker retained by Seller, (d) half of all escrow agent fees
(if any are charged in connection with this Transaction), (e) half of costs and
expenses and premiums in connection with the preparation of the Title Reports
and the issuance of the Title Policies (including all endorsements reasonably
requested by Buyer), (f) half of all recording charges due on recordation of any
Closing Documents, (g) half of the costs and expenses of the Surveyor to prepare
the Survey, (h) half of all of the costs of transfer, documentary, excise,
recording, sales or other taxes or assessments imposed by virtue of the
Transaction, provided Buyer shall provide reasonable cooperation to Seller in
reducing the total amounts described herein, (i) half of the cost and expense of
any local counsel mutually retained by Buyer and Seller in any jurisdiction
where a Property is located and counsel located in Texas previously retained by
Buyer prior to the date hereof with respect to zoning matters, (j) one half of
the costs and expenses of all environmental and engineering reports regarding
any Property furnished to Buyer and any recommended and/or follow-up studies
required or suggested thereby, and (k) one half of the costs of any zoning
reports or related zoning due diligence studies requested by Buyer in connection
with its Due Diligence hereunder.
7.4 Buyer's Closing Costs. Buyer shall pay the following: (a)
except as otherwise provided herein, the costs of Buyer's Due Diligence, (b) one
half of the costs and expenses of all environmental and engineering reports
regarding any property furnished to Buyer and any recommended and/or follow-up
studies required or suggested thereby, (c) the fees and expenses of Buyer's
attorneys, (d) the commission due any Broker retained by Buyer, (e) all lenders'
fees related to any financing to be obtained by Buyer; (f) half of all recording
charges due on recordation of any Closing Documents, (g) half of all escrow
agent fees (if any are charged in connection with this Transaction), (h) half of
the costs and expenses from the Title
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Company to prepare the title reports, (i) half of the costs, expenses and
premiums for the Title Commitment and Title Policy (including all endorsements
reasonably requested by Buyer), (j) half of the costs of the costs of the
Survey, (k) half of all costs of all transfer, documentary, excise, recording,
sales or other taxes or assessments imposed by virtue of the Transaction,
provided that Seller shall provide reasonable cooperation to Buyer in reducing
the total amounts described herein, (l) half of the cost and expense of any
local counsel mutually retained by Buyer and Seller in any jurisdiction where a
Property is located and counsel located in Texas previously retained by Buyer
prior to the date hereof with respect to zoning matters, and (m) one half of the
costs of any zoning reports or related zoning due diligence studies requested by
Buyer in connection with its Due Diligence hereunder.
7.5 Goods and Services Tax Election. The parties hereto will use
their commercially reasonable efforts in good faith to minimize (or eliminate)
any taxes payable under the Excise Tax Act (Canada) in respect of the Closing
by, among other things, making such elections and taking such steps as may be
provided for under that Act (including, for greater certainty, making a joint
election in a timely manner under Section 167 of that Act) if such elections are
applicable to the transactions contemplated herein and as may reasonably be
requested by Buyer in connection with the Closing and acceptable to the Canadian
Sellers in their sole discretion, acting reasonably. Should the parties agree to
make the election under Section 167 of the Excise Tax Act, Buyer shall indemnify
and hold Seller harmless in respect of any GST, penalties, interest and other
amounts which may be assessed against Seller as a result of the transaction
under this Agreement not being eligible for such election or as a result of
Buyer's failure to file the election within the prescribed time.
8. Representations and Warranties.
8.1 Seller's Representations and Warranties. To induce Buyer to
enter into this Agreement, Seller covenants, represents and warrants to Buyer as
follows:
A. Seller is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its formation, and has all
requisite power and authority under the laws of such jurisdiction and its
respective charter documents to enter into and perform its obligations under the
Closing Documents and to consummate the transactions contemplated thereby.
Seller is duly qualified to transact business in each jurisdiction in which the
nature of the business conducted by it requires such qualification, except where
such failure to qualify would not have a material adverse effect on Seller or
the transactions contemplated hereby.
B. Seller has taken (or will take, prior to the Closing Date) all
necessary action to authorize the execution, delivery and performance of this
Agreement and the other Closing Documents to which it is a party, and upon the
execution and delivery of any document to be delivered by Seller on or prior to
the Closing Date, such document shall constitute the valid and binding
obligation and agreement of Seller enforceable against Seller in accordance with
its terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws of general application affecting the
rights and remedies of creditors and general principles of equity.
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C. The execution, delivery or performance of the Closing
Documents by Seller, and the compliance with the terms and provisions thereof,
will not result in any breach of the terms, conditions or provisions of, or
conflict with or constitute a default under, or result in the creation of any
lien, charge or encumbrance upon any Property pursuant to the terms of any
indenture, mortgage, deed of trust, note, evidence of indebtedness or any other
agreement or instrument by which Seller is bound.
D. Except as may be set forth on Schedule 8.1(D), to Seller's
Knowledge, no action or proceeding is pending or threatened, and no
investigation looking toward such an action or proceeding has begun, which (i)
questions the validity of this Agreement and the other Closing Documents or any
action taken or to be taken pursuant thereto, (ii) will result in any material
adverse change in the business, operation, affairs or condition of any Property,
(iii) may result in or subject any Property to a material liability, (iv)
involves condemnation or eminent domain proceedings against any material part of
Property or (v) is likely to materially and adversely affect the ability of
Seller to perform its obligations hereunder.
E. Other than (i) the Permitted Title Exceptions, (ii) the
documents to be assigned to Buyer pursuant to the terms hereof, true and
complete copies of which have been delivered to Buyer, (iii) the Leases set
forth on Schedule 8.1(E), (iv) the Contracts set forth on Exhibit N, (v) the
Ground Leases; and (vi) agreements and easements with governmental bodies and
utility companies which are reasonably necessary for the development and
operation of the Property as contemplated by this Agreement and the Closing
Documents, there are no material agreements, leases, licenses or occupancy
agreements affecting the Property which will be binding on Buyer subsequent to
the Closing Date.
F. Except as may be set forth in Schedule 8.1(F) or in the
written inspection reports delivered to Buyer in connection herewith, to
Seller's Knowledge, there is no fact or condition which materially and adversely
affects the physical condition of the Property which has not been set forth in
this Agreement, or in the other documents, certificates or statements furnished
to or obtained by Buyer in connection with the transactions contemplated hereby.
G. All utilities and services necessary for the use and operation
of the Property (including, without limitation, road access, water, electricity
and telephone) are available thereto, and are of sufficient capacity to meet
adequately all needs and requirements necessary for the current use and
operation of the Property. To Seller's Knowledge, except as may be set forth in
Schedule 8.1(G), no fact, condition or proceeding exists which would result in
the termination or impairment of the furnishing of such utilities to the
Property.
H. Except as may be set forth in Schedule 8.1(H), or in the
written inspection reports (including environmental reports) delivered to Buyer
in connection herewith, to Seller's Knowledge (i) the Property and the use and
operation thereof do not violate any material federal, state, municipal or other
governmental statutes, ordinances, by-laws, rules, regulations or any other
legal requirements, including, without limitation, those relating to
construction, occupancy, zoning, adequacy of parking, environmental protection,
occupational health and safety or fire safety applicable thereto; and (ii) there
are in effect all material licenses, permits and other authorizations necessary
for the current use, occupancy and operation thereof. To Seller's Knowledge,
except as may be set forth in Schedule 8.1(H), there is no threatened request,
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application, proceeding, plan, study or effort which would materially adversely
affect the present use or zoning of the Property or which would modify or
realign any adjacent street or highway.
I. Except as may be set forth in Schedule 8.1(I), other than the
amounts disclosed by current tax bills, true and correct copies of which have
been delivered to Buyer, no taxes or special assessments of any kind (special,
bond or otherwise) are or have been levied with respect to the Property, or any
portion thereof, which are outstanding or unpaid, other than amounts not yet due
and payable, or if due and payable, not yet delinquent (and to the extent any
such taxes or special assessments are due and payable on the Effective Date and
prior to the Closing Date, such amount will be paid at Closing in accordance
with Paragraph 7).
J. Each Seller, other than each Canadian Seller, is not a
"foreign person" within the meaning of Section 1445(f)(3) of the United States
Internal Revenue Code of 1986, as amended, and the regulations promulgated
thereunder.
K. Each Canadian Seller is not a non-resident of Canada within
the meaning of the Income Tax Act (Canada).
K-1 Except as may be set forth in Schedule 8.1(K-1), or in
the written inspection reports (including environmental reports) delivered to
Buyer in connection herewith, to Seller's Knowledge, none of Seller or any other
occupant or user of any of the Property, or any portion thereof, have stored or
disposed of (or engaged in the business of storing or disposing of) or have
released or caused the release of any hazardous waste, contaminants, oil,
radioactive or other material on the Property, or any portion thereof, the
removal of which is required or the maintenance of which is prohibited or
penalized by any applicable federal, state or local statutes, laws, ordinances,
rules or regulations. To Seller's Knowledge, except as may be set forth in
Schedule 8.1(K-1), or in the written inspection reports (including environmental
reports) delivered to Buyer in connection herewith, the Property is free from
any such hazardous waste, contaminants, oil, radioactive and other materials,
except any such materials maintained in accordance with applicable law.
L. To Seller's Knowledge, except as contained in the written
inspection reports (including environmental reports) delivered to Buyer in
connection herewith, there are no defects or inadequacies in the Property which,
if uncorrected, would result in a termination of insurance coverage or an
increase in the premiums charged therefor.
M. Except as may be set forth in Schedule 8.1(M), or in the
written inspection reports delivered to Buyer in connection herewith, to
Seller's Knowledge, Property is in good working order and repair, mechanically
and structurally sound, free from material defects in materials and workmanship
and not subject to any unrepaired casualty.
N. Except as may be set forth in Schedule 8.1(N), all tax returns
for privilege, gross receipts, excise, sales and use, personal property and
franchise taxes required by law to be filed by Seller with respect to Property
prior to the Closing Date will be prepared and duly filed prior to the Closing
(or after Closing with respect to pre-Closing matters) and all taxes, if any,
shown on such returns or otherwise determined to be due, together with any
interest or
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penalties thereon, will be paid by Seller prior to the Closing, or in a timely
manner following Closing.
O. Except as may be set forth in Schedule 8.1(O), or in the
written inspection reports delivered to Buyer in connection herewith, there are
in effect all material licenses (including liquor licenses, if required),
permits and other authorizations necessary for the then current use, occupancy
and operation of the Property.
P. Seller has good title to the Personal Property free and clear
of all liens other than Permitted Title Exceptions.
Q. The Personal Property located at or otherwise used in
connection with the Property (i) complies in all material respects with the
applicable Brand Standards (as defined in the Management Agreement) and (ii) is
otherwise at adequate, appropriate levels and at levels that are at least equal
to those found at other similarly-situated Staybridge Suites, Crowne Plaza,
Holiday Inn, or Intercontinental, as applicable, hotels.
R. Except as may be set forth in Schedule 8.1(R), or in the
written inspection reports (including without limitation environmental condition
reports and property condition reports from ATC Associates, Inc.) delivered to
Buyer in connection herewith, to Seller's Knowledge there exists no violation of
any law, regulation, order or requirement issued by any governmental authority
against or affecting the Property and Seller has not received any notice or
order from any governmental authority requiring any repairs, maintenance or
improvements to are Property which have not been fully performed.
S. Each Real Property constitutes a separate parcel for purposes
of ad valorem real property taxes, and is not subject to a lien for non-payment
of real property taxes relating to any other property.
T. Except as may be set forth on Schedule 8.1(T), to Seller's
Knowledge, there exists no material default on the part of Seller with respect
to any Permitted Title Exception, other than those defaults which can be cured
or discharged by the payment of money and for which an allowance for the payment
thereof has been made at Closing.
U. Each of the financial statements of IHG heretofore delivered
to Buyer have been properly prepared in accordance with the Accounting
Principles (as defined in the Management Agreement), are true, correct and
complete in all material respects and fairly present the consolidated financial
condition of IHG at and as of the dates thereof and the results of its
operations for the periods covered thereby. Each of the financial statements for
the Hotels heretofore delivered to Buyer have been properly prepared in
accordance with the Accounting Principles, are true, correct and complete in all
material respects and fairly present the financial condition of the Hotels
covered thereby at and as of the dates thereof and the results of their
operations for the periods covered thereby.
V. Seller is not a debtor in any voluntary or involuntary
proceeding in bankruptcy.
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W. Other than the Leases listed in Schedule 8.1(W) and the
Permitted Title Exceptions, there are no contracts or agreements with respect to
the use or occupancy of the Property. The copies of the Leases and the Ground
Leases heretofore delivered by Seller to Buyer are a true, correct and complete
copies thereof; neither the Leases nor the Ground Leases have been amended
except as evidenced by amendments similarly delivered to Buyer and constitute
the entire agreement between Seller and the tenants (or the ground lessor, as
applicable) thereunder. Except as otherwise set forth in Schedule 8.1(W): (i) to
Seller's Knowledge, each of the Leases is in full force and effect on the terms
set forth therein and to Seller's Knowledge each tenant, thereunder is legally
required to pay all sums and perform all material obligations set forth therein
without concessions, abatements, offsets, defenses or other basis for relief or
adjustment; (ii) to Seller's Knowledge, each of the Ground Leases are in full
force and effect on the terms set forth therein and the ground lessors
thereunder are legally required to perform all material obligations set forth
therein without concessions, defenses or other basis for relief or adjustment;
(iii) no such tenant (or ground lessor with respect to the performance of any
obligations under the Ground Lease, as applicable) has asserted in writing or,
to Seller's Knowledge, has any defense to, offsets or claims against, rent
payable by it or the performance of its other obligations under its Lease (or
Ground Lease, as applicable); (iv) Seller has no outstanding obligation to
provide any such tenant with an allowance to construct, or to construct at
Seller's expense, any tenant improvements; (v) no such tenant is in arrears in
the payment of any sums or in the performance of any material obligation
required of it under its Lease beyond any applicable grace period, and no such
tenant has prepaid any rent or other charges; (vi) to Seller's Knowledge no such
tenant or ground lessor, as applicable, has filed a petition in bankruptcy or
for the approval of a plan of reorganization or management under the Federal
Bankruptcy Code or under any other similar state law, or made an admission in
writing as to the relief therein provided, or otherwise become the subject of
any proceeding under any federal or state bankruptcy or insolvency law, or has
admitted in writing its inability to pay its debts as they become due or made an
assignment for the benefit of creditors, or has petitioned for the appointment
of or has had appointed a receiver, trustee or custodian for any of its
property; (vii) no such tenant or ground lessor, as applicable, has requested in
writing a modification of its Lease or Ground Lease, respectively, or a release
of its obligations under its Lease or Ground Lease, respectively, in any
material respect or has given written notice terminating its Lease or Ground
Lease, or has been released of its obligations thereunder in any material
respect prior to the normal expiration of the term thereof; (viii) except as set
forth in the Leases, no guarantor has been released or discharged, voluntarily
or involuntarily, or by operation of law, from any obligation under or in
connection with any Lease or any transaction related thereto; (ix) all security
deposits paid by tenants, are as set forth in Schedule 8.1(W); (x) all lease
commissions due with respect to each of the Leases has been paid, except as
otherwise set forth on Schedule 8.1(W); and (xi) the other information set forth
in Schedule 8.1(W) is true, correct and complete in all material respects. No
default or breach exists under any Lease or Ground Lease on the part of Seller.
X. An appropriate Seller affiliate is a "registrant" under Part
IX of the Excise Tax Act (Canada). ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Hotel, Inc.'s registration
number is: 84822 5546 RC0001; Staybridge Markham, Inc.'s registration number is:
84875 0071 RC 0001.
Y. The Designated Representatives are the persons (either
individually or as a whole) to whom any condition which would render any of the
statements in Paragraph 8.1
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untrue, inaccurate or incorrect in any material respect (without regard to any
knowledge qualifier contained in such statement) should be communicated to,
directly or indirectly, by any general manager of a Hotel that first knows such
condition. ▇▇▇▇▇ ▇▇▇▇▇▇ is the person to whom any condition which would render
any of the statements in Paragraph 8.1(Z) untrue, inaccurate or incorrect in any
material respect (without regard to any knowledge qualifier contained in such
statement) should be communicated to, directly or indirectly, by any general
manager of a Hotel that first knows such condition.
Z. Except as set forth in Schedule 8.1(Z), with respect to the
Hotels located in Canada:
(i) No collective agreement is currently being negotiated
by the Canadian Seller or any other Person in respect of any of the Hotels in
Canada or the employees working at any of the Hotels in Canada and the only
collective agreements in force with respect to the employees working at any of
the Hotels in Canada are the Collective Agreements, true, correct and complete
copies of which have been provided to Buyer. To Seller's (Canada) Knowledge, (i)
none of the Hotels in Canada has committed any breaches of their obligations
under the Collective Agreements; (ii) there are no grievances or arbitration
proceedings thereunder; and (iii) there are no written or oral agreements or
course of conduct which modify the terms of the Collective Agreements;
(ii) Except in respect of the Collective Agreements, no
trade union, council of trade unions, employee bargaining agency or affiliated
bargaining agent holds bargaining rights with respect to any of the employees
working at any of the Hotels in Canada by way of certification, interim
certification, voluntary recognition, or succession rights, or has applied or,
to Seller's (Canada) Knowledge, threatened to apply to be certified as the
bargaining agent of the employees working at any of the Hotels in Canada. To
Seller's (Canada) Knowledge, there are no threatened or pending union organizing
activities involving the employees working at any of the Hotels in Canada. There
is no labour strike, dispute, work slowdown or stoppage pending or involving or,
to Seller's (Canada) Knowledge, threatened against or in relation to any of the
Hotels in Canada and no such event has occurred within the last five (5) years;
and
(iii) No trade union has applied to have any of the Hotels
in Canada declared a related employer pursuant to the Labour Relations Act
(Ontario).
AA. The Canadian Seller is not engaged in any activities and does
not provide any of the services of a business described in subsection 14.1(5) of
the Investment Canada Act (Canada). The aggregate value of the Property in
Canada, the control of which is being acquired as a result of the transactions
contemplated by this Agreement, calculated in accordance with the Investment
Canada Act (Canada) and the regulations thereunder, is less than CDN$237
million.
BB. Neither the aggregate value of Canadian Seller's assets in
Canada nor the gross revenues from sales in or from Canada generated from those
assets exceeds the applicable value determined pursuant to section 110 of the
Competition Act (Canada), as amended, and the regulations thereunder.
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8.2 Reserved.
8.3 Claims of Breach Prior To Closing. If at or prior to the
Closing, to Seller Knowledge's if any Seller's Warranty becomes untrue,
inaccurate or incorrect in any material respect (without regard to any
materiality or knowledge qualifier contained therein), Seller shall give Buyer
written notice thereof within ten (10) Business Days of obtaining such knowledge
(but, in any event, prior to the Closing). After the Due Diligence Deadline but
prior to the Closing, if to Buyer's Knowledge any Seller's Warranty is or
becomes untrue, inaccurate or incorrect in any material respect, Buyer shall
give Seller written notice thereof within five (5) Business Days of obtaining
such knowledge (but, in any event, prior to the Closing). In either such event,
Seller shall have the right to cure such misrepresentation or breach and shall
be entitled to a reasonable adjournment of the Closing upon written notice to
Buyer (not to exceed fifteen (15) days) to attempt such cure. Seller shall
notify Buyer within three (3) Business Days of its receipt of such notice if
Seller has elected to cure such untrue, inaccurate or incorrect Seller's
Warranty. If Seller fails to respond within such timeframe, Seller shall be
deemed to have declined to cure such untrue, inaccurate or incorrect Seller's
Warranty.
If to Buyer's Knowledge prior to the applicable Closing Date any
Seller's Warranty is or becomes untrue, inaccurate or incorrect in any material
respect as of the date made, and Seller is unable or unwilling to so cure such
misrepresentation or breach, then Buyer, as its sole remedy shall elect either
(a) to waive such misrepresentation or breach and consummate the Transaction
without any reduction of or credit against the Aggregate Purchase Price, or (b)
to Terminate this Agreement by written notice given to Seller on or before the
Closing Date, in which event Buyer shall be entitled to recover from Seller
within five (5) days of demand, all of Buyer's out-of-pocket costs (including
legal fees) incurred with respect to the transactions contemplated by this
Agreement.
If Buyer has knowledge prior to the applicable Closing Date that any
Seller's Warranty becomes untrue, inaccurate or incorrect in any material
respect through no fault of Seller, and Seller is unable or unwilling to so cure
such misrepresentation or breach, then Buyer, as its sole remedy shall elect
either (a) to waive such misrepresentation or breach and consummate the
Transaction without any reduction of or credit against the Aggregate Purchase
Price, or (b) to Terminate this Agreement by written notice given to Seller on
or before the Closing Date.
If any of Seller's Warranties are untrue, inaccurate or incorrect but
are not, in the aggregate, untrue, inaccurate or incorrect in any material
respect, Buyer shall be required to consummate the Transaction without any
reduction of or credit against the Aggregate Purchase Price. If on the Closing
Date, Buyer has Knowledge that Seller's Warranties are untrue, inaccurate or
incorrect in any material respect and Buyer nevertheless chooses to consummate
the Transaction, Buyer waives any right to seek damages against Seller if such
breach would otherwise have allowed Buyer to terminate this Agreement pursuant
to its terms.
The untruth, inaccuracy or incorrectness of Seller's Warranties shall
be deemed material only if Buyer's aggregate damages resulting from the untruth,
inaccuracy or incorrectness of all Seller's Warranties are reasonably estimated
to equal or exceed three hundred thousand dollars ($300,000.00).
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8.4 Survival and Limits On Buyer's Claims. Seller's Warranties
shall survive the Closing and not be merged therein for a period of one (1) year
and Seller shall only be liable to Buyer hereunder for a breach of Seller's
Warranties made herein or in any of the documents executed by Seller at the
Closing with respect to which an action has been commenced by Buyer against
Seller on or before one (1) year after the date of the Closing. Notwithstanding
the foregoing, whether or not the Closing occurs, if Buyer is otherwise entitled
to bring an action for damages against Seller, Buyer shall not commence any such
action until its damages are reasonably estimated to aggregate $300,000.00 (such
amount being, the "Damages Threshold"). In determining the amount of the Damages
Threshold, Buyer shall be able to aggregate dollar amounts for actions that it
may bring hereunder and for actions that PR Buyer may bring under the PR Stock
Agreement. All covenants set forth in this Agreement, unless waived by Buyer,
shall survive until fully performed. To the extent that Buyer is able to recover
any damages from Seller, it shall be entitled to the entire amount of such
damages notwithstanding the Damages Threshold.
8.5 Buyer's Representations and Warranties. Buyer, as of the date
of the execution of this Agreement by Buyer, represents and warrants to Seller
as follows, and as a condition precedent to Seller's obligation to consummate
the Transaction at Closing pursuant to the terms of this Agreement, the
following representations of Buyer shall be true and correct in all material
respects as of the Closing Date:
A. Status and Authority of Buyer. Buyer is duly organized and
validly existing and the laws of the jurisdiction of its formation, and has all
requisite power and authority under the laws of such jurisdiction and under its
charter documents to enter into and perform its obligations under the Closing
Documents to which it is a party and to consummate the transactions contemplated
thereby. Buyer is (or will be as of the Closing Date) duly qualified and in good
standing in each jurisdiction in which the nature of the business conducted by
it requires such qualification, except where such failure to qualify would not
have a material adverse effect on Buyer or the transactions contemplated hereby.
B. Action of Buyer. Buyer has taken (or will take, prior to the
Closing Date) all necessary action to authorize the execution, delivery and
performance of each of the Closing Documents to which it is a party, and upon
the execution and delivery of any document to be delivered by Buyer on or prior
to the Closing Date such document shall constitute valid and binding obligation
and agreement of Buyer enforceable against Buyer its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws of general application affecting the rights and
remedies of creditors and general principles of equity.
C. No Violations of Agreements. Neither the execution, delivery
or performance of the Closing Documents by Buyer, nor compliance with the terms
and provisions thereof, will result in any breach of the terms, conditions or
provisions of, or conflict with or constitute a default under, or result in the
creation of any lien, or charge upon any property or assets of Buyer pursuant to
the terms of any indenture, mortgage, deed of trust, note, evidence of
indebtedness or any other agreement or instrument by which Buyer is bound.
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D. Litigation. To Buyer's Knowledge, no action or proceeding is
pending or threatened, and no investigation looking toward such an action or
proceeding has begun, which (a) questions the validity of the Closing Documents
or any action taken or to be taken pursuant hereto or (b) is likely to
materially and adversely affect the ability of Buyer to perform its obligations
hereunder.
E. Bankruptcy. Buyer is nor a debtor in any voluntary or
involuntary proceeding in bankruptcy.
F. Sophisticated Buyer. Buyer is an experienced investor that
specializes in the investment in and ownership of hotel properties in
geographically diverse markets. Buyer is a sophisticated real estate owner and
investor with particular experience in the acquisition and ownership of hotels
similar to the Hotels.
G. GST Registration. On Closing, Buyer will be a "registrant"
under Part IX of the Excise Tax Act (Canada) and prior to Closing shall provide
Seller with its GST registration #.
H. Reporting. ▇▇▇▇ ▇▇▇▇▇▇ is the person to whom any condition
which would render any of the statements in this Paragraph 8.5 untrue,
inaccurate or incorrect in any material respect (without regard to any knowledge
qualifier contained in such statement) should be communicated to, directly or
indirectly, by any senior employee of HPT that first knows such condition.
8.6 Reserved.
9. Casualty and Condemnation. Seller shall maintain the property
insurance coverage currently in effect for the Property, or comparable coverage,
through the Closing Date. If after the Effective Date and on or prior to the
Closing Date, any portion of the improvements is materially damaged or destroyed
by fire or other casualty, or there shall be commenced or instituted against any
Property any Condemnation Proceeding, Seller shall promptly (and in no event
more than two (2) Business Days after the occurrence of such casualty or
Condemnation Proceeding) give written notice of such event to Buyer, and the
following provisions shall apply notwithstanding the contrary terms of any
applicable Laws with respect to the subject matter of Paragraph 9:
9.1 Major Event. If such damage or destruction or Condemnation
Proceeding results in any Hotel or Hotels becoming Unsuitable for its Permitted
Use, as reasonably determined by Buyer or Seller, (such damage or Condemnation
Proceeding shall be referred to as a "Major Event"), then both Buyer and Seller
shall have the right to Terminate this Agreement as to either (a) only the
affected Hotel or Hotels; or (b) if three (3) or more Hotels are rendered
Unsuitable for its Permitted Use, as to all Hotels hereunder, in each case by
written notice to the other party given no later than ten (10) Business Days
after the giving of Seller's notice of such event, and the Closing Date shall be
extended, if necessary, to provide sufficient time for Buyer or Seller to make
such election. In the case of a Major Event, and so long as neither party has
elected to Terminate this Agreement as to all Hotels, in addition to the
foregoing termination right, Seller or Buyer shall have the option to extend the
Closing Date for
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up to ninety (90) days for either (a) all Hotels or (b) solely as to the
Hotel(s) affected by the Major Event (to allow Seller to repair/restore the
affected Hotel in a manner satisfactory to Buyer) (in which case the Closing for
the unaffected Hotels shall proceed as set forth herein, except the Purchase
Price shall be reduced by the allocated value of the affected Hotel as set forth
on Exhibit A-13). To the extent that Buyer or Seller elects to postpone Closing
pursuant to the provisions of this Paragraph, Buyer shall have the ability to
conduct a limited due diligence review (such review shall be limited to the
conditions directly related to any restoration and repair of such Hotel) with
respect to such affected Hotel up to and including the date that is ten (10)
calendar days prior to the extended closing date for such Hotel(s) and Buyer
shall have the right to Terminate this Agreement solely as to the Hotel affected
by the Major Event only for reasons directly related to any restoration and
repair of such Hotel. To the extent that this Agreement is terminated as to an
affected Hotel, the Purchase Price shall be reduced by the allocated value of
such affected Hotel as set forth on Exhibit A-13.
9.2 Closing Despite Casualty/Condemnation. If a casualty or
Condemnation Proceeding occurs and neither Buyer nor Seller Terminates this
Agreement with respect to the affected Hotel(s) on account thereof, then at
Closing (a) the conveyance of the Property shall be less such portion of the
Property so taken by (or, as applicable, shall be subject to) said Condemnation
Proceeding, without adjustment of the Purchase Price, (b) Seller shall assign to
Buyer (without recourse to Seller) all the rights to all awards or insurance
proceeds with respect to such casualty or Condemnation Proceeding (except for
business interruption coverage with respect to rental payments prior to
Closing); (c) Buyer and Seller shall cause Owner and Manager to waive any of
their respective ability to terminate the Management Agreement as to such
affected Hotel as a result of such Hotel being "Unsuitable for its Permitted
Use" pursuant to the terms of the Management Agreement; and (d) Seller shall
provide a credit at Closing equal to (i) Seller's deductible under Seller's
insurance policy, plus all proceeds or awards previously paid to Seller with
respect to such casualty or Condemnation Proceeding, less (ii) an amount equal
to the sum of (A) the costs, expenses and fees, including reasonable attorneys'
fees, expenses and disbursements, incurred by Seller in connection with
receiving such proceeds or award, (B) any portion of any Condemnation Proceeding
award that is allocable to loss of use of the Property prior to Closing, and the
proceeds of any rental loss, business interruption or similar insurance to the
extent allocable to the period prior to the Closing Date, and (C) the reasonable
and actual costs incurred by Seller in stabilizing and/or repairing the Property
following such casualty or condemnation.
10. Other Conditions to Closing. The obligation of Buyer and Seller to
close the Transaction shall be further subject to the satisfaction at or prior
to Closing of the conditions precedent set forth in this Paragraph 10.
10.1 Conditions to Buyer's Obligations. The conditions precedent
to Buyer's obligations at Closing referenced above are as follows, any or all of
which may be expressly waived by Buyer in writing, at its sole option:
A. Representations. Seller's Warranties, subject to Paragraph
8.3, shall be true and correct in all material respects on and as of the Closing
Date, except as modified in a manner permitted by the Agreement, as if made on
and as of such date except to the extent that they expressly relate to an
earlier date;
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B. Title Policy. At Closing, Buyer shall have received from the
Title Company the Title Policy (or a specimen or proforma policy thereof or
"marked" Title Commitment) together with an irrevocable written obligation of
the Title Company to issue a Title Policy in the form of such specimen or
proforma policy.
C. Seller Compliance. Seller shall have performed all of the
covenants, undertakings and obligations to be performed or complied with by
Seller at or prior to the Closing.
D. Reliance Letters. Seller shall have delivered a reliance
letter or letters addressed to Buyer and its permitted assignees or designees
from ATC Associates, Inc. substantially in the form attached hereto as Exhibit W
and as otherwise reasonably acceptable to Buyer.
E. Sale of Crowne Plaza (Puerto Rico), Inc. Stock. The closing
under the PR Stock Agreement shall simultaneously occur; provided that the
provisions of this Paragraph shall not apply in the event that such closing has
not been consummated by reason of PR Buyer's default thereunder.
10.2 Conditions to Seller's Obligations. The conditions precedent
to Seller's obligations at Closing referenced above are as follows, any or all
of which may be expressly waived by Seller in writing, at its sole option:
A. Representations. Buyer's warranties set forth in Paragraph
8.3, shall be true and correct in all material respects on and as of the Closing
Date, except as modified in a manner permitted by the Agreement, as if made on
and as of such date except to the extent that they expressly relate to an
earlier date;
B. Buyer Compliance. Buyer shall have performed all of the
covenants, undertakings and obligations to be performed or complied with by
Buyer at or prior to the Closing.
C. Sale of Crowne Plaza (Puerto Rico), Inc. Stock. The closing
under the PR Stock Agreement shall simultaneously occur; provided that the
provisions of this Paragraph shall not apply in the event that such closing has
not been consummated by reason of PR Seller's default thereunder.
10.3 Waiver of Conditions. By closing the Transaction as it
pertains to those Hotel(s) being transferred on an applicable Closing Date,
Seller and Buyer shall be conclusively deemed to have waived the benefit of any
remaining unfulfilled conditions set forth in Paragraph 10.1 and 10.2,
respectively as they apply to such Closing.
10.4 Additional Austin, InterContinental Closing Conditions. In
addition to the conditions contained in Paragraphs 10.1 and 10.2, the conditions
precedent to Seller's or Buyer's obligation to consummate the Closing with
respect to the Austin, TX InterContinental Hotel are as follows, any or all of
which may be expressly waived by Buyer or Seller, at their sole option:
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10.4.1 Buyer and Seller shall have consummated the
Transaction with respect to those Hotels being transferred on the Initial
Closing Date.
10.4.2 Manager and Owner shall have executed and delivered
an amendment to the Management Agreement in order to subject the Austin, TX
InterContinental Hotel to the terms and provisions thereof, such amendment to be
in the form attached hereto as Exhibit R.
10.5 Additional Atlanta, GA Holiday Inn Closing Conditions. To the
extent that Buyer consents to assume the industrial revenue bond obligations
relating to the Atlanta GA Holiday Inn, in addition to the conditions contained
in Paragraphs 10.1 and 10.2, the conditions precedent to Seller's or Buyer's
obligation to consummate the Closing with respect to the Atlanta, GA, Holiday
Inn Hotel are as follows, any or all of which may be expressly waived by Buyer
or Seller, at their sole option:
10.5.1 Buyer and Seller shall have received such
documentation reasonably required by them (and applicable Law) to transfer to
Buyer (and allow Buyer's assumption of) certain Industrial Revenue Bond
obligations owed by Seller and related tax benefits running to the benefit of
Seller, in each case relating to the Atlanta, GA Holiday Inn, such documentation
to be in form and substance satisfactory to Buyer and Seller.
11. Transaction Issues: Brokers, Confidentiality and Indemnity.
11.1 Brokers. Seller and Buyer expressly acknowledge that Seller's
Broker has acted as the exclusive broker with respect to the Transaction and
with respect to this Agreement. Seller shall pay any brokerage commission due to
Seller's Broker in accordance with the separate agreement between Seller and
Seller's Broker. Seller agrees to hold Buyer harmless and indemnify Buyer from
and against any and all Liabilities (including reasonable attorneys' fees,
expenses and disbursements) suffered or incurred by Buyer as a result of any
claims by Seller's Broker or any other party claiming to have represented Seller
as broker in connection with the Transaction. Buyer agrees to hold Seller
harmless and indemnify Seller from and against any and all Liabilities
(including reasonable attorneys' fees, expenses and disbursements) suffered or
incurred by Seller as a result of any claims by any other party claiming to have
represented Buyer as broker in connection with the Transaction.
11.2 Publicity. Except for the Press Releases or Public
Announcements the forms of which are attached hereto as Exhibit S, or if no such
forms are attached, such other forms as are reasonable under the circumstances
or as may be required by law or as may be reasonably necessary, on a
confidential basis, to inform any rating agencies, potential sources of
financing, financial analysts, to perform its obligations and duties contained
in this Agreement or to receive legal, accounting and/or tax advice, the parties
agree that no party shall, with respect to this Agreement and the transactions
contemplated hereby, contact or conduct negotiations with public officials, make
any public pronouncements, issue press releases or otherwise furnish information
regarding this Agreement or the transactions contemplated hereby to any third
party without the consent of the other party, which consent shall not be
unreasonably withheld; provided, however, that, if such information required to
be disclosed by law, the party so
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disclosing the information shall use reasonable efforts to give notice to the
other parties as soon as such party learns that it must make such disclosure.
Buyer acknowledges that certain Ground Leases that affect the Hotels
require landlord consent to any assignment of those rights and/or release of
Seller from continued liability under such lease. Buyer hereby consents to
Seller's disclosure to any such landlords of Buyer's identity and financial
information. Buyer agrees to cooperate (at no material cost and expense) with
Seller and any such landlord and to provide such Buyer financial information as
may be reasonably requested by such landlord in order to consent to the proposed
assignment.
11.3 Indemnity.
11.3.1 Buyer hereby agrees to indemnify, defend, and hold
Seller and each of the other Seller Parties free and harmless from and against
any and all Liabilities (including reasonable attorneys' fees, expenses and
disbursements) arising out of or resulting from (a) the breach of the terms of
Paragraph 11.2 or (b) the entry on the Property and/or the conduct of any Due
Diligence by Buyer or any of Buyer's Representatives at any time prior to the
Closing; provided, however, that Buyer's obligations under this clause (b) shall
not apply to the mere discovery of a pre-existing environmental or physical
condition at the Property. The foregoing indemnity shall survive the Closing
(and not be merged therein) or any earlier termination of this Agreement.
11.3.2 From and after Closing, Seller shall indemnify and
hold harmless Buyer from and against any and all Liabilities (including
reasonable attorneys' fees, expenses and disbursements) arising out of (i) a
breach by Seller of any representation, warranty or covenant set forth herein
(however, such indemnity shall not extend beyond the one (1) year survival
period set forth in Paragraph 8.4), (ii) events or contractual obligations,
acts, or omissions of Seller that occurred in connection with the ownership or
operation of the Property prior to the Closing Date and during the ownership of
the Property by Seller or any of its affiliates, or (iii) any damage to property
of others or injury to or death of any person or any claims for any debts or
obligations occurring on or about or in connection with the Property or any
portion thereof at any time or times prior to the Closing Date and during the
ownership of the Property by Seller or any of its affiliates.
11.4 Employment Indemnity. The Canadian Seller shall fully
indemnify, defend and hold harmless Buyer and any of its Affiliates for, from
and against any cost, loss, damage or expense (including, but not limited to,
reasonable attorneys fees and disbursements and court costs and other expenses
of litigation, whether or not taxable under local law) related to any action,
cause of action, complaint, application, contract and covenant, whether express
or implied, claim and/or demand for damages, indemnity, costs, interest, loss or
injury brought, made or commenced against Buyer and/or any of its Affiliates by
(i) any union on behalf of any employee working at any of the Hotels in Canada
or on its own behalf for any reason, (ii) by any employee working at any of the
Hotels in Canada in respect of or arising out of their employment or the
termination of their employment with the Canadian Seller and/or the Manager, or
(iii) by any organization or governmental entity relating in any way to any of
the employees working at any of the Hotels in Canada, it being understood and
agreed that the Employment Indemnity described in this Paragraph 11.4 shall be
of no force or effect to the
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extent that the claims described in this Paragraph 11.4, and in particular, the
claims referred to in (i), (ii) or (iii), result or arise due to any acts or
omissions of Buyer or any of its Affiliates.
12. Default At or Prior to Closing.
12.1 Buyer Default. If Buyer defaults in the observance or
performance of its covenants and obligations hereunder, and such default
continues for five (5) Business Days after the date of receipt of written notice
from Seller demanding cure of such default, provided Seller is not in default,
Seller shall be entitled, as its sole and exclusive remedy hereunder, to
Terminate this Agreement by written notice to Buyer of such termination and to
receive (x) if such termination election is made on or prior to the Closing
Deadline, liquidated damages equal to five percent (5%) of the Purchase Price
with respect to the allocated value of all Hotels (taking into account any
reduction to such Purchase Price in accordance with Paragraph 9.1 or otherwise
provided for herein); or (y) if such election is made at any time after the
initial Closing, five percent (5%) of the Purchase Price allocated to the
Austin, TX InterContinental Hotel, as full liquidated damages for such default
of Buyer, the parties hereto acknowledging the difficulty of ascertaining the
actual damages in the event of such a default, that it is impossible more
precisely to estimate the damages to be suffered by Seller upon Buyer's default,
that such liquidated damages is intended not as a penalty, but as full
liquidated damages and that such amount constitutes a reasonable good faith
estimate of the potential damages arising therefrom, it being otherwise
difficult or impossible to estimate Seller's actual damages which would be
suffered by Seller in the event of default by Buyer. Except with respect to any
right, obligation or liability which survives Closing or termination of this
Agreement, including any indemnification provisions set forth in this Agreement,
Seller's right to Terminate this Agreement and receive full liquidated damages,
are Seller's sole and exclusive remedies in the event of default hereunder by
Buyer, and Seller hereby waives, relinquishes and releases any and all other
rights and remedies (except any that survive Closing or termination pursuant to
the express provisions of this Agreement), including, but not limited to: (1)
any right to ▇▇▇ Buyer for damages or to prove that Seller's actual damages
exceed the amount of liquidated damages set forth above which is hereby provided
Seller as full liquidated damages, (2) any right to ▇▇▇ Buyer for specific
performance, or (3) any other right or remedy which Seller may otherwise have
against Buyer, either at law, or equity or otherwise. Notwithstanding anything
contained herein to the contrary, if Buyer has made the Deposit hereunder and
Seller Terminates this Agreement in accordance with clause (x) of the first
sentence hereof, then Seller shall be able to receive as its sole remedy payment
of the Deposit as full liquidated damages.
12.2 Seller Default. If Seller defaults in the observance or
performance of its covenants and obligations hereunder, and such default
continues for the greater of five (5) Business Days after the date of receipt of
written notice from Buyer demanding cure of such default, then Buyer shall be
entitled either, at Buyer's option, (i) without waiving the right to elect the
option to Terminate this Agreement, to ▇▇▇ Seller for specific performance of
this Agreement, but only if such suit is filed within one hundred eighty (180)
days after the occurrence of Seller's alleged default, unless Buyer is legally
precluded from bringing such suit pursuant to bankruptcy law requirements within
such one hundred and eighty day period or (ii) to Terminate this Agreement by
the delivery to Seller of notice of such termination and Buyer shall be entitled
to all of its out-of pocket costs (including legal fees) incurred in connection
with the transactions contemplated by this Agreement payable within five (5)
days of demand; provided however that Buyer shall not be able to recover any of
its out-of-pocket costs (including legal fees) to the extent Seller fails to
deliver any Ground Lease Estoppel Certificate pursuant to Paragraph 6.2. Buyer's
rights to so Terminate this Agreement or ▇▇▇ for specific
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performance are Buyer's sole and exclusive remedies hereunder in the event of
default hereunder by Seller, and Buyer hereby waives, relinquishes and releases
any and all other rights and remedies (except any that survive Closing or
termination pursuant to the express provisions of this Agreement), including,
but not limited to: (1) any right to ▇▇▇ for damages, or (2) any other right or
remedy which Buyer may otherwise have against Seller either at law, in equity or
otherwise. Buyer agrees that its failure to timely commence an action for
specific performance within such the period noted above shall be deemed a waiver
by it of its right to commence an action for specific performance as well as a
waiver by it of any right it may have to file or record a notice of lis pendens
or notice of pendency of action or similar notice against any portion of the
Property.
13. Notices. All notices, consents, approvals and other communications
which may be or are required to be given by either Seller or Buyer under this
Agreement shall be properly given only if made in writing and sent by (a) hand
delivery, or (b) certified mail, return receipt requested, or (c) a nationally
recognized overnight delivery service (such as Federal Express, UPS Next Day Air
or Airborne Express), or (d) by telecopying to the telecopy number listed below
(provided that a copy of such notice is also sent within one Business Day to the
party by one of the other methods listed herein), with all postage and delivery
charges paid by the sender and addressed to the Buyer or Seller, as applicable
as set forth below, or at such other address (or telecopy number) as each may
request in writing. Such notices delivered by hand, by telecopy, or overnight
delivery service shall be deemed received on the date of delivery and, if
mailed, shall be deemed received upon the earlier of actual receipt or two days
after mailing. Said notice addresses are as follows (and Seller and Buyer shall
have the right to designate changes to their respective notice addresses,
effective five (5) days after the delivery of written notice thereof):
If to Seller: InterContinental Hotels Group
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: InterContinental Hotels Group
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Legal Dept. - ▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Buyer: Hospitality Properties Trust
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
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Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇▇ & Worcester LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
14. General Provisions.
14.1 Execution Necessary. This Agreement shall not be binding upon
Seller or Buyer, respectively, until fully executed and delivered by a proper
official of Seller, and Buyer no action taken by either of their representatives
shall be deemed an acceptance of this Agreement until this Agreement has been so
executed by them and delivered to each other.
14.2 Counterparts. This Agreement may be executed in separate
counterparts. It shall be fully executed when each party whose signature is
required has signed at least one counterpart even though no one counterpart
contains the signatures of all of the parties to this Agreement.
14.3 Successors and Assigns. This Agreement shall be binding upon
the parties hereto and their respective successors and assigns and inure to the
benefit of the parties hereto and their respective permitted successors and
assigns. Buyer shall not have the right to assign or delegate any right, duty or
obligation of Buyer under this Agreement in whole or in part to any other party
other than its affiliates without the prior written consent of Seller, which
consent Seller may grant or withhold in its sole and absolute discretion, and
any such assignment shall be null and void ab initio. Notwithstanding the
foregoing, Buyer shall have the right to cause Seller to convey the Property or
portions thereof to an affiliate of Buyer which is wholly owned by Buyer or
wholly owned by the owners of Buyer, or to an affiliate which is owned, in part,
by Buyer and which is controlled by Buyer as to property operating and
management issues, and which assignee shall be designated in writing by Buyer,
together with delivery to Seller of evidence reasonably satisfactory to Seller
of the valid legal existence of Buyer's assignee, its qualification (if
necessary) to do business in the jurisdiction in which the Property is located
and of the authority of Buyer's assignee to execute and deliver any and all
documents required of Buyer under the terms of this Agreement, which items shall
be received by Seller not less than three (3) Business Days prior to the Closing
Date; notwithstanding the foregoing, the exercise of such right by Buyer shall
not relieve Buyer of any of its obligations and liabilities hereunder including
obligations and liabilities which survive the Closing or the termination of this
Agreement, nor shall any such assignment alter, impair or relieve such assignee
from the waivers, acknowledgements and agreements of Buyer set forth herein, all
of which are binding upon the assignee(s) of Buyer. In the event of any
permitted assignment by Buyer, any assignee shall assume any and all obligations
and liabilities of Buyer under this Agreement but, notwithstanding such
assumption, Buyer shall continue to be liable hereunder.
14.4 Governing Law. This Agreement shall be governed by the Laws
of the State of New York.
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14.5 Entire Agreement. This Agreement and all the exhibits and
schedules referenced herein and annexed hereto contain the entire agreement of
the parties hereto with respect to the matters contained herein, and no prior
agreement or understanding (including without limitation any letter of intent or
similar proposals or correspondence between Buyer and Seller pertaining to any
of the matters connected with this Transaction shall be effective for any
purpose. Neither this Agreement nor any provision hereof may be waived,
modified, amended, discharged or terminated except by an instrument signed by
the party against whom the enforcement of such waiver, modification, amendment,
discharge or termination is sought, and then only to the extent set forth in
such instrument.
14.6 Time is of the Essence. TIME IS OF THE ESSENCE of the
Transaction and this Agreement. If the time period by which any right, option or
election provided under this Agreement must be exercised, or by which any act
required hereunder must be performed, or by which the Closing must be held,
expires on a Saturday, Sunday or legal or bank holiday, then such time period
shall be automatically extended through the close of business on the next
regularly scheduled Business Day.
14.7 Interpretation. The titles, captions and paragraph headings
are inserted for convenience only and are in no way intended to interpret,
define, limit or expand the scope or content of this Agreement or any provision
hereof. If any party to this Agreement is made up of more than one person or
entity, then all such persons and entities shall be included jointly and
severally, even though the defined term for such party is used in the singular
in this Agreement. If any time period under this Agreement ends on a day other
than a Business Day, then the time period shall be extended until the next
Business Day. This Agreement shall be construed without regard to any
presumption or other rule requiring construction against the party causing this
Agreement to be drafted. If any words or phrases in this Agreement shall have
been stricken out or otherwise eliminated, whether or not any other words or
phrases have been added, this Agreement shall be construed as if the words or
phrases so stricken out or otherwise eliminated were never included in this
Agreement and no implication or inference shall be drawn from the fact that said
words or phrases were so stricken out or otherwise eliminated.
14.8 Survival. Except as set forth herein, the covenants,
agreements, indemnities, representations and warranties contained herein shall
not survive the Closing Date or any termination of this Agreement.
14.9 Further Assurances. Each party agrees to execute and deliver
to the other such further documents or instruments as may be reasonable and
necessary in furtherance of the performance of the terms, covenants and
conditions of this Agreement; provided, however, that the execution and delivery
of such documents by such party shall not result in any additional liability or
cost to such party.
14.10 Exclusive Application. Nothing in this Agreement is intended
or shall be construed to confer upon or to give to any person, firm or
corporation other than Buyer and Seller (and their permitted successors or
assigns) hereto any right, remedy or claim under or by reason of this Agreement.
Except as set forth herein, all terms and conditions of this Agreement shall be
for the sole and exclusive benefit of the parties hereto and may not be
assigned.
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14.11 Partial Invalidity. If all or any portion of any of the
provisions of this Agreement shall be declared invalid by Laws applicable
thereto, then the performance of said offending provision shall be excused by
the parties hereto; provided, however, that, if the performance of such excused
provision affects any material aspect of this Transaction, the party for whose
benefit such excused provision was inserted may request that the other party
enter into a modification or separate agreement which sets forth in valid
fashion the substance of such offending provision in a manner which counsel to
both parties determine is valid.
14.12 No Implied Waiver. Unless otherwise expressly provided
herein, no waiver by Seller or Buyer of any provision hereof shall be deemed to
have been made unless expressed in writing and signed by such party. No delay or
omission in the exercise of any right or remedy accruing to Seller or Buyer upon
any breach under this Agreement shall impair such right or remedy or be
construed as a waiver of any such breach theretofore or thereafter occurring.
The waiver by Seller or Buyer of any breach of any term, covenant or condition
herein stated shall not be deemed to be a waiver of any other breach, or of a
subsequent breach of the same or any other term, covenant or condition herein
contained.
14.13 Rights Cumulative. All rights, powers, options or remedies
afforded to Seller or Buyer either hereunder or by Law shall be cumulative and
not alternative, and the exercise of one right, power, option or remedy shall
not bar other rights, powers, options or remedies allowed herein or by Law,
unless expressly provided to the contrary herein.
14.14 Attorney's Fees. Should either party employ an attorney or
attorneys to enforce any of the provisions hereof or to protect its interest in
any manner arising under this Agreement, or to recover damages for breach of
this Agreement, the non-prevailing party in any action pursued in a court of
competent jurisdiction (the finality of which is not legally contested) agrees
to pay to the prevailing party all reasonable costs, damages and expenses,
including attorney's fees, expended or incurred in connection therewith.
14.15 Waiver of Jury Trial. EACH PARTY HEREBY WAIVES TRIAL BY JURY
IN ANY PROCEEDINGS BROUGHT BY THE OTHER PARTY IN CONNECTION WITH ANY MATTER
ARISING OUT OF OR IN ANY WAY CONNECTED WITH THE TRANSACTION, THIS AGREEMENT, THE
PROPERTY OR THE RELATIONSHIP OF BUYER AND SELLER HEREUNDER. THE PROVISIONS OF
THIS SECTION SHALL SURVIVE THE CLOSING (AND NOT BE MERGED THEREIN) OR ANY
EARLIER TERMINATION OF THIS AGREEMENT.
14.16 Facsimile Signatures. Signatures to this Agreement
transmitted by telecopy or other electronic means shall be valid and effective
to bind the party so signing. Each party agrees to promptly deliver an execution
original to this Agreement with its actual signature to the other party, but a
failure to do so shall not affect the enforceability of this Agreement, it being
expressly agreed that each party to this Agreement shall be bound by its own
telecopied or electronic signature and shall accept the telecopied or electronic
signature of the other party to this Agreement.
14.17 No Recordation. Seller and Buyer each agrees that neither
this Agreement nor any memorandum or notice hereof shall be recorded and Buyer
agrees (a) not to
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file any notice of pendency or other instrument (other than a judgment) against
the Property or any portion thereof in connection herewith and (b) to indemnify
Seller against all Liabilities (including reasonable attorneys' fees, expenses
and disbursements) incurred by Seller by reason of the filing by Buyer of such
notice of pendency or other instrument. Notwithstanding the foregoing, (a) if
the same is permitted pursuant to applicable Laws, Buyer shall be entitled to
record a notice of lis pendens if Buyer is entitled to seek (and is actually
seeking) specific performance of this Agreement by Seller in accordance with the
terms of Paragraph 12.2 hereof, and (b) Buyer shall be entitled to file a copy
of all or a portion of this Agreement (or make specific reference hereto) with
the Securities and Exchange Commission in connection with any of its filings
required by Law or regulation pertaining thereto.
14.18 Maximum Aggregate Liability. Notwithstanding any provision
to the contrary contained in this Agreement or any documents executed by Seller
pursuant hereto or in connection herewith, the maximum aggregate liability of
Seller and the Seller Parties, and the maximum aggregate amount which may be
awarded to and collected by Buyer, in connection with this Agreement and the PR
Stock Agreement for (i) the breach of any of Seller's Warranties for which a
claim is timely made by Buyer, (ii) any Seller indemnity obligations arising
from a breach of Seller's Warranties and (iii) any representation of the PR
Seller under the PR Stock Agreement which pursuant to the terms thereof survive
only for one year after the closing thereunder shall not exceed Seller's
Liability Limit. This Paragraph 14.18 is not intended to conflict in any way
with the provisions of the PR Indemnity and to the extent of any conflict with
the provisions hereof and the PR Indemnity, the terms of the PR Indemnity shall
control. The provisions of this section shall survive the Closing (and not be
merged therein) or any earlier termination of this Agreement.
14.19 Exhibits and Schedules. All exhibits and schedules referred
to in, and attached to, this Agreement are hereby incorporated herein in full by
this reference.
14.20 Jurisdiction. With respect to any suit, action or
proceedings relating to the Transaction, this Agreement, the Property or the
relationship of Buyer and Seller hereunder ("Proceedings") each party
irrevocably (a) submits to the exclusive jurisdiction of the Courts of the
County of New York, State of New York and the United States District Court for
the Southern District of New York, and (b) waives any objection which it may
have at any time to the laying of venue of any proceedings brought in any such
court, waives any claim that such proceedings have been brought in an
inconvenient forum and further waives the right to object, with respect to such
proceedings, that such court does not have jurisdiction over such party. The
provisions of this Paragraph 14.20 shall survive the Closing (and not be merged
therein) or any earlier termination of this Agreement.
14.21 Interpretation of Agreement after Initial Closing Date. The
parties hereto acknowledge that this Agreement, and the rights and obligations
set forth herein, shall remain in full force and effect after the Initial
Closing Date with respect to Seller's obligation to sell, and Buyer's obligation
to buy, the Austin TX, InterContinental Hotel and that each will interpret this
Agreement in accordance with that intent.
14.22 Currency. Each reference herein to any dollar amount is a
reference to such amount of United States dollars (except as set forth in
Paragraph 8.1AA).
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14.23 SEC Matters. Seller shall cooperate with Buyer or any of its
affiliates in connection with the preparation of any documents to be filed under
the Securities Act of 1933, as amended (the "Securities Act") or the Securities
Exchange Act of 1934, as amended (the "Securities Exchange Act") and shall use
commercially reasonable efforts to provide such persons with financial
statements and other financial information that Buyer requests relating to
periods prior to the Closing Date and to obtain consents from Seller's
independent accountants in connection therewith.
14.24 Planning Act. All of the mutual covenants, conditions,
agreements and payments contained in this Agreement with respect to the Toronto
InterContinental Hotel and the Toronto Staybridge Suites Hotel shall be
conditional upon compliance with the Planning Act (Ontario). The Canadian
Sellers covenant with Buyer that the Canadian Sellers shall obtain prior to the
Closing all necessary consents under the Planning Act (Ontario) for the
conveyance of the Toronto InterContinental Hotel and the Toronto Staybridge
Suites Hotel to Buyer and shall comply with any conditions imposed with respect
to any such consent, all at Canadian Sellers' expense.
14.25 Management Agreement. Buyer and Seller acknowledge that the
Hotels acquired by Buyer hereunder shall be subject to the Management Agreement
(in the form attached hereto and as it may be modified by the terms hereof and
thereof).
15. Additional Termination Rights. (a) If the Transaction has not
occurred on or prior to December 31, 2005, other than by reason of a default by
a party hereto, and unless mutually extended by the parties hereto, this
Agreement shall automatically Terminate and this Agreement shall be of no force
and effect between the parties except for those obligations which survive such
termination. (b) If any condition to the initial Closing is not satisfied or
waived by March 31, 2005 either party, so long as such party is not in default
hereunder, may Terminate this Agreement by written notice to the other party
(subject to any rights of such non-defaulting party hereunder) and this
Agreement shall be of no force and effect between the parties except for those
provisions which expressly survive such termination. (c) On or before the
Closing Date, if the PR Stock Agreement is terminated then this Agreement shall
also Terminate, provided however that if such termination results from (i) a
default by PR Seller, then Buyer shall have all of its rights hereunder against
Seller as if Seller was in default hereunder; or (ii) a default by PR Buyer,
then Seller shall have all of its rights hereunder against Buyer as if Buyer was
in default hereunder
16. Retention of Hotel Employees. Each of Buyer and Seller acknowledges
that an affiliate of Seller will manage the Hotel in accordance with the
Management Agreement described in Paragraph 17 and that Seller or an affiliate
will employ all hotel employees at the Hotel with Seller or the Manager having
the responsibilities relative to the employment of and services of these
employees as set forth in the Management Agreement. Seller and Manager shall
continue to recognize the Collective Agreements and all certifications set out
in Schedule 8.1(Z).
17. On-Going Management of Hotel. Buyer and Seller each acknowledge
that Seller is unwilling to sell the Hotels unless Buyer and Seller's designated
affiliate enter into a long term, non-terminable hotel Management Agreement for
the Property. At Closing, Seller's
-35-
designated affiliate and Buyer shall execute the Management Agreement attached
hereto as Exhibit P.
18. Deposit. As a condition to Buyer exercising the Extension Option,
Buyer shall deposit Twenty Five Million and no Dollars ($25,000,000.00, such
amount, together with any interest earned thereon, the "Deposit"), in
immediately available funds, with the Title Company or with an escrow agent
mutually satisfactory to the parties hereto (the "Escrow Agent") on the terms
and conditions set forth in this Paragraph 18. The Deposit shall be held and
delivered by Escrow Agent in accordance with the provisions of this Paragraph
18.
18.1 Deposit. Escrow Agent shall invest the Deposit in
interest-bearing instruments reasonably satisfactory to both Buyer and Seller,
shall not commingle the Deposit with any funds of Escrow Agent or others, and
shall promptly provide Buyer and Seller with confirmation of the investments
made.
18.2 Delivery at Closing. If the initial Closing occurs, Escrow
Agent shall deliver the Deposit to, or upon the instructions of, Buyer and
Seller on the Closing Date to be applied against that portion of the Purchase
Price due on such date.
18.3 Return or Delivery of Deposit Outside Closing . Escrow Agent
shall deliver the Deposit to Seller or Buyer only upon receipt of a written
demand therefor from such party, after which Escrow Agent shall give written
notice to the other party of such demand. Thereafter, (a) if Escrow Agent does
not receive a written objection from the other party to the proposed payment
within ten (10) days after the giving of such notice, then Escrow Agent is
hereby authorized to make such payment, but (b) if Escrow Agent does receive
such written objection within such period, Escrow Agent shall continue to hold
such amount until otherwise directed by written instructions signed by Seller
and Buyer or a final judgment of a court.
18.4 Stakeholder. The parties acknowledge that the Escrow Agent is
acting solely as a stakeholder at their request and for their convenience, that
Escrow Agent shall not be deemed to be the agent of either of the parties, and
that Escrow Agent shall not be liable to either of the parties for any action or
omission on its part taken or made in good faith, and not in disregard of this
Agreement, but shall be liable for its negligent acts and for any Liabilities
(including reasonable attorneys' fees, expenses and disbursements) incurred by
Seller or Buyer resulting from Escrow Agent's mistake of Law or in the
performance of its duties hereunder or any other document executed in connection
with the Deposit. Seller and Buyer shall jointly and severally indemnify and
hold Escrow Agent harmless from and against all Liabilities (including
reasonable attorneys' fees, expenses and disbursements) incurred in connection
with the performance of Escrow Agent's duties hereunder or in any other document
executed in connection with the Deposit, except with respect to actions or
omissions taken or made by Escrow Agent in bad faith, in disregard of this
Agreement, such other documents executed in connection with the Deposit or
involving negligence on the part of Escrow Agent.
18.5 Taxes. The party receiving the Deposit (or the benefit
thereof) shall pay any income taxes on any interest earned on the Deposit. Buyer
and Seller agree that, prior to Buyer making the Deposit, that they will report
their respective taxpayer identification number to Escrow Agent.
18.6 Execution by Escrow Agent. To the extent that Buyer makes the
Deposit, the parties hereto shall amend this Agreement to make Escrow Agent a
party hereto in order to confirm Escrow Agent's agreement to provisions hereof
and that it will receive and shall hold the Deposit, in escrow, and shall
disburse the Deposit pursuant to the provisions of this Agreement. Buyer and
Seller shall be free to amend or modify this Agreement without Escrow Agent's
signature as long as such amendment does not affect Escrow Agent's liability
hereunder.
18.7 Buyer's Termination Rights and Return of Deposit. If Buyer
elects to Terminate this Agreement in accordance with (x) Paragraph 8.3, the
first sentence of Paragraph 9.1(b) or Paragraph 12.2; or (y) Paragraph 15 (so
long as Buyer is not in default hereunder), Buyer shall be entitled to the
return of the Deposit. Under all other circumstances, the Deposit shall be
non-refundable to Buyer. Buyer's right to receive the Deposit is in addition to
(and not in limitation of) any other right it has hereunder to collect certain
damages, out-of-pocket costs or such other amounts from Seller.
19. Additional Disclosure Items.
19.1 Industrial Revenue Bond. With respect to the Atlanta Airport
Holiday Inn Hotel, Buyer acknowledges it is aware of Seller's obligations with
respect to the $20,000,000 in aggregate principal amount of Development
Authority of ▇▇▇▇▇▇▇ County Taxable Economic Development Revenue Bonds (Bass
Resources, Inc. Project), Series 1999 (the "Industrial Revenue Bond") that
encumber the Hotel. Prior to the Closing Date Seller shall elect to either (i)
pay-off the Industrial Revenue Bond in full and convey the Atlanta Airport
Holiday Inn Hotel free and clear of the Industrial Revenue Bond, or (ii) require
Buyer with Buyer's consent to purchase the Atlanta Airport Holiday Inn Hotel
subject to the terms of the Industrial Revenue Bond.
19.2 Collective Bargaining Agreement. With respect to the Redondo
Beach Crowne Plaza Hotel and Toronto InterContinental Hotel, Buyer acknowledges
that the Hotel is subject to a collective bargaining agreement. Buyer and Seller
agree to cooperate with each other and the Manager as to any union notices or
consents required by such collective bargaining agreement. In accordance with
terms of the Management Agreement, the Manager will be the employer responsible
for such employees under the collective bargaining agreement.
20. Limitation of Liability. No advisor, trustee, director, officer,
employee, beneficiary, shareholder, member, partner, participant, representative
or agent of Buyer or Seller shall have any personal liability, directly or
indirectly, under or in connection with this Agreement or any agreement made or
entered into pursuant to the provisions of this Agreement, or any amendment or
amendments to any of the foregoing made at any time or times heretofore or
hereafter. In no event shall any of Buyer or Seller be entitled to punitive,
consequential or special damages under this Agreement, and each of Buyer and
Seller hereby waives any right to claim, pursue or collect same. The provisions
of this Paragraph 20 shall survive any termination of this Agreement and the
Closing hereunder.
21. Nonliability of Trustees. THE DECLARATIONS OF TRUST ESTABLISHING
BUYER, COPIES OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE
"DECLARATION"), IS DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF
THE STATE OF MARYLAND, PROVIDES THAT, AND SELLER HEREBY AGREES THAT, THE NAME
"HPT IHG 2 PROPERTIES TRUST" REFERS TO THE TRUSTEES UNDER THE DECLARATION
COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO
TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF BUYER SHALL BE HELD TO ANY
PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM
AGAINST, BUYER. ALL PERSONS DEALING WITH BUYER, IN ANY WAY, SHALL LOOK ONLY TO
THE ASSETS OF BUYER, FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY
OBLIGATION.
-36-
22. Monies from Seller. To the extent that Seller is obligated under
this Agreement to reimburse Buyer for any of its out-of-pocket costs or to pay
Buyer any other amounts hereunder, then to the extent necessary in Buyer's
judgment to preserve InterContinental Hotel's Group Resources, Inc.'s status as
a Code Section 856(d)(9)(A) "eligible independent contractor" at a Code Section
856(d)(9)(D) "qualified lodging facility" owned or leased by Buyer or its
affiliates, all such amounts shall be paid from those entities comprising Seller
other than InterContinental Hotels Group Resources, Inc.
[Signature Pages Follow]
-37-
IN WITNESS WHEREOF, Buyer and Seller have executed this Agreement under
seal as of the day and year first above written.
SELLER:
Holiday Pacific Partners Limited Partnership,
a Delaware limited partnership
By: Holiday Pacific Equity Corporation,
a Delaware corporation, as its general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, as its Vice President
BHR Texas, L.P., a Delaware limited partnership
By: InterContinental Hotels Group Resources, Inc.,
a Delaware corporation, as its general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, as its Vice President
InterContinental Hotels Group Resources, Inc.,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, as its Vice President
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Hotel Inc.,
an Ontario corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, as its Vice President
Crowne Plaza LAX, LLC,
a California limited liability company
By: InterContinental Hotels Group Resources, Inc.,
a Delaware corporation, as its general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, as its Vice President
Staybridge Markham, Inc.,
an Ontario corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, as its Vice President
Crowne Plaza Hilton Head Holding Company,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, as its Vice President
BUYER:
HPT IHG-2 Properties Trust,
a Maryland real estate investment trust
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
-2-
The following exhibits and schedules have been omitted and will be
supplementally furnished to the Securities and Exchange Commission upon request:
Schedule Document
-------- --------
8.1(D) Pending or Threatened Litigation
8.1(E) List of Leases
8.1(F) Conditions Materially Affecting The Property
8.1(G) Conditions Materially Affecting Utilities And Services
8.1(H) Violation of Laws Relating To Zoning, Construction, Health
And Fire Safety, Etc.
8.1(I) Unpaid (Delinquent) Taxes or Special Assessments
8.1(K-1) Hazardous Materials
8.1(M) Material Defects In Property
8.1(N) Unpaid Taxes
8.1(O) Unobtained Licenses And Permits
8.1(R) Violation Of Laws
8.1(T) Material Defaults With Respect To Permitted Title Exceptions
8.1(W) Information With Respect To Leases And Ground Leases
8.1(Z) Toronto InterContinental Hotel Employment Matters
Exhibit Document
------- --------
A-1 Houston InterContinental Hotel
A-2 Austin InterContinental Hotel
A-3 White Plains Crowne Plaza Hotel
A-4 Redondo Beach Crowne Plaza Hotel
A-5 Los Angeles Crowne Plaza Hotel
A-6 Hilton Head Crowne Plaza Hotel
A-7 Atlanta Airport Holiday Inn Hotel
A-8 Memphis Holiday Inn Hotel
A-9 Anaheim Holiday Inn Hotel
-3-
A-10 Anaheim Staybridge Suites Hotel
▇-▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇-▇▇ ▇▇▇▇▇▇▇ InterContinental Hotel
A-13 General property descriptions, title holder and allocation of
purchase price (for all Hotels)
B-1 Special Warranty Deed
B-2 Assignment of Ground Lease
C-1 ▇▇▇▇ of Sale (Hotel)
C-2 ▇▇▇▇ of Sale (Personal Property)
D Assignment and Assumption of Leases
E Assignment of Contracts, Warranties and Other Interests
F-1 Notice of Sale (to the Tenants)
F-2 Notice of Assignment (to service contract providers)
G-1 Non-Foreign Certificate (Domestic)
G-2 Non-Foreign Certificate (Canadian)
H Affidavit of Title
I Closing Statement Agreement
J Authority Certificate
K Certificate of Reaffirmation
L-1 Tenant Estoppel Certificate
L-2 Landlord Consent and Estoppel Certificate
▇-▇ ▇▇▇▇▇▇▇ InterContinental Hotel Consent and
Estoppel Certificate
N List of Contracts
O Reserved
S IHG Press Releases/Public Announcements
T-1 Registrable Form of Transfer of Registered
Owner's interest in the Staybridge Suites Hotel
T-2 Conveyance of Staybridge Markham, Inc.'s Beneficial Interest in
the Toronto Staybridge
Suites Hotel
T-3 Authorization of Transfer with respect to transfer
-4-
of Registered Owner's interest in the Toronto
Staybridge Suites Hotel by applicable Canadian Seller
T-4 Registrable Form of Assignment and Assumption Agreement with
respect to the Toronto InterContinental Hotel Ground Lease
T-5 Conveyance of ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Hotel Inc.'s Beneficial Interest
under the Toronto
InterContinental Hotel Ground Lease
T-6 Authorization and Direction with respect to transfer of Registered
Tenant's leasehold interest in the Toronto InterContinental Hotel
Ground Lease
T-7 Assignment and Assumption Agreement with respect to the Toronto
InterContinental Hotel Ground Lease among Buyer, Seller and lessor
U GST Indemnity
V Ground Leases
W Reliance Letter
-5-
Schedule A
Attached to and made a part of that certain:
Purchase and Sale Agreement
by and between
BHR TEXAS, L.P.
INTERCONTINENTAL HOTELS GROUP RESOURCES, INC.
CROWNE PLAZA LAX, LLC
CROWNE PLAZA HILTON HEAD HOLDING COMPANY
HOLIDAY PACIFIC PARTNERS LIMITED PARTNERSHIP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ hotel inc.
staybridge markham, inc.
as Seller
and
HPT IHG-2 Properties Trust
as buyer
(Dated as of December 17, 2004)
"Agreement" shall mean this Purchase and Sale Agreement between Seller
and Buyer including all schedules, exhibits and other attachments hereto, and
documents incorporated herein by reference.
"Anaheim Holiday Inn Hotel" shall mean that certain Holiday Inn Hotel
located on that certain tract or parcel of land in Anaheim, California, more
particularly described on Exhibit A-9.
"Anaheim Staybridge Suites Hotel" shall mean that certain Staybridge
Suites Hotel located on that certain tract or parcel of land in Anaheim,
California, more particularly described on Exhibit A-10.
"Atlanta Airport Holiday Inn Hotel" shall mean that certain Holiday Inn
Hotel located on that certain tract or parcel of land in ▇▇▇▇▇▇▇ County,
Georgia, more particularly described on Exhibit A-7.
"Austin InterContinental Hotel" shall mean that certain
InterContinental Hotel located on that certain tract or parcel of land in
Austin, Texas, more particularly described on Exhibit A--2.
"Business Day" shall mean any day other than a Saturday, Sunday or any
other day on which banking institutions in The Commonwealth of Massachusetts or
the State of Georgia are authorized by law or executive action to close.
"Buyer" shall mean the buyer referenced in the first paragraph of this
Agreement.
A-1
"Buyer's Diligence Reports" shall mean the results of any examinations,
inspections, investigations, tests, studies, analyses, appraisals, evaluations
and/or investigations prepared by or for or otherwise obtained by Buyer or
Buyer's Representatives in connection with Buyer's Due Diligence.
"Buyer's Knowledge" shall mean the actual (and not the imputed or
constructive) knowledge of ▇▇▇▇ ▇▇▇▇▇▇ of HPT.
"Buyer's Representatives" shall mean Buyer's officers, employees,
agents, advisors, representatives, attorneys, accountants, consultants, lenders,
investors, contractors, architects and engineers.
"Canadian Seller" shall mean ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Hotel Inc. and Staybridge
Markham, Inc. and as owner and ground lessee, respectively, of the Toronto
InterContinental Hotel and the Toronto Staybridge Suites Hotel.
"Closing" shall mean the consummation and closing of the Transaction.
"Closing Agent" shall mean the Title Company or such other party as is
selected by Buyer and Seller to fund the Closing in escrow.
"Closing Date" shall mean as the context so requires, (i) the date on
which Buyer acquires title to the Property in accordance with the terms hereof
other than the Austin, Texas InterContinental Hotel, which date shall be on or
before the Closing Deadline as defined in Paragraph 1.1 of this Agreement; or
(ii) with respect to the Austin, Texas InterContinental Hotel, the date
occurring on June 1, 2005.
"Closing Deadline" is defined in Paragraph 1.1 of this Agreement.
"Closing Documents" shall mean the documents and instruments delivered
by Buyer and Seller, in order to consummate the Transaction.
"Closing Tax Year" shall mean the Tax Year in which the Closing Date
occurs.
"Code" shall mean the United States Internal Revenue Code of 1986 and
the Treasury Regulations promulgated thereunder, each as from time to time
amended.
"Collective Agreements" means the collective agreements in respect of
the Hotels in Canada and all related documents including letters of
understanding, letters of intent and other written communications with
bargaining agents for employees working at any of the Hotels in Canada which
impose any obligations upon the Canadian Seller or any of its affiliates, all as
listed and described in Schedule 8.1(Z).
"Condemnation Proceeding" shall mean any proceeding in condemnation,
expropriation, eminent domain or any written request for a conveyance in lieu
thereof, or any notice that such proceedings have been or will be commenced
against any portion of the Property.
A-2
"Confidential Materials" shall mean any books, computer software,
databases, records or files (whether in a electronic or printed format) that
consist of or contain any of the following: appraisals; budgets; strategic plans
for the Property; internal analyses; information regarding the marketing of the
Property for sale; submissions relating to obtaining internal authorization for
the sale of the Property by Seller or any direct or indirect owner of any
beneficial interest in Seller; attorney and accountant work product;
attorney-client privileged documents; internal correspondence of Seller, any
direct or indirect owner of any beneficial interest in Seller, or any of their
respective affiliates and correspondence between or among such parties; or other
information or materials in the possession or control of Seller, Seller's
property manager or any direct or indirect owner of any beneficial interest in
Seller which such party deems proprietary or confidential.
"Consent to Ground Lease" shall mean a consent and assignment to Ground
Lease delivered by the landlord under a Ground Lease to Seller, in form and
substance satisfactory to Buyer.
"Contracts" shall mean all contracts respecting leasing, management,
maintenance or operation of the Real Property, including, but not limited to,
equipment leases, agreements with respect to building systems, service,
construction, and maintenance contracts, but specifically excluding any license
to Seller of computer hardware, software, or system(s) or any other item
constituting Excluded Assets . A summary list of the Contracts (including
identity of contract parties and type of service) is shown on Exhibit N and made
a part hereof.
"Due Diligence" shall mean the investigation by Buyer and Buyer's
Representatives of the feasibility and desirability of purchasing the Property,
including all audits, surveys, examinations, inspections, investigations, tests,
studies, analyses, appraisals, evaluations, investigations and verifications
with respect to the Property, the Documents, title matters, applicable land use
and zoning Laws and other Laws applicable to the Property, the physical
condition of the Property, the economic status of the Property, and other
information and documents regarding the Property, including, but not limited to,
investigations of the legal and physical status of the Property by such
consultants, engineers, architects and/or entomologists as Buyer requires, tests
and assessments with respect to environmental matters, soil tests, asbestos
analysis, mold analysis, structural review, examination of title to the
Property, preparation of a Survey of the Land, and verification of all
information made or to be made available to Buyer with respect to Property.
"Due Diligence Deadline" is defined in Paragraph 1.1 of this Agreement.
"Effective Date" shall mean the date of this Agreement referenced in
the first paragraph of this Agreement.
"Excluded Assets" shall mean, with respect to any Property:
A-3
(i) any right, title or interest in the name "Staybridge,"
"InterContinental," Holiday Inn," or "Crowne Plaza", as applicable, hotel and
other System Marks (as defined in the Management Agreement);
(ii) all licenses and permits necessary for Manager to manage such
Property pursuant to the Management Agreement;
(iii) all computer software licensed for use by any of the Sellers or
affiliates of Sellers, including accounts receivable software;
(iv) any and all motor vehicles;
(v) any and all menus, stationery, or other items indicating that such
Property is owned by the Seller;
(vi) any and all personal property of the employees of the Properties;
(vii) books, ledger sheets, files and records with respect to the
operation of such Property;
(viii) all contracts relating to such Property or its operations, other
then the Contracts, Leases and the Permitted Title Exceptions;
(ix) alcoholic beverages inventories; and
(x) leased two way radios.
"Governmental Authority" means any U.S. or Canadian federal, provincial
or municipal government or governmental authority or official having
jurisdiction over the Property, and includes any court, board, commission,
department, administrative agency or regulatory body thereof.
"Ground Lease" shall mean, as the context so requires, each of the
ground leases set forth on Exhibit V.
"Ground Lease Estoppel Certificate" shall have the meaning assigned to
such term in Paragraph 5.1.9 of this Agreement.
"Hilton Head Crowne Plaza Hotel" shall mean that certain Crowne Plaza
Hotel located on that certain tract or parcel of land in Hilton Head, South
Carolina, more particularly described on Exhibit A-6.
"Hotel" shall mean any individual the hotel located on the Land and
described on Exhibits A-1 through A-12.
"Houston InterContinental Hotel" shall mean that certain
InterContinental Hotel located on that certain tract or parcel of land in
Houston, Texas, more particularly described on Exhibit A-1.
A-4
"HPT" shall mean Hospitality Properties Trust, a Maryland real estate
investment trust.
"HPT Guaranty" shall mean the Guaranty Agreement substantially in the
form attached hereto as Exhibit Q made by Hospitality Properties Trust for the
benefit of Manager and PR Tenant, as the same may be amended, restated,
supplemented or otherwise modified from time to time.
"IHG" shall mean InterContinental Hotels Group, PLC, a United Kingdom
corporation.
"IHG Parent Guaranty" shall mean the Amended and Restated Consolidated
Guaranty Agreement substantially in the form attached hereto on Exhibit M to be
made by IHG for the benefit of HPT, Owner and certain of their affiliates, as
the same may be amended, restated, supplemented or otherwise modified from time
to time.
"Initial Closing Date" shall mean the date on which Buyer acquires
title to the Property in accordance with the terms hereof other than the Austin,
TX InterContinental Hotel, which date shall be on or before the Closing Deadline
for such Hotel as defined in Paragraph 1.1 of this Agreement.
"Land" shall mean those certain tracts or parcels of land, more
particularly described on Exhibits A-1 to A-12.
"Law" shall mean any United States or Canadian federal, state,
provincial or local or municipal law, statute, ordinance, code, order, decrees,
or other governmental rule, regulation or requirement, including common law.
"Leases" shall mean all leases, subleases, rental agreements and other
occupancy agreements for the use or occupancy of any portion of the Real
Property, or improvements located thereon if any, together with all amendments
to, modifications of, renewals and extensions thereof.
"Lien" shall mean any mortgage, charge, deed of trust, security deed,
lien, judgment, pledge, conditional sales contract, security interest, past-due
taxes, past-due assessments, contractor's lien, materialmen's lien, construction
lien, judgment or similar encumbrance against the Property of a monetary nature.
"Liabilities" shall mean any and all direct or indirect damages,
demands, claims, payments, problems, conditions, obligations, actions or causes
of action, assessments, losses, liabilities, costs and expenses of any kind or
nature whatsoever, including, without limitation, penalties, interest on any
amount payable to a third party, lost income and profits, and any legal or other
expenses (including, without limitation, reasonable attorneys' fees and
expenses) reasonably incurred in connection with investigating or defending any
claims or actions, whether or not resulting in any liability. In no event shall
"Liabilities" include the right of Seller or Buyer to collect punitive,
consequential, or special damages under this Agreement, and each of Buyer and
Seller waive any right to collect the same.
A-5
"Los Angeles Crowne Plaza Hotel" shall mean that certain Crowne Plaza
Hotel located on that certain tract or parcel of land in Los Angeles,
California, more particularly described on Exhibit A-5.
"Management Agreement" shall mean that certain agreement for management
services between Buyer and Manager, in, the form attached hereto as Exhibit P.
"Manager" shall mean the IHG Management (Maryland) LLC, and any of its
permitted successors and assigns.
"Memphis Holiday Inn Hotel" shall mean that certain Holiday Inn Hotel
located on that certain tract or parcel of land in Memphis, Tennessee, more
particularly described on Exhibit A-8.
"Other Interests" shall mean the following other interests of Seller in
and to the Real Property, Leases, Contracts, or Personal Property, or pertaining
thereto: (a) to the extent that the same are in effect as of the Closing Date,
and not retained by Seller or its affiliates pursuant to the terms hereof or the
Management Agreement or constitute Excluded Assets, any licenses (but excluding
any franchise license rights or liquor licenses), permits and other written
authorizations necessary for the use, operation or ownership of the Real
Property, and (b) any guaranties and warranties in effect with respect to any
portion of the Real Property or the Personal Property as of the Closing Date.
"Owner" shall mean the Owner under the Management Agreement.
"Permitted Title Exceptions" shall mean, subject to Buyer's rights to
review and make objection to the status of title and survey as set forth in this
Agreement, and the right of Buyer to Terminate this Agreement pursuant to
Paragraph 4.5 if the Due Diligence is not satisfactory, the following: (a) the
Leases and any new Leases entered into between the Effective Date and the
Closing Date in accordance with the terms of this Agreement; (b) all real estate
taxes and assessments not yet due and payable as of the Closing Date; (c) local,
state and federal (if applicable) zoning and building Laws; (d) the Record
Exceptions disclosed by the Title Commitment and not Removed as provided for in
Paragraph 4 hereof; (e) the state of facts disclosed by a current Survey of the
Land obtained by Buyer; and (f) any other matters approved as Permitted Title
Exceptions in writing by Buyer prior to Closing or deemed approved as Permitted
Title Exceptions pursuant to this Agreement.
"Personal Property" shall mean (a) all Property Documents; (b) all keys
and combinations to all doors, cabinets, safes, enclosures and other locking
items or areas on or about the improvements; (c) the food and beverage inventory
of the Hotel (for which Seller shall receive a credit pursuant to Paragraph 7.1
above); and (d) all tangible personal property, including, but not limited to,
all "Inventories", as such term is defined in the Uniform System of Accounts,
and all other tools, vehicles, supplies, artwork, furniture, furnishings,
machinery, equipment, specialized hotel equipment and other tangible personal
property, in each case, owned or leased by Seller in connection with the
ownership, operation or maintenance of the Hotel, including without limitation
all china, glassware, silverware, linens, towels, curtains, uniforms, works of
art, engineering, maintenance, and housekeeping supplies, draperies,
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materials and carpeting, used or intended for use, but not for sale, in
connection with the operation of the Hotel, all equipment used in the operation
of the kitchen, dining rooms, lounges, bars, laundry, dry cleaners, lobby,
reservation desk and all supplies, merchandise, food and beverages held for sale
in connection with the operation of the Hotel, which are on hand on the
Effective Date; but specifically excluding (i) any Confidential Materials, (ii)
any computer hardware, software, or system that is licensed to Seller, and (iii)
any Excluded Assets.
"PR Buyer" shall mean Buyer.
"PR Guaranty" shall have such meaning given to such term in the IHG
Guaranty.
"PR Hotel" shall mean that certain InterContinental Hotel located in
San ▇▇▇▇, Puerto Rico and leased by an affiliate of Manager to an affiliate of
Owner pursuant to that certain Lease Agreement to be entered pursuant to the
terms of the PR Stock Agreement.
"PR Indemnity" shall mean that certain Indemnity Agreement made by PR
Seller and Holiday Hospitality Franchising, Inc. for the benefit of Buyer.
"PR Property" shall have the meaning ascribed to the term "Property" in
the PR Lease.
"PR Seller" shall mean Six Continents International Holdings, B.V., a
Netherlands closed limited liability company.
"PR Stock Agreement" shall mean that certain Stock Purchase Agreement
pursuant to which an affiliate of Manager sold the stock of the owner of the PR
Property to an affiliate of Owner.
"Property" shall mean the Real Property, the Leases, the Contracts, the
Personal Property and the Other Interests, but specifically excluding any right
or interest to any liquor license rights and intellectual property rights
referenced in Paragraph 5 hereto and other items constituting Excluded Assets.
"Property Documents" shall mean all books, records and files of Seller
and of the Manager for any Property related thereto (other than those books,
records or files containing Confidential Materials, provided, however that
Seller shall make available extracts of non-confidential information contained
in such books, records or files).
"Purchase Price" is defined in Paragraph 3.2.
"Real Property" shall mean the Land, and the Ground Lease including,
without limitation, (a) the Hotel and any other buildings located on the Land
and all other improvements, (b) all easements and rights-of-way appurtenant to
the Land and other easements, rights-of-way, grants of right, licenses,
privileges or other agreements for the benefit of, belonging to or appurtenant
to the Land whether or not situated upon the Land, including, without
limitation, signage rights and parking rights or agreements, all whether or not
specifically referenced on Exhibits A-1 to A-12, (c) all mineral, oil and gas
rights, riparian rights, water rights, sewer rights and other utility rights
allocated to the Land, (d) all right, title and interest, if any, of the owner
of the Land in and to any and all strips and gores of land located on or
adjacent to the Land, and
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(e) all right, title and interest of the owner of the Land in and to any roads,
streets and ways, public or private, open or proposed, in front of or adjoining
all or any part of the Land and serving the Land.
"Record Exceptions" shall mean all instruments recorded in the real
estate records or land titles registry of the County or municipality in which
the Land is located which affect the status of title to the Real Property.
"Redondo Beach Crowne Plaza Hotel" shall mean that certain Crowne Plaza
Hotel located on that certain tract or parcel of land in Redondo Beach,
California, more particularly described on Exhibit A-4.
"Remove" with respect to any exception to the title of the Real
Property, shall mean that Seller causes the Title Company to remove or
affirmatively insure over the same as an exception to the Title Policy, to the
reasonable satisfaction of Buyer, without any additional cost to Buyer, whether
such removal or insurance is made available in consideration of payment,
bonding, indemnity of Seller or otherwise.
"Required Removal Items" shall mean, collectively, any Title Objections
to the extent (and only to the extent) that the same (a) have not been caused by
Buyer or any Buyer's Representatives, and (b) are either: (i) Liens evidencing
monetary encumbrances (other than liens for general real estate taxes or
assessments not yet due and payable) which can be Removed by payment of
liquidated amounts, (ii) liens or encumbrances (including, but not limited to,
monetary liens) created by Seller after the Effective Date and not consented to
or deemed consented to by Buyer; or (iii) items which Seller has agreed to
Remove pursuant to Paragraph 4.3 of this Agreement.
"Seller" shall mean the Seller referenced in the first paragraph of
this Agreement.
"Seller's Broker" shall mean The ▇▇▇▇▇▇▇▇▇ Group, Inc.
"Seller's (Canada) Knowledge" shall mean the actual (and not the
imputed or constructive knowledge) of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
"Seller's Liability Limit" shall mean an amount that does not exceed in
the aggregate five percent (5%) of the sum of the total allocated values of all
the Hotels set forth on Exhibit A-13 to this Agreement and the purchase price of
the common stock of the PR Seller as set forth in the PR Stock Agreement, plus
$25,000,000.00.
"Seller's Knowledge" shall mean the actual (and not the imputed or
constructive) knowledge of ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, and ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇ (collectively, the "Designated Representatives").
"Seller Parties" shall mean and include, collectively, (a) Seller; (b)
its counsel; (c) any Broker retained by Seller; (d) Seller's property manager;
(e) any direct or indirect owner of any beneficial interest in Seller; (f) any
officer, director, employee, or agent of Seller, its counsel, any Broker
retained by Seller, Seller's property manager or any direct or indirect owner of
any
A-8
beneficial interest in Seller; and (g) any other entity or individual affiliated
or related in any way to any of the foregoing.
"Seller's possession", "in the Seller's possession" or words of similar
import shall be deemed to mean to the extent the material or other item referred
to by such phrase is located at the Hotel or in Seller's corporate headquarters.
"Seller's Representatives" shall mean Seller's officers, employees,
agents, advisors, representatives, attorneys, accountants, consultants,
investors, contractors, architects and engineers.
"Seller's Warranties" shall mean Seller's representations and
warranties set forth in this Agreement and the limited warranty of title set
forth in the deed executed by Seller in connection with Closing, as the same may
be modified or waived by Buyer pursuant to this Agreement.
"Survey" shall mean a survey of the Land obtained by Buyer pursuant to
Paragraph 4.
"Tax Year" shall mean the year period commencing on January 1 of each
calendar year and ending on December 31 of each calendar year.
"Tenant" shall mean a tenant under a Lease; collectively, all tenants
under the Leases are referred to as the "Tenants".
"Terminate" shall mean the termination of this Agreement, by Buyer or
Seller as applicable as set forth in this Agreement, in which event thereafter
neither party hereto shall have any further rights, obligations or liabilities
hereunder except to the extent that any right, obligation or liability set forth
in this Agreement expressly survives termination hereof.
"Title Commitment" shall mean the Commitment of the Title Company to
issue the Title Policy relating to Real Property, as applicable, as the same may
be updated from time to time.
"Title Company" shall mean either Fidelity National Title or such other
title company selected by Buyer.
"Title Objections" shall mean any defects in title (including any
Record Exceptions which are not acceptable to Buyer) or Survey (including the
description of the Land) which may be revealed by Buyer's examinations thereof
to which Buyer timely objects in accordance with the terms of Paragraph 4.3.
"Title Policy" shall mean the ALTA Owner's Policy of Title Insurance
(or such other comparable form of title insurance policy as is available in the
jurisdiction in which the Property is located) issued by the Title Company in
the amount of the Purchase Price and in the form of the Title Commitment, and
containing such endorsements as reasonably requested by Buyer.
"Toronto InterContinental Hotel" shall mean that certain
InterContinental Hotel located on that certain tract or parcel of land in
Toronto, Ontario leased pursuant to that certain Ground Lease dated November 18,
1987 from The Corporation of the City of Toronto, more
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particularly described on Exhibit A-12 in which the registered leasehold
interest thereof is vested in Inter-Continental Holdings (Canada) Inc. and the
beneficial leasehold interest thereof is vested in ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Hotel Inc.
"Toronto Staybridge Suites Hotel" shall mean that certain Staybridge
Suites Hotel located on that certain tract or parcel of land in Markham,
Ontario, more particularly described on Exhibit A-11 the registered owner of
which is InterContinental Hotels Group (Canada) Inc. and the beneficial owner of
which is Staybridge Markham, Inc.
"Transaction" shall mean the purchase and sale transactions occurring
on the applicable Closing Date contemplated by this Agreement.
"Uniform System of Accounts" shall mean the Uniform System of Accounts
for the Lodging Industry, prepared by The Hotel Association of New York City,
Inc., in effect as of the date hereof.
"Unsuitable for Its Permitted Use" shall mean with respect to a Hotel,
a state or condition of such Hotel such that (a) following any damage or
destruction involving such Hotel, such Hotel cannot be operated in the good
faith judgment of Buyer, Seller or Manager on a commercially practicable basis
and it cannot reasonably be expected to be restored to substantially the same
condition as existed immediately before such damage or destruction and otherwise
as required under Article 15 of the Management Agreement, using only the net
proceeds of insurance obtained in connection therewith and other funds that
Seller or Manager elect to provide pursuant to the terms of Article 15 of the
Management Agreement within twelve (12) months following such damage or
destruction or such shorter period of time as to which business interruption
insurance is available to cover amounts to be paid to Owner under the Management
Agreement upon the effectiveness thereof and other costs related to the Hotel
following such damage or destruction, or (b) as the result of a partial taking
by a Condemnation Proceeding, such Hotel cannot be operated in the good faith
judgment of Seller, Buyer or Manager on a commercially practicable basis in
light of then existing circumstances.
"White Plains Crowne Plaza Hotel" shall mean that certain Crowne Plaza
Hotel located on that certain tract or parcel of land in White Plains, New York,
more particularly described on Exhibit A-3.
▇-▇▇
▇▇▇▇▇▇▇ ▇-▇▇
As described above, this Exhibit has been omitted and will be supplementally
furnished to the Securities Exchange Commission upon request. The Exhibit
contains a general description of the properties to be acquired, a list of the
entities that hold title to the properties and the allocation of purchase price
for each property. The aggregate purchase price for the properties is stated as
$306,000,000.
Exhibit M
---------
IHG PARENT GUARANTY
(Attached)
AMENDED AND RESTATED CONSOLIDATED GUARANTY AGREEMENT
THIS AMENDED AND RESTATED CONSOLIDATED GUARANTY AGREEMENT (this
"Agreement") is made and given as of January __, 2005, by INTERCONTINENTAL
HOTELS GROUP PLC, a corporation organized and existing under the laws of England
and Wales (the "Guarantor"), for the benefit of HPT TRS IHG-1, INC., a Maryland
corporation (together with its successors and assigns, "TRS1"), HPT TRS IHG-2,
INC., a Maryland corporation (together with its successors and assigns, "TRS2"),
HPT IHG PR, INC., a Puerto Rico corporation (together with its successors and
assigns, "Landlord"), and HOSPITALITY PROPERTIES TRUST, a Maryland real estate
investment trust (together with its successors and assigns, "Trust"; and Trust
together with ▇▇▇▇, ▇▇▇▇ and Landlord, collectively, "HPT").
W I T N E S S E T H :
WHEREAS, the Guarantor entered into a certain Guaranty Agreement dated
as of July 1, 2003 as amended by a certain First Amendment to Guaranty Agreement
dated as of September 18, 2003 (the "Original Staybridge Guaranty"); and
WHEREAS, the Guarantor entered into a certain Guaranty Agreement dated
as of October 27, 2003 (the "Original Candlewood Guaranty"; and the Original
Candlewood Guaranty together with the Original Staybridge Guaranty,
collectively, the "Original Guaranties"); and
WHEREAS, it is a condition precedent to Landlord entering into the PR
Lease (as hereinafter defined) and TRS2 entering into the New Management
Agreement (as hereinafter defined) and the consummation of certain other
transactions contemplated by the Transaction Documents (as defined in the New
Management Agreement) that the Guarantor enter into this Agreement; and
WHEREAS, the transactions contemplated by the Guaranteed Agreements (as
hereinafter defined) and the Transaction Documents are of direct material
benefit to the Guarantor;
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the mutual receipt and legal sufficiency of which
are hereby acknowledged, the parties hereto hereby agree as follows:
1. Certain Terms. Capitalized terms used but not defined herein have
the meaning ascribed thereto in the New Management
Agreement. The following terms as used in this Agreement shall have the meanings
set forth below:
"Accounting Principles" shall mean generally accepted accounting
principles, as adopted in the United States of America, consistently applied or,
if the Guarantor's principal place of business is the United Kingdom, generally
accepted accounting principles, as adopted in the United Kingdom, consistently
applied.
"Base Guaranteed Amount" shall mean the sum of One Hundred Twenty Five
Million Dollars ($125,000,000).
"Candlewood Management Agreement" shall mean that certain Management
Agreement, dated as of October 27, 2003, between TRS1 and Existing Manager, as
the same may be amended, modified, supplemented, or otherwise altered from time
to time.
"Collateral Agency Agreement" shall mean a written agreement, in form
and substance reasonably acceptable to HPT, among HPT, the Guarantor and the
Collateral Agent pursuant to which the Collateral Agent shall agree to hold any
cash delivered to such Collateral Agent pursuant to the terms of this Agreement
as collateral agent on behalf of HPT, as the same may hereafter be amended,
restated, modified, supplemented, or otherwise altered. Among other things, the
Collateral Agency Agreement shall provide that (a) the Collateral Agent shall
look solely to the Guarantor for any amounts owed to the Collateral Agent in
connection with such agreement, (b) the Collateral Agent shall not offset any
amount owed to the Collateral Agent against the cash delivered to it pursuant to
the Collateral Agency Agreement and this Agreement, (c) the Collateral Agent
shall hold such cash as trust funds and not commingle such cash with any assets
of the Collateral Agent and (d) HPT shall be entitled to apply any cash
collateral held by the Collateral Agent to the overdue obligations of the
Guarantor hereunder in such order and at such times as HPT may determine in its
sole judgment.
"Collateral Agent" shall mean a bank or other financial institution
reasonably acceptable to HPT having a rating of not less than BBB-/Baa3 rating
from the Rating Agencies, which bank or other financial institution is the
collateral agent under the Collateral Agency Agreement as such collateral agent
may be replaced in accordance with the terms of the Collateral Agency Agreement.
"Coverage Date" shall mean the date which is the day after the second
consecutive calendar year for which each of the
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following conditions has been satisfied: (a) the Priority Coverage Ratio under
the Candlewood Management Agreement has equaled or exceeded 1.3; (b) the
Staybridge Priority Coverage Ratio has equaled or exceeded 1.3; and (c) the
quotient of (i) the sum of the numerators used in calculating both the PR Rent
Coverage Ratio under this Agreement and the Priority Coverage Ratio under the
New Management Agreement, divided by (ii) the sum of the denominators used in
calculating both the PR Rent Coverage Ratio under this Agreement and the
Priority Coverage Ratio under the New Management Agreement is equal to or
exceeds 1.3.
"Dollars" and "$" shall mean dollars in lawful currency of the United
States of America.
"Existing Manager" shall mean Intercontinental Hotels Group Resources,
Inc.
"Guaranteed Agreements" shall mean the Management Agreements and the PR
Lease, collectively.
"Guaranteed Obligations" shall mean the payment to ▇▇▇▇, ▇▇▇▇, Landlord
and Trust, as applicable, of: (a) all of the Owner's First Priority as and when
due under the Candlewood Management Agreement determined without respect to
Gross Revenue thereunder or Operating Profits thereunder; (b) all of the Owner's
First Priority as and when due under the New Management Agreement determined
without respect to Gross Revenue thereunder or Operating Profits thereunder; (c)
all of the Owner's Priority as and when due under the Staybridge Management
Agreement determined without respect to Gross Revenue thereunder or Operating
Profits thereunder; (d) all of the Minimum Rent as and when due under the PR
Lease; and (e) any and all liquidated damages due to ▇▇▇▇, ▇▇▇▇ or Landlord
under the Guaranteed Agreements.
"Management Agreements" shall mean the Staybridge Management Agreement,
the Candlewood Management Agreement and the New Management Agreement,
collectively.
"Managers" shall mean the Existing Manager and the New Manager,
collectively.
"New Candlewood Guaranty" shall mean a Guaranty Agreement made by the
Guarantor in favor of TRS1 and HPT and otherwise in the form attached hereto as
Exhibit A.
"New Guaranties" shall mean the New Candlewood Guaranty and the New
Staybridge Guaranty, collectively.
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"New Management Agreement" shall mean that certain Management Agreement
dated as of the date hereof between TRS2 and New Manager, as the same may be
amended, modified, supplemented, or otherwise altered.
"New Manager" shall mean IHG Management (Maryland) LLC.
"New Portfolio Coverage Date" shall mean the date which is the day
after the second (2nd) consecutive calendar year for which the quotient of (i)
the sum of the numerators used in calculating both the PR Rent Coverage Ratio
under this Agreement and the Priority Coverage Ratio under the New Management
Agreement, divided by (ii) the sum of the denominators used in calculating both
the PR Rent Coverage Ratio under this Agreement and the Priority Coverage Ratio
under the New Management Agreement is equal to or exceeds 1.3.
"New Staybridge Guaranty" shall mean a Guaranty Agreement made by the
Guarantor in favor of TRS1 and HPT and otherwise in the form attached hereto as
Exhibit B.
"Outstanding Balance" shall mean, from time to time, the Base
Guaranteed Amount, less the excess of the aggregate amount paid by the Guarantor
under Section 3 hereof over the sum of the aggregate of any amounts reimbursed
to the Guarantor pursuant to the terms of the Management Agreements.
"PR Additional Rent" shall have the meaning given to the term
"Additional Rent" in the PR Lease.
"PR Guaranty" shall mean that certain Guaranty Agreement of even date
herewith from PR Tenant to TRS2 and Trust, as the same may hereafter be amended,
restated, modified, supplemented, or otherwise altered.
"PR Operating Costs" shall have the meaning given to the term
"Operating Costs" in the PR Lease.
"PR Rent Coverage Ratio" shall mean for any period, the quotient of (a)
the excess of PR Total Hotel Sales over the sum of (i) PR Operating Costs (other
than PR Minimum Rent and PR Additional Rent) and (ii) an imputed reserve for
Capital Expenses equal to five percent (5%) of Total Hotel Sales for such
period, divided by (b) the sum of PR Minimum Rent for such period.
"PR Minimum Rent" shall have the meaning given to the term "Minimum
Rent" in the PR Lease.
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"PR Tenant" shall mean the tenant under the PR Lease.
"PR Total Hotel Sales" shall have the meaning given to the term "Total
Hotel Sales" in the PR Lease.
"Provide Collateral" or "Provided Collateral" shall mean:
(a) delivery to HPT of (i) a Satisfactory Letter of Credit or (ii) cash
in an amount equal to the then Outstanding Balance; or
(b) the deposit of cash equal to the then Outstanding Balance with the
Collateral Agent to be held by the Collateral Agent in accordance with
the Collateral Agency Agreement provided:(i) the Collateral Agency
Agreement has been executed and delivered by the parties thereto; (ii)
HPT has a perfected first priority security interest in any cash
delivered to the Collateral Agent; (iii) HPT has received favorable
opinions of counsel, in form and substance reasonably satisfactory to
HPT, with respect to such perfected first priority interest, the valid
existence and good standing of the other parties to the Collateral
Agency Agreement, the due execution and delivery thereof by such other
parties, the enforceability of the Collateral Agency Agreement against
such parties, and that any cash held by the Collateral Agent pursuant
to the Collateral Agency Agreement shall not be "property of the
estate" of Collateral Agent should any event described in Sections
17.1(a), (b) or (c) of the New Management Agreement shall occur with
respect to the Collateral Agent; or
(c) delivery to HPT of other collateral satisfactory to HPT in its good
faith discretion to secure the Guaranteed Obligations;
provided, however, the Guarantor shall not be deemed to have Provided Collateral
if at any time the Outstanding Balance exceeds the sum of (i) the then remaining
balance drawable under the Satisfactory Letter of Credit or the balance of the
cash deposited by the Guarantor hereunder, plus (ii) proceeds of any
Satisfactory Letter of Credit or cash deposited hereunder, in either case,
applied to the Guaranteed Obligations.
"Rating Agencies" shall mean, collectively, Standards & Poor's Rating
Services or its successors and ▇▇▇▇▇'▇ Investor Services, Inc. or its
successors; provided, however, if the Rating Agencies (i) cease operations
without successors or (ii) cease to issue credit ratings, "Rating Agencies"
shall mean a nationally recognized organization periodically issuing ratings
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of the financial strength and/or credit of United States domestic and
international banking institutions reasonably agreed to by HPT and the
Guarantor.
"Reorganization" shall mean any merger, consolidation, reorganization,
change of control or any transaction pursuant to which the Guarantor shall be or
become a Subsidiary of any other Person.
"Satisfactory Letter of Credit" shall mean a clean irrevocable letter
of credit in form and substance reasonably satisfactory to HPT in an amount
equal to the Outstanding Balance issued by a bank with a credit rating of not
less than A2/A (or, if after the date hereof the system of ratings used by the
Rating Agencies changes in a material way, their then equivalents of such credit
rating in HPT's reasonable judgment) from the Rating Agencies, having an
expiration date of not earlier than one year after the date on which it was
issued and which permits for partial draws.
"Severance Date" shall have the meaning given such term in Section 10
of this Agreement.
"Staybridge Management Agreement" shall mean that certain Management
Agreement, dated as of July 1, 2003, between TRS1 and Existing Manager, as the
same may be amended, modified, supplemented, or otherwise altered from time to
time.
"Staybridge Priority Coverage Ratio" shall mean, for any period, the
ratio of (a) the excess of Gross Revenue under the Staybridge Management
Agreement for such period over the sum of the amounts distributed or applied for
such period pursuant to Sections 10.1(a), (b) (determined as though the Reserve
Percentage thereunder for the Expansion Hotels (as defined in the Staybridge
Management Agreement) was at all times five percent (5%)), (e), (g), (h), (i),
(k) and (l) of the Staybridge Management Agreement, to (b) the sum for such
period of Owner's Priority under that Agreement and Owner's Percentage Priority
under that Agreement.
"Substitute Guarantor" shall mean a Person who assumes the Guarantor's
obligations hereunder in accordance with the terms of Section 2.7 below and is
either (a) a Person who satisfies the Rating Agencies' requirements for a single
purpose bankruptcy remote entity who has Provided Collateral or (b) a Person(s)
with (i) a tangible net worth determined in accordance with the Accounting
Principles of not less than Seven Hundred Fifty Million Dollars ($750,000,000)
and (ii) unencumbered assets with a fair market value of not less than One
Hundred
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Million Dollars (exclusive of any note, instrument, security or claim issued by,
against or in any way dependent on the credit of, an Affiliate of Guarantor).
2. Representations and Covenants. The Guarantor represents, warrants,
covenants and agrees that:
2.1 Validity of Agreement. The Guarantor has duly and validly
executed and delivered this Agreement; this Agreement constitutes the legal,
valid and binding obligation of the Guarantor, enforceable against the Guarantor
in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws of general
application affecting the rights and remedies of creditors; and the execution,
delivery and performance of this Agreement have been duly authorized by all
requisite action of the Guarantor and such execution, delivery and performance
by the Guarantor will not result in any breach of the terms, conditions or
provisions of, or conflict with or constitute a default under, or result in the
creation of any lien, charge or encumbrance upon any of the property or assets
of the Guarantor pursuant to the terms of, any indenture, mortgage, deed of
trust, note, other evidence of indebtedness, agreement or other instrument to
which the Guarantor is a party or by which the Guarantor or any property or
assets of the Guarantor is bound, or violate any provision of law applicable to
the Guarantor, or any order, writ, injunction, judgment or decree of any court
applicable to the Guarantor or any order or other public regulation of any
governmental commission, bureau or administrative agency applicable to the
Guarantor.
2.2 Payment of Expenses. The Guarantor agrees, as principal
obligor and not as guarantor only, to pay to HPT forthwith, upon demand, in
immediately available Federal funds, all costs and expenses (including court
costs and reasonable legal expenses) incurred or expended by HPT in connection
with the enforcement of this Agreement, together with interest at the Interest
Rate on amounts recoverable under this Agreement from the time such amounts
become due until payment.
2.3 Reports. The Guarantor shall timely deliver to HPT the
Consolidated Financials required under the Guaranteed Agreements and otherwise
comply with the terms of the Guaranteed Agreements applicable to it.
2.4 Financial Condition of Guarantor; Status of Guarantor. So long
as the Guarantor's obligations under Section 3 below are outstanding, unless the
Guarantor shall have Provided Collateral to secure its obligations hereunder:
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(a) The Guarantor shall at all times maintain a tangible net worth
determined in accordance with the Accounting Principles in an amount not less
than Five Hundred Million Dollars ($500,000,000) or if there has been a
Reorganization, or if the Guarantor is not the originally named Guarantor, Seven
Hundred Fifty Million Dollars ($750,000,000); and
(b) The Guarantor shall not engage in any Reorganization unless
following such Reorganization it has (i) a tangible net worth determined in
accordance with the Accounting Principles in an amount not less than
Seven
Hundred Fifty Million Dollars ($750,000,000) and (ii) unencumbered assets with a
fair market value of not less than One Hundred Million Dollars ($100,000,000)
(exclusive of any note, instrument, security or claim issued by, against or in
any way dependent on the credit of, an Affiliate of Guarantor).
2.5 Security.
(a) Upon the termination of the Guarantor's obligations under Section 3
or if the Outstanding Balance equals zero dollars ($0), HPT will return to the
Guarantor any Satisfactory Letter of Credit previously delivered to HPT or any
unapplied cash collateral then being held by HPT hereunder and shall direct the
Collateral Agent to return any cash being held by it under the Collateral Agency
Agreement to the Guarantor.
(b) HPT shall be entitled to draw upon any Satisfactory Letter of
Credit delivered to it (i) for the full amount thereof if at any time there is
less than thirty (30) days until the expiry date of such Satisfactory Letter of
Credit; (ii) for the full amount thereof if the bank that issued such
Satisfactory Letter of Credit shall not have a credit rating of at least A/A2
(or, if after the date hereof the system of ratings used by the Rating Agencies
changes in a material way, their then equivalents in HPT's reasonable judgment)
from the Rating Agencies and such satisfactory Letter of Credit shall not have
been replaced within thirty (30) days with a new Satisfactory Letter of Credit
delivered to HPT; or (iii) to the extent and in the amounts then due and payable
hereunder, if the Guarantor shall fail to pay or perform any of its obligations
under this Agreement in accordance with the terms hereof.
(c) HPT shall be entitled to apply any cash collateral held by it or
the Collateral Agent to the overdue obligations of the Guarantor hereunder in
such order and at such times as HPT may determine in its sole judgment. Any cash
collateral held by HPT shall not be commingled with its other funds, and shall
be invested, at the Guarantor's risk, in interest bearing
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investments reasonably acceptable to the Guarantor. Any interest on such cash
collateral, and any losses in such investments, shall belong to IHG.
2.6 Legal Existence. The Guarantor shall do or cause to be done
all things necessary to preserve and keep in full force and effect its corporate
existence. The Guarantor has appointed attorneys ▇▇▇▇▇▇ & Bird LLP, having an
address at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attn:
Managing Partner as its agent for service of process. The Guarantor acknowledges
and agrees that service of process on such agent shall constitute service of
process on Guarantor with respect to any and all claims hereunder, under the
Guaranteed Agreements or under any Transaction Document.
2.7 Substitute Guarantor. The then Guarantor (the "Departing
Guarantor") shall be released from obligations under Section 3 hereof on the
following terms and conditions:
(a) a Substitute Guarantor shall assume pursuant to a written
instrument satisfactory to HPT all of the Guarantor's obligations hereunder; and
(b) HPT shall receive an opinion of counsel satisfactory to HPT with
respect to, among other things, the existence and good standing of the
Substitute Guarantor and the due execution, delivery and enforceability of such
assumption.
Upon the satisfaction of the foregoing conditions and the expiration of
all applicable preference or similar periods, HPT shall deliver a release to the
Departing Guarantor of its obligations under Section 3 hereof and the Substitute
Guarantor shall be deemed the "Guarantor" hereunder. Further, if the Substitute
Guarantor has Provided Collateral or has (i) a tangible net worth determined in
accordance with the Accounting Principles of not less than Seven Hundred Fifty
Million Dollars ($750,000,000) and (ii) unencumbered assets with a fair market
value of not less than One Hundred Million Dollars (exclusive of any note,
instrument, security or claim issued by, against or in any way dependent on the
credit of, an Affiliate of Guarantor), HPT shall return to the Departing
Guarantor any letter of credit or cash delivered by the Departing Guarantor and
held by HPT hereunder and shall direct the Collateral Agent to return to the
Departing Guarantor any cash delivered by the Departing Guarantor and held by
such Collateral Agent pursuant to the terms of the Collateral Agency Agreement.
-9-
3. Guarantee.
(a) The Guarantor hereby unconditionally guarantees that the Guaranteed
Obligations which become due and payable shall be paid in full when due and
payable subject to any applicable cure periods, whether upon demand, at the
stated or accelerated maturity thereof or upon any mandatory or voluntary
prepayment pursuant to any Guaranteed Agreement, or otherwise.
(b) This guarantee is a guarantee of payment and not of collectibility
and is absolute and in no way conditional or contingent. In case any part of the
Guaranteed Obligations shall not have been paid when due and payable or
performed at the time performance is required, subject to any applicable cure
periods, the Guarantor shall, pay or cause to be paid to HPT the amount thereof
as is then due and payable and unpaid (including interest and other charges, if
any, due thereon through the date of payment in accordance with the applicable
provisions of the Transaction Documents) or perform or cause to be performed
such obligations in accordance with the Transaction Documents. Simultaneously
with the giving of any notice of default to the Managers or PR Tenant under the
Guaranteed Agreements, TRS1, TRS2 or Landlord, as applicable, shall give a copy
of such notice to the ▇▇▇▇▇▇▇▇▇. ▇▇▇▇, ▇▇▇▇ or Landlord, as applicable, shall
accept any cure of such default by the Guarantor provided such cure is completed
within the applicable cure period under the applicable Guaranteed Agreement.
4. Unenforceability of Guaranteed Obligations, Etc. If the Managers or
PR Tenant are for any reason under no legal obligation to discharge any of the
Guaranteed Obligations, or if any other moneys included in the Guaranteed
Obligations have become unrecoverable from the Managers or PR Tenant by
operation of law or for any other reason, including, without limitation, the
invalidity or irregularity in whole or in part of any Guaranteed Obligation or
of any Guaranteed Agreement or any limitation on the liability of the Managers
or PR Tenant thereunder or any limitation on the method or terms of payment
thereunder which may now or hereafter be caused or imposed in any manner
whatsoever, the guarantees contained in this Agreement shall nevertheless remain
in full force and effect in accordance with the terms set forth herein and shall
be binding upon the Guarantor to the same extent as if the Guarantor at all
times had been the principal debtor and obligor on all such Guaranteed
Obligations.
5. Additional Guarantees. This Agreement shall be in addition to any
other guarantee or other security for the Guaranteed Obligations and it shall
not be prejudiced or
-10-
rendered unenforceable by the invalidity of any such other guarantee or security
or by any waiver, amendment, release or modification thereof.
6. Consents and Waivers, Etc. The Guarantor hereby acknowledges receipt
of correct and complete copies of each of the Guaranteed Agreements and consents
to all of the terms and provisions thereof, as the same may be from time to time
hereafter amended or changed in accordance therewith, and waives, to the extent
the Guarantor lawfully may do so, (a) presentment, demand for payment, and
protest of nonpayment, of any of the Guaranteed Obligations, (b) notice of
acceptance of this Agreement and of diligence, presentment, demand and protest,
(c) notice of any default hereunder and any default, breach or nonperformance
under the Guaranteed Agreements or a Manager Event of Default or Manager Default
under any Management Agreement or an Event of Default under the PR Lease except
as expressly provided in Section 3, (d) notice of the terms, time and place of
any private or public sale of collateral held as security for the Guaranteed
Obligations, (e) demand for performance or observance of, and any enforcement of
any provision of, or any pursuit or exhaustion of rights or remedies against the
Managers, or PR Tenant or any other guarantor of the Guaranteed Obligations,
under or pursuant to the Guaranteed Agreements, or any agreement directly or
indirectly relating thereto and any requirements of diligence or promptness on
the part of the holders of the Guaranteed Obligations in connection therewith,
and (f) any and all demands and notices of every kind and description with
respect to the foregoing or which may be required to be given by any statute or
rule of law.
7. No Impairment, Etc. The obligations, covenants, agreements and
duties of the Guarantor under this Agreement shall not be affected or impaired
by any assignment or transfer in whole or in part of any of the Guaranteed
Obligations without notice to the Guarantor, or any waiver by HPT or any holder
of any of the Guaranteed Obligations or by the holders of all of the Guaranteed
Obligations of the performance or observance by the Managers, PR Tenant or any
other guarantor of any of the agreements, covenants, terms or conditions
contained in the Guaranteed Obligations or the Guaranteed Agreements or any
indulgence in or the extension of the time for payment by the Managers, PR
Tenant or any other guarantor of any amounts payable under or in connection with
the Guaranteed Obligations or the Guaranteed Agreements or any other instrument
or agreement relating to the Guaranteed Obligations or of the time for
performance by the Managers, PR Tenant or any other guarantor of any other
obligations under or arising out of any
-11-
of the foregoing or the extension or renewal thereof, or the modification or
amendment made with the consent of the Guarantor of any duty, agreement or
obligation of the Managers, PR Tenant or any other guarantor set forth in any of
the foregoing, or the voluntary or involuntary sale or other disposition of all
or substantially all the assets of the Managers, PR Tenant or any other
guarantor or insolvency, bankruptcy, or other similar proceedings affecting the
Managers, PR Tenant or any other guarantor or any assets of the Managers, PR
Tenant or any such other guarantor, or the release or discharge of the Managers,
PR Tenant or any such other guarantor from the performance or observance of any
agreement, covenant, term or condition contained in any of the foregoing without
the consent of the holders of the Guaranteed Obligations by operation of law.
8. Reimbursement, Subrogation, Etc. The Guarantor hereby covenants and
agrees that the Guarantor will not enforce or otherwise exercise any rights of
reimbursement, subrogation, contribution or other similar rights against the
Managers, PR Tenant or any other person with respect to the Guaranteed
Obligations prior to the irrevocable payment in full of all amounts then due and
owing but unpaid under the Guaranteed Agreements. Until the Guaranteed
Obligations have been satisfied in full, the Guarantor shall not have any right
of subrogation, and the Guarantor waives any defense it may have based upon any
election of remedies by HPT which destroys the Guarantor's subrogation rights or
the Guarantor's rights to proceed against the Managers or PR Tenant for
reimbursement, including, without limitation, any loss of rights the Guarantor
may suffer by reason of any rights, powers or remedies of the Managers or PR
Tenant in connection with any anti-deficiency laws or any other laws limiting,
qualifying or discharging the indebtedness to HPT. Until all obligations of the
Managers and PR Tenant pursuant to the Guaranteed Agreements shall have been
irrevocably paid and satisfied in full, the Guarantor waives any right to
enforce any remedy which HPT now has or may in the future have against the
Managers, PR Tenant, any other guarantor or any other person and any benefit of,
or any right to participate in, any security whatsoever now or in the future
held by HPT. Nothing contained in this Section 8 shall limit any of Guarantor's
rights under the Management Agreements.
9. Defeasance; Guaranty Limitations. The Guarantor's obligations under
Section 3 shall terminate upon the date on which the Guaranteed Obligations have
been paid and performed in full and all other obligations of the Guarantor to
HPT under this Agreement have been irrevocably satisfied in full; provided,
however, the Guarantor's obligations under ▇▇▇▇▇▇▇ ▇
-▇▇-
▇▇▇▇▇ ▇▇ subject to early termination upon the Coverage Date; provided further,
however, if at any time, all or any part of any payment applied on account of
the Guaranteed Obligations is or must be rescinded or returned for any reason
whatsoever (including, without limitation, the insolvency, bankruptcy or
reorganization of the Managers or PR Tenant), this Agreement, to the extent such
payment is or must be rescinded or returned, shall be deemed to have continued
in existence notwithstanding any such termination. Notwithstanding anything
contained in this Agreement to the contrary, in no event shall the Guarantor's
liability under Section 3 exceed the Outstanding Balance.
10. Severance. If the New Portfolio Coverage Date occurs prior to the
Coverage Date, the Guarantor is not then in default of its obligations under
this Agreement and the Guarantor delivers to HPT and TRS1 executed counterparts
of the New Guaranties and an opinion of counsel satisfactory to Trust with
respect to, among other things, the existence and good standing of the Guarantor
and the due execution, delivery and enforceability of the New Guaranties, then,
on the date on which the New Guaranties and such opinion are delivered (the
"Severance Date"), the Guarantor's obligations under this Agreement shall
terminate, subject to the second proviso contained in Section 9 above.
Furthermore, if any Substitute Guarantor has succeeded to the interests of the
Guarantor named herein, then the termination of such Substitute Guarantor's
obligations under this Agreement shall be further conditioned upon such
Substitute Guarantor satisfying the requirements with respect to a Substitute
Guarantor under each of the New Guaranties, including, without limitation, the
obligation to Provide Collateral under each of the New Guaranties (if
applicable). Notwithstanding the foregoing, the termination of the Guarantor's
obligations under this Agreement shall not diminish, impair or otherwise affect
the Guarantor's obligations under the New Guaranties.
11. Notices. (a) Any and all notices, demands, consents, approvals,
offers, elections and other communications required or permitted under this
Agreement shall be deemed adequately given if in writing and the same shall be
delivered either by hand, by telecopier with written acknowledgment of receipt
(provided a copy thereof is sent by Federal Express or similar expedited
commercial carrier for delivery on the next business day), or Federal Express or
similar expedited commercial carrier, addressed to the recipient of the notice,
postpaid and registered or certified with return receipt requested (if by
-13-
mail), or with all freight charges prepaid (if by Federal Express or similar
carrier).
(b) All notices required or permitted to be sent hereunder shall be
deemed to have been given for all purposes of this Agreement upon the date of
acknowledged receipt, in the case of a notice by telecopier, and, in all other
cases, upon the date of receipt or refusal, except that whenever under this
Agreement a notice is either received on a day which is not a Business Day or is
required to be delivered on or before a specific day which is not a Business
Day, the day of receipt or required delivery shall automatically be extended to
the next Business Day.
(c) All such notices shall be addressed,
if to HPT to:
c/o Hospitality Properties Trust
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇
[Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇]
with a copy to:
▇▇▇▇▇▇▇▇ & Worcester LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Esq.
[Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇]
if to the Guarantor to:
Intercontinental Hotels Group PLC
▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
ENGLAND
Attn: Company Secretary
Telecopier No. ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
-14-
with a copy to:
Intercontinental Hotels Resources Group, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Vice President, Asset Management
[Telecopier No. ▇▇▇-▇▇▇-▇▇▇▇]
(d) By notice given as herein provided, the parties hereto and their
respective successors and assigns shall have the right from time to time and at
any time during the term of this Agreement to change their respective addresses
effective upon receipt by the other parties of such notice and each shall have
the right to specify as its address any other address within the United States
of America.
12. Successors and Assigns. Whenever in this Agreement, any of the
parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party, including without limitation the holders,
from time to time, of the Guaranteed Obligations; and all representations,
warranties, covenants and agreements by or on behalf of the Guarantor which are
contained in this Agreement shall inure to the benefit of HPT's successors and
assigns, including, without limitation, such holders, whether so expressed or
not.
13. Applicable Law. Except as to matters regarding the internal affairs
of HPT and issues of or limitations on any personal liability of the
shareholders and trustees of HPT for obligations of HPT, as to which the laws of
the State of Maryland shall govern, this Agreement and any other instruments
executed and delivered to evidence, complete or perfect the transactions
contemplated hereby shall be interpreted, construed, applied and enforced in
accordance with the laws of New York applicable to contracts between residents
of New York which are to be performed entirely within New York, regardless of
(i) where any such instrument is executed or delivered; or (ii) where any
payment or other performance required by any such instrument is made or required
to be made; or (iii) where any breach of any provision of any such instrument
occurs, or any cause of action otherwise accrues; or (iv) where any action or
other proceeding is instituted or pending; or (v) the nationality, citizenship,
domicile, principal place of business, or jurisdiction of organization or
domestication of any party; or (vi) whether the laws of the forum jurisdiction
otherwise would apply the laws of a jurisdiction other than New York; or (vii)
any combination of the foregoing.
-15-
All actions and proceedings arising out of or in any way relating to
this Agreement shall be brought, heard, and determined exclusively in an
otherwise appropriate federal or state court located within the State of New
York. Guarantor hereby (i) submits to the exclusive jurisdiction of any New York
federal or state court of otherwise competent jurisdiction for the purpose of
any action or proceeding arising out of or relating to this Agreement and (ii)
voluntarily and irrevocably waives, and agrees not to assert by way of motion,
defense, or otherwise in any such action or proceeding, any claim or defense
that it is not personally subject to the jurisdiction of such a court, that such
a court lacks personal jurisdiction over Guarantor or the matter, that the
action or proceeding has been brought in an inconvenient or improper forum, that
the venue of the action or proceeding is improper, or that this Agreement may
not be enforced in or by such a court. To the maximum extent permitted by
applicable law, Guarantor consents to service of process by registered mail,
return receipt requested, or by any other manner provided by law.
To the maximum extent permitted by applicable law, each of the parties
hereto waives its rights to trial by jury with respect to this Agreement or any
matter arising in connection herewith.
14. Modification of Agreement. No modification or waiver of any
provision of this Agreement, nor any consent to any departure by the Guarantor
therefrom, shall in any event be effective unless the same shall be in writing
and signed by HPT, and such modification, waiver or consent shall be effective
only in the specific instances and for the purpose for which given. No notice to
or demand on the Guarantor in any case shall entitle the Guarantor to any other
or further notice or demand in the same, similar or other circumstances.
15. Waiver of Rights by HPT. Neither any failure nor any delay on HPT's
part in exercising any right, power or privilege under this Agreement shall
operate as a waiver thereof, nor shall a single or partial exercise thereof
preclude any other or further exercise, or the exercise of any other right,
power or privilege.
16. Severability. In case any one or more of the provisions contained
in this Agreement should be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby, but this Agreement
shall be reformed and construed and enforced to the maximum extent permitted by
applicable law.
-16-
17. Entire Contract. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and shall
supersede and take the place of any other instruments purporting to be an
agreement of the parties hereto relating to the subject matter hereof.
18. Headings; Counterparts. Headings in this Agreement are for purposes
of reference only and shall not limit or otherwise affect the meaning hereof.
This Agreement may be executed in any number of counterparts, each of which
shall be an original, but all of which together shall constitute one instrument,
and in pleading or proving any provision of this Agreement, it shall not be
necessary to produce more than one of such counterparts.
19. Remedies Cumulative. No remedy herein conferred upon HPT is
intended to be exclusive of any other remedy, and subject to the limitations set
forth in Section 9 above, each and every remedy shall be cumulative and shall be
in addition to every other remedy given hereunder or now or hereafter existing
at law or in equity or by statute or otherwise.
20. Nonliability of Trustees. THE DECLARATION OF TRUST ESTABLISHING
TRUST, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE
"DECLARATION"), IS DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF
THE STATE OF MARYLAND, PROVIDES THAT, AND THE GUARANTOR HEREBY AGREES THAT, THE
NAME "HOSPITALITY PROPERTIES TRUST" REFERS TO THE TRUSTEES UNDER THE DECLARATION
COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO
TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF TRUST SHALL BE HELD TO ANY
PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM
AGAINST, TRUST. ALL PERSONS DEALING WITH TRUST, IN ANY WAY, SHALL LOOK ONLY TO
THE ASSETS OF TRUST FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY
OBLIGATION.
21. Effective Date. This Agreement shall be of no force or effect
unless and until the Effective Date occurs.
22. PR Guaranty Obligations. Guarantor acknowledges and agrees that at
any time there is any amount due and otherwise payable under the PR Guaranty,
HPT shall be entitled to treat any payment by Guarantor as a payment by the PR
Tenant under the PR Guaranty and to the extent HPT so elects such payment shall
not result in a reduction in the Outstanding Balance.
23. Restatement. This Agreement consolidates, supercedes, amends and
restates in their entirety the Original Staybridge Guaranty and the Original
Candlewood Guaranty.
-17-
WITNESS the execution hereof under seal as of the date above first
written.
INTERCONTINENTAL HOTELS GROUP PLC
By:___________________________
Its:_______________________
By:___________________________
Its:_______________________
ACKNOWLEDGED AND AGREED:
HPT TRS IHG-1, INC.
By:_________________________
Its:_____________________
HPT TRS IHG-[3], INC.
By:_________________________
Its:_____________________
[PR Owner]
By:_________________________
Its:_____________________
HOSPITALITY PROPERTIES TRUST
By:_________________________
Its:_____________________
-18-
EXHIBIT A
NEW CANDLEWOOD GUARANTY
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT (this "Agreement") is made and given as of
________ __, 20__, by INTERCONTINENTAL HOTELS GROUP PLC, a corporation organized
and existing under the laws of England and Wales (the "Guarantor"), for the
benefit of HPT TRS IHG-1, INC., a Maryland corporation (together with its
successors and assigns, the "Tenant"), and HOSPITALITY PROPERTIES TRUST, a
Maryland real estate investment trust (together with its successors and assigns,
"Trust"; and Trust together with the Tenant, "HPT").
W I T N E S S E T H :
WHEREAS, on January __, 2005, the Guarantor delivered to HPT that
certain Amended and Restated Consolidated Guaranty Agreement (the "Consolidated
Guaranty"); and
WHEREAS, the New Portfolio Coverage Date (as such term is defined in
the Consolidated Guaranty) has occurred and the Guarantor wishes to terminate
its obligations the Consolidated Guaranty in accordance with Section 10 of the
Consolidated Guaranty; and
WHEREAS, Section 10 of the Consolidated Guaranty requires, among other
things, that the Guarantor deliver this Guaranty Agreement to HPT in order to
terminate its obligations under the Consolidated Guaranty as aforesaid; and
WHEREAS, the termination of its obligations under the Consolidated
Guaranty as aforesaid constitute a direct material benefit to the Guarantor;
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the mutual receipt and legal sufficiency of which
are hereby acknowledged, the parties hereto hereby agree as follows:
1. Certain Terms. Capitalized terms used and not otherwise defined in
this Agreement shall have the meanings ascribed to such terms in the Management
Agreement (as
hereinafter defined). The following terms as used in this Agreement shall have
the meanings set forth below:
"Accounting Principles" shall mean generally accepted accounting
principles, as adopted in the United States of America, consistently applied or,
if the Guarantor's principal place of business is the United Kingdom, generally
accepted accounting principles, as adopted in the United Kingdom, consistently
applied.
"Collateral Agency Agreement" shall mean a written agreement, in form
and substance reasonably acceptable to HPT, among HPT, the Guarantor and the
Collateral Agent pursuant to which the Collateral Agent shall agree to hold any
cash delivered to such Collateral Agent pursuant to the terms of this Agreement
as collateral agent on behalf of HPT, as the same may be amended, restated,
supplemented or otherwise modified from time to time with the consent of the
parties thereto. Among other things, the Collateral Agency Agreement shall
provide that (a) the Collateral Agent shall look solely to the Guarantor for any
amounts owed to the Collateral Agent in connection with such agreement, (b) the
Collateral Agent shall not offset any amount owed to the Collateral Agent
against the cash delivered to it pursuant to the Collateral Agency Agreement and
this Agreement, (c) the Collateral Agent shall hold such cash as trust funds and
not commingle such cash with any assets of the Collateral Agent and (d) HPT
shall be entitled to apply any cash collateral held by the Collateral Agent to
the overdue obligations of the Guarantor hereunder in such order and at such
times as HPT may determine in its sole judgment.
"Collateral Agent" shall mean a bank or other financial institution
reasonably acceptable to HPT having a rating of not less than BBB-/Baa3 rating
from the Rating Agencies, which bank or other financial institution is the
collateral agent under the Collateral Agency Agreement as such collateral agent
may be replaced in accordance with the terms of the Collateral Agency Agreement.
"Coverage Date" shall mean the date which is the day after the second
(2nd) consecutive calendar year for which the Priority Coverage Ratio is equal
to or exceeds 1.3.
"Guaranteed Obligations" shall mean the payment to Tenant of (a) all of
the Owner's First Priority as and when due under the Management Agreement
determined without respect to Gross Revenue or Operating Profits and (b) any and
all liquidated damages due to Tenant under the Management Agreement.
- A-2 -
"Management Agreement" shall mean [that certain Amended and Restated
Management Agreement, dated as of January __, 2005, between TRS1 and Manager]
with respect to certain hotels being operated under the "Candlewood" brand]
[that certain Management Agreement, dated as of October 27, 2003, between TRS1
and Manager], as the same may be amended, modified, supplemented, or otherwise
altered from time to time.
"Manager" shall mean Intercontinental Hotels Group Resources, Inc.
"Outstanding Balance" shall mean, from time to time, Fifty Million
Dollars ($50,000,000), less the excess of the aggregate amount paid by the
Guarantor under Section 3 hereof over the aggregate of any amounts reimbursed to
the Guarantor pursuant to the terms of the Management Agreement.
"Provide Collateral" or "Provided Collateral" shall mean:
(a) delivery to HPT of (i) a Satisfactory Letter of Credit or (ii) cash
in an amount equal to the then Outstanding Balance; or
(b) the deposit of cash equal to the then Outstanding Balance with the
Collateral Agent to be held by the Collateral Agent in accordance with
the Collateral Agency Agreement provided:(i) the Collateral Agency
Agreement has been executed and delivered by the parties thereto; (ii)
HPT has a perfected first priority security interest in any cash
delivered to the Collateral Agent; (iii) HPT has received favorable
opinions of counsel, in form and substance reasonably satisfactory to
HPT, with respect to such perfected first priority interest, the valid
existence and good standing of the other parties to the Collateral
Agency Agreement, the due execution and delivery thereof by such other
parties, the enforceability of the Collateral Agency Agreement against
such parties, and that any cash held by the Collateral Agent pursuant
to the Collateral Agency Agreement shall not be "property of the
estate" of Collateral Agent should any event described in Sections
17.1(a), (b) or (c) of the Management Agreement shall occur with
respect to the Collateral Agent; or
(c) delivery to HPT of other collateral satisfactory to HPT in its good
faith discretion to secure the Guaranteed Obligations;
provided, however, the Guarantor shall not be deemed to have Provided Collateral
if at any time the Outstanding Balance
- A-3 -
exceeds the sum of (i) the then remaining balance drawable under the
Satisfactory Letter of Credit or the balance of the cash deposited by the
Guarantor hereunder, plus (ii) proceeds of any Satisfactory Letter of Credit or
cash deposited hereunder, in either case, applied to the Guaranteed Obligations.
"Rating Agencies" shall mean, collectively, Standard's & Poor's Rating
Services or its successor and ▇▇▇▇▇'▇ Investor Services, Inc. or its successors;
provided, however, if the Rating Agencies (i) cease operations without
successors or (ii) cease to issue credit ratings, "Rating Agencies" shall mean a
nationally recognized organization periodically issuing ratings of the financial
strength and/or credit of United States domestic and international banking
institutions reasonably agreed to by HPT and the Guarantor.
"Reorganization" shall mean any merger, consolidation, reorganization,
change of control or any transaction pursuant to which the Guarantor shall be or
become a Subsidiary of any other Person.
"Satisfactory Letter of Credit" shall mean a clean irrevocable letter
of credit in form and substance reasonably satisfactory to HPT in an amount
equal to the Outstanding Balance issued by a bank with a credit rating of not
less than A2/A (or, if after the date hereof the system of ratings used by the
Rating Agencies changes in a material way, their then equivalents of such credit
rating in HPT's reasonable judgment) from the Rating Agencies, having an
expiration date of not earlier than one year after the date on which it was
issued and which permits for partial draws.
"Substitute Guarantor" shall mean a Person who assumes the Guarantor's
obligations hereunder in accordance with the terms of Section 2.7 below and is
either (a) a Person who satisfies the Rating Agencies' requirements for a single
purpose bankruptcy remote entity who has Provided Collateral or (b) a Person(s)
with (i) a tangible net worth determined in accordance with the Accounting
Principles not less than Seven Hundred Fifty Million Dollars ($750,000,000) and
(ii) unencumbered assets with a fair market value of not less than One Hundred
Million Dollars (exclusive of any note, instrument, security or claim issued by,
against or in any way dependent on the credit of, an Affiliate of Guarantor).
2. Representations and Covenants. The Guarantor represents, warrants,
covenants and agrees that:
- A-4 -
2.1 Validity of Agreement. The Guarantor has duly and validly
executed and delivered this Agreement; this Agreement constitutes the legal,
valid and binding obligation of the Guarantor, enforceable against the Guarantor
in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws of general
application affecting the rights and remedies of creditors; and the execution,
delivery and performance of this Agreement have been duly authorized by all
requisite action of the Guarantor and such execution, delivery and performance
by the Guarantor will not result in any breach of the terms, conditions or
provisions of, or conflict with or constitute a default under, or result in the
creation of any lien, charge or encumbrance upon any of the property or assets
of the Guarantor pursuant to the terms of, any indenture, mortgage, deed of
trust, note, other evidence of indebtedness, agreement or other instrument to
which the Guarantor is a party or by which the Guarantor or any property or
assets of the Guarantor is bound, or violate any provision of law applicable to
the Guarantor, or any order, writ, injunction, judgement or decree of any court
applicable to the Guarantor or any order or other public regulation of any
governmental commission, bureau or administrative agency applicable to the
Guarantor.
2.2 Payment of Expenses. The Guarantor agrees, as principal
obligor and not as guarantor only, to pay to HPT forthwith, upon demand, in
immediately available Federal funds, all costs and expenses (including court
costs and reasonable legal expenses) incurred or expended by HPT in connection
with the enforcement of this Agreement, together with interest at the Interest
Rate on amounts recoverable under this Agreement from the time such amounts
become due until payment.
2.3 Reports. The Guarantor shall timely deliver to HPT the
Consolidated Financials required under the Management Agreement and otherwise
comply with the terms of the Management Agreement applicable to it.
2.4 Financial Condition of Guarantor; Status of Guarantor. So long
as the Guarantor's obligations under Section 3 below are outstanding, unless the
Guarantor shall have Provided Collateral to secure its obligations hereunder:
(a) The Guarantor shall at all times maintain a tangible net worth
determined in accordance with the Accounting Principles in an amount not less
than Five Hundred Million Dollars ($500,000,000) or if there has been a
Reorganization, or if the Guarantor is not the originally named Guarantor, Seven
Hundred Fifty Million Dollars ($750,000,000); and
- A-5 -
(b) The Guarantor shall not engage in any Reorganization unless
following such Reorganization it has (i) a tangible net worth determined in
accordance with the Accounting Principles in an amount not less than Seven
Hundred Fifty Million Dollars ($750,000,000) and (ii) unencumbered assets with a
fair market value of not less than One Hundred Million Dollars ($100,000,000)
(exclusive of any note, instrument, security or claim issued by, against or in
any way dependent on the credit of, an Affiliate of Guarantor).
2.5 Security. Upon the termination of the Guarantor's obligations
under Section 3 or if the excess of aggregate amount paid by the Guarantor under
Section 3 over the aggregate of any amounts reimbursed to it pursuant to the
terms of the Management Agreement equals not less than Fifty Million dollars
($50,000,000), HPT will return to the Guarantor any Satisfactory Letter of
Credit previously delivered to HPT or any unapplied cash collateral then being
held by HPT hereunder and shall direct the Collateral Agent to return any cash
being held by it under the Collateral Agency Agreement to the Guarantor. HPT
shall be entitled to draw upon any Satisfactory Letter of Credit delivered to it
(a) for the full amount thereof if at any time there is less than thirty (30)
days until the expiry date of such Satisfactory Letter of Credit; (b) for the
full amount thereof if the bank that issued such Satisfactory Letter of Credit
shall not have a credit rating of at least A/A2 (or, if after the date hereof
the system of ratings used by the Rating Agencies changes in a material way,
their then equivalents in HPT's reasonable judgment) from the Rating Agencies
and such satisfactory Letter of Credit shall not have been replaced within
thirty (30) days with a new Satisfactory Letter of Credit delivered to HPT; or
(c) to the extent and in the amounts then due and payable hereunder, if the
Guarantor shall fail to pay or perform any of its obligations under this
Guaranty in accordance with the terms hereof. HPT shall be entitled to apply any
cash collateral held by it or the Collateral Agent to the overdue obligations of
the Guarantor hereunder in such order and at such times as HPT may determine in
its sole judgment. Any cash collateral held by HPT shall not be commingled with
its other funds, and shall be invested, at the Guarantor's risk, in interest
bearing investments reasonably acceptable to the Guarantor. Any interest on such
cash collateral, and any losses in such investments, shall belong to IHG.
2.6 Legal Existence. The Guarantor shall do or cause to be done
all things necessary to preserve and keep in full force and effect its corporate
existence. The Guarantor has appointed attorneys ▇▇▇▇▇▇ & Bird LLP, having an
address at 1201
- A-6 -
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attn: Managing Partner as
its agent for service of process. The Guarantor acknowledges and agrees that
service of process on such agent shall constitute service of process on
Guarantor with respect to any and all claims hereunder or under any other
Transaction Document.
2.7 Substitute Guarantor. The then Guarantor (the "Departing
Guarantor") shall be released from obligations under Section 3 hereof on the
following terms and conditions:
(a) a Substitute Guarantor shall assume pursuant to a written
instrument satisfactory to HPT all of the Guarantor's obligations hereunder; and
(b) HPT shall receive an opinion of counsel satisfactory to HPT with
respect to, among other things, the existence and good standing of the
Substitute Guarantor and the due execution, delivery and enforceability of such
assumption.
Upon the satisfaction of the foregoing conditions and the expiration of
all applicable preference or similar periods, HPT shall deliver a release to the
Departing Guarantor of its obligations hereunder and the Substitute Guarantor
shall be deemed the "Guarantor" hereunder. Further, if the Substitute Guarantor
has Provided Collateral or has (i) a tangible net worth determined in accordance
with the Accounting Principles of not less than Seven Hundred Fifty Million
Dollars ($750,000,000) and (ii) unencumbered assets with a fair market value of
not less than One Hundred Million Dollars (exclusive of any note, instrument,
security or claim issued by, against or in any way dependent on the credit of,
an Affiliate of Guarantor), HPT shall return to the Departing Guarantor any
letter of credit or cash delivered by the Departing Guarantor and held by HPT
hereunder and shall direct the Collateral Agent to return to the Departing
Guarantor any cash delivered by the Departing Guarantor and held by such
Collateral Agent pursuant to the terms of the Collateral Agency Agreement.
- A-7 -
3. Guarantee.
(a) The Guarantor hereby unconditionally guarantees that the Guaranteed
Obligations which become due and payable during the term of the Management
Agreement shall be paid in full when due and payable subject to any applicable
cure periods, whether upon demand, at the stated or accelerated maturity thereof
or upon any mandatory or voluntary prepayment pursuant to any Transaction
Document, or otherwise.
(b) This guarantee is a guarantee of payment and not of collectibility
and is absolute and in no way conditional or contingent. In case any part of the
Guaranteed Obligations shall not have been paid when due and payable or
performed at the time performance is required, subject to any applicable cure
periods, the Guarantor shall, pay or cause to be paid to HPT the amount thereof
as is then due and payable and unpaid (including interest and other charges, if
any, due thereon through the date of payment in accordance with the applicable
provisions of the Transaction Documents) or perform or cause to be performed
such obligations in accordance with the Transaction Documents. Simultaneously
with the giving of any notice of default to the Manager under the Management
Agreement, Tenant shall give a copy of such notice to the Guarantor. Tenant
shall accept any cure of such default by the Guarantor provided such cure is
completed within the applicable cure period under the Management Agreement.
4. Unenforceability of Guaranteed Obligations, Etc. If the Manager is
for any reason under no legal obligation to discharge any of the Guaranteed
Obligations, or if any other moneys included in the Guaranteed Obligations have
become unrecoverable from the Manager by operation of law or for any other
reason, including, without limitation, the invalidity or irregularity in whole
or in part of any Guaranteed Obligation or of any Transaction Document or any
limitation on the liability of the Manager thereunder or any limitation on the
method or terms of payment thereunder which may now or hereafter be caused or
imposed in any manner whatsoever, the guarantees contained in this Agreement
shall nevertheless remain in full force and effect in accordance with the terms
set forth herein and shall be binding upon the Guarantor to the same extent as
if the Guarantor at all times had been the principal debtor on all such
Guaranteed Obligations.
5. Additional Guarantees. This Agreement shall be in addition to any
other guarantee or other security for the Guaranteed Obligations and it shall
not be prejudiced or rendered unenforceable by the invalidity of any such other
- A-8 -
guarantee or security or by any waiver, amendment, release or modification
thereof.
6. Consents and Waivers, Etc. The Guarantor hereby acknowledges receipt
of correct and complete copies of each of the Transaction Documents and consents
to all of the terms and provisions thereof, as the same may be from time to time
hereafter amended or changed in accordance therewith, and waives, to the extent
the Guarantor lawfully may do so, (a) presentment, demand for payment, and
protest of nonpayment, of any of the Guaranteed Obligations, (b) notice of
acceptance of this Agreement and of diligence, presentment, demand and protest,
(c) notice of any default hereunder and any default, breach or nonperformance or
a Manager Event of Default under any of the Guaranteed Obligations or the
Transaction Documents, except as expressly provided in Section 3, (d) notice of
the terms, time and place of any private or public sale of collateral held as
security for the Guaranteed Obligations, (e) demand for performance or
observance of, and any enforcement of any provision of, or any pursuit or
exhaustion of rights or remedies against the Manager or any other guarantor of
the Guaranteed Obligations, under or pursuant to the Transaction Documents, or
any agreement directly or indirectly relating thereto and any requirements of
diligence or promptness on the part of the holders of the Guaranteed Obligations
in connection therewith, and (f) any and all demands and notices of every kind
and description with respect to the foregoing or which may be required to be
given by any statute or rule of law.
7. No Impairment, Etc. The obligations, covenants, agreements and
duties of the Guarantor under this Agreement shall not be affected or impaired
by any assignment or transfer in whole or in part of any of the Guaranteed
Obligations without notice to the Guarantor, or any waiver by HPT or any holder
of any of the Guaranteed Obligations or by the holders of all of the Guaranteed
Obligations of the performance or observance by the Manager or any other
guarantor of any of the agreements, covenants, terms or conditions contained in
the Guaranteed Obligations or the Transaction Documents or any indulgence in or
the extension of the time for payment by the Manager or any other guarantor of
any amounts payable under or in connection with the Guaranteed Obligations or
the Transaction Documents or any other instrument or agreement relating to the
Guaranteed Obligations or of the time for performance by the Manager or any
other guarantor of any other obligations under or arising out of any of the
foregoing or the extension or renewal thereof, or the modification or amendment
made with the consent of the Guarantor of any duty, agreement or obligation of
the Manager or any other
- A-9 -
guarantor set forth in any of the foregoing, or the voluntary or involuntary
sale or other disposition of all or substantially all the assets of the Manager
or any other guarantor or insolvency, bankruptcy, or other similar proceedings
affecting the Manager or any other guarantor or any assets of the Manager or any
such other guarantor, or the release or discharge of the Manager or any such
other guarantor from the performance or observance of any agreement, covenant,
term or condition contained in any of the foregoing without the consent of the
holders of the Guaranteed Obligations by operation of law.
8. Reimbursement, Subrogation, Etc. The Guarantor hereby covenants and
agrees that the Guarantor will not enforce or otherwise exercise any rights of
reimbursement, subrogation, contribution or other similar rights against the
Manager or any other person with respect to the Guaranteed Obligations prior to
the irrevocable payment in full of all amounts then due and owing but unpaid
under the Management Agreement, and until the Guaranteed Obligations have been
satisfied in full, the Guarantor shall not have any right of subrogation, and
the Guarantor waives any defense it may have based upon any election of remedies
by HPT which destroys the Guarantor's subrogation rights or the Guarantor's
rights to proceed against the Manager for reimbursement, including, without
limitation, any loss of rights the Guarantor may suffer by reason of any rights,
powers or remedies of the Manager in connection with any anti-deficiency laws or
any other laws limiting, qualifying or discharging the indebtedness to HPT.
Until all obligations of the Manager pursuant to the Transaction Documents shall
have been irrevocably paid and satisfied in full, the Guarantor waives any right
to enforce any remedy which HPT now has or may in the future have against the
Manager, any other guarantor or any other person and any benefit of, or any
right to participate in, any security whatsoever now or in the future held by
HPT. Nothing contained in this Section 8 shall limit any of Guarantor's rights
under the Management Agreement.
9. Defeasance; Guaranty Limitations. The Guarantor's obligations under
Section 3 shall terminate upon the first to occur of (a) the date on which the
Guaranteed Obligations have been paid and performed in full and all other
obligations of the Guarantor to HPT under this Agreement have been irrevocably
satisfied in full and (b) the Coverage Date; provided, however, if at any time,
all or any part of any payment applied on account of the Guaranteed Obligations
is or must be rescinded or returned for any reason whatsoever (including,
without limitation, the insolvency, bankruptcy or reorganization of the
Manager), this Agreement, to the extent such payment is or must
- A-10 -
be rescinded or returned, shall be deemed to have continued in existence
notwithstanding any such termination. Notwithstanding anything contained in this
Agreement to the contrary, in no event shall the Guarantor's liability under
Section 3 hereof exceed the sum of Fifty Million Dollars ($50,000,000) less (ii)
the aggregate amount paid by the Guarantor under Section 3 in excess of the
aggregate of any amounts reimbursed to it pursuant to the terms of the
Management Agreement.
10. Notices. (a) Any and all notices, demands, consents, approvals,
offers, elections and other communications required or permitted under this
Agreement shall be deemed adequately given if in writing and the same shall be
delivered either by hand, by telecopier with written acknowledgment of receipt
(provided a copy thereof is sent by Federal Express or similar expedited
commercial carrier for delivery on the next business day), or Federal Express or
similar expedited commercial carrier, addressed to the recipient of the notice,
postpaid and registered or certified with return receipt requested (if by mail),
or with all freight charges prepaid (if by Federal Express or similar carrier).
(b) All notices required or permitted to be sent hereunder shall be
deemed to have been given for all purposes of this Agreement upon the date of
acknowledged receipt, in the case of a notice by telecopier, and, in all other
cases, upon the date of receipt or refusal, except that whenever under this
Agreement a notice is either received on a day which is not a Business Day or is
required to be delivered on or before a specific day which is not a Business
Day, the day of receipt or required delivery shall automatically be extended to
the next Business Day.
(c) All such notices shall be addressed,
if to HPT to:
c/o Hospitality Properties Trust
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇
[Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇]
with a copy to:
▇▇▇▇▇▇▇▇ & Worcester LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Esq.
[Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇]
- A-11 -
if to the Guarantor to:
Intercontinental Hotels Group PLC
▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
ENGLAND
Attn: Company Secretary
Telecopier No. ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
with a copy to:
Intercontinental Hotels Resources Group, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Vice President, Asset Management
[Telecopier No. ▇▇▇-▇▇▇-▇▇▇▇]
(d) By notice given as herein provided, the parties hereto and their
respective successors and assigns shall have the right from time to time and at
any time during the term of this Agreement to change their respective addresses
effective upon receipt by the other parties of such notice and each shall have
the right to specify as its address any other address within the United States
of America.
11. Successors and Assigns. Whenever in this Agreement, any of the
parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party, including without limitation the holders,
from time to time, of the Guaranteed Obligations; and all representations,
warranties, covenants and agreements by or on behalf of the Guarantor which are
contained in this Agreement shall inure to the benefit of HPT's successors and
assigns, including, without limitation, such holders, whether so expressed or
not.
12. Applicable Law. Except as to matters regarding the internal affairs
of HPT and issues of or limitations on any personal liability of the
shareholders and trustees of HPT for obligations of HPT, as to which the laws of
the State of Maryland shall govern, this Agreement and any other instruments
executed and delivered to evidence, complete or perfect the transactions
contemplated hereby shall be interpreted, construed, applied and enforced in
accordance with the laws of New York applicable to contracts between residents
of New York which are to be performed entirely within New York, regardless of
(i) where any such instrument is executed or delivered; or (ii) where any
payment or other performance required by any such
- A-12 -
instrument is made or required to be made; or (iii) where any breach of any
provision of any such instrument occurs, or any cause of action otherwise
accrues; or (iv) where any action or other proceeding is instituted or pending;
or (v) the nationality, citizenship, domicile, principal place of business, or
jurisdiction of organization or domestication of any party; or (vi) whether the
laws of the forum jurisdiction otherwise would apply the laws of a jurisdiction
other than Massachusetts; or (vii) any combination of the foregoing.
All actions and proceedings arising out of or in any way relating to
this Agreement shall be brought, heard, and determined exclusively in an
otherwise appropriate federal or state court located within the State of New
York. Guarantor hereby (i) submits to the exclusive jurisdiction of any New York
federal or state court of otherwise competent jurisdiction for the purpose of
any action or proceeding arising out of or relating to this Agreement and (ii)
voluntarily and irrevocably waives, and agrees not to assert by way of motion,
defense, or otherwise in any such action or proceeding, any claim or defense
that it is not personally subject to the jurisdiction of such a court, that such
a court lacks personal jurisdiction over Guarantor or the matter, that the
action or proceeding has been brought in an inconvenient or improper forum, that
the venue of the action or proceeding is improper, or that this Agreement may
not be enforced in or by such a court. To the maximum extent permitted by
applicable law, Guarantor consents to service of process by registered mail,
return receipt requested, or by any other manner provided by law.
To the maximum extent permitted by applicable law, each of the parties
hereto waives its rights to trial by jury with respect to this Agreement or any
matter arising in connection herewith.
13. Modification of Agreement. No modification or waiver of any
provision of this Agreement, nor any consent to any departure by the Guarantor
therefrom, shall in any event be effective unless the same shall be in writing
and signed by HPT, and such modification, waiver or consent shall be effective
only in the specific instances and for the purpose for which given. No notice to
or demand on the Guarantor in any case shall entitle the Guarantor to any other
or further notice or demand in the same, similar or other circumstances.
14. Waiver of Rights by HPT. Neither any failure nor any delay on HPT's
part in exercising any right, power or privilege under this Agreement shall
operate as a waiver thereof, nor shall a single or partial exercise thereof
preclude any other or
- A-13 -
further exercise, or the exercise of any other right, power or privilege.
15. Severability. In case any one or more of the provisions contained
in this Agreement should be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby, but this Agreement
shall be reformed and construed and enforced to the maximum extent permitted by
applicable law.
16. Entire Contract. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and shall
supersede and take the place of any other instruments purporting to be an
agreement of the parties hereto relating to the subject matter hereof.
17. Headings; Counterparts. Headings in this Agreement are for purposes
of reference only and shall not limit or otherwise affect the meaning hereof.
This Agreement may be executed in any number of counterparts, each of which
shall be an original, but all of which together shall constitute one instrument,
and in pleading or proving any provision of this Agreement, it shall not be
necessary to produce more than one of such counterparts.
18. Remedies Cumulative. No remedy herein conferred upon HPT is
intended to be exclusive of any other remedy, and subject to the limitations set
forth in Section 9 above, each and every remedy shall be cumulative and shall be
in addition to every other remedy given hereunder or now or hereafter existing
at law or in equity or by statute or otherwise.
19. Nonliability of Trustees. THE DECLARATION OF TRUST ESTABLISHING
TRUST, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE
"DECLARATION"), IS DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF
THE STATE OF MARYLAND, PROVIDES THAT, AND THE GUARANTOR HEREBY AGREES THAT, THE
NAME "HOSPITALITY PROPERTIES TRUST" REFERS TO THE TRUSTEES UNDER THE DECLARATION
COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO
TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF TRUST SHALL BE HELD TO ANY
PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM
AGAINST, TRUST. ALL PERSONS DEALING WITH TRUST, IN ANY WAY, SHALL LOOK ONLY TO
THE ASSETS OF TRUST FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY
OBLIGATION.
20. Effective Date. This Agreement shall be of no force or effect
unless and until the Effective Date occurs.
- A-14 -
WITNESS the execution hereof under seal as of the date above first
written.
INTERCONTINENTAL HOTELS GROUP PLC
By:___________________________
Its:_______________________
By:___________________________
Its:_______________________
ACKNOWLEDGED AND AGREED:
HPT TRS IHG-1, INC.
By:_________________________
Its:_____________________
HOSPITALITY PROPERTIES TRUST
By:_________________________
Its:_____________________
- A-15 -
EXHIBIT B
NEW STAYBRIDGE GUARANTY
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT (this "Agreement") is made and given as of
________ __, 20__, by INTERCONTINENTAL HOTELS GROUP PLC, a corporation organized
and existing under the laws of England and Wales (the "Guarantor"), for the
benefit of HPT TRS IHG-1, INC., a Maryland corporation (together with its
successors and assigns, the "Tenant"), and HOSPITALITY PROPERTIES TRUST, a
Maryland real estate investment trust (together with its successors and assigns,
"Trust"; and Trust together with the Tenant, "HPT").
W I T N E S S E T H :
WHEREAS, on January __, 2005, the Guarantor delivered to HPT that
certain Amended and Restated Consolidated Guaranty Agreement (the "Consolidated
Guaranty"); and
WHEREAS, the New Portfolio Coverage Date (as such term is defined in
the Consolidated Guaranty) has occurred and the Guarantor wishes to terminate
its obligations the Consolidated Guaranty in accordance with Section 10 of the
Consolidated Guaranty; and
WHEREAS, Section 10 of the Consolidated Guaranty requires, among other
things, that the Guarantor deliver this Guaranty Agreement to HPT in order to
terminate its obligations under the Consolidated Guaranty as aforesaid; and
WHEREAS, the termination of its obligations under the Consolidated
Guaranty as aforesaid constitutes a direct material benefit to the Guarantor;
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the mutual receipt and legal sufficiency of which
are hereby acknowledged, the parties hereto hereby agree as follows:
1. Certain Terms. Capitalized terms used and not otherwise defined in
this Agreement shall have the meanings
ascribed to such terms in the Management Agreement. The following terms as used
in this Agreement shall have the meanings set forth below:
"Accounting Principles" shall mean generally accepted accounting
principles, as adopted in the United States of America, consistently applied or,
if the Guarantor's principal place of business is the United Kingdom, generally
accepted accounting principles, as adopted in the United Kingdom, consistently
applied.
"Collateral Agency Agreement" shall mean a written agreement, in form
and substance reasonably acceptable to HPT, among HPT, the Guarantor and the
Collateral Agent pursuant to which the Collateral Agent shall agree to hold any
cash delivered to such Collateral Agent pursuant to the terms of this Agreement
as collateral agent on behalf of HPT, as the same may be amended, restated,
supplemented or otherwise modified from time to time with the consent of the
parties thereto. Among other things, the Collateral Agency Agreement shall
provide that (a) the Collateral Agent shall look solely to the Guarantor for any
amounts owed to the Collateral Agent in connection with such agreement, (b) the
Collateral Agent shall not offset any amount owed to the Collateral Agent
against the cash delivered to it pursuant to the Collateral Agency Agreement and
this Agreement, (c) the Collateral Agent shall hold such cash as trust funds and
not commingle such cash with any assets of the Collateral Agent and (d) HPT
shall be entitled to apply any cash collateral held by the Collateral Agent to
the overdue obligations of the Guarantor hereunder in such order and at such
times as HPT may determine in its sole judgment.
"Collateral Agent" shall mean a bank or other financial institution
reasonably acceptable to HPT having a rating of not less than BBB-/Baa3 rating
from the Rating Agencies, which bank or other financial institution is the
collateral agent under the Collateral Agency Agreement as such collateral agent
may be replaced in accordance with the terms of the Collateral Agency Agreement.
"Coverage Date" shall mean the date which is the day after the second
(2nd) consecutive calendar year for which the Priority Coverage Ratio is equal
to or exceeds 1.3.
"Guaranteed Obligations" shall mean the payment to Tenant of (a) all of
the Owner's Priority as and when due under the Management Agreement determined
without respect to Gross Revenue or Operating Profits and (b) any and all
liquidated damages due to Tenant under the Management Agreement.
- B-2 -
"Management Agreement" shall mean [that certain Amended and Restated
Management Agreement, dated as of January __. 2005], between TRS1 and Manager,
with respect to certain hotels being operated under the "Staybridge" brand]
[that certain Management Agreement, dated as of July 1, 2003, between TRS1 and
Manager] as the same may be amended, modified, supplemented, or otherwise
altered from time to time.
"Manager" shall mean Intercontinental Hotels Group Resources, Inc.
"Outstanding Balance" shall mean, from time to time, the Seventy
Million Dollars ($70,000,000) less the excess of the aggregate amount paid by
the Guarantor under Section 3 hereof over the aggregate amount reimbursed to the
Guarantor pursuant to Section 10.1(l) of the Management Agreement.
"Provide Collateral" or "Provided Collateral" shall mean:
(a) delivery to HPT of (i) a Satisfactory Letter of Credit or (ii) cash
in an amount equal to the then Outstanding Balance; or
(b) the deposit of cash equal to the then Outstanding Balance with the
Collateral Agent to be held by the Collateral Agent in accordance with the
Collateral Agency Agreement provided:(i) the Collateral Agency Agreement has
been executed and delivered by the parties thereto; (ii) HPT has a perfected
first priority security interest in any cash delivered to the Collateral Agent;
(iii) HPT has received favorable opinions of counsel, in form and substance
reasonably satisfactory to HPT, with respect to such perfected first priority
interest, the valid existence and good standing of the other parties to the
Collateral Agency Agreement, the due execution and delivery thereof by such
other parties, the enforceability of the Collateral Agency Agreement against
such parties, and that any cash held by the Collateral Agent pursuant to the
Collateral Agency Agreement shall not be "property of the estate" of Collateral
Agent should any event described in Sections 17.1(a), (b) or (c) of the
Management Agreement shall occur with respect to the Collateral Agent; or
(c) delivery to HPT of other collateral satisfactory to HPT in its good
faith discretion to secure the Guaranteed Obligations;
provided, however, the Guarantor shall not be deemed to have Provided Collateral
if at any time the Outstanding Balance exceeds the sum of (i) the then remaining
balance drawable under
- B-3 -
the Satisfactory Letter of Credit or the balance of the cash deposited by the
Guarantor hereunder, plus (ii) proceeds of any Satisfactory Letter of Credit or
cash deposited hereunder, in either case, applied to the Guaranteed Obligations.
"Priority Coverage Ratio" shall mean, for any period, the ratio of (a)
the excess of Gross Revenue for such period over the sum of the amounts
distributed or applied for such period pursuant to Sections 10.1(a), (b), (e),
(g), (h), (i), (k) and (l) of the Management Agreement, to (b) the sum for such
period of Owner's Priority and Owner's Percentage Priority.
"Rating Agencies" shall mean, collectively, Standard's & Poor's Rating
Services or its successor and ▇▇▇▇▇'▇ Investor Services, Inc. or its successors;
provided, however, if the Rating Agencies (i) cease operations without
successors or (ii) cease to issue credit ratings, "Rating Agencies" shall mean a
nationally recognized organization periodically issuing ratings of the financial
strength and/or credit of United States domestic and international banking
institutions reasonably agreed to by HPT and the Guarantor.
"Reorganization" shall mean any merger, consolidation, reorganization,
change of control or any transaction pursuant to which the Guarantor shall be or
become a Subsidiary of any other Person.
"Satisfactory Letter of Credit" shall mean a clean irrevocable letter
of credit in form and substance reasonably satisfactory to HPT in an amount
equal to the Outstanding Balance issued by a bank with a credit rating of not
less than A2/A (or, if after the date hereof the system of ratings used by the
Rating Agencies changes in a material way, their then equivalents of such credit
rating in HPT's reasonable judgment) from the Rating Agencies, having an
expiration date of not earlier than one year after the date on which it was
issued and which permits for partial draws.
"Substitute Guarantor" shall mean a Person who assumes the Guarantor's
obligations hereunder in accordance with the terms of Section 2.7 below and is
either (a) a Person who satisfies the Rating Agencies' requirements for a single
purpose bankruptcy remote entity who has Provided Collateral or (b) a Person(s)
with (i) a tangible net worth determined in accordance with the Accounting
Principles not less than Seven Hundred Fifty Million Dollars ($750,000,000) and
(ii) unencumbered assets with a fair market value of not less than One Hundred
Million Dollars (exclusive of any note, instrument, security or claim issued by,
- B-4 -
against or in any way dependent on the credit of, an Affiliate of Guarantor).
2. Representations and Covenants. The Guarantor represents, warrants,
covenants and agrees that:
2.1 Validity of Agreement. The Guarantor has duly and validly
executed and delivered this Agreement; this Agreement constitutes the legal,
valid and binding obligation of the Guarantor, enforceable against the Guarantor
in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws of general
application affecting the rights and remedies of creditors; and the execution,
delivery and performance of this Agreement have been duly authorized by all
requisite action of the Guarantor and such execution, delivery and performance
by the Guarantor will not result in any breach of the terms, conditions or
provisions of, or conflict with or constitute a default under, or result in the
creation of any lien, charge or encumbrance upon any of the property or assets
of the Guarantor pursuant to the terms of, any indenture, mortgage, deed of
trust, note, other evidence of indebtedness, agreement or other instrument to
which the Guarantor is a party or by which the Guarantor or any property or
assets of the Guarantor is bound, or violate any provision of law applicable to
the Guarantor, or any order, writ, injunction, judgement or decree of any court
applicable to the Guarantor or any order or other public regulation of any
governmental commission, bureau or administrative agency applicable to the
Guarantor.
2.2 Payment of Expenses. The Guarantor agrees, as principal
obligor and not as guarantor only, to pay to HPT forthwith, upon demand, in
immediately available Federal funds, all costs and expenses (including court
costs and reasonable legal expenses) incurred or expended by HPT in connection
with the enforcement of this Agreement, together with interest at the Interest
Rate on amounts recoverable under this Agreement from the time such amounts
become due until payment.
2.3 Reports. The Guarantor shall timely deliver to HPT the
Consolidated Financials required under the Management Agreement and otherwise
comply with the terms of the Management Agreement applicable to it.
2.4 Financial Condition of Guarantor; Status of Guarantor. So long
as the Guarantor's obligations under Section 3 below are outstanding, unless the
Guarantor shall have Provided Collateral to secure its obligations hereunder:
- B-5 -
(a) The Guarantor shall at all times maintain a tangible net worth
determined in accordance with the Accounting Principles in an amount not less
than Five Hundred Million Dollars ($500,000,000) or if there has been a
Reorganization, or if the Guarantor is not the originally named Guarantor, Seven
Hundred Fifty Million Dollars ($750,000,000); and
(b) The Guarantor shall not engage in any Reorganization unless
following such Reorganization it has (i) a tangible net worth determined in
accordance with the Accounting Principles in an amount not less than Seven
Hundred Fifty Million Dollars ($750,000,000) and (ii) unencumbered assets with a
fair market value of not less than One Hundred Million Dollars ($100,000,000)
(exclusive of any note, instrument, security or claim issued by, against or in
any way dependent on the credit of, an Affiliate of Guarantor).
2.5 Security. Upon the termination of the Guarantor's obligations
under Section 3 or if the excess of aggregate amount paid by the Guarantor under
Section 3 over the aggregate amount reimbursed to it pursuant to Section 10.1(l)
of the Management Agreement equals not less than Fifty Million dollars
($50,000,000), HPT will return to the Guarantor any Satisfactory Letter of
Credit previously delivered to HPT or any unapplied cash collateral then being
held by HPT hereunder and shall direct the Collateral Agent to return any cash
being held by it under the Collateral Agency Agreement to the Guarantor. HPT
shall be entitled to draw upon any Satisfactory Letter of Credit delivered to it
(a) for the full amount thereof if at any time there is less than thirty (30)
days until the expiry date of such Satisfactory Letter of Credit; (b) for the
full amount thereof if the bank that issued such Satisfactory Letter of Credit
shall not have a credit rating of at least A/A2 (or, if after the date hereof
the system of ratings used by the Rating Agencies changes in a material way,
their then equivalents in HPT's reasonable judgment) from the Rating Agencies
and such satisfactory Letter of Credit shall not have been replaced within
thirty (30) days with a new Satisfactory Letter of Credit delivered to HPT; or
(c) to the extent and in the amounts then due and payable hereunder, if the
Guarantor shall fail to pay or perform any of its obligations under this
Guaranty in accordance with the terms hereof. HPT shall be entitled to apply any
cash collateral held by it or the Collateral Agent to the overdue obligations of
the Guarantor hereunder in such order and at such times as HPT may determine in
its sole judgment. Any cash collateral held by HPT shall not be commingled with
its other funds, and shall be invested, at the Guarantor's risk, in interest
bearing investments reasonably acceptable to the
- B-6 -
Guarantor. Any interest on such cash collateral, and any losses in such
investments, shall belong to IHG.
2.6 Legal Existence. The Guarantor shall do or cause to be done
all things necessary to preserve and keep in full force and effect its corporate
existence. The Guarantor has appointed attorneys ▇▇▇▇▇▇ & Bird LLP, having an
address at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attn:
Managing Partner as its agent for service of process. Managing Partner as its
agent for service of process. The Guarantor acknowledges and agrees that service
of process on such agent shall constitute service of process on Guarantor with
respect to any and all claims hereunder or under any other Transaction Document.
2.7 Substitute Guarantor. The then Guarantor (the "Departing
Guarantor") shall be released from obligations under Section 3 hereof on the
following terms and conditions:
(a) a Substitute Guarantor shall assume pursuant to a written
instrument satisfactory to HPT all of the Guarantor's obligations hereunder; and
(b) HPT shall receive an opinion of counsel satisfactory to HPT with
respect to, among other things, the existence and good standing of the
Substitute Guarantor and the due execution, delivery and enforceability of such
assumption.
Upon the satisfaction of the foregoing conditions and the expiration of
all applicable preference or similar periods, HPT shall deliver a release to the
Departing Guarantor of its obligations hereunder and the Substitute Guarantor
shall be deemed the "Guarantor" hereunder. Further, if the Substitute Guarantor
has Provided Collateral or has (i) a tangible net worth determined in accordance
with the Accounting Principles of not less than Seven Hundred Fifty Million
Dollars ($750,000,000) and (ii) unencumbered assets with a fair market value of
not less than One Hundred Million Dollars (exclusive of any note, instrument,
security or claim issued by, against or in any way dependent on the credit of,
an Affiliate of Guarantor), HPT shall return to the Departing Guarantor any
letter of credit or cash delivered by the Departing Guarantor and held by HPT
hereunder and shall direct the Collateral Agent to return to the Departing
Guarantor any cash delivered by the Departing Guarantor and held by such
Collateral Agent pursuant to the terms of the Collateral Agency Agreement.
- B-7 -
3. Guarantee.
(a) The Guarantor hereby unconditionally guarantees that the Guaranteed
Obligations which become due and payable during the term of the Management
Agreement shall be paid in full when due and payable subject to any applicable
cure periods, whether upon demand, at the stated or accelerated maturity thereof
or upon any mandatory or voluntary prepayment pursuant to any Transaction
Document, or otherwise.
(b) This guarantee is a guarantee of payment and not of collectibility
and is absolute and in no way conditional or contingent. In case any part of the
Guaranteed Obligations shall not have been paid when due and payable or
performed at the time performance is required, subject to any applicable cure
periods, the Guarantor shall, pay or cause to be paid to HPT the amount thereof
as is then due and payable and unpaid (including interest and other charges, if
any, due thereon through the date of payment in accordance with the applicable
provisions of the Transaction Documents) or perform or cause to be performed
such obligations in accordance with the Transaction Documents. Simultaneously
with the giving of any notice of default to the Manager under the Management
Agreement, Tenant shall give a copy of such notice to the Guarantor. Tenant
shall accept any cure of such default by the Guarantor provided such cure is
completed within the applicable cure period under the Management Agreement.
4. Unenforceability of Guaranteed Obligations, Etc. If the Manager is
for any reason under no legal obligation to discharge any of the Guaranteed
Obligations, or if any other moneys included in the Guaranteed Obligations have
become unrecoverable from the Manager by operation of law or for any other
reason, including, without limitation, the invalidity or irregularity in whole
or in part of any Guaranteed Obligation or of any Transaction Document or any
limitation on the liability of the Manager thereunder or any limitation on the
method or terms of payment thereunder which may now or hereafter be caused or
imposed in any manner whatsoever, the guarantees contained in this Agreement
shall nevertheless remain in full force and effect in accordance with the terms
set forth herein and shall be binding upon the Guarantor to the same extent as
if the Guarantor at all times had been the principal debtor on all such
Guaranteed Obligations.
5. Additional Guarantees. This Agreement shall be in addition to any
other guarantee or other security for the Guaranteed Obligations and it shall
not be prejudiced or rendered unenforceable by the invalidity of any such other
- B-8 -
guarantee or security or by any waiver, amendment, release or modification
thereof.
6. Consents and Waivers, Etc. The Guarantor hereby acknowledges receipt
of correct and complete copies of each of the Transaction Documents and consents
to all of the terms and provisions thereof, as the same may be from time to time
hereafter amended or changed in accordance therewith, and waives, to the extent
the Guarantor lawfully may do so, (a) presentment, demand for payment, and
protest of nonpayment, of any of the Guaranteed Obligations, (b) notice of
acceptance of this Agreement and of diligence, presentment, demand and protest,
(c) notice of any default hereunder and any default, breach or nonperformance or
a Manager Event of Default under any of the Guaranteed Obligations or the
Transaction Documents, except as expressly provided in Section 3, (d) notice of
the terms, time and place of any private or public sale of collateral held as
security for the Guaranteed Obligations, (e) demand for performance or
observance of, and any enforcement of any provision of, or any pursuit or
exhaustion of rights or remedies against the Manager or any other guarantor of
the Guaranteed Obligations, under or pursuant to the Transaction Documents, or
any agreement directly or indirectly relating thereto and any requirements of
diligence or promptness on the part of the holders of the Guaranteed Obligations
in connection therewith, and (f) any and all demands and notices of every kind
and description with respect to the foregoing or which may be required to be
given by any statute or rule of law.
7. No Impairment, Etc. The obligations, covenants, agreements and
duties of the Guarantor under this Agreement shall not be affected or impaired
by any assignment or transfer in whole or in part of any of the Guaranteed
Obligations without notice to the Guarantor, or any waiver by HPT or any holder
of any of the Guaranteed Obligations or by the holders of all of the Guaranteed
Obligations of the performance or observance by the Manager or any other
guarantor of any of the agreements, covenants, terms or conditions contained in
the Guaranteed Obligations or the Transaction Documents or any indulgence in or
the extension of the time for payment by the Manager or any other guarantor of
any amounts payable under or in connection with the Guaranteed Obligations or
the Transaction Documents or any other instrument or agreement relating to the
Guaranteed Obligations or of the time for performance by the Manager or any
other guarantor of any other obligations under or arising out of any of the
foregoing or the extension or renewal thereof, or the modification or amendment
made with the consent of the Guarantor of any duty, agreement or obligation of
the Manager or any other
- B-9 -
guarantor set forth in any of the foregoing, or the voluntary or involuntary
sale or other disposition of all or substantially all the assets of the Manager
or any other guarantor or insolvency, bankruptcy, or other similar proceedings
affecting the Manager or any other guarantor or any assets of the Manager or any
such other guarantor, or the release or discharge of the Manager or any such
other guarantor from the performance or observance of any agreement, covenant,
term or condition contained in any of the foregoing without the consent of the
holders of the Guaranteed Obligations by operation of law.
8. Reimbursement, Subrogation, Etc. The Guarantor hereby covenants and
agrees that the Guarantor will not enforce or otherwise exercise any rights of
reimbursement, subrogation, contribution or other similar rights against the
Manager or any other person with respect to the Guaranteed Obligations prior to
the irrevocable payment in full of all amounts then due and owing but unpaid
under the Management Agreement, and until the Guaranteed Obligations have been
satisfied in full, the Guarantor shall not have any right of subrogation, and
the Guarantor waives any defense it may have based upon any election of remedies
by HPT which destroys the Guarantor's subrogation rights or the Guarantor's
rights to proceed against the Manager for reimbursement, including, without
limitation, any loss of rights the Guarantor may suffer by reason of any rights,
powers or remedies of the Manager in connection with any anti-deficiency laws or
any other laws limiting, qualifying or discharging the indebtedness to HPT.
Until all obligations of the Manager pursuant to the Transaction Documents shall
have been irrevocably paid and satisfied in full, the Guarantor waives any right
to enforce any remedy which HPT now has or may in the future have against the
Manager, any other guarantor or any other person and any benefit of, or any
right to participate in, any security whatsoever now or in the future held by
HPT. Nothing contained in this Section 8 shall limit the Guarantor's rights
under Section 10.1(l) of the Management Agreement.
9. Defeasance; Guaranty Limitations. The Guarantor's obligations under
Section 3 shall terminate upon the first to occur of (a) the date on which the
Guaranteed Obligations have been paid and performed in full and all other
obligations of the Guarantor to HPT under this Agreement have been irrevocably
satisfied in full and (b) the Coverage Date; provided, however, if at any time,
all or any part of any payment applied on account of the Guaranteed Obligations
is or must be rescinded or returned for any reason whatsoever (including,
without limitation, the insolvency, bankruptcy or reorganization of the
Manager), this Agreement, to the extent such payment is or must
- B-10 -
be rescinded or returned, shall be deemed to have continued in existence
notwithstanding any such termination. Notwithstanding anything contained in this
Agreement to the contrary, the Guarantor's liability under Section 3 hereof in
the aggregate shall not exceed (a) for the period ending on December 31, 2005,
(i) Fifty Million Dollars ($50,000,000) with respect to the portion of Owner's
Priority attributable to the Original Hotels and (ii) an additional Sixteen
Million Dollars ($16,000,000) with respect to the portion of Owner's Priority
attributable to the Expansion Hotels, and (b) thereafter, Seventy Million
Dollars ($70,000,000) with respect to the entire amount of Owner's Priority;
provided, however, such liability shall be reduced by any advances made by
Manager under Section 10.3 of the Management Agreement which Manager elects to
be deemed advances hereunder pursuant to said Section and such liability shall
be increased by any reimbursements made to the Guarantor pursuant to Section
10.1(l) of the Management Agreement.
10. Notices. (a) Any and all notices, demands, consents, approvals,
offers, elections and other communications required or permitted under this
Agreement shall be deemed adequately given if in writing and the same shall be
delivered either by hand, by telecopier with written acknowledgment of receipt
(provided a copy thereof is sent by Federal Express or similar expedited
commercial carrier for delivery on the next business day), or Federal Express or
similar expedited commercial carrier, addressed to the recipient of the notice,
postpaid and registered or certified with return receipt requested (if by mail),
or with all freight charges prepaid (if by Federal Express or similar carrier).
(b) All notices required or permitted to be sent hereunder shall be
deemed to have been given for all purposes of this Agreement upon the date of
acknowledged receipt, in the case of a notice by telecopier, and, in all other
cases, upon the date of receipt or refusal, except that whenever under this
Agreement a notice is either received on a day which is not a Business Day or is
required to be delivered on or before a specific day which is not a Business
Day, the day of receipt or required delivery shall automatically be extended to
the next Business Day.
- B-11 -
(c) All such notices shall be addressed,
if to HPT to:
c/o Hospitality Properties Trust
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇
[Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇]
with a copy to:
▇▇▇▇▇▇▇▇ & Worcester LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Esq.
[Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇]
if to the Guarantor to:
Intercontinental Hotels Group PLC
▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
ENGLAND
Attn: Company Secretary
Telecopier No. ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
with a copy to:
Intercontinental Hotels Group, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Vice President, Asset Management
[Telecopier No. ▇▇▇-▇▇▇-▇▇▇▇]
(d) By notice given as herein provided, the parties hereto and their
respective successors and assigns shall have the right from time to time and at
any time during the term of this Agreement to change their respective addresses
effective upon receipt by the other parties of such notice and each shall have
the right to specify as its address any other address within the United States
of America.
11. Successors and Assigns. Whenever in this Agreement, any of the
parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party, including without limitation the holders,
from time to time, of
- B-12 -
the Guaranteed Obligations; and all representations, warranties, covenants and
agreements by or on behalf of the Guarantor which are contained in this
Agreement shall inure to the benefit of HPT's successors and assigns, including,
without limitation, such holders, whether so expressed or not.
12. Applicable Law. Except as to matters regarding the internal affairs
of HPT and issues of or limitations on any personal liability of the
shareholders and trustees of HPT for obligations of HPT, as to which the laws of
the State of Maryland shall govern, this Agreement and any other instruments
executed and delivered to evidence, complete or perfect the transactions
contemplated hereby shall be interpreted, construed, applied and enforced in
accordance with the laws of New York applicable to contracts between residents
of New York which are to be performed entirely within New York, regardless of
(i) where any such instrument is executed or delivered; or (ii) where any
payment or other performance required by any such instrument is made or required
to be made; or (iii) where any breach of any provision of any such instrument
occurs, or any cause of action otherwise accrues; or (iv) where any action or
other proceeding is instituted or pending; or (v) the nationality, citizenship,
domicile, principal place of business, or jurisdiction of organization or
domestication of any party; or (vi) whether the laws of the forum jurisdiction
otherwise would apply the laws of a jurisdiction other than Massachusetts; or
(vii) any combination of the foregoing.
All actions and proceedings arising out of or in any way relating to
this Agreement shall be brought, heard, and determined exclusively in an
otherwise appropriate federal or state court located within the State of New
York. Guarantor hereby (i) submits to the exclusive jurisdiction of any New York
federal or state court of otherwise competent jurisdiction for the purpose of
any action or proceeding arising out of or relating to this Agreement and (ii)
voluntarily and irrevocably waives, and agrees not to assert by way of motion,
defense, or otherwise in any such action or proceeding, any claim or defense
that it is not personally subject to the jurisdiction of such a court, that such
a court lacks personal jurisdiction over Guarantor or the matter, that the
action or proceeding has been brought in an inconvenient or improper forum, that
the venue of the action or proceeding is improper, or that this Agreement may
not be enforced in or by such a court. To the maximum extent permitted by
applicable law, Guarantor consents to service of process by registered mail,
return receipt requested, or by any other manner provided by law.
- B-13 -
To the maximum extent permitted by applicable law, each of the parties
hereto waives its rights to trial by jury with respect to this Agreement or any
matter arising in connection herewith.
13. Modification of Agreement. No modification or waiver of any
provision of this Agreement, nor any consent to any departure by the Guarantor
therefrom, shall in any event be effective unless the same shall be in writing
and signed by HPT, and such modification, waiver or consent shall be effective
only in the specific instances and for the purpose for which given. No notice to
or demand on the Guarantor in any case shall entitle the Guarantor to any other
or further notice or demand in the same, similar or other circumstances.
14. Waiver of Rights by HPT. Neither any failure nor any delay on HPT's
part in exercising any right, power or privilege under this Agreement shall
operate as a waiver thereof, nor shall a single or partial exercise thereof
preclude any other or further exercise, or the exercise of any other right,
power or privilege.
15. Severability. In case any one or more of the provisions contained
in this Agreement should be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby, but this Agreement
shall be reformed and construed and enforced to the maximum extent permitted by
applicable law.
16. Entire Contract. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and shall
supersede and take the place of any other instruments purporting to be an
agreement of the parties hereto relating to the subject matter hereof.
17. Headings; Counterparts. Headings in this Agreement are for purposes
of reference only and shall not limit or otherwise affect the meaning hereof.
This Agreement may be executed in any number of counterparts, each of which
shall be an original, but all of which together shall constitute one instrument,
and in pleading or proving any provision of this Agreement, it shall not be
necessary to produce more than one of such counterparts.
18. Remedies Cumulative. No remedy herein conferred upon HPT is
intended to be exclusive of any other remedy, and subject to the limitations set
forth in Section 9 above, each and every remedy shall be cumulative and shall be
in addition to every
- B-14 -
other remedy given hereunder or now or hereafter existing at law or in equity or
by statute or otherwise.
19. Nonliability of Trustees. THE DECLARATION OF TRUST ESTABLISHING
TRUST, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE
"DECLARATION"), IS DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF
THE STATE OF MARYLAND, PROVIDES THAT, AND THE GUARANTOR HEREBY AGREES THAT, THE
NAME "HOSPITALITY PROPERTIES TRUST" REFERS TO THE TRUSTEES UNDER THE DECLARATION
COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO
TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF TRUST SHALL BE HELD TO ANY
PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM
AGAINST, TRUST. ALL PERSONS DEALING WITH TRUST, IN ANY WAY, SHALL LOOK ONLY TO
THE ASSETS OF TRUST FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY
OBLIGATION.
- B-15 -
WITNESS the execution hereof under seal as of the date above first
written.
INTERCONTINENTAL HOTELS GROUP PLC
By:___________________________
Its:_______________________
ACKNOWLEDGED AND AGREED:
HPT TRS IHG-1, INC.
By:_________________________
Its:_____________________
HOSPITALITY PROPERTIES TRUST
By:_________________________
Its:_____________________
HOSPITALITY PROPERTIES TRUST
By:_________________________
Its:_____________________
- B-16 -
EXHIBIT P
---------
MANAGEMENT AGREEMENT
(See attached)
MANAGEMENT AGREEMENT
BY AND
BETWEEN
HPT TRS IHG-2, INC.
AND
IHG MANAGEMENT (MARYLAND) LLC
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS........................................................1
1.1 "8.1(c) Statement"..............................................1
1.2 "Accounting Principles".........................................1
1.3 "Affiliate".....................................................1
1.4 "Agreed Upon Procedure Letter"..................................2
1.5 "Arbitration"...................................................2
1.6 "Authorized Mortgage"...........................................2
1.7 "Award".........................................................3
1.8 "Bank Accounts".................................................3
1.9 "Base Management Fee"...........................................3
1.10 "Base Priority Amount".........................................3
1.11 "Base Year"....................................................3
1.12 "Brand"........................................................4
1.13 "Brand Standards"..............................................4
1.14 "Buildings"....................................................4
1.15 "Business Day".................................................5
1.16 "Canadian Consumer Price Index"................................5
1.17 "Canadian Hotel"...............................................5
1.18 "Canadian Manager".............................................5
1.19 "Canadian Services"............................................5
1.20 "Candlewood Management Agreement"..............................5
1.21 "Capital Replacements".........................................5
1.22 "Capital Replacements Budget"..................................5
1.23 "Closing"......................................................5
1.24 "Code".........................................................5
1.25 "Collateral Agency Agreement"..................................6
1.26 "Collateral Agent".............................................6
1.27 "Competitor"...................................................6
1.28 "Condemnation".................................................6
1.29 "Condemnor"....................................................6
1.30 "Consolidated Financials"......................................6
1.31 "Consumer Price Index".........................................6
1.32 "Controlling Interest".........................................6
1.33 "Crowne Plaza Hotels"..........................................6
1.34 "Debt Service Coverage Ratio"..................................7
1.35 "Disbursement Rate"............................................7
1.36 "Effective Date"...............................................7
1.37 "Environmental Notice".........................................7
1.38 "Expiration Date"..............................................7
1.39 "Fiscal Month".................................................7
1.40 "Fiscal Year"..................................................7
1.41 "Furniture, Fixtures and Equipment" or "FF&E"..................7
1.42 "Government Agencies"..........................................8
1.43 "Gross Revenues"...............................................8
1.46 "Guaranty".....................................................9
1.47 "Hazardous Substances".........................................9
1.48 "Holiday Inn Hotels"..........................................10
1.49 "Hotel".......................................................10
1.50 "HPT".........................................................10
1.51 "HPT Group"...................................................10
1.52 "IHG".........................................................10
1.53 "Incentive Management Fee"....................................10
1.54 "Initial Term"................................................10
1.55 "Initial Working Capital".....................................10
1.56 "Insurance Requirements"......................................10
1.57 "Intellectual Property........................................11
1.58 "InterContinental Hotels".....................................11
1.59 "Interest Rate"...............................................11
1.60 "Lease".......................................................11
1.61 "Legal Requirements"..........................................11
1.62 "Management Fees".............................................11
1.63 "Manager".....................................................11
1.64 "Manager Default".............................................11
1.65 "Manager Event of Default"....................................12
1.66 "Material Repair".............................................12
1.67 "New Management Agreement"....................................12
1.68 "NOI".........................................................12
1.69 "Non-Economic Hotel"..........................................12
1.70 "Offer".......................................................12
1.71 "Officer's Certificate".......................................12
1.72 "Operating Costs".............................................13
1.73 "Operating Equipment".........................................14
1.74 "Operating Profit"............................................14
1.75 "Operating Standards".........................................15
1.76 "Operating Supplies"..........................................15
1.77 "Original Candlewood Guaranty"................................15
1.78 "Original Staybridge Guaranty"................................15
1.79 "Other Documents".............................................15
1.80 "Owner".......................................................15
1.81 "Owner's First Priority"......................................15
1.82 "Owner's First Priority Adjustment Rate"......................15
1.83 "Owner's Fixed Priority"......................................15
1.84 "Owner's Percentage Priority".................................16
1.85 "Owner's Second Priority".....................................16
1.86 "Parent"......................................................16
1.87 "Person"......................................................16
1.88 "Pledged Hotels"..............................................16
1.89 "Pooled FF&E Hotels"..........................................16
1.90 "PR Guaranty".................................................16
1.91 "PR Indemnity"................................................17
1.92 "PR Lease"....................................................17
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1.93 "PR Property".................................................17
1.94 "PR Stock Agreement"..........................................17
1.95 "PR Tenant"...................................................17
1.96 "Principal Documents".........................................17
1.97 "Priority Coverage Ratio".....................................17
1.98 "Purchase Agreement"..........................................17
1.99 "Purchaser"...................................................17
1.100 "Renewal Terms"..............................................18
1.101 "Repairs"....................................................18
1.102 "Replacement Property".......................................18
1.103 "Reservation System".........................................18
1.104 "Reserve Account"............................................18
1.105 "Reserve Percentage".........................................18
1.106 "Residual Distribution"......................................18
1.107 "Restricted Area"............................................18
1.108 "Restricted Period"..........................................18
1.109 "Rooms Revenue"..............................................19
1.110 "RST"........................................................19
1.111 "Sales Tax"..................................................19
1.112 "Severance Date".............................................19
1.113 "Sites"......................................................19
1.114 "Specially Designated or Blocked Person".....................19
1.115 "Staybridge Hotels"..........................................19
1.116 "Staybridge Management Agreement"............................19
1.117 "Subsidiary".................................................19
1.118 "Substitute Tenant"..........................................20
1.119 "Successor Purchaser"........................................20
1.120 "System Fees"................................................20
1.121 "System Marks"...............................................20
1.122 "Term".......................................................20
1.123 "Transaction Documents" shall................................20
1.124 "Transferred Hotel"..........................................20
1.125 "Uniform System of Accounts".................................20
1.126 "Ultimate Parent"............................................20
1.127 "Unsuitable for Its Permitted Use"...........................20
1.128 "Working Capital"............................................21
1.129 "Yearly Budget"..............................................21
ARTICLE 2 SCOPE OF AGREEMENT................................................21
2.1 Engagement of Manager..........................................21
2.2 Additional Services............................................24
2.3 Use of Hotels..................................................24
2.4 Right to Inspect...............................................24
2.5 No Right of Offset.............................................24
2.6 Condition of the Hotels........................................25
2.7 Non-Economic Hotels............................................25
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2.8 No Early Termination of Manager; Nature of Relationship etc....27
ARTICLE 3 TERM AND RENEWALS.................................................28
3.1 Term. 28
3.2 Renewal Term...................................................28
3.3 Owner's Termination Right at End of Term.......................29
ARTICLE 4 TITLE TO HOTEL....................................................29
4.1 Covenants of Title.............................................29
4.2 Non-Disturbance................................................29
4.3 Financing......................................................30
4.4 Sale of a Hotel to an Affiliate................................33
4.5 Sale of All the Hotels.........................................33
4.6 The Lease......................................................33
4.7 Restricted Sale................................................33
ARTICLE 5 REQUIRED FUNDS....................................................33
5.1 Working Capital................................................33
5.2 Reserve Account................................................34
5.3 Additional Requirements for Reserve............................37
5.4 Ownership of Replacements......................................38
5.5 No Additional Contributions....................................38
5.6 Pooled Reserves................................................38
ARTICLE 6 BRAND STANDARDS AND MANAGER'S CONTROL.............................38
6.1 Brand Standards................................................38
6.2 Manager's Control..............................................38
6.3 Arbitration....................................................39
ARTICLE 7 OPERATION OF THE HOTEL............................................39
7.1 Permits.......................................................39
7.2 Equipment and Supplies........................................39
7.3 Personnel.....................................................40
7.4 Sales, Marketing and Advertising..............................42
7.5 Reservation and Communication Services........................42
7.6 Maintenance and Repairs.......................................43
7.7 Material Repairs..............................................44
7.8 Liens; Credit.................................................45
7.9 Real Estate and Personal Property Taxes.......................45
7.10 GST and RST...................................................46
7.11 Contest.......................................................46
7.12 Privacy.......................................................46
ARTICLE 8 FISCAL MATTERS....................................................46
8.1 Accounting Matters.............................................46
8.2 Yearly Budgets.................................................49
8.3 Bank Accounts..................................................50
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8.4 Consolidated Financials........................................51
ARTICLE 9 FEES TO MANAGER...................................................51
9.1 Management Fees................................................51
9.2 System Fees....................................................52
ARTICLE 10 DISBURSEMENTS....................................................54
10.1 Disbursement of Funds.........................................54
10.2 Residual Distribution.........................................56
10.3 Owner's First Priority........................................56
10.4 Owner's Percentage Priority...................................57
10.5 Owner's Second Priority.......................................57
10.6 No Interest...................................................58
10.7 Calculation of Interim Disbursements..........................58
10.8 Amounts Outstanding at End of Term............................58
10.9 Allocation of Owner's Fixed Priority..........................58
10.10 Survival.....................................................59
ARTICLE 11 CERTAIN OTHER SERVICES...........................................59
11.1 Optional Services.............................................59
11.2 Purchasing....................................................59
ARTICLE 12 SIGNS AND SERVICE MARKS..........................................60
12.1 Signs.........................................................60
12.2 System Marks..................................................60
12.3 System ▇▇▇▇ Litigation........................................60
12.4 Other Intellectual Property Provisions........................61
ARTICLE 13 INSURANCE........................................................62
13.1 Insurance Coverage............................................62
13.2 Insurance Policies............................................63
13.3 Insurance Certificates........................................64
13.4 Insurance Proceeds............................................65
13.5 Manager's Insurance Program...................................65
ARTICLE 14 INDEMNIFICATION AND WAIVER OF SUBROGATION........................65
14.1 Indemnification...............................................65
14.2 Waiver of Subrogation.........................................66
14.3 Survival......................................................66
ARTICLE 15 DAMAGE TO AND DESTRUCTION OF THE HOTEL...........................66
15.1 Termination...................................................66
15.2 Restoration...................................................67
ARTICLE 16 CONDEMNATION.....................................................68
16.1 Total Condemnation............................................68
16.2 Partial Condemnation..........................................69
16.3 Temporary Condemnation........................................70
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16.4 Effect of Condemnation........................................70
ARTICLE 17 DEFAULT AND TERMINATION..........................................70
17.1 Manager Events of Default.....................................70
17.2 Remedies for Manager Defaults.................................72
17.3 Owner Events of Default and Remedies for Owner Defaults.......73
17.4 Post Termination Obligations..................................74
ARTICLE 18 NOTICES 76
18.1 Procedure.....................................................76
ARTICLE 19 RELATIONSHIP, AUTHORITY AND FURTHER ACTIONS......................78
19.1 Relationship..................................................78
19.2 Further Actions...............................................78
ARTICLE 20 APPLICABLE LAW...................................................78
ARTICLE 21 SUCCESSORS AND ASSIGNS...........................................79
21.1 Assignment....................................................79
21.2 Binding Effect................................................82
ARTICLE 22 RECORDING........................................................82
22.1 Memorandum of Agreement.......................................82
ARTICLE 23 FORCE MAJEURE....................................................82
23.1 Operation of Hotel............................................82
23.2 Extension of Time.............................................82
ARTICLE 24 GENERAL PROVISIONS...............................................83
24.1 Trade Area Restriction........................................83
24.2 Environmental Matters.........................................84
24.3 Authorization.................................................85
24.4 Severability..................................................85
24.5 Merger........................................................86
24.6 Formalities...................................................86
24.7 Consent to Jurisdiction; No Jury Trial........................86
24.8 Performance on Business Days..................................87
24.9 Attorneys' Fees...............................................87
24.10 Section and Other Headings...................................87
24.11 Documents....................................................87
24.12 No Consequential Damages.....................................87
24.13 No Political Contributions...................................87
24.14 REIT Qualification...........................................88
24.15 Further Compliance with Section 856(d)
of the Code.............................................88
24.16 Adverse Regulatory Event.....................................90
24.17 Adverse Canadian Event.......................................91
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24.18 Commercial Leases............................................93
24.19 Nonliability of Trustees.....................................94
24.20 Arbitration..................................................95
24.21 Estoppel Certificates........................................96
24.22 Confidentiality..............................................97
24.23 Hotel Warranties.............................................98
24.24 Currency.....................................................98
24.25 Independent Covenants........................................98
vii
MANAGEMENT AGREEMENT
MANAGEMENT AGREEMENT (this "Agreement") is made and entered into as of
, 2005, by and between HPT TRS IHG-2, INC., a Maryland corporation ("Owner"),
and IHG MANAGEMENT (MARYLAND) LLC, a Maryland limited liability company
("Manager").
W I T N E S S E T H
WHEREAS, pursuant to the Purchase Agreement (this and other capitalized
terms used and not otherwise defined herein having the meanings ascribed to such
terms in Article 1), on the Effective Date: (a) Purchaser is acquiring the
Hotels from Manager or its Affiliate(s); (b) Purchaser and Owner, its Affiliate,
are entering into the Lease; and (c) Owner and Manager are entering into this
Agreement; and
WHEREAS, Owner wishes to engage Manager and Manager wishes to be
engaged to manage and operate the Hotels, subject to and upon the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are herein acknowledged, Owner and Manager, intending to be
legally bound, hereby agree as follows:
ARTICLE 1
DEFINITIONS
Capitalized terms used in this Agreement and not otherwise defined
herein shall have the meanings set forth below, in the Section of this Agreement
referred to below, or in such other document or agreement referred to below:
1.1 "8.1(c) Statement" shall have the meaning given such term in
Section 8.1(c).
1.2 "Accounting Principles" shall mean generally accepted accounting
principles, as adopted in the United States of America, consistently applied.
1.3 "Affiliate" shall mean, with respect to any Person, (a) in the case
of any such Person which is a partnership, any partner in such partnership; (b)
in the case of any such Person which is a limited liability company, any member
of such
company; (c) any other Person which is a Parent, or Subsidiary or a Subsidiary
of a Parent with respect to such Person or to one or more of the persons
referred to in the preceding clauses (a) and (b); and (d) any other Person who
is an officer, director, trustee or employee of, or partner in, such Person or
any Person referred to in the preceding clauses (a), (b) and (c).
1.4 "Agreed Upon Procedure Letter" shall mean a letter from Ernst &
Young or another firm of independent certified public accountants (the
"auditor") selected by Manager and approved by Owner (which approval shall not
be unreasonably withheld or delayed) which letter shall, subject to the
limitations and conditions imposed by the auditor, address the following
components and such other reasonable matters as Owner and the auditor shall
reasonably agree:
(a) That auditor has tested Manager's systems of internal controls.
(b) That auditor has verified that the information provided was
generated from the same reporting systems as Manager uses for its regular
periodic accounting and reporting.
(c) That auditor has verified the mathematical accuracy of the 8.1(c)
Statement.
(d) That auditor has recomputed the annual calculation of Management
Fees, System Fees, contributions to the Reserve Account, expenditures from the
Reserve Account, Owner's Percentage Priority and the Residual Distribution.
(e) That auditor has confirmed that the Hotels are subjected to audit
procedures by Manager's internal audit department, if any, and reviewed work
papers provided in connection therewith. If auditor has performed hotel level
audit procedures at any Hotel, auditor shall identify those Hotels and list the
procedures performed and results obtained. In any event at least three (3) of
the Pooled FF&E Hotels shall be subjected to audit procedures each Fiscal Year
by either internal audit or the auditor.
1.5 "Arbitration" shall mean an arbitration conducted in accordance
with the terms of Section 24.20.
1.6 "Authorized Mortgage" shall mean any first mortgage, charge,
debenture, first deed-of-trust or first deed to secure debt, and other related
security documents granted in connection
2
therewith, now or hereafter granted by Purchaser to secure a loan to, or other
debt of, Purchaser or its Affiliates which is made by an institutional lender,
investment bank, publicly traded investment fund or other similar Person
regularly making loans secured by hotels, or incurred in connection with the
issuance of a mortgage backed security, which loan or debt provides for (i)
level payments of interest and principal and (ii) amortization and other terms
which are commercially reasonable.
1.7 "Award" shall have the meaning given such term in the Lease.
1.8 "Bank Accounts" shall mean one or more bank accounts established
for the operation of the Hotels in Owner's name at a bank selected by Manager
and approved by Owner.
1.9 "Base Management Fee" shall mean three percent (3%) of the
aggregate Gross Revenues at the Hotels in each Fiscal Year during the Term.
1.10 "Base Priority Amount" shall initially mean the following annual
amounts with respect to the corresponding periods:
Period Annual Amount
------ -------------
Effective Date - December 31, 2005 $__________1
Thereafter $__________
Provided that Purchaser performs its obligations under Section 3.2(b) of the
Purchase Agreement, the Base Priority Amount shall be increased by $850,000 per
annum on each of January 1, 2006 and January 1, 2007 and by $425,000 per annum
on January 1, 2008.
1.11 "Base Year" shall mean the 2006 Fiscal Year; provided, however, if
there shall occur a casualty, condemnation or other force majeure event with
respect to a Hotel which
------------
1 In connection with the closing of the Purchase Agreement, Owner and
Manager shall complete all of the blanks and confirm all of the amounts in the
definition of Base Priority Amount. Such blanks and amounts will be
completed/confirmed with the understanding that the Base Priority Amount for
2005 will equal $4,420,000, plus the sum of the amounts set forth for each Hotel
as its Raw Base Priority Amount for 2005 on Annex 1 hereto. The Base Priority
Amount after 2005 shall equal $4,696,250, plus the sum of the amounts set forth
for each Hotel as its Raw Base Priority Amount after 2005 on Annex 1, which page
is not intended to be a part of the Management Agreement to be entered into at
closing.
3
causes a material decline in Gross Revenues for such Hotel or a force majeure
event as described in Section 23.1 in Canada, the United States or Caribbean
Region or in any relevant market that results in a ten percent (10%) annual
decline in REVPAR for the Upscale segment with respect to the Staybridge Hotels,
the Luxury segment with respect to the InterContinental Hotels, the Upscale
segment with respect to Crowne Plaza Hotels and Mid-Scale with F and B segment
with respect to the Holiday Inn Hotels, or other appropriate segment, as
determined by ▇▇▇▇▇ Travel Research, in Canada, the United States or Caribbean
Region or in the relevant market, which, in either case, causes a material
decline in Gross Revenues for such Hotel for the 2006 Fiscal Year, the Base Year
for such Hotel shall be adjusted to be the first full Fiscal Year of operation
of such Hotel after the resolution of any such casualty, condemnation or force
majeure event and the return of such Hotel to its substantially normal status.
1.12 "Brand" shall mean: with respect to the Staybridge Hotels, the
Staybridge Suites hotel service marks; with respect to the InterContinental
Hotels, the InterContinental hotel service marks; with respect to the Crowne
Plaza Hotels, the Crowne Plaza hotel service marks; and with respect to the
Holiday Inn Hotels, the Holiday Inn hotel service marks, excluding any separate
Holiday Inn Express service marks; together with, in each instance, the
applicable Brand Standards, and all of the attributes and features customarily
associated with, as applicable, Staybridge Suites hotels, InterContinental
hotels, Crowne Plaza hotels and the Holiday Inn hotels in North America from
time to time.
1.13 "Brand Standards" shall mean the standards of operation, as
amended from time to time, in effect at substantially all hotels which are
operated under, as applicable, the Staybridge Suites, InterContinental, Crowne
Plaza or Holiday Inn name as may be specified in manuals and other guidelines
provided by the owner of the System Marks or its Affiliates.
1.14 "Buildings" shall mean, collectively, all buildings, structures
and improvements now or hereafter located on the Sites, and all fixtures and
equipment attached to, forming a part of and necessary for the operation of such
buildings, structures and improvements as a hotel (including, without
limitation, heating, lighting, sanitary, air-conditioning, laundry,
refrigeration, kitchen, elevator and similar items) having guest sleeping rooms,
each with bath, and such (i) restaurants, bars, banquet, meeting and other
public areas; (ii)
4
commercial space, including concessions and shops; (iii) parking facilities and
areas; (iv) storage and service areas; (v) recreational facilities and areas;
(vi) permanently affixed signage; (vii) public grounds and gardens; and (viii)
other facilities and appurtenances, as may hereafter be attached to and form a
part of such building, structures and improvements in accordance with this
Agreement.
1.15 "Business Day" shall mean any day other than Saturday, Sunday, or
any other day on which banking institutions in The Commonwealth of Massachusetts
are authorized by law or executive action to close.
1.16 "Canadian Consumer Price Index" shall mean the Consumer Price
Index (All Items for Ontario, base year 1992-=100) published by Statistics
Canada or if such index is no longer published, such other index as is published
in substitution therefor.
1.17 "Canadian Hotel" shall mean a Hotel located in Canada.
1.18 "Canadian Manager" shall have the meaning given such term in
Section 21.1(b).
1.19 "Canadian Services" shall have the meaning given such term in
Section 21.1(b).
1.20 "Candlewood Management Agreement" shall have the meaning ascribed
thereto in the Guaranty.
1.21 "Capital Replacements" shall mean, collectively, replacements and
renewals to the FF&E and Repairs which are normally capitalized under the
Accounting Principles.
1.22 "Capital Replacements Budget" shall mean the annual budget for
Capital Replacements at the Hotels, covering a Fiscal Year, as prepared by
Manager and approved by Owner as part of a Yearly Budget. References to Yearly
Budget shall be deemed to incorporate the Capital Replacements Budget unless
specifically excluded.
1.23 "Closing" shall mean the Closing under the Purchase Agreement.
1.24 "Code" shall mean the United States Internal Revenue Code of 1986
and the Treasury Regulations promulgated thereunder, each as from time to time
amended.
5
1.25 "Collateral Agency Agreement" shall have the meaning given such
term in the Guaranty.
1.26 "Collateral Agent" shall have the meaning given such term in the
Guaranty.
1.27 "Competitor" shall mean any Person (other than Manager and its
Affiliates) which owns directly or through an Affiliate a hotel brand, trade
name, system, or chain having at least fifteen (15) hotels (excluding a mere
franchisee or mere passive investor).
1.28 "Condemnation" shall have the meaning given such term in the
Lease.
1.29 "Condemnor" shall have the meaning given such term in the Lease.
1.30 "Consolidated Financials" shall mean for any fiscal year or any
interim period of any Person, annual or interim financial statements of such
Person prepared on a consolidated basis, including such Person's consolidated
balance sheet and the related statements of income and cash flows, all in
reasonable detail, and setting forth in comparative form the corresponding
figures for the corresponding period in the preceding fiscal year of such
Person, and prepared in accordance with the Accounting Principles throughout the
periods reflected or if such Person's principal place of business is the United
Kingdom, in accordance with generally accepted accounting principles, as adopted
in the United Kingdom, consistently applied throughout the periods reflected
provided that any such financial statement which is audited shall contain a
reconciliation of any differences between such accounting principles and
Accounting Principles.
1.31 "Consumer Price Index" shall mean the Consumer Price Index for all
Urban Consumers, U.S. City Average, published by the United States Bureau of
Labor Statistics or if such index is no longer published, such other index as is
published in substitution therefor.
1.32 "Controlling Interest" shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the business,
management or policies of a Person.
1.33 "Crowne Plaza Hotels" shall mean the Hotels that are operated as
of the date hereof as Crowne Plaza hotels.
6
1.34 "Debt Service Coverage Ratio" shall mean, with respect to any loan
or other debt secured by an Authorized Mortgage, the quotient obtained by
dividing (a) the NOI of the properties securing such loan or other debt for the
twelve (12) months ending on the date on which such Authorized Mortgage is
granted by (b) regularly scheduled interest and principal payments projected to
be paid thereunder during the first (1st) twelve (12) months after the first day
of the month next after such date.
1.35 "Disbursement Rate" shall mean a per annum rate equal to the
greater of (i) the sum of the per annum rate for fifteen (15) year U.S. Treasury
Obligations as published in The Wall Street Journal, plus four hundred thirty
(430) basis points and (ii) nine and five-tenths percent (9.5%).
1.36 "Effective Date" shall mean the date of this Agreement.
1.37 "Environmental Notice" shall have the meaning given such term in
Section 24.2(a).
1.38 "Expiration Date" shall mean the date on which the Term shall
expire.
1.39 "Fiscal Month" shall mean each calendar month in the Term or each
partial calendar month in the Term.
1.40 "Fiscal Year" shall mean each calendar year in the Term and each
partial calendar year in the Term.
1.41 "Furniture, Fixtures and Equipment" or "FF&E" shall mean,
collectively, all furniture, furnishings and equipment (except Operating
Equipment and real property fixtures included in the definition of Buildings)
now or hereafter located and installed in or about the Hotels which are used in
the operation thereof as hotels in accordance with the standards set forth in
this Agreement, including, without limitation (i) office furnishings and
equipment; (ii) specialized hotel equipment necessary for the operation of any
portion of the Building as a Staybridge Suites, InterContinental, Crowne Plaza
or Holiday Inn, as applicable, hotel, including equipment for kitchens,
laundries, dry cleaning facilities, bars, restaurants, public rooms, commercial
space, parking areas, and recreational facilities; and (iii) all other
furnishings and equipment hereafter located and installed in or about the
Buildings which are used in the operation of the Buildings as such a hotel in
accordance with the standards set forth in this Agreement.
7
1.42 "Government Agencies" shall mean any court, agency, authority,
board (including, without limitation, environmental protection, planning and
zoning), bureau, commission, department, ministry, regulatory body, office or
instrumentality of any nature whatsoever of any governmental or
quasi-governmental unit of the United States or Canada or any state, province,
county, municipality or any political subdivision of any of the foregoing,
whether now or hereafter in existence, having jurisdiction over Owner, any of
the Sites or any of the Hotels.
1.43 "Gross Revenues" shall mean for any period with respect to each
Hotel, all revenues and income of any nature derived directly or indirectly from
such Hotel or from the use or operation thereof including, without limitation:
room sales; food and beverage sales (regardless of whether Owner, Manager or any
of their Affiliates own the items being sold); telephone, telegraph, fax and
internet revenues; rental or other payments from lessees, subleases,
concessionaires and others occupying or using space or rendering services at
such Hotel (but not the gross receipts of such lessees, subleases or
concessionaires); and the actual cash proceeds of business interruption, use,
occupancy or similar insurance; provided, however, that Gross Revenues shall not
include the following (and there shall be appropriate deductions made in
determining Gross Revenues for): gratuities or service charges in the nature of
a gratuity added to a customer's ▇▇▇▇; Sales Tax or any other taxes collected
directly from patrons or guests or included as part of the sales price of any
goods or services sold to patrons or guests; any refunds of GST or any similar
value added tax that is refundable; interest received or accrued with respect to
the funds in the Reserve Account or (other than for purposes of calculating the
Incentive Management Fee and the Residual Distribution) the other operating
accounts of the Hotels; any refunds, rebates, discounts and credits of a similar
nature, given, paid or returned in the course of obtaining Gross Revenues or
components thereof; insurance proceeds (other than proceeds from business
interruption or other loss of income insurance); condemnation proceeds (other
than for a temporary taking); credits or refunds made to customers, guests or
patrons; sums and credits received by Owner for lost or damaged merchandise;
proceeds from the sale or other disposition of a Hotel, any part thereof, of
FF&E or any other assets of the Hotels; or proceeds of any financing or
re-financing; the Initial Working Capital and any other matters specifically
excluded from Gross Revenues pursuant to this Agreement.
8
1.44 "GST" shall mean goods and services taxes imposed pursuant to Part
IX of the Excise Tax Act (Canada).
1.45 "Guarantor" shall mean the Guarantor under the Guaranty.
1.46 "Guaranty" shall mean that certain Amended and Restated
Consolidated Guaranty Agreement of even date herewith made by IHG for the
benefit of, inter alia, Owner, as the same may be amended, supplemented or
replaced from time to time.
1.47 "Hazardous Substances" shall mean any substance:
(a) the presence of which requires or may hereafter require
notification, investigation or remediation under any Legal Requirement; or
(b) which is or becomes defined as a "hazardous waste," "hazardous
material" or "hazardous substance" or "pollutant" or "contaminant" under any
present or future Legal Requirement including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C.
Section 9601 et seq.) and the Resource Conservation and Recovery Act (42 U.S.C.
Section 6901 et seq.) and the regulations promulgated thereunder; or
(c) which is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic or otherwise hazardous and is or becomes
regulated by any Government Agency; or
(d) the presence of which at a Hotel causes or materially threatens to
cause an unlawful nuisance upon such Hotel or to adjacent properties or poses or
materially threatens to pose a hazard to such Hotel or to the health or safety
of persons; or
(e) without limitation, which contains gasoline, diesel fuel or other
petroleum hydrocarbons or volatile organic compounds; or
(f) without limitation, which contains polychlorinated biphenyls (PCBs)
or asbestos or urea formaldehyde foam insulation; or
(g) without limitation, which contains or emits radioactive particles,
waves or material; or
9
(h) without limitation, constitutes materials which are now or may
hereafter be subject to regulation pursuant to the Medical Waste Tracking Act of
1988, or any requirement promulgated by any Government Agencies.
1.48 "Holiday Inn Hotels" shall mean the Hotels that are operated as of
the date hereof as Holiday Inn hotels.
1.49 "Hotel" shall mean each Hotel located at a Site including all of
the Owner's interest in such Site, the Building there, the Furniture, Fixtures
and Equipment there, the Operating Equipment there and the Operating Supplies
there; provided, however, upon the termination of the Agreement with respect to
less than all of the Hotels, pursuant to the terms hereof or otherwise, the term
"Hotel" shall, with respect to the obligation of the parties thereafter
accruing, only refer to a Hotel with respect to which this Agreement is in full
force and effect.
1.50 "HPT" shall mean Hospitality Properties Trust, a Maryland real
estate investment trust, together with its successors and permitted assigns.
1.51 "HPT Group" shall mean Owner and its Affiliates, collectively.
1.52 "IHG" shall mean InterContinental Hotels Group PLC, its successors
and assigns.
1.53 "Incentive Management Fee" shall mean for any Fiscal Year, fifty
percent (50%) of the excess, if any, of (i) Gross Revenues from all of the
Hotels over (ii) the applications thereof made pursuant to Sections 10.1(a)
through and including 10.1(q).
1.54 "Initial Term" shall mean the period commencing on the Effective
Date and ending on December 31, 2029.
1.55 "Initial Working Capital" shall have the meaning given to such
term in Section 5.1.
1.56 "Insurance Requirements" shall mean all terms of any insurance
policy required by this Agreement and all requirements of the issuer of any such
policy and all orders, rules and regulations and any other requirements of the
National Board of Fire Underwriters (or any other body exercising similar
functions) binding upon the Hotels.
10
1.57 "Intellectual Property" shall have the meaning given to such term
in Section 12.4.
1.58 "InterContinental Hotels" shall mean the Hotels that are operated
as of the date hereof as InterContinental hotels.
1.59 "Interest Rate" shall mean a rate, not to exceed the maximum legal
interest rate, equal to the greater of (i) twelve percent (12%) per annum and
(ii) two percent (2%) per annum in excess of the Disbursement Rate determined as
of the first day that interest accrues on any amount to which such Interest Rate
is to be applied.
1.60 "Lease" shall mean, collectively, the one or more Lease Agreements
pursuant to which Owner leases the Hotels from Purchaser or certain of its
Affiliates as in effect on the date hereof, as the same may be amended from time
to time in accordance with the terms of this Agreement.
1.61 "Legal Requirements" shall mean all federal (United States and
Canada), state, provincial, county, municipal, local and other governmental
statutes, laws, rules, orders, regulations, by-laws, ordinances, judgments,
decrees, injunctions and requirements affecting Owner (excluding any
requirements which affect Owner's status as a real estate investment trust),
Purchaser, Manager, a Hotel or the maintenance, construction, alteration,
management or operation thereof, whether now or hereafter enacted or in
existence, including, without limitation, (a) all permits, licenses,
authorizations, certificates and regulations necessary to operate a Hotel, (b)
all covenants, agreements, ground leases, restrictions and encumbrances, (c) the
outcome of any Arbitration and (d) any collective bargaining agreement or other
agreement or legal requirement pertaining to any union representing employees of
a Hotel.
1.62 "Management Fees" shall mean, collectively, the Base Management
Fee and the Incentive Management Fee.
1.63 "Manager" shall have the meaning given such term in the preamble
to this Agreement.
1.64 "Manager Default" shall mean a Manager Event of Default or any
other circumstances which with the giving of notice, the passage of time or both
would constitute a Manager Event of Default or otherwise entitle Owner to
terminate this Agreement in its entirety pursuant to the terms hereof.
11
1.65 "Manager Event of Default" shall have the meaning given such term
in Section 17.1.
1.66 "Material Repair" shall mean a Repair the cost of which exceeds
$250,000; provided, however, on January 1 of each year starting in 2006 said
$250,000 shall be adjusted to reflect the percentage change in the Consumer
Price Index since the prior January 1.
1.67 "New Management Agreement" shall have the meaning given to such
term in Section 24.17.
1.68 "NOI" shall mean, with respect to any property, for any period,
the Gross Operating Profit (as defined in the Uniform System of Accounts) of
such property for such period net of, for such period and such property, real
and personal property taxes and casualty and liability insurance premiums, an
imputed reserve for capital replacements equal to five percent (5%) of gross
revenues and an imputed management fee equal to three percent (3%) of gross
revenues. To the extent that any amount (or portion thereof) used to calculate
NOI is denominated in any currency other than United States Dollars, the same
shall be converted to United States dollars using a reasonable method consistent
with the Accounting Principles then employed by Manager and its Affiliates when
accounting for foreign currencies.
1.69 "Non-Economic Hotel" shall mean any Hotel which has been
designated a Non-Economic Hotel pursuant to the terms hereof (so long as such
designation has not been deemed withdrawn pursuant to the terms of Section
2.7(a)).
1.70 "Offer" shall mean a bona fide arm's-length binding unconditional
offer to purchase a Non-Economic Hotel free and clear of any rights of Manager
hereunder made by an unrelated third party having the financial capacity to
implement the terms of such offer which provides for an all cash purchase price
acceptable to Manager and is otherwise on customary terms.
1.71 "Officer's Certificate" shall mean as to any Person, a certificate
of the chief executive officer, chief financial officer or chief accounting
officer of such Person, duly authorized, accompanying the financial statements
required to be delivered by such Person pursuant to Sections 8.1 or 17.4 or
otherwise pursuant to the PR Guaranty, in which such officer shall certify to
such officer's best knowledge (a) that such statements have been properly
prepared in accordance with the Accounting Principles, (b) in the event that the
certifying
12
party is an officer of IHG or another Guarantor, that such statements are true,
correct and complete in all material respects and fairly present the
consolidated financial condition of such Person at and as of the dates thereof
and the results of its and their operations for the periods covered thereby and
that there is no default on the part of the Guarantor under the Guaranty, and
(c) in the event that the certifying party is an officer of Manager and the
certificate is being given in such capacity, that such statements fairly present
the financial operation of the Hotels.
1.72 "Operating Costs" shall mean, collectively, all costs and expenses
of the Hotels (regardless of whether the same are incurred by Owner, Purchaser
or Manager) that are normally charged as an operating expense under Accounting
Principles, including, without limitation:
(i) the cost of Operating Supplies, wages, salaries and
employee fringe benefits, advertising and promotional expenses, the
cost of personnel training programs, utility and energy costs,
operating licenses and permits, maintenance costs, and equipment
rentals;
(ii) all expenditures made for maintenance and repairs to keep
the Hotel in good condition and repair (other than Capital
Replacements);
(iii) premiums for insurance required hereunder;
(iv) the System Fees;
(v) real estate and personal property taxes and expenses
except to the extent expressly specified otherwise herein;
(vi) audit, legal and accounting fees and expenses except to
the extent expressly specified otherwise herein;
(vii) rent or lease payments under ground leases or for
equipment used at the Hotels in the operation thereof; and
(viii) Sales Tax (except as provided below) payable on or in
respect of Operating Costs (including those for which Manager is
reimbursed).
Notwithstanding anything contained herein to the contrary, Operating Costs shall
exclude: (a) the Base Management Fee and
13
the Incentive Management Fee; (b) items expressly excluded from Operating Costs
pursuant to the terms hereof; (c) items for which Manager or its Affiliates are
to indemnify Purchaser or Owner; (d) items for which Owner or its Affiliates are
to indemnify Manager; (e) items for which Manager or its Affiliates has agreed
under the Transaction Documents to be liable at its own cost and expense; (f)
amounts payable to Owner or its Affiliates under the Purchase Agreement or the
Transaction Documents or for periods not included in the Term; (g) any
reimbursement of advances made by Manager or Owner; (h) the cost of Capital
Replacements; (i) the Minimum Rent and the Additional Rent under the Lease; (j)
debt service on any loan or other debt secured by an Authorized Mortgage or
other financing obtained by Purchaser, Owner or Manager other than equipment
financing permitted hereunder; (k) except as provided in Sections 2.2, 6.1 or
11.1, the cost of providing any services by the Manager or its Affiliates using
their own personnel to the Hotels which are not performed at the Hotels; (l) any
cost incurred in connection with the sale of the Hotels from Manager or its
Affiliates to Owner or its Affiliates including, without limitation, any expense
incurred in connection with performing obligations under the Purchase Agreement
or any agreement, instrument, indemnity or undertaking executed and delivered by
IHG or any of its Affiliates in connection with the Closing; (m) gratuities or
service charges in the nature of a gratuity added to a customer's ▇▇▇▇, Sales
Tax or any other taxes collected directly from patrons or guests or included as
part of the sales price of any goods or services sold to patrons or guests,
provided Manager shall apply any amounts collected on account of such excluded
items to the obligations to which they pertain; (n) costs and expenses relating
to transfers of any Hotel by Purchaser pursuant to Sections 4.4 or 4.5; (o)
costs and expenses incurred by Owner in connection with providing asset
management services and related undertakings pursuant to Section 2.8(b); and (p)
GST or any similar value added tax that is refundable, payable on or in respect
of Operating Costs (including those for which Manager is reimbursed) and/or on
or in respect of any amounts payable to Manager or the Canadian Manager
hereunder, including but not limited to, the Base Management Fee and the
Incentive Management Fee.
1.73 "Operating Equipment" shall have the meaning given to the term
"Property and Equipment" under the Uniform System of Accounts.
1.74 "Operating Profit" shall mean: with respect to any Hotel, for any
period, the excess, if any, of Gross Revenues for
14
such Hotel for such period over Operating Costs for such Hotel for such period;
and with respect to all of the Hotels (or a group of Hotels), for any period,
the excess, if any, of Gross Revenues for all of the Hotels (or such group of
Hotels) for such period over Operating Costs for all of the Hotels (or such
group of Hotels) for such period.
1.75 "Operating Standards" shall have the meaning given such term in
Section 2.1.
1.76 "Operating Supplies" shall have the meaning given to the term
"Inventories" under the Uniform System of Accounts.
1.77 "Original Candlewood Guaranty" shall have the meaning given to
such term in the Guaranty.
1.78 "Original Staybridge Guaranty" shall have the meaning given to
such term in the Guaranty.
1.79 "Other Documents" shall mean, collectively, the Purchase
Agreement, the PR Stock Agreement and any other agreement, instrument, indemnity
or undertaking executed and delivered by IHG or any of its Affiliates in
connection with the Closing or the closing under the PR Stock Agreement or any
other Transaction Document.
1.80 "Owner" shall have the meaning given such term in the preamble to
this Agreement and shall include its successors and assigns.
1.81 "Owner's First Priority" shall mean an annual amount equal to the
sum of (a) the Base Priority Amount plus, (b) effective on the date of each
disbursement by Purchaser or Owner pursuant to Sections 5.2(c)(iv) or 15.2 (in
excess of net insurance proceeds or the Award), an amount equal to the amount so
disbursed multiplied by the Owner's First Priority Adjustment Rate (determined
as of the dates on which such sums are advanced). Owner's First Priority shall
be subject to further adjustment as provided in Sections 2.7, 15.1(c) and 24.17.
1.82 "Owner's First Priority Adjustment Rate" shall mean a per annum
rate equal to the greater of (x) eight and five-tenths (8.5%) percent and (y)
the sum of the rate for fifteen (15) year U.S. Treasury Obligations, as
published in the Wall Street Journal, plus three hundred thirty (330) basis
points.
1.83 "Owner's Fixed Priority" shall mean Owner's First Priority and
Owner's Second Priority, collectively.
15
1.84 "Owner's Percentage Priority" shall mean, for each Fiscal Year
after the 2006 Fiscal Year for each Hotel, an amount equal to seven and one-half
percent (7.5%) of the excess, if any, of Gross Revenues of such Hotel for such
Fiscal Year over the Gross Revenues for such Hotel for its Base Year.
1.85 "Owner's Second Priority" shall mean an annual amount equal to the
sum of (a) ________________________________ Dollars ($__________), plus (b)
effective on the date of the closing under the PR Stock Agreement, an amount
equal to ____________________ Dollars ($__________), plus (c) effective on the
date of each disbursement by Purchaser or Owner pursuant to Sections 5.2(c)(ii)
hereof, an amount equal to the amount so disbursed multiplied by the applicable
Disbursement Rate (determined as of the dates on which such sums are advanced).
Owner's Second Priority shall be subject to further adjustment as provided in
Sections 2.7, 15.1(c) and 24.17.2
1.86 "Parent" shall mean with respect to any Person, any Person who
owns directly, or indirectly through one or more Subsidiaries or Affiliates,
greater than fifty percent (50%) of the voting or beneficial interest in, or
otherwise has the right or power (whether by contract, through ownership of
securities or otherwise) to control, such Person.
1.87 "Person" shall mean any individual or entity, and the heirs,
executors, administrators, legal representatives, successors and assigns of such
individual or entity where the context so admits.
1.88 "Pledged Hotels" shall mean, with respect to any loan or other
debt secured by an Authorized Mortgage, collectively, the Hotels which secure
such loan or other debt.
1.89 "Pooled FF&E Hotels" shall mean the Hotels and, after the closing
under the PR Stock Agreement and subject to the limitations on transfer set
forth in the PR Lease, so long as the PR Property is owned by an Affiliate of
Purchaser, the PR Property.
1.90 "PR Guaranty" shall have the meaning given to such term in the
Guaranty.
---------------
2 In connection with the closing of the Purchase Agreement, Owner and
Manager shall complete all of the blanks in the definition of Owner's Second
Priority. Such blanks will be completed with the understanding that the Owner's
Second Priority will equal the sum of the amounts set forth as the Raw Second
Priority Amount for each of the Hotels on Annex 1.
16
1.91 "PR Indemnity" shall mean that certain Indemnity Agreement to be
executed and delivered by the Guarantor pursuant to the PR Stock Agreement at
the closing thereunder.
1.92 "PR Lease" shall mean that certain lease to be entered into
pursuant to the PR Stock Agreement between the owner of the PR Property, on the
one hand, and Manager's Affiliate, on the other hand, with respect to the
InterContinental Hotel in San ▇▇▇▇, Puerto Rico, as the same may be amended from
time to time.
1.93 "PR Property" shall have the meaning ascribed to the term
"Property" in the PR Lease.
1.94 "PR Stock Agreement" shall mean that certain Stock Purchase
Agreement pursuant to which an Affiliate of Manager sold or will sell the stock
of the owner of the PR Property to an Affiliate of Owner.
1.95 "PR Tenant" shall mean the tenant under the PR Lease.
1.96 "Principal Documents" shall mean, collectively, this Agreement,
the PR Lease, the Guaranty, the PR Guaranty, the PR Indemnity and the Collateral
Agency Agreement.
1.97 "Priority Coverage Ratio" shall mean for any period, for any Hotel
or group of Hotels, the quotient of (a) the excess of Operating Profit for such
Hotel or group of Hotels over an implied reserve for capital replacements equal
to five percent (5%) of Gross Revenues for such Hotel or group of Hotels (as
applicable) divided by (b) the sum of the Owner's First Priority allocated
pursuant to Section 10.9 to such Hotel or group of Hotels (as applicable)for
such period. To the extent that any amount (or portion thereof) used to
calculate the Priority Coverage Ratio is denominated in any currency other than
United States Dollars, the same shall be converted to United States Dollars
using a reasonable method consistent with the Accounting Principles used by
Manager and its Affiliates to account for foreign currencies.
1.98 "Purchase Agreement" shall mean, collectively, one or more
purchase agreements between Owner or its Affiliate(s) and Manager or its
Affiliate(s) pursuant to which Purchaser has on the Effective Date acquired the
Hotels from Manager or its Affiliate(s).
1.99 "Purchaser" shall mean, collectively, the landlords under the
Lease.
17
1.100 "Renewal Terms" shall mean any extension of the Term of this
Agreement, commencing upon the expiration of the Initial Term or any extensions
thereto, as provided in Article 3.
1.101 "Repairs" shall have the meaning given such term in Section 7.6.
1.102 "Replacement Property" shall mean a hotel mutually acceptable to
the parties acquired by Purchaser in substitution for a Hotel with respect to
which this Agreement was terminated pursuant to Section 16.1.
1.103 "Reservation System" shall mean a computerized network of high
speed terrestrial and satellite-linked hardware and data lines connecting
hotels, central reservation centers, data processing centers and travel agencies
which provides reservation services to the Staybridge Suites, InterContinental,
Crowne Plaza or Holiday Inn, as applicable, hotels in North America.
1.104 "Reserve Account" shall mean an interest-bearing United States
dollar account established for funds to be held in reserve for Capital
Replacements in Purchaser's name at a bank selected by Purchaser.
1.105 "Reserve Percentage" shall mean the following percentages for the
corresponding periods:
Year Rate
---- ----
2005 0%
2006 0%
2007 3.0%
2008 3.5%
2009 4.0%
2010 4.5%
Thereafter 5.0%
1.106 "Residual Distribution" shall mean amounts to be distributed to
Owner pursuant to Section 10.2.
1.107 "Restricted Area" shall mean, for any Hotel, the area around such
Hotel depicted on Exhibit D.
1.108 "Restricted Period" shall mean: for each Staybridge Hotel and
Holiday Inn Hotel, the period ending on the third (3rd) anniversary of the
Effective Date; and for each
18
InterContinental Hotel and Crowne Plaza Hotel, the period ending on the fifth
(5th) anniversary of the Effective Date.
1.109 "Rooms Revenue" shall mean all revenue derived from the rental of
guest rooms in a Hotel in whatever currency collected determined in accordance
with the Accounting Principles.
1.110 "RST" shall mean retail sales taxes imposed pursuant to the
Retail Sales Tax Act (Ontario).
1.111 "Sales Tax" shall mean all federal (U.S. and Canada), state,
provincial, municipal or local sales, use, excise, GST, value added, retail
sales, gross receipts and occupancy taxes, duties, levies, charges or similar
governmental charges, whether imposed now or in the future.
1.112 "Severance Date" shall have the meaning given to such term in the
Guaranty.
1.113 "Sites" shall mean the parcels of real estate more particularly
described on Exhibit A.
1.114 "Specially Designated or Blocked Person" shall mean (i) a Person
designated by the US Department of Treasury's Office of Foreign Assets Control
from time to time as a "specially designated national or blocked person" or
similar status, (ii) a Person described in Section 1 of the US Executive Order
13224, issued September 23, 2001, or (iii) a person or entity otherwise
identified by Government Agencies as a person or entity with which either Party
is prohibited from transacting business. As of the Effective Date, a list of
such designations and the text of the Executive Order are published at:
▇▇▇.▇▇▇▇▇▇▇.▇▇▇/▇▇▇▇▇▇▇/▇▇▇▇▇▇▇▇▇▇▇/▇▇▇▇.
1.115 "Staybridge Hotels" shall mean the Hotels that are operated as of
the date hereof as Staybridge Suites hotels.
1.116 "Staybridge Management Agreement" shall have the meaning ascribed
thereto in the Guaranty.
1.117 "Subsidiary" shall mean with respect to any Person, any entity
(a) in which such Person owns directly, or indirectly, greater than twenty
percent (20%) of the voting or beneficial interest or (b) which such Person
otherwise has the right or power to control (whether by contract, through
ownership of securities or otherwise).
19
1.118 "Substitute Tenant" shall have the meaning given the term in
Section 4.2.
1.119 "Successor Purchaser" shall have the meaning given to such term
in Section 4.3(a)(iv).
1.120 "System Fees" shall mean the fees specified in Section 9.2,
excluding the e-mail service fee and the accounting fee described therein.
1.121 "System Marks" shall mean all service marks, trademarks,
copyrights, trade names, logo types, commercial symbols, patents or other
similar rights or registrations now or hereafter held, applied for or licensed
by Manager or any Affiliate of Manager in connection with the Staybridge Suites,
InterContinental, Crowne Plaza or Holiday Inn, as applicable, brand of hotels.
1.122 "Term" shall mean the term of this Agreement as it may be
extended or terminated pursuant to the terms of this Agreement.
1.123 "Transaction Documents" shall mean, collectively, the Principal
Documents and the Other Documents.
1.124 "Transferred Hotel" shall mean a Canadian Hotel which is sold or
otherwise transferred by Purchaser and Owner (other than to an Affiliate)
pursuant to Section 24.17.
1.125 "Uniform System of Accounts" shall mean the Uniform System of
Accounts for the Lodging Industry, Ninth Revised Edition, 1996, as published by
the Educational Institute of the American Hotel and Motel Association, as it may
be amended from time to time.
1.126 "Ultimate Parent" shall mean, with respect to any Person, each
Parent of such Person who in turn has no Parent.
1.127 "Unsuitable for Its Permitted Use" shall mean with respect to a
Hotel, a state or condition of such Hotel such that (a) following any damage or
destruction involving such Hotel, such Hotel cannot be operated in the good
faith judgment of Manager or Owner on a commercially practicable basis and it
cannot reasonably be expected to be restored to substantially the same condition
as existed immediately before such damage or destruction and otherwise as
required under Article 15 hereof, using only the net proceeds of insurance
obtained in connection
20
therewith and other funds that Owner or Manager elect to provide pursuant to the
terms of Article 15 hereof within twelve (12) months following such damage or
destruction or such shorter period of time as to which business interruption
insurance is available to cover amounts payable to Owner hereunder and other
costs related to the Hotel following such damage or destruction, or (b) as the
result of a partial taking by Condemnation, such Hotel cannot be operated in the
good faith judgment of Manager or Owner on a commercially practicable basis in
light of then existing circumstances.
1.128 "Working Capital" shall mean funds, in whatever currency, that
are used (or held for use) in the day-to-day operation of the business of the
Hotels, including, without limitation, change and ▇▇▇▇▇ cash funds, amounts
deposited in operating bank accounts, receivables, deposits with utility
providers, amounts deposited in payroll accounts, prepaid expenses and funds
required to maintain Operating Supplies, less accounts payable and accrued
current liabilities, exclusive of any funds in the Reserve Account.
1.129 "Yearly Budget" shall mean, with respect to each Hotel, the
annual operating budget of such Hotel, covering a Fiscal Year, as prepared by
Manager in accordance with the Accounting Principles and approved by Owner. Such
budget shall include an operating budget, a business plan and a Capital
Replacements Budget. Without limiting the generality of the foregoing, the
Yearly Budget shall include a projection of the estimated financial results of
the operation of each Hotel for the Fiscal Year. Such projection shall project
the estimated Gross Revenues, departmental profits, Operating Costs and
Operating Profit for the Fiscal Year for each Hotel.
ARTICLE 2
SCOPE OF AGREEMENT
2.1 Engagement of Manager. Subject to the terms of this Agreement,
Owner hereby grants to Manager the sole and exclusive right to supervise and
direct the management and operation of the Hotels for the Term as Owner's agent
coupled with an interest. Manager hereby accepts said grant and agrees that it
will control, supervise and direct the management and operation of the Hotels,
all subject to the terms, requirements and conditions of this Agreement, with
commercially reasonable efforts in doing so, and in an efficient and economical
manner consistent with standards prevailing in well managed hotels similar to
the Hotels, including all activities in connection therewith which are
21
customary and usual to such an operation (the foregoing standards constituting
the "Operating Standards"). Without limiting the generality of the foregoing,
and in addition to the other functions to be performed by Manager pursuant to
this Agreement, Manager shall perform (or shall cause its Affiliates to
perform), in connection with the Hotels and in accordance with the applicable
Brand Standards, the Operating Standards and the terms of this Agreement, each
of the following functions, provided, however, except as otherwise set forth in
this Agreement, the costs and expenses of performing the following functions
shall be Operating Costs:
(a) Establish and revise, as necessary, administrative policies and
procedures, including policies and procedures for the control of revenue and
expenditures, for the purchasing of supplies and services, for the control of
credit, and for the scheduling of maintenance, and verify that the foregoing
procedures are operating in a sound manner.
(b) Manage expenditures to replenish Operating Supplies and Operating
Equipment, make payments on accounts payable and collect accounts receivable.
(c) Arrange for and supervise public relations and advertising and
prepare marketing plans.
(d) Procure all Operating Supplies and replacement Operating Equipment.
(e) Provide, or cause to be provided, risk management services relating
to the types of insurance required to be obtained or provided by Manager under
this Agreement.
(f) Reasonably cooperate (provided that except as herein expressly
provided Manager shall not be obligated to enter into any amendments of this
Agreement or, unless Owner agrees to reimburse Manager therefor, to incur any
material expense including any internal expenses) in any attempt(s) to: (i)
effectuate a sale or other transfer of a Hotel subject to the terms of Sections
4.4 and 4.5 of this Agreement; or (ii) to obtain any Authorized Mortgage.
(g) Negotiate, enter into and administer service contracts and licenses
for the operation of the Hotels, including, without limitation, and to the
extent appropriate, contracts and licenses for health and safety systems
maintenance, electricity, gas, telephone, cleaning, elevator and boiler
maintenance, air conditioning maintenance, laundry and dry cleaning, master
22
television service, use of copyrighted materials (such as music and videos),
entertainment and other services as Manager deems advisable.
(h) Negotiate, enter into and administer contracts for the use of
banquet and meeting facilities and guest rooms by groups and individuals.
(i) Take reasonable action to collect and institute in its own name or
in the name of Owner or a Hotel, in each instance as Manager in its reasonable
discretion deems appropriate, legal actions or proceedings to collect charges,
rent or other income derived from the operation of the Hotels or to oust or
dispossess guests, tenants, members or other Persons in possession therefrom, or
to cancel or terminate any lease, license or concession agreement for the breach
thereof or default thereunder by the tenant, licensee or concessionaire.
(j) Make representatives available to consult with and advise Owner or
Owner's designee at Owner's reasonable request concerning policies and
procedures affecting the conduct of the business of the Hotels.
(k) Collect and account for and remit to Government Agencies all
applicable excise, sales, value added, occupancy and use taxes or similar
governmental charges collected by or at the Hotels directly from guests,
members, other patrons, tenants, licensees, concessionaires or other occupants,
or as part of the sales price of any goods, services, rentals or displays, such
as gross receipts, admission or similar or equivalent taxes, duties, levies or
charges, and prepare, sign and submit to the applicable Government Agencies the
applicable returns and reports therefor on behalf of Owner, in Owner's name and
using Owner's registration.
(l) Keep Owner advised of events which might reasonably be expected to
have a material effect on the financial performance or value of any Hotel.
(m) To the extent in Manager's control, obtain and maintain all
approvals necessary to use and operate the Hotels in accordance with the
applicable Brand Standards, Operating Standards and Legal Requirements.
(n) Use its reasonable efforts to keep all ground, underlying and
parking leases in full force and effect and arrange appropriate substitutes for
any such lease which ceases
23
to be or is reasonably anticipated to cease to be in full force and in effect.
(o) Perform such other tasks with respect to the Hotels as are
generally performed by managers of similar hotels consistent with the Operating
Standards and the Brand Standards.
2.2 Additional Services. Any fees for services not included in the
Management Fees for the Hotels shall be consistent with fees established for
similar types of hotels managed by Manager or its Affiliates. Any disputes under
this Section 2.2 shall be resolved by Arbitration.
2.3 Use of Hotels. Manager shall not use, and shall exercise
commercially reasonable efforts to prevent the use of, the Hotels and Owner's
and Manager's personal property used in connection with the Hotels, if any, for
any unlawful purpose. Manager shall not commit, and shall use commercially
reasonable efforts to prevent the commission of, any waste at the Hotels.
Manager shall not use, and shall use commercially reasonable efforts to prevent
the use of, the Hotels in such a manner as will constitute an unlawful nuisance
thereon or therein. Manager shall use commercially reasonable efforts to prevent
the use of the Hotels in such a manner as might reasonably be expected to impair
Owner's or Purchaser's title thereto or any portion thereof or might reasonably
be expected to give rise for a claim or claims for adverse use or adverse
possession by the public, as such, or of implied dedication of the Hotels or any
portion thereof.
2.4 Right to Inspect. Manager shall permit Owner and its authorized
representatives to inspect or show the Hotels during usual business hours upon
not less than twenty four (24) hours' notice, provided that any inspection by
Purchaser or its representatives shall not unreasonably interfere with the use
and operation of the Hotels and further provided that in the event of an
emergency as determined by Purchaser in its reasonable discretion, prior notice
shall not be required.
2.5 No Right of Offset. Manager shall not offset against any amounts
owed to Owner; provided, however, Manager may offset amounts which Owner has
failed to fund in violation of Section 5.2(c) (or, so long as PR Property is a
Pooled FF&E Hotel, the landlord under the PR Lease has failed to fund in
violation of Section 5.1.3(b) of the PR Lease) against the amounts owed to Owner
hereunder provided that after giving effect to all such offsets there shall
still be paid to Owner an amount sufficient to pay regularly scheduled payments
of interest and principal
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under any loan or other debt secured by an Authorized Mortgage and attributable
to the Pledged Hotels.
2.6 Condition of the Hotels. Manager acknowledges receipt and delivery
of possession of each Hotel, and Manager accepts each Hotel in its "as is"
condition as of the Effective Date, subject to the rights of parties in
possession, the existing title, including all covenants, conditions,
restrictions, reservations, mineral leases, easements and other matters of
record or that are visible or apparent on the Hotels, all applicable Legal
Requirements, and such other matters which would be disclosed by an inspection
of the Hotels and the record title thereto or by an accurate survey thereof.
MANAGER REPRESENTS THAT: IT HAS INSPECTED THE HOTELS INCLUDING THE FF&E AND ALL
OF THE FOREGOING AND HAS FOUND THE CONDITION THEREOF SATISFACTORY; AS OF THE
EFFECTIVE DATE, THE HOTELS ARE IN COMPLIANCE WITH THE APPLICABLE BRAND STANDARDS
IN ALL MATERIAL RESPECTS; EXCEPT FOR CAPITAL REPLACEMENTS TO BE MADE FROM TIME
TO TIME USING FUNDS TO BE DEPOSITED IN THE RESERVE ACCOUNT PURSUANT TO SECTION
5.2(a) AND AMOUNTS TO BE EXPENDED BY THE MANAGER'S AFFILIATES AS REQUIRED BY THE
PURCHASE AGREEMENT, MANAGER CURRENTLY DOES NOT ANTICIPATE THE NEED TO MAKE
CAPITAL REPLACEMENTS DURING THE FIRST FIVE YEARS OF THE TERM (PROVIDED, HOWEVER,
SUCH REPRESENTATION IS NOT A GUARANTY OR WARRANTY THAT NO SUCH CAPITAL
REPLACEMENTS WILL BE REQUIRED); AND IT IS NOT RELYING ON ANY REPRESENTATION OR
WARRANTY OF OWNER, PURCHASER OR ANY OF THEIR AGENTS OR EMPLOYEES WITH RESPECT TO
ANY OF THE MATTERS SET FORTH IN THIS SECTION. MANAGER WAIVES ANY CLAIM OR ACTION
AGAINST OWNER AND PURCHASER WITH RESPECT TO THE CONDITION OF THE HOTELS.
PURCHASER AND OWNER MAKE NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, WITH
RESPECT TO ANY HOTEL OR ANY PART THEREOF, EITHER AS TO ITS FITNESS FOR USE,
DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE, OR AS TO THE
QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT.
2.7 Non-Economic Hotels.
(a) Manager shall be entitled to designate as a Non-Economic Hotel any
Hotel for which, in each of any three (3) consecutive full Fiscal Years during
the Term, the Operating Profit is less than the sum of (i) amounts to be funded
to the Reserve Account pursuant to Section 5.2(a) on account of such Hotel, plus
(ii) Owner's Fixed Priority attributable to such Hotel pursuant to Exhibit C
hereto; provided, however, that the number of Hotels designated as Non-Economic
Hotels under this Agreement (other than those with respect to which such
designation has been withdrawn or deemed withdrawn, but
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including those which have been sold pursuant to this Section 2.7) shall not
exceed three (3). If subsequent to a Hotel being designated as a Non-Economic
Hotel but prior to its sale pursuant to this Section 2.7, the Operating Profit
of such Hotel for any Fiscal Year shall exceed the sum of amounts to be funded
to the Reserve Account pursuant to Section 5.2(a) on account of such Hotel, plus
the portion of the Owner's Fixed Priority for such Fiscal Year so attributable
to such Hotel, such designation shall be deemed withdrawn; provided, however, if
Manager is then negotiating a sale of such Hotel to a third-party, such
designation shall not be deemed withdrawn for a period of three (3) months.
(b) So long as there is no Manager Default or Manager Event of Default,
Manager may market each Hotel that is a Non-Economic Hotel for sale. In
addition, if Manager reasonably anticipates based on projections prepared in the
ordinary course that a Hotel will become a Non-Economic Hotel within the next
twelve (12) months, Manager may market such Hotel for sale; provided, however,
no Hotel shall be sold pursuant to this Section 2.7 other than Non-Economic
Hotels. If Manager receives an Offer, Manager shall give Owner and Purchaser
notice thereof, which notice shall include a copy of the executed Offer. In the
event that Owner and Purchaser shall fail to accept or reject such Offer within
five (5) Business Days after receipt of such notice, such Offer shall be deemed
to be rejected by them. Provided there is no Manager Default or Manager Event of
Default, if Owner and Purchaser shall either sell such Non-Economic Hotel
pursuant to such Offer or reject or be deemed to have rejected such Offer, then
effective as of the date of such sale or, if the Offer was rejected or deemed
rejected, the proposed date of sale contained in such Offer, as the case may be,
the following shall apply: (i) the Term shall terminate with respect to such
Non-Economic Hotel; (ii) no further Owner's Percentage Priority shall accrue
with respect to such Non-Economic Hotel's Gross Revenues which accrue after such
termination; (iii) the Owner's First Priority shall be reduced by an amount
equal to eight percent (8%) of the net (after taking into account any costs paid
by Manager) proceeds of sale received by Owner or Purchaser (or, in the case of
such a rejection, eight percent (8%) of the projected net (after taking into
account any costs to be paid by Manager) proceeds of sale which would have been
received by Owner or Purchaser determined by reference to such Offer); and (iv)
the Owner's Second Priority shall be reduced by one half of one percent (0.5%)
of such net proceeds (or, in the case of a rejection, one half of one percent
(0.5%) of such projected net proceeds).
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2.8 No Early Termination of Manager; Nature of Relationship etc.
(a) So long as this Agreement is in full force and effect and Owner is
not entitled pursuant to the terms hereof to terminate this Agreement in its
entirety, Owner covenants and agrees not to hire, engage, appoint or employ any
other manager to manage the Hotels prior to the expiration or earlier
termination of the Term. Any otherwise applicable principles of law
notwithstanding, it is Owner's intent and agreement that Manager shall manage
the Hotel pursuant to this Agreement through the Term so long as this Agreement
is in full force and effect.
(b) Owner shall provide appropriate asset management services with
respect to the Hotels at no cost or expense to Manager (and shall use reasonable
efforts to cooperate with Manager in order to keep all ground, underlying and
parking leases in full force and effect). The costs and expenses incurred by
Owner in connection with providing such asset management services shall not be
Operating Costs. Owner shall, from time to time, upon the request of Manager
provide Manager with the name, telephone number, fax number and email address of
the individual responsible for providing such asset management services. Manager
will cooperate with and assist the Owner in every reasonable and proper way to
permit Owner to carry out its duties and exercise its rights hereunder with
respect to the Hotels.
(c) Without limiting the scope or intent of the provisions of Section
19.1 of this Agreement, each of the parties acknowledges and agrees that (i) the
execution and delivery by the other of this Agreement is substantial and
essential consideration for their respective Affiliates' purchase and sale of
the Hotels pursuant to the Purchase Agreement, (ii) but for the execution and
delivery of this Agreement, Manager's Affiliates would not have sold the Hotels
to Purchaser, (iii) but for the execution and delivery of this Agreement,
Owner's Affiliates would not have purchased the Hotels from Manager's
Affiliates, (iv) the terms and provisions of the Purchase Agreement, including
the purchase price set forth therein, the PR Stock Agreement and the PR Lease
were negotiated and agreed upon on the basis and upon the condition that this
Agreement be executed and delivered at the time of the closing of the sale of
the Hotels to Purchaser, (v) this Agreement fairly, accurately and fully sets
forth the agreement between Owner and Manager regarding Manager's management of
the Hotels through the Term, (vi) there are no duties or obligations between the
parties not expressly set forth herein and (vii) each of the
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parties hereto has a duty of commercial good faith and fair dealing.
(d) Any common law or other rule or restriction that would otherwise
apply notwithstanding, but subject to the terms of Section 24.1, Manager, Owner
and their respective Affiliates are free to manage, engage in or license other
business activities, including activities involving transient lodging and
related activities. Except as provided in Section 24.1, nothing herein or
otherwise shall prevent Manager, Owner or their respective Affiliates from
owning, managing or licensing other facilities, and Manager, Owner and their
respective Affiliates may manage, engage in or license any business activity at
any other location whether or not competing with the Hotels, without the consent
or approval of, or liability to, the other and without offering the other any
opportunity to participate therein. Subject to the terms of Section 24.1, each
party hereby waives any claim or cause of action, of whatever nature and however
derived, relating to or arising in any way out of the other's ownership,
licensing or management of any other hotel or commercial property wherever
located.
ARTICLE 3
TERM AND RENEWALS
3.1 Term. The term of this Agreement shall be for a period beginning on
the Effective Date and continuing for the Initial Term and any extension of the
term hereof in accordance with the provisions of this Agreement, unless sooner
terminated as herein provided. Manager acknowledges that if the ground lease for
the InterContinental Hotel in Toronto, Ontario is terminated, the lessor
thereunder may terminate this Agreement upon giving not less than 180 days'
notice, which notice shall be given within ninety (90) days after such ground
lease is terminated.
3.2 Renewal Term. Provided the term of the PR Lease is simultaneously
extended in accordance with the terms of the PR Lease, the Term may be extended,
at Manager's option, for up to two (2) consecutive periods (each, a "Renewal
Term") of fifteen (15) years each on not less than two (2) years' prior notice
to Owner. If Manager fails to give notice of its election not to exercise either
of its options to extend the Term on or before the date which is the day prior
to the date that is two (2) years prior to the then Expiration Date or if PR
Tenant fails to give notice of its election not to exercise either of its
options to extend the term of the PR Lease on or before the date
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which is the day prior to the date that is two (2) years prior to the then
expiration date of the PR Lease, Manager shall be deemed to have exercised the
applicable extension option. The terms and provisions of this Agreement will
remain in effect as stated herein during any Renewal Term except that Manager
shall have no right to extend the Term beyond the Renewal Terms herein provided.
3.3 Owner's Termination Right at End of Term. If Manager gives notice
of its election not to extend the Term, or the PR Tenant gives notice of its
election not to extend the term of the PR Lease, or Manager shall have no
further right to extend the Term, then at any time during the last two years of
the Term, Owner may terminate this Agreement on not less than thirty (30) days'
prior written notice.
ARTICLE 4
TITLE TO HOTEL
4.1 Covenants of Title. During the Term, provided no Manager Default
exists, Manager shall have the right peaceably and quietly to operate the Hotels
in accordance with the terms of this Agreement, free from interference,
disturbance and eviction by Owner or Purchaser or by any other Person or Persons
claiming by, through or under Owner or Purchaser, subject only to termination of
this Agreement as herein provided. Except as may otherwise be provided herein,
Owner, at Owner's own expense (and not as an Operating Cost), shall prosecute
all appropriate actions, judicial or otherwise, required to assure such quiet
and peaceable operation by Manager and shall pay and discharge any rental
obligations under the Lease. Without Manager's written consent, which consent
shall not be unreasonably withheld, Owner shall not during the Term enter into
an agreement, covenant or encumbrance affecting title to the Hotels except in
connection with Authorized Mortgages and sales or transfers of the Hotels not
prohibited hereby. Further, during the Term, Owner shall not convert any Hotel
to a condominium form of ownership.
4.2 Non-Disturbance. Purchaser and Manager agree that in the event the
Lease terminates prior to expiration or earlier termination of the Term, so long
as (i) there exists no uncured Manager Event of Default and (ii) Owner is not
otherwise entitled to terminate this Agreement: (a) Manager shall not be
disturbed in its rights under this Agreement by Purchaser; (b) Purchaser shall
assume the obligations of Owner under this Agreement; and (c) Manager shall
attorn to Purchaser and
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recognize Purchaser as the "Owner" under this Agreement. Purchaser shall have
the right to assign all of its right, title and interest in, to and under this
Agreement to a new tenant (a "Substitute Tenant") to which Purchaser shall lease
the Hotels (pursuant to a lease which imposes no greater risks, obligations,
duties or liability on Manager than the Lease (assuming the same had not been
terminated) and for a term equal to the unexpired term of this Agreement) which
Substitute Tenant shall expressly assume all of the Owner's obligations under
this Agreement. Upon such assignment to, and assumption by, a Substitute Tenant,
Purchaser shall be relieved of all future obligations arising under this
Agreement (other than any expressly imposed on Purchaser pursuant to Sections
4.2 through and including 4.7), Manager shall attorn to the Substitute Tenant
and recognize the Substitute Tenant as the "Owner" under this Agreement, and the
term "Lease" as used in this Agreement shall be deemed to refer to such lease
between Purchaser and the Substitute Tenant.
4.3 Financing.
(a) Purchaser shall be entitled to encumber the Hotels or any of them
with one or more Authorized Mortgages which are expressly subordinate to this
Agreement or in connection with which the following terms and conditions are
satisfied:
(i) the loan or other debt secured by such Authorized Mortgage
shall not be cross-collateralized with other property or hotels which
are not managed or franchised by Manager, IHG or their respective
Affiliates;
(ii) the principal amount secured by such Authorized Mortgage
shall not exceed the sum of seventy five percent (75%) (or, if less
than four (4) Pooled FF&E Hotels secure such principal amount, sixty
five percent (65%)) of the sum of the fair market value as of the date
of the granting of such Authorized Mortgage of the Pledged Hotels and
the other properties securing such principal amount;
(iii) as of the date of the granting of such Authorized
Mortgage, the Debt Service Coverage Ratio associated with such loan or
debt secured thereby shall not be less than (i) 1.4 if fewer than four
(4) Pooled FF&E Hotels secure such loan or other debt or (ii) 1.3 if
four (4) or more Pooled FF&E Hotels secure such loan or other debt; and
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(iv) the holder of such Authorized Mortgage shall execute and
deliver to Manager (Manager agreeing to likewise execute and deliver to
such holder) a so-called subordination, non-disturbance and attornment
agreement which shall provide that:
(A) this Agreement and Manager's rights hereunder are
subject and subordinate to the Authorized Mortgage,
the lien thereof, the rights of the holder thereof
and to any and all advances made thereunder, interest
thereon or costs incurred in connection therewith;
(B) so long as this Agreement is in full force and
effect and there exists no Manager Default which has
not been cured within any applicable notice or grace
period, Manager's rights under this Agreement shall
not be disturbed by reason of such subordination or
by reason of foreclosure of such Authorized Mortgage
or receipt of deed in lieu of foreclosure;
(C) Manager shall attorn to the holder or the
purchaser at any such foreclosure or the grantee of
any such deed (each, a "Successor Purchaser");
(D) in the event of such attornment, the terms of
this Agreement binding on Purchaser and Manager shall
continue in full force and effect as a direct
agreement between such Successor Purchaser and
Manager, upon all the terms, conditions and covenants
set forth herein, except that the Successor Purchaser
shall not be (1) bound by any payment of Owner's
Fixed Priority, Owner's Percentage Priority or the
Residual Distribution in advance of when due; (2)
bound by any amendment or modification of this
Agreement made after the date that Manager first had
written notice of such Authorized Mortgage without
the consent of the holder thereof; (3) liable in any
way to Manager for any act or omission, neglect or
default on the part of Purchaser or Owner under this
Agreement; (4) obligated to perform any work or
improvements to be done by Purchaser or Owner or to
make any advances except for those advances to be
made pursuant to Section 5.2(c) from and after the
date on which such Successor Purchaser acquired
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the Hotel(s); or (5) subject to any counterclaim or
setoff which theretofore accrued to Manager against
Purchaser or Owner;
(E) In the event of a casualty or condemnation
affecting any Pledged Hotel which does not result in
the termination of this Agreement with respect to
such Pledged Hotel, the net insurance proceeds or
Award shall be applied to the restoration of such
Hotel as herein provided; and
(F) Such other terms as are customary for similar
agreements.
(b) In the event less than all of the Hotels are to secure loan or
other debt secured by an Authorized Mortgage, Owner shall have the right to
cause the Pledged Hotels to be managed pursuant to a separate management
agreement which agreement shall be for a term equal to the unexpired portion of
the Term and otherwise on substantially the same terms of this Agreement except
as otherwise provided herein, provided that the Pledged Hotels in the aggregate
and the remaining Hotels in the aggregate shall have Priority Coverage Ratios
for the 12-month period ending on the last day of the month next prior to the
date on which such Authorized Mortgage is granted equal to each other or equal
to, or greater than, 1.3. In connection with entering into such separate
management agreement, the parties shall make appropriate allocations of Owner's
Fixed Priority, amounts in the Reserve Account, the Working Capital, and any
outstanding advances made by Owner, Manager or their respective Affiliates so
that the obligations allocable to the Hotels subject to such Authorized Mortgage
shall not be due from the other Hotels and vice versa. The allocation of Owner's
Fixed Priority for each Hotel shall be proportional to the NOI of such Hotel for
the then most recently ended twelve (12) months relative to the NOI of all the
other Hotels for such period. Without the consent of Manager, the holder of any
Authorized Mortgage shall have the right to elect to be subject and subordinate
to this Agreement, such subordination to be effective upon such terms and
conditions as such holder may direct which are not inconsistent with the
provisions hereof.
(c) Manager shall be entitled to pay any overdue regularly scheduled
payments of interest and principal on any Authorized Mortgage from the Operating
Profits of all of the Hotels subject to such Authorized Mortgage and to credit
any such payments against disbursement obligations for Owner's Fixed Priority.
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4.4 Sale of a Hotel to an Affiliate. In the event of a sale or transfer
of Purchaser's interest in any Hotel to an Affiliate of the Purchaser with such
Affiliate assuming Purchaser's obligations under the Lease, this Agreement shall
remain in full force and effect without regard to such sale or transfer.
4.5 Sale of All the Hotels. If Purchaser sells or otherwise transfers
all of the Hotels to a single transferee in a single transaction, (a) the
transferee shall assume Purchaser's obligations hereunder and (b) Purchaser
shall be released and relieved from any and all obligation hereunder. In
connection with such transfer, Owner may assign this Agreement to the transferee
or its Affiliate, and provided the assignee assumes all of Owner's obligations
hereunder thereafter accruing, Owner shall be released and relieved from all
such obligations. Except as provided in Sections 2.7 or 24.17 or in connection
with the foreclosure of an Authorized Mortgage or deed-in-lieu of such
foreclosure, Purchaser and its Affiliates and their successors and assigns shall
not sell less than all the Pooled FF&E Hotels to any Person except to an
Affiliate as provided in Section 4.4 or in Section 15.6 of the PR Lease.
4.6 The Lease. The Lease shall not be amended or modified in any way
which would materially increase Manager's obligations hereunder or materially
reduce its rights hereunder. In the event of a conflict between the terms hereof
and the terms of the Lease, the terms hereof shall govern.
4.7 Restricted Sale. Except as provided in Section 2.7 or in connection
with a foreclosure of an Authorized Mortgage, neither Purchaser nor Owner shall
transfer its interest in any Hotel, directly or indirectly, (a) to any Person
which: (i) is in control of or controlled by Persons who have been convicted of
felonies; (ii) is a Competitor or an Affiliate of a Competitor; (iii) lacks the
financial capabilities to perform Owner's obligations hereunder; or (iv) is a
Specially Designated or Blocked Person or (b) if such transfer would materially
adversely affect the ability of Manager or its Affiliates to obtain or retain
any license or permit for the Hotels or comply with any applicable ground or
parking leases for the Hotels.
ARTICLE 5
REQUIRED FUNDS
5.1 Working Capital. Manager shall contribute to the Working Capital
for the Hotels an amount reasonably sufficient
33
to pay Operating Costs for the Hotels for the first thirty (30) days of
operating the same following the Effective Date (the "Initial Working Capital").
Promptly after the month in which the Effective Date occurs, the parties shall
agree on the amount of the Initial Working Capital which Manager so contributed.
After the first thirty (30) days of operating the Hotels, upon written notice
from Manager, Owner shall advance any additional funds, over and above the
Initial Working Capital, necessary to pay Operating Costs (but not Owner's First
Priority or Owner's Second Priority) as they come due. Any such request by
Manager shall be accompanied by a reasonably detailed explanation of the reasons
for the request. All funds so advanced for Working Capital shall be utilized by
Manager to pay Operating Costs as they come due. If Owner does not advance such
additional Working Capital within two (2) Business Days after notice, Manager,
as its exclusive remedy, shall have the right either to (i) advance such
additional Working Capital or (ii) terminate this Agreement on ten (10) days'
advance written notice to Owner; provided, however, such notice of termination
shall be void ab initio if Owner advances the requested funds necessary to pay
Operating Costs prior to the end of the tenth (10th) day after the receipt of
such termination notice. If Manager fails to either make such advance or give
notice of termination within ten (10) days, then after the expiration of such
two (2) Business Days, Owner may elect by written notice to Manager to terminate
this Agreement, which termination shall be effective ten (10) days after the
date such notice is given. Upon the expiration or earlier termination of the
Term, the Working Capital of the Hotels shall be applied to pay all Operating
Costs and all amounts owed to Owner to the extent Gross Revenues are
insufficient. Thereafter, Manager shall be entitled to retain the Initial
Working Capital and the balance of the Working Capital shall belong to Owner.
5.2 Reserve Account.
(a) Manager shall transfer from the Bank Accounts to the Reserve
Account in cash on or before the 25th day of each Fiscal Month, beginning on
February 25, 2007 and continuing for each and every month during the Term, an
aggregate amount equal to each Hotel's Reserve Percentage times its Gross
Revenues for the prior Fiscal Month. The amount to be contributed to the Reserve
Account on account of the Gross Revenues of the Canadian Hotels shall be
calculated using Canadian dollars but shall be contributed to the Reserve
Account in United States dollars in accordance with Section 24.23. Subject to
the terms of Section 5.2(g), amounts in the Reserve Account are to pay for
Capital
34
Replacements undertaken after the Effective Date required to maintain any and
all of the Hotels in accordance with the Operating Standards and the Brand
Standards; provided, however, notwithstanding anything in this Agreement to the
contrary, no additional cost or expense shall be incurred or paid in connection
with any Capital Replacements made during the last two (2) years of the Term to
the extent attributable solely to complying with the Brand Standards. The
amounts so paid into the Reserve Account shall be recorded on the Hotels' books
of account as "Reserve for FF&E Replacements." Except as expressly provided
herein, any expenditures for Capital Replacements during any Fiscal Year which
have been approved in the yearly Capital Replacements Budget may be made without
Owner's further approval and, to the extent available, may be made by Manager
from the Reserve Account. Any amounts remaining in the Reserve Account at the
close of each Fiscal Year will be carried forward and retained in the Reserve
Account. Any and all portions of the Hotels which are scrapped or removed in
connection with the making of any major or non-major repairs, renovations,
additions, alterations, improvements, removals or replacements at the Hotels
shall be disposed of by Manager and any net proceeds thereof shall be deposited
in the Reserve Account and not included in Gross Revenues. In addition, any
proceeds from the sale of FF&E no longer necessary to the operation of the
Hotels shall be added to the Reserve Account. Manager shall be entitled to use
funds in the Reserve Account to make Capital Replacements at any and all of the
Hotels regardless of the Hotel from which such funds originate. To the extent
that the cost of any such Capital Replacements are to be paid for in a currency
other than United States dollars, Manager shall exchange an appropriate portion
of the funds in the Reserve Account into such other currency at the best rates
and terms commercially available to Manager at the time of such exchange for
such purpose on or about the date such funds are withdrawn from the Reserve
Account and applied to pay such costs in accordance with Manager's general
practice for Capital Replacements. All costs of such exchange shall be Operating
Costs.
(b) Subject to the terms of Section 5.6, Manager shall be the only
party entitled to withdraw funds from the Reserve Account until a Manager
Default shall occur.
(c) Subject to the terms of Sections 5.2(f) and 5.2(g), additional
amounts shall be funded into the Reserve Account to pay for Capital Replacements
as follows:
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(i) Either Owner or Manager may propose that additional funds
be funded into the Reserve Account.
(ii) If both parties give their approval to a proposed funding
within twenty (20) Business Days after a request for such approval is
given from one party to the other, Owner shall (or shall cause
Purchaser to) fund the approved amount into the Reserve Account within
twenty (20) Business Days after both parties approve in writing of such
funding provided that there is then no uncured Manager Default. Neither
party shall unreasonably withhold its approval of such a proposed
funding; provided, however, no purchaser at foreclosure of an
Authorized Mortgage or grantee of a deed in lieu of such foreclosure
nor any Person claiming by, through or under such purchaser or grantee
shall have an obligation to so not withhold its consent; provided
further, however, Owner will consider the likelihood of its receiving
the increase in Owner's Second Priority which would result from its
making such advance as well as the effect on the value of the Hotels
resulting from the delay or failure in making the proposed Capital
Replacements. Upon such funding, Owner's Second Priority will be
adjusted as provided in the definition of such term.
(iii) If Owner proposes in writing such funding for the
purpose of making particular Capital Replacements but Manager does not
approve of the same in writing within twenty (20) Business Days after
Owner gives such proposal to Manager, Owner shall have the right, but
not the obligation, to make such funding, and Manager shall cause such
Capital Replacements to be made with the amounts so funded unless such
Capital Replacements conflict with the applicable Brand Standards.
(iv) If Manager proposes in writing such funding for the
purpose of one or more particular Capital Replacements and Owner does
not, in its sole and absolute discretion, approve of the same in
writing within twenty (20) Business Days after such proposal is given
to Owner, Manager shall have the right, but not the obligation, to
either provide the proposed funding itself or, if, such Capital
Replacements are set forth in the Capital Replacements Budget or are
required to comply with the Operating Standards, applicable Brand
Standards, Insurance Requirements or Legal Requirements and at the time
of the giving of such proposal to Owner, the funds in the Reserve
Account shall be insufficient for such Capital
36
Replacements, require Owner to provide (or cause Purchaser to provide)
the proposed funding. If Owner or Purchaser provides such funding, the
Owner's First Priority will be adjusted as provided in the definition
of that term.
(d) If Owner shall fail to disburse (or cause Purchaser to disburse)
funds to Manager for deposit into the Reserve Account in violation of Section
5.2(c), which failure continues for five (5) days after the giving of notice
from Manager to Owner, then, in addition to Manager's other remedies hereunder
or under the HPT Guaranty (as defined in the Purchase Agreement), Manager shall
be entitled, but not obligated, to deposit in the Reserve Account the amount of
funds which Owner so failed to disburse.
(e) Upon the expiration or earlier termination of the Term, Manager
shall disburse to Purchaser, or as Purchaser shall direct, all amounts remaining
in the Reserve Account after payments of all expenses on account of Capital
Replacements appropriately incurred by Manager during the Term.
(f) Unless and until the Affiliates of the Manager which sold the
Hotels to Purchaser and the stock of the owner of the PR Property to an
Affiliate of Owner have expended $25,000,000 of their own funds to make Capital
Replacements at the Pooled FF&E Hotels, Owner shall have no obligation to make
or to cause Purchaser to make any advances to the Reserve Account.
(g) Notwithstanding anything contained herein to the contrary, if Owner
advises Manager that in Owner's opinion, the fair market value of all personal
property of Purchaser at, about or which forms a part of a Hotel is equal to or
exceeds thirteen and one half percent (13.5%) of the fair market value of all
property of Purchaser pertaining to such Hotel (including all such personal
property, the Building and the underlying land or ground lease), Manager and its
Affiliates shall not use funds from the Reserve Accounts or which are required
to be expended pursuant to the Purchase Agreement to purchase additional
personal property for use at, about or as part of such Hotel without Owner's
prior written consent, which consent may be granted or withheld in Owner's sole
and absolute judgment.
5.3 Additional Requirements for Reserve. All expenditures from the
Reserve Account shall be (as to both the amount of each such expenditure and the
timing thereof) both reasonable and necessary given the objective that the
Hotels will be maintained and operated to a standard comparable to competitive
properties and in accordance with the Operating Standards and the applicable
Brand Standards.
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5.4 Ownership of Replacements. All Capital Replacements made pursuant
to this Agreement and all amounts in the Reserve Account shall be the property
of Owner or Purchaser, as applicable, as provided under the Lease.
5.5 No Additional Contributions. Except as otherwise expressly provided
in this Agreement, neither Owner nor Purchaser shall, under any circumstances,
be required to, or provide funds to, build or rebuild any improvement at the
Hotel, or make any repairs, replacements, alterations, restorations or renewals
of any nature or description to the Hotel, whether ordinary or extraordinary,
structural or nonstructural, foreseen or unforeseen.
5.6 Pooled Reserves. It is understood and agreed that so long as the PR
Property is a Pooled FF&E Hotel, funds deposited in the Reserve Account pursuant
to this Agreement and the FF&E Reserve under PR Lease shall be maintained and
used on a consolidated basis such that all amounts to be deposited in the
Reserve Account and the FF&E Reserve shall be deposited in a single account and
Manager and PR Tenant may apply any funds therein to any of the Pooled FF&E
Hotels in accordance with the terms of this Agreement and PR Lease.
ARTICLE 6
BRAND STANDARDS AND MANAGER'S CONTROL
6.1 Brand Standards. Manager shall operate each Hotel as a Staybridge
Suites, InterContinental, Crowne Plaza or Holiday Inn, as applicable, hotel in
accordance with the terms of this Agreement, the applicable Brand Standards and
the Operating Standards. Manager and its Affiliates which own the applicable
System Marks and Brand Standards reserve the right to revise and amend such
System Marks or Brand Standards from time to time on a non-discriminatory basis.
Owner also agrees that the Hotels will be required to participate in applicable
Brand-wide or area programs that are implemented after the date hereof from time
to time by Manager or its Affiliates with respect to the applicable Brand. The
allocable cost of participation in such programs (to the extent not duplicative
of the services for which the Management Fee is being paid) shall be Operating
Costs of the Hotel to the extent the same are consistent in all material
respects with the amounts for the same included in the applicable Yearly Budget.
6.2 Manager's Control. Subject to the terms of this Agreement, Manager
shall have uninterrupted control over the
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operation of the Hotels. Owner acknowledges that under this Agreement, Owner
delegates all authorities and responsibilities for operation of the Hotels to
Manager provided, however, Manager shall not be entitled to make any agreement
or commitment binding on Owner except as herein expressly provided. Manager
shall be solely responsible for determining room rates, food and beverage menu
prices, charges to guests for other Hotel services and the terms of guest
occupancy and admittance to the Hotels, use of rooms for commercial purposes,
policies relating to entertainment, labor policies, publicity and promotion
activities and technology services and equipment to be used in the Hotel.
Manager shall review with Owner from time to time, and during the annual review
of the Yearly Budget, material changes in policies, practices and procedures and
their effect on the financial performance of the Hotels.
6.3 Arbitration. Any dispute under this Article 6 shall be resolved by
Arbitration.
ARTICLE 7
OPERATION OF THE HOTEL
7.1 Permits. Manager, as an Operating Cost, shall obtain and maintain
in its name (or Owner's or Purchaser's name to the extent the same is required
by applicable Legal Requirements)in full force and effect all necessary
operating licenses and permits, including liquor, bar, restaurant, sign and
hotel licenses, as may be required for the operation of the Hotels in accordance
with this Agreement, the applicable Brand Standards and the Operating Standards.
Owner and/or Purchaser shall reasonably cooperate with Manager in obtaining any
such operating licenses or permits. Any costs or expenses (including, without
limitation, reasonable attorneys' fees) incurred by Owner and/or Purchaser in
connection therewith shall constitute Operating Costs. Manager will use
reasonable efforts to comply with all Legal Requirements imposed in connection
with any such licenses and permits and at all times use commercially reasonable
efforts to manage the Hotels in accordance with, and cause the Hotels to comply
with, such Legal Requirements, any other Legal Requirements and Insurance
Requirements applicable to any Hotel.
7.2 Equipment and Supplies. Manager shall procure pursuant to the
Yearly Budgets all such Operating Supplies and Operating Equipment as Manager
deems necessary for the normal and ordinary course of operation of the Hotel in
accordance with the applicable Brand Standards and Operating Standards.
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7.3 Personnel.
(a) All personnel employed at the Hotels will be employees of Manager.
Manager will hire, supervise, direct, discharge and determine the compensation,
other benefits and terms of employment of all personnel working in the Hotels;
provided, however, Manager shall make no final decision with respect to hiring
the general manager for any Hotel without first consulting with Owner. Subject
to the foregoing proviso, Manager, in the exercise of reasonable discretion and
business judgment, will be the sole judge of the fitness and qualifications of
such personnel and is vested with absolute discretion in the hiring,
supervising, directing, discharging and determining the compensation, other
benefits and terms of employment of such personnel. In such discretion, Manager
may elect to staff certain functions at offsite or regional locations, or to
provide employee benefits on an applicable Brand-wide or other multi-location
basis and shall equitably allocate the employee costs among the hotels
participating in such staffing or benefits. Subject to Manager's rights to apply
Gross Revenues to Operating Costs, the Manager shall be responsible for (i) the
payment of all compensation owing to its employees, (ii) the provision of any
benefits, statutory or otherwise, earned, incurred or accrued by any of its
employees, and (iii) the payment or the deduction from the compensation and/or
benefits of its employees, as the case may be, and the remittance to the
appropriate Government Agencies such sums as may be required to be paid by an
employer or withheld from the employees' compensation and/or benefits under the
provision of any Legal Requirements. Owner shall not interfere with the
performance of employment duties of, or give orders or instructions to, any
personnel employed at the Hotel. Except as otherwise provided herein, Operating
Costs will include all expenses, costs or charges which are allocable to the
Term and are related to or incidental to any on-site personnel employed in the
operation of the Hotels (including, without limitation, salaries, wages, other
compensation, benefit contributions and premiums, net of amounts paid by Hotel
employees; stop-loss insurance premiums; group health plan benefit payments in
excess of contribution and premium amounts paid by Hotel employees; pay for
vacation, holidays, sick leave and other leaves of absence; workers'
compensation premiums; workers compensation benefit payments paid by Manager;
reasonable and customary administrative fees and taxes; and severance benefits
applicable under Manager's then current human resources policies).
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(b) Manager shall comply with all Legal Requirements pertaining to
labor relations, the personnel employed by it pursuant to this Agreement and
their employment. Manager shall not enter into any written employment agreements
with any person which purport to bind the Owner without obtaining Owner's
consent, which consent may be withheld in Owner's sole and absolute discretion.
If either Manager or Owner shall be required, pursuant to any such Legal
Requirement, to recognize a labor union or to enter into collective bargaining
with a labor union, the party so required shall promptly notify the other. The
terms of this Section 7.3(b) shall survive the expiration or earlier termination
of this Agreement. Manager shall be the "successor employer" under any
collective bargaining agreements applicable to the Hotels as of the Closing and
under applicable Legal Requirements.
(c) No employee of the Hotels shall reside at the Hotels without the
prior written approval of Owner. No person shall be given gratuitous
accommodations or services without prior approval of Owner except in accordance
with usual practices of the applicable Brand and the hotel and travel industry.
(d) To the extent consistent with the applicable Yearly Budget,
Operating Costs may include up to the following amounts per Fiscal Year, for
travel related expenses of Manager's senior operational personnel in connection
with their visits to such Hotel:
Hotel Type Amount
---------- ------
Staybridge Hotels $ 5,000
Intercontinental Hotels $10,000
Crowne Plaza $10,000
Holiday Inn Hotels $ 5,000
Said amounts shall be adjusted every January 1 starting in 2006 to
reflect the percentage change in the Consumer Price Index since the prior
January 1. Any amounts in excess of the foregoing shall be Manager's sole
responsibility and shall not be an Operating Cost.
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(e) With respect to Hotels located in Ontario, Canada, the Manager
shall register, if not already registered, with the Workplace Safety and
Insurance Board ("WSIB"). Immediately prior to the commencement of the Term and
at 60 day intervals thereafter, Manager shall request, in writing, to the WSIB
the necessary specific clearance certificate to be issued by the WSIB to Manager
and Owner confirming that Manager's WSIB account is in good standing. Manager
shall, at all times, accurately disclose all information required by the WSIB
and shall pay all amounts owing with respect to Workplace Safety and Insurance
coverage for its employees within the time period specified by the WSIB.
7.4 Sales, Marketing and Advertising. Manager shall and/or shall cause
one or more of its Affiliates to:
(a) advertise and promote the business of the Hotels;
(b) institute and supervise a sales and marketing program for the
Hotels;
(c) include the Hotels in Manager's and its Affiliates' local, regional
and worldwide promotional and advertising programs, in each case, related to the
applicable Brand;
(d) represent the Hotels through Manager's and its Affiliates'
worldwide sales offices;
(e) include the Hotels in the applicable loyalty programs, including,
without limitation, inclusion of the Hotels in promotional materials distributed
to participants of such program;
(f) coordinate the Hotels' participation in travel programs marketed by
airlines, travel agents and government tourist departments when Manager
determines such participation to be advisable; and
(g) cause the Hotels to participate in sales and promotional campaigns
and activities involving complimentary rooms, food and beverages to bona fide
travel agents, tourist officials and airline representatives where Manager has
determined that such participation is in furtherance of the Hotels' business and
is customary in the travel industry or in the practices and policies of Manager.
7.5 Reservation and Communication Services. The Hotels shall be
included as participating hotels on the Reservation
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System operated by Manager, its Affiliates or agent(s) for the benefit of
Staybridge Suites, InterContinental, Crowne Plaza or Holiday Inn, as applicable,
hotels from and after the Effective Date. Manager will provide (or will cause
its Affiliates to provide) the following services to the Hotels through the
Reservation System:
(a) acceptance of reservations for the Hotels through the applicable
Reservation System from individual customers and groups who contact Manager (or
its Affiliates or agents) directly or through a regional reservation or sale
office of Manager or its Affiliates or agents;
(b) acceptance of reservations for the Hotels through other hotels in
the applicable Brand;
(c) acceptance of reservations for the Hotels through the reservation
systems of other providers in the travel industry, including, without
limitation, global distribution systems and general sales agencies with which
Manager (or its Affiliates) may have agreements from time to time, whereby the
reservation systems of such parties are available for communication of
reservations to hotels in the applicable Brand;
(d) acceptance of reservations for the Hotels received through
alternative communications channels such as the internet; and
(e) access to the Hotels of the communications network used by Manager
(or its Affiliates) for communication between it and hotels in the applicable
Brand.
7.6 Maintenance and Repairs. Subject to the terms hereof, Manager shall
promptly make or cause to be made all repairs, replacements, corrections,
maintenance, alterations, improvements, renovations, installations, renewals and
additions (collectively, "Repairs") of every kind and nature, whether interior
or exterior, structural or nonstructural, ordinary or extraordinary, foreseen or
unforeseen or arising by reason of a condition existing prior to the
commencement of the Term (concealed or otherwise) necessary or appropriate to
maintain the Hotels (including all private roadways, sidewalks and curbs located
thereon) for which Owner, Purchaser or a Hotel has responsibility in good order
and repair, reasonable wear and tear excepted (whether or not the need for such
Repairs occurs as a result of Owner's or Manager's use, any prior use, Insurance
Requirements, the elements or the age of the Hotels, or any portion thereof),
and in conformity with Legal
43
Requirements (including, without limitation, retaining all construction lien
holdbacks under the Construction Lien Act (Ontario) and releasing such holdbacks
only when all liens have expired or been discharged or vacated, all notices have
been withdrawn, and the time period for filing any liens has expired),
applicable Brand Standards and the Operating Standards. All Repairs shall be
made in a good, workmanlike manner, consistent with Manager's and industry
standards for like hotels in like locales, in accordance with all applicable
Legal Requirements and Insurance Requirements. To the extent such Repairs cannot
be performed by Manager's on-site staff, Manager shall entitled to cause such
repairs to be performed by third parties or, subject to Owner's prior approval,
Affiliates of Manager acting under separate technical services agreements
pursuant to Section 11.1.
7.7 Material Repairs.
(a) Except as set forth in Section 7.7(b), prior to making any Material
Repair, Manager shall submit, to Owner in writing, a proposal setting forth, in
reasonable detail, the proposed Material Repair and shall provide to Owner such
plans and specifications, and such permits, licenses, contracts and such other
information concerning the same as Owner may reasonably request. Owner shall
have twenty (20) Business Days to approve or disapprove all materials submitted
to Owner, in connection with any such proposal; provided, however, (i) Owner may
not withhold its approval of a Material Repair with respect to such items as are
(A) required in order for the Hotels to comply with applicable Brand Standards
(except during the last two (2) years of the Term as set forth in Section
5.2(a)) or Operating Standards; or (B) required by reason of or under any
Insurance Requirement or Legal Requirement, or otherwise required for the
continued safe and orderly operation of each Hotel and (ii) Owner's approval
shall not be required with respect to the cost of any proposed Material Repair
if the same is set forth as a separate line item in the then applicable approved
Capital Replacements Budget. If Owner fails to disapprove of such Material
Repair within such twenty (20) Business Days, Owner shall be deemed to have
approved same.
(b) In the event that a condition should exist in or about a Hotel of
an emergency nature or in violation of applicable Legal Requirements or
Insurance Requirements, including structural conditions, which requires
immediate repair necessary to prevent imminent danger or damage to persons or
property, Manager is hereby authorized to take all steps and to make all
expenditures necessary to repair and correct any such condition,
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regardless of whether provisions have been made in the applicable Yearly Budget
for any such expenditures or if sufficient funds exist in the Reserve Accounts.
Upon the occurrence of such an event or condition, Manager will communicate to
Owner all available information regarding such event or condition as soon as
reasonably possible and will take reasonable steps to obtain Owner's approval
before incurring such expenses. Expenditures under this Section 7.7(b) shall be
paid from the Reserve Account to the extent such expenditure is properly
considered a Capital Replacement.
(c) No Capital Replacements shall be made which would tie-in or connect
a Hotel with any other improvements on property adjacent to such Hotel (and not
part of its Site) including, without limitation, tie-ins of buildings or other
structures or utilities (other than connections to public or private utilities)
without the prior written approval of Owner, which approval may be granted or
withheld in Owner' sole and absolute discretion.
7.8 Liens; Credit. Manager shall use commercially reasonable efforts to
prevent any liens from being filed against any Hotel which arise from any
Repairs in or to such Hotels. Manager shall use commercially reasonable efforts
to cause the release of any such liens from the Hotels. If any such lien arises
as a result of or in connection with a Manager Default, then Manager shall bear
the cost of obtaining the lien release (exclusive of the cost of the Repair to
which it pertains, unless Manager is otherwise responsible therefor) and the
same shall not constitute an Operating Cost. In no event shall any party borrow
money in the name of, or pledge the credit of, any other party. Manager shall
not allow any lien to exist with respect to its interest in this Agreement.
Manager shall not finance the cost of any Repair by the granting of a lien on,
or security interest in, any Hotel or Manager's interest therein or hereunder.
7.9 Real Estate and Personal Property Taxes. Manager shall pay as
Operating Costs on behalf of Owner, prior to delinquency, all taxes and
assessments which may become a lien on, or are assessed against, any Hotel or
any component thereof and which may be due and payable for the Term, unless
payment thereof is being contested by Manager, as hereinafter provided,
enforcement is stayed and the amount so contested is escrowed or guaranteed in a
form satisfactory to Owner. Owner shall, promptly after receipt thereof by
Owner, give Manager copies of all notices as to all such taxes and assessments.
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7.10 GST and RST. The parties acknowledge that the Owner is the
supplier of hotel services and that the Manager acts as the Owner's agent in
making supplies to the public of hotel services. The Owner authorizes Manager to
prepare and file GST and RST returns on behalf of the Owner, in the Owner's
name, and using the Owner's GST or RST registration number or vendor permit
number as the case may be. Owner shall provide Manager with details of any GST
or RST collected or paid by it directly which detail is not otherwise available
to Manager.
7.11 Contest. Manager shall have the right in Manager's or Owner's name
to contest or protest any tax or assessment or proposed assessment which may
become a lien on, or be assessed against, any Hotel or any component thereof due
and for the Term or any Legal Requirement payable by appropriate legal
proceedings, conducted in good faith and with due diligence, provided that (a)
such contest shall not cause Purchaser or Owner to be in default under any
Authorized Mortgage, (b) no part of a Hotel nor any Gross Revenues therefrom
shall be in any immediate danger of sale, forfeiture, attachment or loss, and
(c) Owner and Purchaser are not exposed to any risk for criminal or civil
liability. The reasonable cost and expenses of such contest or protest shall be
Operating Costs.
7.12 Privacy. Manager shall conduct the business of the Hotels in
compliance in all material respects with all applicable Legal Requirements
governing privacy and the protection of personal information (including, inter
alia, the personal information of patrons and employees of the Hotels),
including the Personal Information Protection and Electronic Documents Act
(Canada). The Manager shall implement a written privacy policy which governs the
collection, use and disclosure of personal information and shall comply in all
material respects with such policy.
ARTICLE 8
FISCAL MATTERS
8.1 Accounting Matters.
(a) Manager shall maintain books and records reflecting the results of
Hotel operations on an accrual basis in accordance with the Uniform System of
Accounts and the Accounting Principles. Owner and Manager and their respective
independent accounting firms and representatives will have the right to examine
such books and records of the Hotel at any reasonable time and to make and
retain copies thereof. Manager
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shall retain, for at least three (3) years after the expiration of each Fiscal
Year, reasonably adequate records showing Gross Revenues and applications
thereof for the Hotels for such Fiscal Year (which obligation shall survive the
expiration or earlier termination of the Term).
(b) On or before the twenty-fifth (25th) day after the end of each
Fiscal Month, Manager shall furnish (or shall cause its Affiliates to furnish)
Owner with a detailed operating statement setting forth the results of
operations at the Hotels with respect to such month and year-to-date showing for
each Hotel and for all of the FF&E Pooled Hotels, Gross Revenues, Rooms
Revenues, revenue per available room, occupancy percentage and average daily
rate, Operating Costs, Operating Profit, the applications and distributions
thereof and its Owner's Percentage Priority together with an Officer's
Certificate. Such statements may be provided electronically to Owner.
(c) Not less than ten (10) days prior to the date on which Owner or any
of its Affiliates are required to file audited financial statements with the
United States Securities and Exchange Commission (but in all events on or before
February 15 of each year), Manager shall deliver to Owner and Purchaser an
Officer's Certificate (the "8.1(c) Statement") setting forth for the prior year
the totals for each Hotel and for all of the FF&E Pooled Hotels of Gross
Revenues and Operating Costs, the calculation of Owner's Percentage Priority and
the Residual Distribution, Additional Rent under the PR Lease (if applicable)
and deposits to, and expenditures from, the Reserve Account together with an
Agreed Upon Procedures Letter with respect thereto. The cost of obtaining such
letter shall be an Operating Cost.
(d) If any amounts due to Owner as shown in an Officer's Certificate or
audit provided pursuant to Sections 8.1(f) or 17.4 exceed the amounts previously
paid with respect thereto to Owner, Manager shall pay such excess to Owner at
such time as the Officer's Certificate or audit is delivered, together with
interest at the Interest Rate from the date due. (Any such interest which
accrues after the day that is ten (10) Business Days after the date on which the
8.1(c) Statement is delivered or is due and any such interest which results from
Manager's willful understatement of amounts due to Owner shall not be Operating
Costs, but shall be paid by Manager.) If Owner's Percentage Priority due as
shown in an Officer's Certificate or audit is less than the amount previously
paid with respect thereto to Owner, Owner shall be entitled to retain the same
but shall credit such overpayment against the next installment of
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Owner's Percentage Priority. If any Management Fee due to Manager as shown on an
Officer's Certificate or audit is less than the amount previously paid to
Manager on account thereof, Manager shall, within ten (10) Business Days after
the date on which such Officer's Certificate or audit is delivered, deposit the
overpayment in the Bank Accounts. If the Residual Distribution due as shown on
the Officer's Certificate or audit is less than the amount previously paid to
Owner with respect thereto, Owner shall promptly deposit (or deliver to Manager
who will in turn deposit) the overpayment in the Bank Accounts. In no event
shall (i) any amount previously deposited in the Reserve Account be withdrawn
therefrom pursuant to this Article 8 or (ii) distributions of Owner's First
Priority be subject to adjustment.
(e) In addition, Manager shall provide Owner with information relating
to the Hotels, Manager and its Affiliates that (i) may be required in order for
Owner or its Affiliates to prepare financial statements in accordance with
Accounting Principles or to comply with any Legal Requirement including, without
limitation, any applicable tax and securities laws and regulations and the
United States Securities and Exchange Commission's interpretation thereof, (ii)
may be required for Owner or any of its Affiliates to prepare federal (United
States and Canada), state, provincial or local tax returns, including, without
limitation, GST or (iii) is of the type that Manager customarily prepares for
other hotel owners or itself.
(f) At Owner's election and at Owner's cost except as otherwise
provided herein, a certified audit of the Hotels' operations may be performed
annually, and after the Expiration Date, by a nationally recognized, independent
certified public accounting firm appointed by Owner. In the event that Owner
elects to have such an audit performed, Owner must give notice of its election
within twelve (12) months after its receipt of the applicable 8.1(c) Statement.
Any dispute concerning the correctness of an audit shall be settled by
Arbitration. Manager shall pay the cost of any audit revealing an understatement
of Owner's Percentage Priority and the Residual Distribution by more than three
percent (3%) in the aggregate, and such cost shall not be an Operating Cost. In
the event that either no notice of audit is given within said twelve (12)
months, or no audit is in fact commenced within eighteen (18) months after
receipt of the 8.1(c) Statement, such operating statement will constitute the
final statement for that Fiscal Year, deemed to have been approved by Owner.
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(g) The terms of Sections 8.1(a), 8.1(d) and 8.1(f) and any provisions
regarding dispute resolution set forth in this Section 8.1 shall survive the
expiration or earlier termination of the Term.
8.2 Yearly Budgets.
(a) Not less than sixty (60) days prior to the first day of each Fiscal
Year after the 2005 Fiscal Year, Manager shall submit to Owner for Owner's
approval a proposed Yearly Budget for each Hotel including a proposed Capital
Replacements Budget for each Hotel for the ensuing full or partial Fiscal Year,
as the case may be. If Owner fails to disapprove of a proposed Yearly Budget
within thirty (30) days after the submission thereof to Owner for its approval,
the same shall be deemed approved. Together with each such Capital Replacements
Budget, Manager shall provide to Owner a proposed three-year capital forecast
for such Hotel for Owner's review and approval. Manager will, from time to time
not less often than quarterly, issue periodic forecasts of operating performance
to Owner reflecting any significant unanticipated changes, variables or events
or describing significant additional unanticipated items of income or expense.
Manager will provide Owner with the material data and information utilized in
preparing the Yearly Budgets and the Capital Replacements Budgets or any
revisions thereof. Manager will not be deemed to have made any guaranty,
warranty or representation whatsoever in connection with the Yearly Budgets and
the Capital Replacements Budgets, except that the proposed Yearly Budgets,
including the Capital Replacements Budgets, reflect Manager's best professional
estimates of the matters they describe. Manager shall use its reasonable
efforts, subject to the Operating Standards, to operate and manage the Hotels in
accordance with their Yearly Budgets. The Yearly Budgets for the Hotels for the
2005 Fiscal Year shall be those most recently delivered by Manager to Owner on
or before the Effective Date.
(b) In the event Owner disapproves or raises any objections to the
proposed Yearly Budget, or any portion thereof, or any revisions thereto, Owner
and Manager shall cooperate with each other in good faith to resolve the
disputed or objectionable items. If Owner disapproves of a proposed Yearly
Budget, Owner will disapprove on a specific line-by-line basis to the extent
reasonably practical. Any dispute with respect to a proposed Yearly Budget which
is not resolved by the parties within thirty (30) days after the submission
thereof to Owner shall be resolved by Arbitration.
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(c) In the event Owner and Manager are not able to resolve the disputed
or objectionable matters raised by Owner in regard to a Yearly Budget prior to
the commencement of the applicable Fiscal Year, either voluntarily or by means
of Arbitration, Manager is authorized to operate the Hotel in accordance with
the proposed Yearly Budget; provided, however, that as for disputed budget
items, Manager may not expend more than the previous year's budgeted amount for
such item (if any), increased by a percentage equal to the increase in (i) the
Consumer Price Index during the last year, with respect to the non-Canadian
Hotels and (ii) the Canadian Consumer Price Index during the last year, with
respect to the Canadian Hotels, unless such expenditure is of the type
contemplated under Section 7.7(b) or is for an expense (such as real estate
taxes, insurance premiums or utilities) which are beyond the Manager's
reasonable control; provided further, however, Manager shall not expend on
account of Capital Replacements in any period for any Hotel an amount in excess
of five percent (5%) of such Hotel's Gross Revenues for such period other than
pursuant to an approved Capital Replacements Budget or with the prior written
consent of Owner or in connection with the up to $25,000,000 required to be
expended by Manager's Affiliates pursuant to Section 5.2.1 of the Purchase
Agreement. For purposes of this section, "increase in the Consumer Price Index
during the last year" shall mean the percentage increase in the Consumer Price
Index for the twelve (12) month period ending immediately prior to the date of
submission of the disputed proposed Yearly Budget, and "increase in the Canadian
Consumer Price Index during the last year" shall mean the percentage increase in
the Canadian Consumer Price Index for the twelve (12) month period ending
immediately prior to the date of submission of the disputed proposed Yearly
Budget.
8.3 Bank Accounts.
(a) The revenues of the Hotels shall be deposited into the one or more
Bank Accounts. The Bank Accounts will be separate and distinct from any other
accounts, reserves or deposits required by this Agreement, and Manager's
designees who are included in the coverage of any required fidelity or similar
insurance will be the only parties authorized to draw upon any Bank Account;
provided, however, such designees shall only be authorized to draw upon a Bank
Account for purposes authorized by the terms of this Agreement.
(b) So long as this Agreement is in full force and effect and there is
no uncured Manager Default, Manager shall have exclusive control of the Bank
Accounts. Nothing contained
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herein is to be construed as preventing Manager from maintaining separate
payroll accounts or ▇▇▇▇▇ cash funds and making payments therefrom as the same
may be customary in the hotel business or the applicable Brand Standards.
8.4 Consolidated Financials. Each Ultimate Parent of Manager and each
Guarantor shall furnish to Owner within ten (10) days after the filing by such
Ultimate Parent or any Guarantor of any material filing with respect to the
securities of such Ultimate Parent or such Guarantor or any financial statement
with any governmental agency, quasi-governmental agency or stock exchange, a
copy of the same; provided, however, if a Guarantor or Ultimate Parent of
Manager is not required to file interim and annual financial statements with the
Securities and Exchange Commission or its equivalent in the United Kingdom such
Guarantor or Ultimate Parent shall furnish the following statements to Owner:
(a) Within forty-five (45) days after each interim period for which
such Ultimate Parent or Guarantor prepares Consolidated Financials, the
Consolidated Financials of such Ultimate Parent or Guarantor for such period
accompanied by an Officer's Certificate; and
(b) within ninety (90) days after each fiscal year of such Ultimate
Parent or Guarantor, the Consolidated Financials of such Ultimate Parent or such
Guarantor for such fiscal year audited by a firm of independent certified public
accountants reasonably satisfactory to Owner accompanied by an Officer's
Certificate.
ARTICLE 9
FEES TO MANAGER
9.1 Management Fees.
(a) As consideration for the management and operation of the Hotels by
Manager, Manager shall earn the following fees, which fees shall be payable as
provided in Section 10.1.
(i) The Base Management Fee shall be paid in monthly
installments in arrears based on the Gross Revenues of the Hotels for
the prior Fiscal Month. The Base Management Fee for any period less
than a full twelve (12) month Fiscal Year shall be paid on the basis of
Gross Revenues for that period.
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(ii) The Incentive Management Fee shall be paid in monthly
installments in arrears. The Incentive Management Fee for any period
less than a full twelve (12) month Fiscal Year shall be paid on the
basis of Gross Revenues for that period.
(b) So long as the PR Property shall be a Pooled FF&E Hotel, Owner
shall be entitled to offset against the Management Fees any amounts then due and
owing to Owner or any of its Affiliates under the PR Lease or the PR Indemnity,
and Manager shall not pay itself any amount which Owner is so entitled to
offset.
(c) The parties acknowledge that services performed by the Manager
hereunder in connection with a Canadian Hotel constitute one or more "taxable
supplies" for GST purposes. As a result, GST is applicable and must be charged
and collected from Owner by Manager in addition to and calculated on the Base
Management Fee, the Incentive Management Fee, and that part of the Operating
Costs incurred by the Manager and reimbursed in connection with this Agreement.
9.2 System Fees. Manager shall pay, as Operating Costs on behalf of
Owner, usual and customary system fees and assessments on an area-wide basis for
the systems of hotels comprising the applicable Brand which currently include:
(a) with respect to the Staybridge Brand, (i) a reservation and
marketing fee of three percent (3.0%) of Rooms Revenue, (ii) a Priority Club Fee
of four and three-quarters percent (4.75%) of all qualifying folio revenue at a
Hotel to Priority Club (i.e., the loyalty program of the Brands) members, (iii)
a Technology Fee equal to $10.80 per guest room per month, (iv) an e-mail
service fee equal to $15.00 per e-mail user per month and (v) an accounting fee
of $15.00 per month per guest room;
(b) with respect to the InterContinental Brand, (i) a reservation and
marketing fee of three percent (3.0%) of Rooms Revenue, (ii) a Priority Club Fee
of four and three-quarters percent (4.75%) of all qualifying folio revenue at a
Hotel to Priority Club members, (iii) a Technology Fee equal to $10.80 per guest
room per month, (iv) an e-mail service fee equal to $15.00 per e-mail user per
month and (v) an accounting fee of $15.00 per guest room per month;
(c) with respect to the Crowne Plaza Brand, (i) a reservation and
marketing fee of three percent (3.0%) of Rooms
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Revenue, (ii) a Priority Club Fee of four and three-quarters percent (4.75%) of
all qualifying folio revenue at a Hotel to Priority Club members, (iii) a
Technology Fee equal to $10.80 per guest room per month, (iv) an e-mail service
fee equal to $15.00 per e-mail user per month and (v) an accounting fee of
$15.00 per guest room per month; and
(d) with respect to the Holiday Inn Brand, (i) a reservation and
marketing fee of three percent (3.0%) of Rooms Revenue, (ii) a Priority Club Fee
of four and three-quarters percent (4.75%) of all qualifying folio revenue at a
Hotel to Priority Club members, (iii) a Technology Fee equal to $10.80 per guest
room per month, (iv) an e-mail service fee equal to $15.00 per e-mail user per
month and (v) an accounting fee of $15.00 per guest room per month.
Each of the foregoing System Fees and other fees shall be adjusted from time to
time to reflect the Hotels' equitable portion of the Manager's and/or its
Affiliates' actual out-of-pocket costs for providing the services to which such
fees pertain and only in accordance with changes generally applicable to the
Brand in question. Not less frequently than annually, Manager shall provide to
Owner financial statements with respect to all fees comparable to the System
Fees collected by Manager and/or its Affiliates and the applications thereof;
provided, however, Manager shall not be obligated to provide such statements
with respect to the accounting fee, the Technology Fee or the e-mail service
fees until such time as it has in place the means of producing such statements.
Manager covenants, warrants and represents that (i) each hotel in the applicable
Brand (other than the Intercontinental Brand) pays, and shall at all times pay,
the same System Fees for such services and all such System Fees collected by
Manager and/or its Affiliates are, and will be, applied to the cost of providing
such services to all hotels in such Brand, (ii) the e-mail service fees and the
accounting fees being charged under this Agreement are no higher than the
amounts being charged for such services in at least fifty (50%) of the other
hotels in the U.S. and Canada which are being managed by Manager or its
Affiliates under management agreements dated after January 1, 2000 (exclusive of
any other management agreements with Owner or its Affiliates) and the
percentages of any increases in such fees charged under this Agreement shall not
be higher than the comparable percentages of increases charged to such other
hotels under such other management agreements and (iii) the System Fees being
charged under this Agreement for the Intercontinental Brand are no higher than
the amounts being charged in at least
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fifty (50%) of the other Intercontinental Brand hotels in the U.S. and Canada
which are being managed by Manager or its Affiliates under management agreements
dated on or after January 1, 2000 (exclusive of any other management agreements
with Owner or its Affiliates) and the percentages of any increases in such fees
charged under this Agreement shall not be higher than the comparable percentages
of increases charged to such other hotels under such other management
agreements. Other than with respect to the System Fees for the InterContinental
Hotels, Manager or its Affiliates shall not make any profits from the System
Fees except to the extent that such profit for any year shall be applied to the
cost of providing such services in the subsequent year or future years;
provided, however, Manager and its Affiliates shall not retain any such profits
for an unreasonable period of time. Any disputes under this Section 9.2 shall be
resolved by Arbitration.
All System Fees and e-mail service fees and accounting fees described above
shall accrue monthly, when billed, but in no event shall any such fees accrue
prior to the end of the month for which they are incurred.
ARTICLE 10
DISBURSEMENTS
10.1 Disbursement of Funds. As and when received by Manager or the
Hotels, all Gross Revenues from all of the Hotels shall be deposited into the
Bank Accounts and, subject to the terms of Sections 8.1 and 10.6, applied in the
following order of priority to the extent available:
(a) First, to pay all Operating Costs;
(b) Second, to fund the Reserve Account as required by Section 5.2 for
the previous Fiscal Month;
(c) Third, to Owner, all accrued but unpaid Owner's First Priority for
the Fiscal Year to which such Gross Revenues pertain (net of amounts theretofore
paid from Gross Revenues by Manager on behalf of Owner on account of debt
service due under an Authorized Mortgage as provided in Section 4.3(c));
(d) Fourth, (i) to reimburse Manager for any amounts advanced by
Manager pursuant to Section 5.2(d) together with interest on the outstanding
amounts thereof at the Interest Rate (determined as of the date of the
applicable advance) and (ii)
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to pay for Capital Replacements which Owner failed to timely fund in violation
of Section 5.2(d);
(e) Fifth, to fund the Reserve Account to the extent that the aggregate
amounts previously funded for prior periods is less than the amount required to
be funded for such periods pursuant to the terms of Section 5.2;
(f) Sixth, to Manager, interest at the Interest Rate (determined as of
the date of the applicable advance) on any outstanding amounts advanced by
Manager pursuant to Section 15.2(c);
(g) Seventh, to Manager, any accrued but unpaid Base Management Fee for
the Fiscal Year to which such Gross Revenues pertain but not for any other
period;
(h) Eighth, to Owner, all accrued but unpaid Owner's Second Priority
for the Fiscal Year to which such Gross Revenues pertain but not for any other
period (and, without duplication for amounts netted under Section 10.1(c), net
of amounts theretofore paid from Gross Revenues by Manager on behalf of Owner on
account of debt service due under an Authorized Mortgage as provided in Section
4.3(c));
(i) Ninth, (commencing in 2007) to Owner, all accrued but unpaid
Owner's Percentage Priority for all of the Hotels but not for any other period;
(j) Tenth, to reimburse Owner for any advances made by Owner to Working
Capital;
(k) Eleventh, to reimburse Manager for any advances made by Manager to
Working Capital in excess of the Initial Working Capital;
(l) Twelfth, prior to the Severance Date, provided the Guarantor is not
in default of any of its obligations under the Guaranty, to reimburse the
Guarantor for any unreimbursed payments made by it on account of the Guaranteed
Obligations under the Guaranty; provided, however, if the Guarantor shall have
Provided Collateral (as defined in the Guaranty) under the Guaranty, then the
amount to be reimbursed to the Guarantor under this Section 10.1(l) shall be
disbursed to Owner, to be held by Owner as collateral for the Guarantor's
obligations under the Guaranty until the Outstanding Balance under the Guaranty
is equal to zero dollars ($0); provided further, however, that any amounts which
would otherwise be reimbursed to
55
the Guarantor shall first be applied to any amount due under the PR Guaranty;
(m) Thirteenth, to reimburse Owner for any advances made by Owner or
Purchaser to the Reserve Account pursuant to Section 5.2(c)(iii);
(n) Fourteenth, to reimburse Manager for (i) outstanding advances made
by Manager pursuant to Section 15.2(c) to the extent then due and payable and
(ii) other contributions made by it to the Reserve Account other than pursuant
to Section 5.2(d) or Section 5.2(f);
(o) Fifteenth, to Owner, all accrued and unpaid Owner's First Priority
for prior periods;
(p) Sixteenth, to pay Manager accrued but unpaid Base Management Fees
for prior periods;
(q) Seventeenth, to Owner, all accrued and unpaid Owner's Second
Priority for prior periods; and
(r) Eighteenth, to Manager, the Incentive Management Fee.
10.2 Residual Distribution. Simultaneously with the making of each
payment of the Incentive Management Fee, the then remaining Gross Revenues will
be disbursed to Owner. Except as herein provided, Manager shall have no
responsibility to incur Operating Costs or undertake any Capital Replacement
except to the extent Manager is reasonably assured that funds to pay such
Operating Costs and for such Capital Replacements will be timely available.
10.3 Owner's First Priority. Owner's First Priority shall be due and
payable in advance in equal monthly installments on the first day of each Fiscal
Month, pro-rated for any partial month, regardless of any inadequacy of Gross
Revenues or Operating Profits. If any installment of Owner's First Priority is
not paid when due, the same shall accrue interest at the Interest Rate. (Such
interest shall be payable on demand, shall not be an Operating Cost, and shall
be paid by Manager.) Appropriate adjustments shall be made to reflect any change
in Owner's First Priority on account of advances made pursuant to Sections
5.2(c) or 15.2 by Owner or Purchaser when such advances are made, provided any
additional amounts of Owner's First Priority due by reason of any such advance
for the month in which such advance is made shall not be due and payable until
the first Business Day of the month next after the date as of
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which such change occurs. As installments of Owner's First Priority are to be
paid in advance, Manager may advance amounts due on account of a monthly
installment of Owner's First Priority for a Fiscal Month and reimburse itself
from Operating Profits for such Fiscal Month the amounts so advanced; provided,
however, if Operating Profits of all of the Hotels for such Fiscal Month in
excess of the amount to be contributed to the Reserve Account pursuant to
Section 5.2 are insufficient to make such reimbursements, the amount of such
insufficiency shall be deemed an advance under the PR Guaranty to the extent any
amount is owed thereunder and then an advance to Working Capital, and Manager
shall be entitled to the reimbursement thereof only pursuant to Section 10.1(k);
provided, however, unless such advance is deemed an advance under the PR
Guaranty, by notice given to Owner within thirty (30) days after the end of such
Fiscal Month, Manager may elect to deem the amount of such insufficiency an
advance under the Guaranty (and not an advance to Working Capital). If Manager
shall so make such election, the amount of such insufficiency shall be
reimbursed to the Guarantor as provided in Section 10.1(l). If Owner fails to
receive any installment of Owner's First Priority as and when due, Owner may
terminate this Agreement on not less than thirty (30) days' notice; provided,
however, such notice shall be void ab initio if such installment together with
any interest accrued thereon is paid to Owner prior to the thirtieth (30th) day
after such notice is given.
10.4 Owner's Percentage Priority. Owner's Percentage Priority shall be
calculated on a Hotel-by-Hotel basis, and shall accrue and be payable in monthly
installments to the extent that Gross Revenues year-to-date at any Hotel exceed
Gross Revenues for such Hotel for the corresponding period in its Base Year. The
installment of Owner's Percentage Priority for all of the Hotels for each Fiscal
Month shall be due and payable on the twenty fifth (25th) day of the following
month. Owner's Percentage Priority with respect to any Hotel located in Canada
shall be calculated in Canadian dollars but shall be paid to Owner in United
States dollars in accordance with Section 24.23.
10.5 Owner's Second Priority. Owner's Second Priority shall accrue in
equal monthly installments on the first day of each Fiscal Month, pro-rated for
any partial month, and shall be paid as provided in Section 10.1; provided,
however, all accrued and unpaid Owner's Second Priority shall be due and payable
upon the expiration or earlier termination of the Term. Appropriate adjustments
shall be made to reflect any change in Owner's
57
Second Priority on account of advances made by Owner or Purchaser pursuant to
Sections 5.2(c)(ii) when such advances are made, provided any additional amounts
of Owner's Second Priority due by reason of any such advance for the month in
which such advance is made shall not be due and payable until the first Business
Day of the month next after the date as of which such change occurs.
10.6 No Interest. Except as expressly provided herein, no interest
shall accrue or be payable to either party hereunder on account of any amount
owed to such party hereunder.
10.7 Calculation of Interim Disbursements. Other than as described in
Sections 5.2 or 10.3, the priority order for disbursement of Gross Revenues set
forth in Section 10.1 shall be determined on an annual basis in accordance with
Section 8.1; provided, however, there shall be interim monthly disbursements to
which the following shall apply:
(a) Each month during a Fiscal Year, the disbursements of Gross
Revenues will be made on a cumulative, year-to-date basis based on Manager's
monthly statements delivered pursuant to Section 8.1(b) as if that year-to-date
period represented a full Fiscal Year.
(b) If a statement delivered pursuant to Section 8.1(b) reflects any
overpayment (other than with respect to Owner's First Priority or amounts to be
contributed to the Reserve Account), the party which received such overpayment
shall deposit the same in the Bank Accounts (or remit the same to Manager for
such deposit) and the same shall then be dispersed in the order specified in
Section 10.1.
10.8 Amounts Outstanding at End of Term. Unless this Agreement is
wrongfully terminated by Owner, then upon the expiration or earlier termination
of this Agreement, Manager shall have no claim against Owner, Purchaser or the
Hotels for amounts owed to it under this Agreement which have not been paid by
reason of the inadequacy of Gross Revenues or Operating Profits.
10.9 Allocation of Owner's Fixed Priority. Owner's Fixed Priority shall
initially be allocated among the Hotels as set forth in Exhibit C. Upon any
increase to Owner's Fixed Priority by reason of any advance made pursuant to
Section 5.2(c) or Section 15.2, such increase shall be allocated to each Hotel
to the extent such advance was made for such Hotel. In the event of an
adjustment to Owner's First Priority or Owner's Second
58
Priority pursuant to Sections 2.7 or 24.17, such adjustment shall be allocated
among the remaining Hotels in proportion to their allocated share of Owner's
First Priority immediately prior to such adjustment.
10.10 Survival. The terms of this Article 10 shall survive the
expiration or earlier termination of the Term.
ARTICLE 11
CERTAIN OTHER SERVICES
11.1 Optional Services. Owner acknowledges that Manager and its
Affiliates sometimes provide separate, optional services which may relate to the
Hotels in addition to those which are encompassed by this Agreement. Owner
agrees to consider in good faith any proposals presented to it by Manager or any
of Manager's Affiliates for such additional services relative to the Hotels; it
being understood, however, that this Section shall in no event be construed to
require Owner to accept any such proposals.
11.2 Purchasing. In making purchasing decisions with respect to
products and services used in the operation of the Hotels, Manager will exercise
reasonable business judgment in accordance with the Operating Standards. Manager
shall be entitled to contract with its Affiliates, others in whom Manager or its
Affiliates have an ownership interest and others with whom Manager or its
Affiliates have contractual relationships to provide goods and/or services to
the Hotels, provided that the prices and/or terms for such goods and/or services
are competitive and no worse than the prices and/or terms that such provider
charges unrelated third-parties. In determining whether such prices and/or terms
are so competitive, they will be compared to the prices and/or terms which are
available from comparably qualified providers for goods and/or services of
similar quality grouped in reasonable categories, rather than being compared
item by item. Subject to the foregoing proviso, the prices charged for such
goods or services may include overhead and the allowance of a reasonable return
to the provider. Subject to the foregoing proviso, Owner acknowledges and agrees
that the providers of such goods and/or services may retain for their own
benefit any credits, rebates or commissions received with respect to such
purchases. Notwithstanding anything contained herein to the contrary, Manager
will act in a manner that enables Owner and the Hotels to gain not less than the
same benefits with respect to purchasing as are made available to other hotels
of the same category as the Hotels
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which other hotels are owned or operated by Manager or its Affiliates. Disputes
under this Section 11.2 shall be resolved by Arbitration.
ARTICLE 12
SIGNS AND SERVICE MARKS
12.1 Signs. To the extent not in place on the Effective Date, Manager
agrees to erect and install, in accordance with all applicable Legal
Requirements, all necessary signs under the applicable Brand Standards.
12.2 System Marks. It is understood and agreed by Owner that the names
Staybridge Suites, InterContinental, Crowne Plaza and Holiday Inn and all System
Marks are the exclusive property of Manager or its Affiliates. Owner agrees and
acknowledges the exclusive right of ownership of Manager and its Affiliates to
the System Marks and the Reservation Systems. Except for any rights expressly
granted to Owner in this Agreement, Owner hereby disclaims any right or interest
therein, regardless of the legal protection afforded thereto. Except for any
rights expressly granted to Owner in this Agreement, in the event of termination
or cancellation of this Agreement, whether as a result of a default by Manager
or otherwise, Owner shall not hold itself out as, or operate the Hotels as,
Staybridge Suites, InterContinental, Crowne Plaza and Holiday Inn, as
applicable, hotels, and will immediately cease using such names and all other
System Marks in connection with the name or operation of each Hotel as of the
Expiration Date. Promptly after the Expiration Date (or such later date on which
Manager shall cease to operate the Hotels) and the expiration of any right
granted to Owner to use the System Marks, subject to the terms of Section 17.4,
Owner shall remove all signs, furnishings, printed material, emblems, slogans or
other distinguishing characteristics which are now or hereafter may be connected
or identified with an applicable Brand or Reservation System. Owner shall not
use any System Marks or any part, combination or variation thereof in the name
of any partnership, corporation or other business entity, nor allow the use
thereof by others.
12.3 System ▇▇▇▇ Litigation.
(a) Manager, IHG and each other Guarantor shall hold Owner and its
Affiliates harmless from and indemnify and defend Owner and its Affiliates
against any and all costs and expenses incurred by Owner or its Affiliates
(including, without limitation, attorneys' fees reasonably incurred), arising
out of
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the use of System Marks at or in connection with the operation of the Hotels by
Owner or its designees pursuant to the terms of this Agreement or by Manager or
its Affiliates.
(b) In the event a Hotel, Owner or Manager is the subject of any
litigation or action brought by any party seeking to claim rights in or to
restrain the use of any System ▇▇▇▇ used by Manager in connection with the
Hotel, then, provided Owner is a party to such litigation or action and further
provided that Manager shall have provided to Owner either a guaranty in form and
substance reasonably satisfactory to Owner with respect to Manager's obligations
under Section 12.3(a) or collateral to secure Manager's obligations under
Section 12.3(a) reasonably satisfactory to Owner, the conduct of any suit
whether brought by Manager or instituted against Owner and/or Manager shall be
under the absolute control of counsel nominated and retained by Manager
notwithstanding that Manager may not be a party to such suit.
(c) The Owner shall not bring suit against any user of any System ▇▇▇▇
alleging or asserting any claim based on Owner's right, title or interest as of
the Effective Date in any System ▇▇▇▇.
(d) The terms of this Section 12.3 shall survive the expiration or
earlier termination of this Agreement.
12.4 Other Intellectual Property Provisions. Owner acknowledges that
Manager or Manager's Affiliates are or may become the owner or licensee of
certain intellectual property including: (a) software for use at one or more
facilities managed by Manager or Manager's Affiliates and all source and object
code versions thereof and all related documentation, flow charts, user manuals,
listing and service/operator manuals and any enhancements, modifications or
substitutions thereof; and (b) operating methods, procedures and policies and
(c) upgrades and improvements to the foregoing (as the same may be upgraded or
improved, collectively, "Intellectual Property"). Manager shall utilize the
Intellectual Property to the extent necessary or appropriate in connection with
the operation of the Hotels for the purpose of carrying out its obligations
hereunder. Subject to the terms of Sections 6.1 and 24.1, such use shall be
strictly on a non-exclusive basis and neither such use nor anything contained in
this Agreement shall confer any proprietary or other rights in the Intellectual
Property on Owner or any third parties.
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ARTICLE 13
INSURANCE
13.1 Insurance Coverage. Unless Owner elects to procure and maintain
the insurance required hereunder, as an Operating Cost, which election may be
made from time to time and withdrawn from time to time on not less than thirty
(30) days' notice, then, to the extent commercially available (regardless of
whether it is available on reasonable terms), Manager shall procure and maintain
as an Operating Cost, at all times during the Term or while it is in possession
of any of the Hotels, reasonable and adequate amounts of casualty, liability and
other usual and customary types of insurance for the Hotels and their
operations. Without limiting the generality of the foregoing, Manager shall
obtain and maintain, with insurance companies of recognized responsibility, a
minimum of the following insurance to the extent commercially available
(regardless of whether it is available on reasonable terms):
(a) "Special Form" property insurance, including insurance against loss
or damage by fire, vandalism and malicious mischief, terrorism (if available on
commercially reasonable terms), earthquake, explosion of steam boilers, pressure
vessels or other similar apparatus, now or hereafter installed in the Hotels,
with equivalent coverage as that provided by the usual extended coverage
endorsements, in an amount equal to one hundred percent (100%) of the then full
replacement cost of the property requiring replacement (excluding foundations)
from time to time, including an increased cost of construction endorsement;
(b) Business interruption and blanket earnings plus extra expense under
a rental value insurance policy or endorsement covering risk of loss during the
lesser of the first twelve (12) months of reconstruction or the actual
reconstruction period necessitated by the occurrence of any of the hazards
described in subparagraph (a) above, in such amounts as may be customary for
comparable properties managed or leased by Manager or its Affiliates in the
surrounding area and in an amount sufficient to prevent Owner or Purchaser from
becoming a co-insurer;
(c) Commercial general liability insurance, including bodily injury and
property damage (on an occurrence basis and on a 1993 ISO CGL form or on a form
customarily maintained by similarly situated hotels, including, without
limitation, broad form contractual liability, independent contractor's hazard
and completed operations coverage, aggregate limit as applicable) in
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an amount not less than Two Million Dollars ($2,000,000) per occurrence and
umbrella coverage of all such claims in an amount not less than Fifty Million
Dollars ($50,000,000) per occurrence;
(d) Flood (if a Hotel is located in whole or in part within an area
identified as an area having special flood hazards and in which flood insurance
has been made available under the National Flood Insurance Act of 1968, as
amended, or the Flood Disaster Protection Act of 1973, as amended (or any
successor acts thereto) and insurance against such other hazards and in such
amounts as may be available under the National Flood Insurance Program and
customary for comparable properties in the area;
(e) Worker's compensation insurance coverage for all persons employed
by Manager at the Hotels with statutory limits and otherwise with limits of and
provisions in accordance with Legal Requirements and employer's liability
insurance as is customarily carried by similar employers which coverage shall be
written by an insurance company of recognized responsibility, as a qualified
self-insurer subject to applicable state requirements and approvals, or specific
to the State of Texas, as a nonsubscriber;
(f) Employment practices liability insurance with limits of Twenty Five
Million Dollars ($25,000,000); and
(g) Such additional insurance as may be required, from time to time by
(i) any Legal Requirement, (ii) any holder of an Authorized Mortgage or (iii)
which is otherwise reasonably required upon advance notice given to Manager in
accordance with the terms hereof.
13.2 Insurance Policies.
(a) All insurance provided for under this Article 13 must be effected
by policies issued by insurance companies of good reputation and of sound
financial responsibility and will be subject to Owner's reasonable approval.
(b) All insurance policies (other than workers' compensation policies)
shall be issued in the name of Purchaser with Manager and Owner and any holder
of an Authorized Mortgage being named as additional insureds; provided, however,
subject to Owner's obligations under Article 15, Manager shall not be named as
an additional insured on, and shall not have any interest in the proceeds of,
any property insurance. Purchaser
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or the holder of an Authorized Mortgage shall be named loss payee(s) on any
property insurance.
(c) The insurance herein required may be brought within the coverage of
a so-called blanket policy or policies of insurance carried and maintained by
Owner or Manager, provided that such blanket policies fulfill the requirements
contained herein.
(d) In the event Owner or Manager believes that the then full
replacement cost of a Hotel has increased or decreased at any time during the
Term, such party, at its own cost, shall have the right to have such full
replacement cost redetermined by an independent accredited appraiser approved by
the other, which approval shall not be unreasonably withheld or delayed. The
party desiring to have the full replacement cost so redetermined shall
forthwith, on receipt of such determination by such appraiser, give written
notice thereof to the other parties. The determination of such appraiser shall
be final and binding on the parties hereto until any subsequent determination
under this Section 13.2(d), and the party obligated to maintain insurance
hereunder shall forthwith conform the amount of the insurance carried to the
amount so determined by the appraiser. Such replacement value determination will
not be necessary so long as a Hotel is insured through a blanket replacement
value policy.
(e) All insurance policies and endorsements required pursuant to this
Article 13 shall be fully paid for, nonassessable and, except for umbrella,
worker's compensation, flood and earthquake coverage, shall be issued by
insurance carriers authorized to do business in the state/province where each
Hotel is located, having a general policy holder's rating of no less than B++ in
Best's latest rating guide.
(f) All such policies shall provide Owner, Manager and any holder of an
Authorized Mortgage if required by the same, thirty (30) days' prior written
notice of any material change or cancellation of such policy and the property
insurance policies shall provide for a waiver of subrogation, to the extent
available.
13.3 Insurance Certificates. Manager shall deliver to Owner, Purchaser
and any holder of an Authorized Mortgage, certificates of insurance with respect
to all policies so procured by it and, in the case of insurance policies about
to expire, shall deliver certificates with respect to the renewal thereof. In
the event Manager shall fail to effect such
64
insurance as herein required, to pay the premiums therefor, or to deliver,
within fifteen (15) days of a request therefor, such certificates, Owner shall
have the right, but not the obligation, to acquire such insurance and pay the
premiums therefor, which amounts shall be payable to Owner, upon demand, as an
Operating Cost, together with interest accrued thereon at the Interest Rate
(which interest shall not be an Operating Cost, but shall be paid by Manager)
from the date such payment is made until (but excluding) the date repaid.
13.4 Insurance Proceeds. All proceeds payable by reason of any loss or
damage to a Hotel, or any portion thereof (other than the proceeds of any
business interruption insurance), shall be paid directly to Purchaser as its
interest may appear and all loss adjustments with respect to losses payable to
Manager shall require the prior written consent of Purchaser.
13.5 Manager's Insurance Program.
(a) Manager will obtain quotations for insurance on an annual basis and
provide, when available, such quotations to Owner for its approval or rejection.
If Owner rejects such quotations, it may obtain such insurance and thereafter
Owner shall maintain, as an Operating Cost, the insurance, the quotation for
which Owner rejected.
(b) Owner acknowledges that in the event the insurance required
hereunder is provided through Manager's insurance program, to the extent
available, the costs and charges therefore will be paid as an Operating Cost
without regard to whether such payment is to an Affiliate of Manager and whether
that Affiliate receives a profit as a result thereof.
ARTICLE 14
INDEMNIFICATION AND WAIVER OF SUBROGATION
14.1 Indemnification. Each of the parties hereto shall indemnify,
defend and hold harmless the other for, from and against any cost, loss, damage
or expense (including, but not limited to, reasonable attorneys' fees and all
court costs and other expenses of litigation, whether or not taxable under local
law) to the extent caused by or arising from: the failure of the indemnifying
party to duly and punctually perform any of its obligations owed to the other;
or any gross negligence or willful misconduct of the indemnifying party.
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14.2 Waiver of Subrogation. To the fullest extent permitted by law,
each of Owner and Manager hereby waives any and all rights of subrogation and
right of recovery or cause of action, and agrees to release the other and
Purchaser from liability for loss or damage to property to the extent such loss
or damage is covered by valid and collectible insurance in effect at the time of
such loss or damage or which would have been covered if the insurance required
by this Agreement were being carried (unless the same is not carried due to the
fault of Owner); provided, however, that such waiver shall be of no force or
effect if the party benefiting therefrom fails to obtain and maintain the
insurance required to be obtained and maintained by it. Such waivers are in
addition to, and not in limitation or derogation of, any other waiver or release
contained in this Agreement. Written notice of the terms of the above waivers
shall be given to the insurance carriers of Owner and Manager, and the insurance
policies shall be properly endorsed, if necessary, to prevent the invalidation
of said policies by reason of such waivers.
14.3 Survival. The terms of this Article 14 shall survive the
expiration or earlier termination of this Agreement.
ARTICLE 15
DAMAGE TO AND DESTRUCTION OF THE HOTEL
15.1 Termination.
(a) If during the Term any Hotel shall be totally or partially
destroyed and the Hotel is thereby rendered Unsuitable for Its Permitted Use,
(i) Manager may terminate this Agreement with respect to such Hotel on sixty
(60) days' written notice to Owner, or (ii) Owner may terminate this Agreement
with respect to such Hotel on not less than sixty (60) days' written notice to
Manager, whereupon, this Agreement, with respect to such Hotel, shall terminate
and Owner or Purchaser shall be entitled to retain the insurance proceeds
payable on account of such damage.
(b) Notwithstanding any provisions of Section 15.2 below to the
contrary, if damage to or destruction of any Hotel occurs during the last twenty
four (24) months of the then Term (after giving effect to any exercised options
to extend the same) and if such damage or destruction cannot reasonably be
expected to be fully repaired and restored prior to the date that is twelve (12)
months prior to the end of such Term, then either Owner or
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Manager may terminate this Agreement with respect to such Hotel on not less than
thirty (30) days' advance notice.
(c) Upon any termination under this Article 15 or Article 16, Owner's
First Priority and Owner's Second Priority shall be reduced as follows:
(i) Such reduction to Owner's First Priority shall be in an
amount such that after giving effect to such reduction the ratio of
Owner's First Priority to the NOI of the Hotels (other than the Hotel
with respect to which this Agreement has been so terminated) for the
most recently ended full twelve (12) calendar months prior to the date
of the casualty or Condemnation shall equal the ratio of Owner's First
Priority before such reduction to the NOI of all the Hotels (including,
the Hotel with respect to which this Agreement has been terminated) for
such 12-month period; and
(ii) Such reduction to Owner's Second Priority shall be in an
amount such that after giving effect to such reduction the ratio of
Owner's Second Priority to the NOI of the Hotels (other than the Hotel
with respect to which this Agreement has been so terminated) for the
most recently ended full twelve (12) calendar months prior to the date
of the casualty or Condemnation shall equal the ratio of Owner's Second
Priority before such reduction to the NOI of all the Hotels (including,
the Hotel with respect to which this Agreement has been terminated) for
such 12-month period.
(d) Manager hereby waives any statutory rights of termination which may
arise by reason of any damage to or destruction of any Hotel.
15.2 Restoration.
(a) If during the Term any Hotel is damaged or destroyed by fire,
casualty or other cause but is not rendered Unsuitable for Its Permitted Use or
if neither Owner nor Manager terminates this Agreement pursuant to Section 15.1,
Owner shall make the net proceeds of insurance received in connection with such
casualty (excluding the proceeds of business interruption or similar insurance
which are a portion of Gross Revenues) and any other amount Owner elects to
contribute toward restoration available to Manager for restoration of such Hotel
subject to customary terms applicable to advances and construction loans (to the
extent applicable) and the terms of the Lease and any
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Authorized Mortgage, and Owner shall make, or shall cause there to be made, all
Repairs necessary to restore such Hotel to substantially the same condition as
existed prior to such casualty. If Owner elects to retain Manager's services in
connection with such Repairs, the terms of Section 11.1 shall apply.
(b) Any casualty which does not result in a termination of this
Agreement with respect to the applicable Hotel shall not excuse the payment of
sums due to Owner hereunder with respect to such Hotel.
(c) If the net proceeds of the insurance received in connection with a
casualty or an Award received in connection with a Condemnation are insufficient
to complete the required Repairs, Owner shall have the right (but not the
obligation) to contribute (or cause Purchaser to contribute) the amount of such
insufficiency. If Owner elects not to contribute such insufficiency by notice
given to Manager within ten (10) Business Days after a notice given by Manager
to Owner reasonably detailing the existence of such insufficiency, Manager shall
have the right to contribute such insufficiency. If Manager fails to contribute
such insufficiency to an account of Owner to be used in completing such Repairs
within ten (10) Business Days after Owner's election, the Hotel subject to such
casualty or Condemnation shall be deemed Unsuitable for Its Permitted Use and
the terms of Section 15.1 or 16.1, as applicable, shall apply. Subject to the
terms of Section 10.1, Manager shall be entitled to the return of amounts funded
by it under this Section 15.2(c) in equal monthly installments based upon the
number of months remaining in the Term after the month in which such advance is
made (after giving effect to any then exercised or deemed exercised options to
extend).
ARTICLE 16
CONDEMNATION
16.1 Total Condemnation. If either (x) the whole of a Hotel shall be
taken by Condemnation, or (y) a Condemnation of less than the whole of a Hotel
renders such Hotel Unsuitable for Its Permitted Use, this Agreement shall
terminate with respect to such Hotel and Owner and Purchaser shall seek the
Award for their interests in such Hotel as provided in the Lease, which Award
shall belong solely to them. In addition, Manager shall have the right to
initiate or participate in such proceedings as it deems advisable to recover any
damages to which Manager may be entitled; provided, however, that Manager shall
be entitled
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to retain the award or compensation it may obtain through such proceedings which
are conducted separately from those of Owner and Purchaser only if such award or
compensation does not reduce the award or compensation otherwise available to
Owner and Purchaser. If this Agreement is so terminated with respect to a Hotel,
Owner and Purchaser shall make reasonable efforts to use the Award to acquire a
Replacement Property proposed by Manager to which this Agreement shall be
extended; provided, however:
(a) Purchaser and Owner shall not be obligated to expend in the
aggregate more than the Award in connection with (i) investigating and
negotiating to purchase all properties proposed by Manager to be the Replacement
Property (including, without limitation, attorneys' and consultants' fees and
title search and survey costs) and (ii) acquiring a Replacement Property
(including, without limitation, the purchase price therefor, title insurance
premiums, broker's commissions and transfer taxes);
(b) Purchaser and Owner shall have no obligation to acquire any
proposed Replacement Property unless the projected NOI thereof and each of every
other aspect of the proposed Replacement Property which Purchaser reasonably
considers relevant is comparable in Purchaser's sole judgment in all respects to
the Hotel which is being replaced;
(c) Purchaser and Owner shall not be obligated to investigate more than
three (3) proposed properties;
(d) Owner's Fixed Priority will be increased by an amount equal to the
reduction therein resulting from the termination of this Agreement with respect
to the Hotel which is being replaced; and
(e) Purchaser shall not be obligated to acquire any proposed
Replacement Property, if Manager and Owner do not reasonably agree upon an
appropriate amendment hereto pursuant to which this Agreement will be extended
to such property.
If Purchaser decides to acquire a proposed Replacement Property, then
simultaneously with such acquisition the Lease and this Agreement shall be
appropriately amended so as to cover such Replacement Property.
16.2 Partial Condemnation. In the event of a Condemnation of less than
the whole of a Hotel such that such Hotel is not rendered Unsuitable for Its
Permitted Use, Owner shall, to the extent of the Award and any additional
amounts disbursed by
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Owner or Purchaser, commence promptly and continue diligently to restore the
untaken portion of such Hotel so that such Hotel shall constitute a complete
architectural unit of the same general character and condition (as nearly as may
be possible under the circumstances) as existed immediately prior to such
Condemnation, in full compliance with all Legal Requirements, using the Award
made available therefor and any other funds Owner elects to contribute subject
to customary terms applicable to advances of construction loans (to the extent
applicable). If Owner elects to retain Manager's services in connection
therewith, the terms of Section 11.1 shall apply.
16.3 Temporary Condemnation. In the event of any temporary Condemnation
of a Hotel or Owner's interest therein, this Agreement shall continue in full
force and effect. The entire amount of any Award made for such temporary
Condemnation allocable to the Term, whether paid by way of damages, rent or
otherwise, shall constitute Gross Revenues. For purposes of this Agreement, a
Condemnation shall be deemed to be temporary if the period of such Condemnation
is not expected to, and does not, exceed twelve (12) months.
16.4 Effect of Condemnation. Any condemnation which does not result in
a termination of this Agreement in accordance with its terms with respect to the
applicable Hotel shall not excuse the payment of sums due to Owner hereunder
with respect to such Hotel and this Agreement shall remain in full force and
effect as to such Hotel.
ARTICLE 17
DEFAULT AND TERMINATION
17.1 Manager Events of Default. Each of the following shall constitute
a "Manager Event of Default":
(a) The filing by Manager, the Canadian Manager, PR Tenant or the
Guarantor of a voluntary petition in bankruptcy or insolvency or a petition for
reorganization under any bankruptcy law, or the admission by Manager, the
Canadian Manager, PR Tenant or the Guarantor that it is unable to pay its debts
as they become due, or the institution of any proceeding by Manager, the
Canadian Manager, PR Tenant or the Guarantor for its dissolution or earlier
termination.
(b) The consent by Manager, the Canadian Manager, PR Tenant or the
Guarantor to an involuntary petition in bankruptcy or the failure to vacate,
within ninety (90) days from the date
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of entry thereof, any order approving an involuntary petition with respect to
Manager, the Canadian Manager, PR Tenant or the Guarantor.
(c) The entering of an order, judgment or decree by any court of
competent jurisdiction, on the application of a creditor, adjudicating Manager,
the Canadian Manager, PR Tenant or the Guarantor as bankrupt or insolvent or
approving a petition seeking reorganization or appointing a receiver, trustee,
or liquidator of all or a substantial part of Manager's, the Canadian Manager's,
PR Tenant's or the Guarantor's assets, and such order, judgment or decree's
continuing unstayed and in effect for an aggregate of sixty (60) days (whether
or not consecutive).
(d) The failure of Manager, the Guarantor, PR Tenant, the guarantor
under the PR Guaranty or any Affiliate of any of them to make any payment
required to be made in accordance with the terms of this Agreement or any other
Transaction Document which failure continues beyond any applicable notice and
grace period.
(e) The failure of Manager, its Ultimate Parent, the Collateral Agent,
the Guarantor, PR Tenant, the guarantor under the PR Guaranty or any Affiliate
of any of them to perform, keep or fulfill any of the other covenants,
undertakings, obligations or conditions set forth in this Agreement or any other
Principal Document on or before the date required for the same, which failure
continues for a period of thirty (30) days after receipt of written notice
demanding such cure; provided, however, if such failure is susceptible of cure,
but such cure cannot be accomplished within said thirty (30) day period, said
thirty (30) days shall be extended for so long as is reasonably necessary to
effect such cure provided that such cure is commenced within thirty (30) days
after such notice is given and is thereafter diligently pursued to completion.
(f) The material failure of Manager, the sellers under the Purchase
Agreement or the PR Stock Agreement, IHG or any Affiliate of any of them to
perform, keep or fulfill any of the other covenants, undertakings, obligations
or conditions set forth in any of the Other Documents on or before the date
required for the same, which failure continues for a period of thirty (30) days
after receipt of written notice demanding such cure; provided, however, if such
failure is susceptible of cure, but such cure cannot be accomplished within said
thirty (30) day period, said thirty (30) days shall be extended for so long as
is reasonably necessary to effect such cure provided that such
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cure is commenced within thirty (30) days after such notice is given and is
thereafter diligently pursued to completion.
(g) The failure of Manager to maintain insurance coverages required to
be maintained by Manager under this Agreement.
(h) The failure by Manager, PR Tenant, their Ultimate Parent(s) or the
Guarantor to deliver to Owner any financial statement as and when required by
the Principal Documents, which failure continues for a period of ten (10)
Business Days after written notice from Owner.
(i) Any representation or warranty made by Manager or any of its
Affiliates in this Agreement or any Transaction Document proves to have been
false in any material respect on the date when made or deemed made; provided,
however, if Manager did not know of such falseness at the time such
representation or warranty was made, and the facts or circumstances giving rise
to such falseness are susceptible of cure, Manager shall have up to thirty (30)
days after notice from Owner to effectuate such cure.
(j) The failure of (i) any Ultimate Parent of Manager or (ii) the
Guarantor to timely and fully keep and observe any obligations under the
Transaction Documents or any other document or instrument executed and delivered
in connection herewith to maintain any net worth or unencumbered assets or to
deliver any collateral, in all cases as required under the Transaction
Documents, which is not cured within ten (10) days after notice from Owner to
Manager.
(k) The occurrence of an Event of Default under the PR Lease.
(l) The failure of the Canadian Manager to be an Affiliate of Manager.
17.2 Remedies for Manager Defaults. So long as a Manager Event of
Default shall be outstanding, Owner shall have (in addition to its other rights
and remedies at law, in equity or otherwise) the right to terminate this
Agreement. Upon such termination, or if this Agreement is terminated pursuant to
Sections 5.1 or 10.3, Owner shall be entitled to liquidated damages. Owner's
right to receive liquidated damages has been agreed to due to the uncertainty,
difficulty and/or impossibility of ascertaining the actual damages suffered by
Owner. Further, if not for Owner's right to receive such liquidated damages,
Purchaser would not have entered into the
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Purchase Agreement, Purchaser would not have acquired the Hotels and Owner would
not have entered into the Lease. MANAGER HEREBY ACKNOWLEDGES AND AGREES THAT
such liquidated damages are not a penalty, but are to compensate Owner AND ITS
AFFILIATES for the expense and lost earnings which may result from arranging
substitute management for the Hotels as well as to compensate for THE RENT OWNER
MUST PAY UNDER THE LEASE AND the price paid for the Hotels BY OWNER'S AFFILIATE.
Such liquidated damages shall be equal to all accrued but unpaid amounts due to
Owner hereunder up until the date of termination, plus the Outstanding Balance,
as defined in the Guaranty. Owner shall be entitled to interest, at the Interest
Rate, on such liquidated damages from the date of such termination until the
date of payment of such damages and interest. Except with respect to Owner's
rights and remedies for any breach or violations by Manager of the terms of
Section 17.4, Owner shall look solely to any collateral hereafter pledged
securing Manager's obligations hereunder for satisfaction of any claim of Owner
against Manager hereunder; provided, however, nothing contained herein is
intended to, nor shall it, limit or reduce the obligations of the Guarantor
under the Guaranty or limit Owner's rights with respect thereto.
17.3 Owner Events of Default and Remedies for Owner Defaults. In the
event any representation or warranty made by Owner in this Agreement proves to
be untrue when made in any material respect or Owner fails to perform any of its
obligations hereunder, then Manager shall have the right to institute forthwith
any and all proceedings permitted by law or equity (provided they are not
specifically barred under the terms of this Agreement), including, without
limitation, actions for specific performance and/or damages; provided, however,
except as may be expressly provided in this Agreement, Manager shall have no
right to terminate this Agreement by reason of such a failure by Owner or
otherwise. Manager shall be entitled to terminate this Agreement in the event of
a violation of the terms of Section 4.7 by Purchaser or Owner. Except as
otherwise specifically provided in this Agreement, Manager hereby waives all
rights arising from any occurrence whatsoever, which may now or hereafter be
conferred upon it by law, (a) to modify without the agreement of Owner,
surrender or terminate this Agreement or quit or surrender any Hotel or any
portion thereof, or (b) to obtain (i) any abatement, reduction, suspension or
deferment of the sums allocable or otherwise payable to Owner or other
obligations to be performed by Manager hereunder or (ii) any increase in any
amounts payable to Manager hereunder. In the event Owner wrongfully terminates
this Agreement or Manager terminates this Agreement pursuant to a right to do so
as a
73
result of Owner's breach, then, subject to Manager's mitigation obligations,
Manager shall be entitled to recover as part of its damages for such wrongful
termination an amount equal to the damages suffered by Manager on account of
terminating the employment of on-site employees of the Hotels as a result of
such wrongful termination.
17.4 Post Termination Obligations. Upon expiration or earlier
termination of this Agreement for any reason, Owner and Manager shall proceed as
follows:
(a) Within sixty (60) days following the effective date of such
expiration or earlier termination, Manager will submit to Owner an audited final
accounting of the results of the Pooled FF&E Hotels' operations and all accounts
between Owner and Manager through the effective date of such expiration or
earlier termination, the cost of which audit shall be shared equally by Manager
and Owner and shall not be an Operating Cost and shall be performed by Ernst &
Young or another accounting firm selected by Manager and approved by Owner. Said
final accounting shall be accompanied by an Officer's Certificate and shall be
promptly be submitted by Manager to Owner for its approval. Owner shall not
unreasonably withhold or delay its approval of the final accounting and any such
disapproval shall contain reasonably detailed explanation for disapproval.
Within thirty (30) days after delivery of such final accounting, the parties
will make appropriate adjustments to any amounts previously paid or due under
this Agreement.
(b) On the effective date of such expiration or earlier termination,
Manager will deliver to Owner all books and records of the Hotels, provided that
Manager may retain copies of any of the same for Manager's records.
Notwithstanding the foregoing, Manager will not be required to deliver to Owner
any information or materials (including, without limitation, software, database,
manuals and technical information) which are proprietary property of Manager.
(c) On the effective date of such expiration or earlier termination,
Manager will deliver possession of the Hotels, together with any and all keys or
other access devices, to Owner.
(d) On the effective date of such expiration or earlier termination,
Manager will assign to Owner or its designee, and Owner or such designee will
assume, all booking, reservation, service and operating contracts relating
exclusively to the occupancy or operation of the Hotels and entered into in the
74
ordinary course of business by Manager in accordance with this Agreement. Owner
agrees to indemnify and hold Manager harmless from liability or other
obligations under any such agreements relating to acts or occurrences, including
Owner's or such designee's failure to perform, on or after the effective date of
such assignment.
(e) Manager will assign to Owner or its designee any assignable
licenses and permits pertaining to the Hotels and will otherwise reasonably
cooperate with Owner as may be necessary for the transfer of any and all Hotel
licenses and permits to Owner or Owner's designee.
(f) Manager shall release and transfer to Owner or Purchaser, as
applicable, any funds of Owner or Purchaser which are held or controlled by
Manager.
(g) Manager shall have the option, to be exercised within thirty (30)
days after termination or expiration, to purchase, at their then book value, any
FF&E, Operating Equipment or other personal property as may be marked with any
System ▇▇▇▇ at the Hotels. In the event Manager does not exercise such option,
Owner agrees that it will use any such items not so purchased exclusively in
connection with the Hotels until they are consumed; provided, however, Manager
shall not be entitled to purchase FF&E, Operating Equipment or other personal
property located at a Hotel which is to be operated under the Brand name or by
Manager, until such Hotel shall no longer be so operated.
(h) Owner shall have the right to operate the improvements on the
applicable Sites without modifying the structural design of same and without
making any Material Repair, notwithstanding the fact that such design or certain
features thereof may be proprietary to Manager or its Affiliates and/or
protected by trademarks or service marks held by Manager or an Affiliate,
provided that such use shall be confined to the applicable Sites. Further,
provided that the applicable Hotels then satisfy the applicable Brand Standards
(unless the Hotels fail to satisfy such Brand Standards due to a breach hereof
by Manager), Owner shall be entitled (but not obligated) to operate such of the
Hotels as Owner designates under the applicable Brand name for a period of one
(1) year following such expiration or earlier termination in consideration for
which Owner shall pay the then standard franchise and system fees for such Brand
and comply with the other applicable terms and conditions of the form of
franchise agreement then being entered into with respect to such Brand.
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(i) Manager shall transfer to Owner the telephone numbers used in
connection with the operation of the Hotels (but not any Brand generally).
(j) Manager shall cooperate with Owner's or its designees' efforts to
engage employees of the Hotels.
(k) If requested by Owner prior to such expiration or earlier
termination of this Agreement in whole or in part, Manager shall continue to
manage under the applicable Brand any affected Hotels designated by Owner after
such expiration or earlier termination for up to one (1) year, on such
reasonable terms (which shall include an agreement to reimburse Manager for its
reasonable out-of-pocket costs and expenses, and reasonable administrative costs
and a management fee of seven and one-half percent (7.5%) of Gross Revenues with
respect to the Staybridge Hotels and the Holiday Inn Hotels and a management fee
of three percent (3%) of Gross Revenues with respect to the InterContinental
Hotels and the Crowne Plaza Hotels) as Owner and Manager shall reasonably agree.
The provisions of this Section 17.4 shall survive the expiration or
earlier termination of this Agreement.
ARTICLE 18
NOTICES
18.1 Procedure.
(a) Any and all notices, demands, consents, approvals, offers,
elections and other communications required or permitted under this Agreement
shall be deemed adequately given if in writing and the same shall be delivered
either by hand, by telecopier with written acknowledgment of receipt (provided
if notice is given by telecopier, a copy shall also be sent on the following
Business Day by Federal Express or similar expedited commercial carrier), or by
Federal Express or similar expedited commercial carrier, addressed to the
recipient of the notice, with all freight charges prepaid (if by Federal Express
or similar carrier).
(b) All notices required or permitted to be sent hereunder shall be
deemed to have been given for all purposes of this Agreement upon the date of
acknowledged receipt, in the case of a notice by telecopier, and, in all other
cases, upon the date of receipt or refusal, except that whenever under this
Agreement a notice is either received on a day which is not a Business Day
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or is required to be delivered on or before a specific day which is not a
Business Day, the day of receipt or required delivery shall automatically be
extended to the next Business Day.
(c) All such notices shall be addressed as follows:
If to Owner: HPT TRS IHG-2, INC.
c/o Hospitality Properties Trust
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇▇ & Worcester LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Esq.
Facsimile: 617-338-2880
If to Manager: IHG Management (Maryland) LLC
c/o Intercontinental Hotels Group
Resources, Inc.
8844 Columbia ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Vice President of Operations
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to: InterContinental Hotels Group
Resources, Inc.
c/o Six Continents Hotels, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel - Operations
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇ & Bird LLP
One Atlantic Center
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
(d) By notice given as herein provided, the parties hereto and their
respective successors and assigns shall have the right from time to time and at
any time during the term of this Agreement to change their respective addresses
effective upon receipt by the other parties of such notice and each shall have
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the right to specify as its address any other address within the United States
of America.
ARTICLE 19
RELATIONSHIP, AUTHORITY AND FURTHER ACTIONS
19.1 Relationship. Manager shall be the agent of Owner with a limited
agency, coupled with an interest, solely for the purpose of operating the Hotels
and carrying out ordinary and customary transactions for that purpose. Owner and
Manager shall not be construed as joint venturers or partners of each other, and
neither shall have the power to bind or obligate the other except as set forth
in this Agreement. Manager shall not constitute a tenant or subtenant of Owner
and this Agreement shall not constitute Owner a franchisee of Manager or of any
of Manager's Affiliates. This Agreement shall not create a franchise or a
franchisor/franchisee relationship within the meaning of the Federal Trade
Commission Act or any other Legal Requirement.
19.2 Further Actions. Each of the parties agrees to execute all
contracts, agreements and documents and take all actions necessary to comply
with the provisions of this Agreement and the intent hereof.
ARTICLE 20
APPLICABLE LAW
This Agreement shall be interpreted, construed, applied and enforced in
accordance with the laws of the State of Maryland applicable to contracts
between residents of Maryland which are to be performed entirely within
Maryland, regardless of (a) where this Agreement is executed or delivered, (b)
where any payment or other performance required by this Agreement is made or
required to be made, (c) where any breach of any provision of this Agreement
occurs, or any cause of action otherwise accrues, (d) where any action or other
proceeding is instituted or pending, (e) the nationality, citizenship, domicile,
principal place of business, or jurisdiction of organization or domestication of
any party, (f) whether the laws of the forum jurisdiction otherwise would apply
the laws of a jurisdiction other than Maryland, (g) the location of the Hotels
or any applicable Hotel, or (h) any combination of the foregoing.
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ARTICLE 21
SUCCESSORS AND ASSIGNS
21.1 Assignment.
(a) Except as expressly provided below, Manager shall not assign,
mortgage, pledge, hypothecate or otherwise transfer its interest in all or any
portion of this Agreement or any rights arising under this Agreement or suffer
or permit such interests or rights to be assigned, transferred, mortgaged,
pledged, hypothecated or encumbered, in whole or in part, whether voluntarily,
involuntarily or by operation of law, or permit the management of the Hotels by
anyone other than Manager or Owner. For purposes of this Section 21.1, an
assignment of this Agreement shall be deemed to include any transaction which
results in Manager no longer being an Affiliate of Guarantor or pursuant to
which all or substantially all of Manager's assets are transferred to any Person
who is not an Affiliate of Guarantor.
(b) Manager shall have the right, without Owner's consent, but subject
to the applicable assignee or Affiliate satisfying the requirements of Section
24.15, to (i) assign Manager's interest in this Agreement (A) to IHG or any
Affiliate of IHG, (B) in connection with a merger, corporate restructuring or
consolidation of IHG or a sale of all or substantially all of the assets of IHG
and (C) in connection with a sale of all or substantially all of the assets
(including associated management agreements) owned by IHG and its Affiliates
relating to the Brands and (ii) engage its Affiliates as sub-managers with
respect to the separate Brands of Hotels. At Owner's election, Manager shall
assign this Agreement to any Person who is not an Affiliate of IHG that acquires
all or substantially all of the assets of IHG relating to the Brands and shall
cause such Person to assume all of Manager's obligations thereafter accruing
hereunder. Notwithstanding anything herein to the contrary, Manager shall
neither, directly or indirectly, assign this Agreement to any Person, nor engage
any sub-manager, who is or is an Affiliate of a Specially Designated or Blocked
Person.
Manager also shall have the right, without Owner's consent, but subject
to the applicable Affiliate satisfying the requirements of Section 24.15, to
assign to a Canadian Affiliate (the "Canadian Manager") under an Assignment and
Assumption of Management Agreement in the form attached hereto as Exhibit E, the
rights and obligations of the Manager under this Agreement that relate to
services to be performed by the Manager in
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respect of all (but not less than all) of the Canadian Hotels (the "Canadian
Services"), provided that the Canadian Manager agrees to assume and be bound by
the obligations of Manager hereunder as they relate to the Canadian Services. As
a result of any such assignment:
(i) the Canadian Manager shall provide the Canadian Services
to the Owner in accordance with this Agreement;
(ii) there shall be payable to the Canadian Manager (rather
than Manager), as provided in this Agreement and as consideration for
the Canadian Services, a portion of the amounts otherwise payable or
reimbursable to Manager under this Agreement, as follows:
(A) the portion of the Operating Costs incurred by
the Canadian Manager in providing the Canadian
Services;
(B) the portion of the Base Management Fee for each
period equal to the fraction that the Gross Revenues
of the Canadian Hotels for such period is of the
Gross Revenues of the Hotels for such period, which
fee shall be payable to the Canadian Manager
concurrently with the remaining portion of the Base
Management Fee payable to the Manager;
(C) the portion of the Incentive Management Fee for
each period equal to the fraction that the NOI of the
Canadian Hotels for such period is of the NOI of the
Hotels for such period, which fee shall be paid to
the Canadian Manager concurrently with the remaining
portion of the Incentive Management Fee payable to
the Canadian Manager;
provided, however, notwithstanding anything contained in this Section
21.1(b)(ii) to the contrary, Owner shall not be obligated to make any
of the foregoing calculations or to cause any such amounts to be paid
directly to the Canadian Manager, it being acknowledged and agreed that
all such amounts shall be payable to Manager, Manager shall be
responsible for performing all such calculations and remitting all such
applicable amounts to the Canadian Manager on Owner's behalf and
Manager shall provide Owner with the details of such calculations and
remittances if Owner so requests;
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(iii) no portion of the System Fees or other fees referred to
in Section 9.2 shall be payable in respect of Canadian Services;
(iv) Manager shall not be released from any of its obligations
under this Agreement and shall at all times remain liable for the
performance of the Canadian Services and all other obligations of
Manager hereunder; and
(v) The Canadian Manager shall at all times be an Affiliate of
Manager.
(c) Owner shall not assign, mortgage, pledge, hypothecate or otherwise
transfer its interest in all or any portion of this Agreement or any rights
arising under this Agreement without the prior written consent of Manager except
(i) in connection with a sale of a Hotel in accordance with the terms of
Sections 4.4 or 4.5, (ii) to Purchaser or an Affiliate of Purchaser, (iii) to
Manager or an Affiliate of Manager, (iv) to an Affiliate of Owner in a merger,
corporate restructuring or consolidation of Purchaser or any of its
Affiliates,(v) in connection with the granting of an Authorized Mortgage or (vi)
to a Substitute Tenant as provided in Section 4.2; provided, however, in each
instance (other than in connection with a collateral assignment) that the
assignee hereof assumes all of Owner's obligation hereunder and under the other
Transaction Documents thereafter accruing.
(d) In the event either party consents to an assignment of this
Agreement by the other, no further assignment shall be made without the express
consent in writing of such party, unless such assignment may otherwise be made
without such consent pursuant to the terms of this Agreement. An assignment by
Owner of its interest in this Agreement approved or permitted pursuant to the
terms hereof shall relieve Owner of its obligations under this Agreement
thereafter accruing.
(e) In the event fifty percent (50%) or more of the hotels comprising a
Brand cease to be Staybridge Suites, InterContinental, Crowne Plaza or Holiday
Inn, as applicable, hotels and are converted to another brand in a single
transaction or a series of related transactions, Owner may elect to require
Manager to promptly convert at its own cost and expense (and not as an Operating
Cost and without reimbursement from the Reserve Account) the applicable Hotels
to the brand of hotels to which such other hotels are converted. In such event,
all references herein to "Staybridge Suites",
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"InterContinental", "Crowne Plaza" or "Holiday Inn", as applicable, shall be
deemed to refer to the trade name of the system of hotels to which the Hotels
are to be so converted.
21.2 Binding Effect. The terms, provisions, covenants, undertakings,
agreements, obligations and conditions of this Agreement shall be binding upon
and shall inure to the benefit of the successors in interest and the assigns of
the parties hereto with the same effect as if mentioned in each instance where
the party hereto is named or referred to, except that no assignment, transfer,
sale, pledge, encumbrance, mortgage, lease or sublease by or through Owner, as
the case may be, in violation of the provisions of this Agreement shall vest any
rights in the assignee, transferee, purchaser, secured party, mortgagee,
pledgee, lessee, sublessee or occupant.
ARTICLE 22
RECORDING
22.1 Memorandum of Agreement. As of the Effective Date, at the option
of Manager, Owner and Manager agree to execute, acknowledge and record a
Memorandum of this Agreement in the land records of the states and counties
where the Hotels are located, in a form reasonably satisfactory to Manager.
ARTICLE 23
FORCE MAJEURE
23.1 Operation of Hotel. If at any time during the Term it becomes
necessary in Manager's reasonable opinion to cease or alter operations at any
Hotel in order to protect the health, safety and welfare of the guests and/or
employees of such Hotel, or such Hotel itself, for reasons of force majeure
beyond the control of Manager such as, but not limited to, acts of war,
insurrection, civil strife and commotion, labor unrest or acts of God, then in
such event Manager may close and cease or alter operation of all or part of such
Hotel, reopening and commencing or resuming operation when Manager deems that
such may be done without jeopardy to such Hotel, its guests and employees.
23.2 Extension of Time. Owner and Manager agree that, with respect to
any obligation, other than the payment of money, to be performed by a party
during the Term, neither party will be liable for failure so to perform when
prevented by any occurrence beyond the reasonable control of such party, herein
referred to as a "force majeure" including, without limitation,
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occurrences such as strike, lockout, breakdown, accident, order or regulation of
or by any Government Agency, failure of supply or inability, by the exercise of
reasonable diligence, to obtain supplies, parts or employees necessary to
perform such obligation, or war or other emergency. The time within which such
obligation must be performed will be extended for a period of time equivalent to
the number of days of delay from such cause.
ARTICLE 24
GENERAL PROVISIONS
24.1 Trade Area Restriction.
(a) Notwithstanding anything to the contrary in this Agreement, neither
Manager nor any Affiliate shall acquire, own, manage, operate or open any hotel
as a "Staybridge Suite" or "Holiday Inn" hotel nor shall Manager or any
Affiliate authorize a third party to operate or open any hotel as a "Staybridge
Suite" or "Holiday Inn" hotel that is within the Restricted Area of any Hotel
operated under the same name during its Restricted Period, unless such hotel (i)
is owned or leased by Owner or its Affiliate; (ii) is owned, operated, managed,
franchised or under development on the Effective Date and has been specifically
identified in writing at or prior to the time of the execution of the Purchase
Agreement or replaces any such hotel, provided such replacement hotel does not
have more than ten percent (10%) more guest rooms than the original hotel which
it replaces; or (iii) is part of an acquisition by IHG or its Affiliates of an
interest (including an interest as a franchisor) in a chain or group of not less
than ten (10) comparable hotels (such acquisition to occur in a single
transaction or a series of related transactions). The terms of this Section
24.1(a) shall apply only to "Staybridge Suites" and "Holiday Inn" hotels and
shall not in any way restrict the ownership, management, franchising or
operation of other brands or flags of any hotels owned or operated by Manager or
its Affiliates within the Restricted Area.
(b) Notwithstanding anything to the contrary in this Agreement, neither
Manager nor any Affiliate shall acquire, own, manage, operate or open any hotel
as an "InterContinental" or "Crowne Plaza" hotel nor shall Manager or any
Affiliate authorize a third party to operate or open any hotel as an
"InterContinental" or "Crowne Plaza" hotel that is within the Restricted Area of
any Hotel operated under the same name during its Restricted Period, unless such
hotel (i) is owned or leased
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by Owner or its Affiliate; (ii) is owned, operated, managed, franchised or under
development on the Effective Date and has been specifically approved by Owner in
writing at or prior to the time of the execution of the Purchase Agreement or
replaces any such hotel, provided such replacement hotel is not first opened
after such time and does not have more than ten percent (10%) more guest rooms
than the original hotel which it replaces; or (iii) is part of an acquisition by
IHG or its Affiliates of an interest (including an interest as a franchisor) in
a chain or group of not less than five (5) comparable full service hotels (such
acquisition to occur in a single transaction or a series of related
transactions). The terms of this Section 24.1(b) shall apply only to
"InterContinental" and "Crowne Plaza" hotels and shall not in any way restrict
the ownership, management, franchising or operation of other brands or flags of
any hotels owned or operated by Manager or its Affiliates within the Restricted
Area.
24.2 Environmental Matters.
(a) Manager shall not store, release, discharge, spill upon, dispose of
or transfer to or from any Hotel any Hazardous Substance, except for those which
are customarily used at other hotels like the Hotels and are in compliance with
all Legal Requirements. Manager shall maintain the Hotels at all times free of
any Hazardous Substance (except for those which are customarily used at other
hotels like the Hotels and are in compliance with all Legal Requirements).
Manager (i) upon receipt of notice or knowledge thereof shall promptly notify
Purchaser and Owner in writing of any material change in the nature or extent of
Hazardous Substances at any Hotel, (ii) shall file and transmit to Purchaser and
Owner a copy of any Community Right to Know or similar report which is required
to be filed with respect to any Hotel pursuant to the Emergency Planning and
Community Right to Know Act, 42 U.S.C. Section 11001 et seq., or any other Legal
Requirements, (iii) shall transmit to Purchaser and Owner copies of any
citations, orders, notices or other governmental communications received by
Manager with respect to Hazardous Substances or alleged violations of Legal
Requirements relating to the protection of the environment or human health or
safety (collectively, "Environmental Notice"), which Environmental Notice
requires a written response or any action to be taken and/or if such
Environmental Notice gives notice of and/or presents a material risk of any
material violation of any Legal Requirement and/or presents a material risk of
any material cost, expense, loss or
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damage, (iv) shall observe and comply with all Legal Requirements relating to
the use, storage, maintenance and disposal of Hazardous Substances and all
orders or directives from any official, court or agency of competent
jurisdiction relating to the use, storage or maintenance or requiring the
removal, treatment, containment or other disposition of Hazardous Substances,
and (v) shall pay or otherwise dispose of any fine, charge or imposition related
to any of the foregoing.
(b) In the event of the discovery of Hazardous Substances other than
those maintained in accordance with this Agreement on any portion of any Site or
in any Hotel during the Term, Manager shall use reasonable efforts to promptly
(i) clean up and remove from and about such Hotel all Hazardous Substances
thereon, if appropriate, (ii) contain and prevent any further release or threat
of release of Hazardous Substances on or about such Hotel, and (iii) use good
faith efforts to eliminate any further release or threat of release of Hazardous
Substances on or about such Hotel, and (iv) otherwise effect a remediation of
the problem in accordance with (A) the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Section 9601 et seq., as amended; (B)
the regulations promulgated thereunder, from time to time; and (C) all Legal
Requirements (now or hereafter in effect) dealing with the use, generation,
treatment, release, discharge, storage, disposal, clean up, remediation or
abatement of Hazardous Substances.
(c) To the extent any service required to be performed under this
Section 24.2 or cost incurred under this Section 24.2 is not due to the fault of
Manager or is not performed or incurred in the operations of the Hotels in the
ordinary course, the same shall be governed by Section 11.1; provided, however,
to the extent that Section 11.1 shall apply to such services or costs, Owner
shall be entitled to engage a third party to perform such services.
24.3 Authorization. Owner represents that it has full power and
authority to execute this Agreement and to be bound by and perform the terms
hereof. Manager represents it has full power and authority to execute this
Agreement and to be bound by and perform the terms hereof. On request, each such
party will furnish to the other evidence of such authority.
24.4 Severability. If any provision of this Agreement shall be held or
deemed to be, or shall in fact be, invalid, inoperative or unenforceable as
applied to any particular case in any jurisdiction or jurisdictions, or in all
jurisdictions or in all cases, because of the conflict of any provision with any
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constitution or statute or rule of public policy or for any other reason, such
circumstance shall not have the effect of rendering the provision or provisions
in question invalid, inoperative or unenforceable in any other jurisdiction or
in any other case or circumstance or of rendering any other provision or
provisions herein contained invalid, inoperative or unenforceable to the extent
that such other provisions are not themselves actually in conflict with such
constitution, statute or rule of public policy, but this Agreement shall be
reformed and construed in any such jurisdiction or case as if such invalid,
inoperative or unenforceable provision had never been contained herein and such
provision reformed so that it would be valid, operative and enforceable to the
maximum extent permitted in such jurisdiction or in such case.
24.5 Merger. This Agreement constitutes the entire agreement of the
parties hereto with respect to the subject matter hereof and shall supersede and
take the place of any other instruments purporting to be an agreement of the
parties hereto relating to the subject matter hereof.
24.6 Formalities. Any amendment or modification of this Agreement must
be in writing signed by all parties hereto. This Agreement may be executed in
one or more counterparts, each of which will be deemed an original.
24.7 Consent to Jurisdiction; No Jury Trial.
(a) Except as provided in Section 24.20, all actions and proceedings
arising out of or in any way relating to this Agreement shall be brought, heard,
and determined exclusively in an otherwise appropriate federal or state court
located within the State of Maryland. Except as provided in Section 24.20, the
parties hereby (a) submit to the exclusive jurisdiction of any Maryland federal
or state court of otherwise competent jurisdiction for the purpose of any action
or proceeding arising out of or relating to this Agreement and (b) voluntarily
and irrevocably waive, and agree not to assert by way of motion, defense, or
otherwise in any such action or proceeding, any claim or defense that they are
not personally subject to the jurisdiction of such a court, that such a court
lacks personal jurisdiction over any party or the matter, that the action or
proceeding has been brought in an inconvenient or improper forum, that the venue
of the action or proceeding is improper, or that this Agreement may not be
enforced in or by such a court. To the maximum extent permitted by applicable
law, each party consents to service of process by registered mail, return
receipt requested, or by any other manner provided by law.
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(b) To the maximum extent permitted by applicable law, each of the
parties hereto waives its rights to trial by jury with respect to this Agreement
or matter arising in connection herewith.
24.8 Performance on Business Days. In the event the date on which
performance or payment of any obligation of a party required hereunder is other
than a Business Day, the time for payment or performance shall automatically be
extended to the first Business Day following such date.
24.9 Attorneys' Fees. If any lawsuit or arbitration or other legal
proceeding arises in connection with the interpretation or enforcement of this
Agreement, the prevailing party therein shall be entitled to receive from the
other party the prevailing party's costs and expenses, including reasonable
attorneys' fees incurred in connection therewith, in preparation therefor and on
appeal therefrom, which amounts shall be included in any judgment therein.
24.10 Section and Other Headings. The headings contained in this
Agreement are for reference purposes only and shall not in any way affect the
meaning or interpretation of this Agreement.
24.11 Documents. Throughout the Term, Owner agrees to furnish Manager
copies of all notices relating to real and personal property taxes and insurance
statements, all financing documents (including notes and mortgages) relating to
the Hotel and such other documents pertaining to the Hotels as Manager may
request.
24.12 No Consequential Damages. Except as may be expressly provided
herein, in no event shall either party be liable for any consequential,
exemplary or punitive damages suffered by the other as the result of a breach of
this Agreement. Time is of the essence with respect to this Agreement.
24.13 No Political Contributions. Notwithstanding anything contained in
this Agreement to the contrary, no money or property of the Hotels shall be paid
or used or offered, nor shall Owner or Manager directly or indirectly use or
offer, consent or agree to use or offer, any money or property of the Hotels (i)
in aid of any political party, committee or organization, (ii) in aid of any
corporation, joint stock or other association organized or maintained for
political purposes, (iii) in aid of any candidate for political office or
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nomination for such office, (iv) in connection with any election, (v) for any
political purpose whatever, or (vi) for the reimbursement or indemnification of
any person for any money or property so used.
24.14 REIT Qualification.
(a) Manager shall take all commercially reasonable actions reasonably
requested by Owner or Purchaser for the purpose of qualifying Purchaser's rental
income from Owner under the Lease as "rents from real property" pursuant to
Sections 856(d)(2), 856(d)(8)(B) and 856(d)(9) of the Code. Manager shall not be
liable if such reasonably requested actions, once implemented, fail to have the
desired result of qualifying Purchaser's rental income from Owner under the
Lease as "rents from real property" pursuant to Sections 856(d)(2), 856(d)(8)(B)
and 856(d)(9) of the Code. This Section 24.14 shall not apply in situations
where an Adverse Regulatory Event has occurred; instead, Section 24.16 shall
apply in such an instance.
(b) In the event Owner or Purchaser wish to invoke the terms of Section
24.14(a), Owner or Purchaser (as appropriate) shall contact Manager and the
parties shall meet with each other to discuss the relevant issues and to develop
a plan for implementing such reasonably requested actions.
(c) Any additional out-of-pocket costs or expenses incurred by Manager
in complying with such a request shall be borne by Owner (and shall not be an
Operating Cost). Owner shall reimburse Manager for such expense or cost
promptly, but not later than five (5) Business Days after such expense or cost
is incurred.
24.15 Further Compliance with Section 856(d) of the Code. Commencing
with the Effective Date and continuing throughout the Term, the Manager shall
qualify as an "eligible independent contractor" as defined in Section
856(d)(9)(A) of the Code. To that end:
(a) Manager shall not permit wagering activities to be conducted at or
in connection with any Hotel by any person who is engaged in the business of
accepting ▇▇▇▇▇▇ and who is legally authorized to engage in such business at or
in connection with such Hotel;
(b) Manager shall use reasonable efforts to cause each Hotel to qualify
as a "qualified lodging facility" under Section 856(d)(9)(D) of the Code;
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(c) Manager shall not own, directly or indirectly or constructively
(within the meaning of Section 856(d)(5) of the Code), more than thirty five
percent (35%) of the shares of HPT (whether by vote, value or number of shares),
and Manager shall otherwise comply with any regulations or other administrative
or judicial guidance now or hereafter existing under said Section 856(d)(5) of
the Code with respect to such ownership limits; and
(d) Manager shall be actively engaged (or shall, within the meaning of
Section 856(d)(9)(F) of the Code, be related to a person that is so actively
engaged) in the trade or business of operating "qualified lodging facilities"
(defined below) for a person who is not a "related person" within the meaning of
Section 856(d)(9)(F) of the Code with respect to HPT or Owner ("Unrelated
Persons"). In order to meet this requirement, the Manager agrees that it (or any
"related person" with respect to Manager within the meaning of Section
856(d)(9)(F) of the Code) (i) shall derive at least ten percent (10%) of both
its revenue and profit from operating "qualified lodging facilities" for
Unrelated Persons and (ii) shall comply with any regulations or other
administrative or judicial guidance under Section 856(d)(9) of the Code with
respect to the amount of hotel management business with Unrelated Persons that
is necessary to qualify as an "eligible independent contractor" within the
meaning of such Code Section.
A "qualified lodging facility" is defined in Section 856(d)(9)(D) of
the Code and means a "lodging facility" (defined below), unless wagering
activities are conducted at or in connection with such facility by any person
who is engaged in the business of accepting ▇▇▇▇▇▇ and who is legally authorized
to engage in such business at or in connection with such facility. A "lodging
facility" is a hotel, motel or other establishment more than one-half of the
dwelling units in which are used on a transient basis, and includes customary
amenities and facilities operated as part of, or associated with, the lodging
facility so long as such amenities and facilities are customary for other
properties of a comparable size and class owned by other owners unrelated to
HPT.
(e) Manager, without the prior consent of Owner, which consent shall
not be unreasonably withheld, shall not permit:
(i) the Manager to fail to be a limited liability company
under state law taxable under the Code as a disregarded entity of
InterContinental Hotels Group Resources, Inc.;
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(ii) InterContinental Hotels Group Resources, Inc. to fail to
be a corporation under state law and taxable under the Code as an
association; or
(iii) a direct or indirect subsidiary of InterContinental
Hotels Group Resources, Inc. to become a lessee of property owned by
Purchaser or any of its Affiliates.
(f) Without the prior consent of Owner, which consent shall not be
unreasonably withheld, the Canadian Manager and Manager shall not permit:
(i) the Canadian Manager to fail to be a corporation under
Canadian provincial law taxable under the Code as an association;
(ii) a direct or indirect subsidiary of the Canadian Manager
to become a lessee of property owned by Purchaser or any of its
Affiliates; or
(iii) The Canadian Manager or Manager, for so long as
Purchaser or Owner or any Affiliate as to Purchaser or Owner shall seek
to qualify as a "real estate investment trust" under the Code, to be
reorganized, restructured, combined, merged or amalgamated with any
Affiliate (as to Manager or the Canadian Manager) in such manner that
any such Affiliate would, or in Purchaser's or Owner's reasonable
judgment could, be expected to adversely affect (including, e.g., by
application of any Person's actual "disregarded entity" status under
the Code) the status that both Manager and the Canadian Manager have as
a Code Section 856(d)(9)(A) "eligible independent contractor" at a Code
Section 856(d)(9)(D) "qualified lodging facility" owned or leased by
Purchaser or Owner.
24.16 Adverse Regulatory Event.
(a) In the event of an Adverse Regulatory Event arising from or in
connection with this Agreement, Owner and Manager shall work together in good
faith to amend this Agreement to eliminate the impact of such Adverse Regulatory
Event; provided, however, Manager shall have no obligation to materially reduce
its rights or materially increase its obligation under this Agreement, all taken
as a whole, or to bear any out-of-pocket costs or expenses under this Section
24.16. Manager shall not be liable if any such amendment, once operative, fails
to have
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the desired result of eliminating the impact of an Adverse Regulatory Event.
(b) For purposes of this Agreement, the term "Adverse Regulatory Event"
means any time that a new law, statute, ordinance, code, rule or regulation (but
not an administrative or judicial ruling) imposes, or could impose in Owner's or
Purchaser's reasonable opinion, any material threat to HPT's status as a "real
estate investment trust" under the Code or to the treatment of amounts paid to
Purchaser under the Lease as "rents from real property" under Section 856(d) of
the Code.
(c) Owner or Purchaser shall promptly inform Manager of any Adverse
Regulatory Event of which it is aware and which it believes likely to impair
compliance of any of the Hotels with respect to the aforementioned sections of
the Code.
24.17 Adverse Canadian Event. If, as a result of the adoption of,
making of or change to any tax law, tax regulation, tax treaty or official
directive or the interpretation or application thereof by any court or by any
Government Agency charged with the administration thereof or the compliance with
any guideline or request of any Government Agency (whether or not having the
force of law) Owner and Purchaser determine in good faith that it is no longer
consistent with their business goals to continue to own the Canadian Hotels,
then, subject to the terms and conditions of Section 4.7, Owner and Purchaser
may sell all of their interest in the Canadian Hotels (either on a pooled basis
or individually). The following shall apply each time Owner and Purchaser desire
to sell a Canadian Hotel under this Section 24.17:
(a) Owner and Purchaser shall first offer to sell such Canadian
Hotel(s) to Manager, without representation or warranty, for such purchase price
as Owner and Purchaser shall specify in a written notice given to Manager. In
the event that Manager shall fail to accept or reject such offer within ten (10)
Business Days after receipt of such notice, such offer shall be deemed to be
rejected by Manager.
(b) If Manager accepts an offer made with respect to any Canadian Hotel
pursuant to this Section 24.17, then effective as of the date of such sale, the
following shall apply: (i) Purchaser shall deliver to Manager with respect to
such Transferred Hotel(s) a deed with covenants against grantor's acts; (ii)
Manager shall deliver to Purchaser the purchase price specified in the offer;
(iii) the Term shall terminate with respect to such Transferred Hotel(s); (iv)
no further Owner's
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Percentage Priority shall accrue with respect to the Gross Revenues of such
Transferred Hotel(s) which accrue after such termination; (v) the Owner's First
Priority shall be reduced by an amount equal to eight and one half percent
(8.5%) of the net (after taking into account any costs paid by Manager) proceeds
of sale received by Owner or Purchaser; and (vi) the Owner's Second Priority
shall be reduced by one percent (1.0%) of such net proceeds.
(c) If Manager rejects or is deemed to have rejected any offer made
with respect to any Canadian Hotel(s) pursuant to this Section 24.17, then Owner
and Purchaser shall have the right, for a period of one (1) year from the date
on which such offer is rejected or deemed rejected, to sell such Canadian
Hotel(s) to any third party purchaser on such terms and conditions as Owner and
Purchaser shall determine in their sole discretion; provided, however, in no
event shall the purchase price with respect to such Canadian Hotel(s) be less
than ninety-five percent (95%) of the purchase price offered to Manager under
this Section 24.17. If Owner and Purchaser fail to consummate the sale of such
Canadian Hotel(s) within one (1) year from the date on which their offer is
rejected or deemed rejected, then Owner and Purchaser shall be obligated again
to first offer such Canadian Hotel(s) to Manager in accordance with this Section
24.17 prior to selling it to any third party. If Owner and Purchaser sell such
Canadian Hotel(s) to any third party in accordance with this Section 24.17, then
the following shall apply:
(i) Subject to the execution or delivery of a New Management
Agreement as provided below, this Agreement with respect to such
Transferred Hotel(s) shall be terminated effective as of the date title
is transferred to such Transferred Hotel.
(ii) Simultaneously with such termination, Manager and the
transferee of such Transferred Hotel(s) or any tenant under a new lease
with respect to such Transferred Hotel(s) (which new lease shall have a
term equal to the then unexpired term of the Lease and shall impose no
greater liability, responsibility, or obligation on Manager than the
Lease) shall enter into a new management agreement (a "New Management
Agreement") with Manager on substantially the same terms as this
Agreement except as otherwise provided herein for a term equal to the
unexpired portion of the Term of this Agreement.
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(iii) Manager, Owner, Purchaser and the transferee (or its
tenant), acting reasonably, shall allocate amounts in the Reserve
Account and the Working Capital between such Transferred Hotel(s) and
the other Hotels. The parties shall also make reasonable allocations
with respect to Owner's Fixed Priority, and any outstanding advances
made by Owner, Manager or their respective Affiliates. Only for
purposes of allocating Owner's Fixed Priority between the Transferred
Hotel(s) and the other Hotels, the allocation of Owner's First Priority
and Owner's Second Priority for each Hotel shall be proportional to the
NOI of such Hotel(s) for the then most recently ended thirty-six (36)
months relative to the NOI of all the other Hotels for such period.
Amounts which are allocated to the Transferred Hotel(s) shall be
transferred to the transferee thereof to be held by Manager or such
transferee (or its tenant) pursuant to the New Management Agreement.
(iv) Following such sale or transfer, Owner, its Affiliates
and the Hotels which are not Transferred Hotel(s) shall have no
responsibilities with respect to amounts that are so transferred and
the transferee, its tenant and their Affiliates and the Transferred
Hotel(s) shall have no responsibility with respect to amounts which are
not so transferred.
(v) From and after the consummation of such sale or other
transfer and compliance with the terms hereof, the term "Hotels" as
used herein shall not include the Transferred Hotel(s).
(vi) Owner shall be responsible to cause its Affiliates, any
new tenant and the transferee to execute and deliver the documents
contemplated by this Section 24.17 to be executed and delivered by
them.
24.18 Commercial Leases. Manager shall not enter into any sublease with
respect to any Hotel (or any part thereof) unless the same has been approved by
Purchaser in its sole and absolute discretion; provided, however, Manager may
sublease or grant concessions or licenses to shops or any other space at a Hotel
subject to the following terms and conditions: (a) subleases and concessions are
for newsstand, gift shop, parking garage, heath club, restaurant, bar or
commissary purposes or similar concessions; (b) such subleases and concessions
do not have a term in excess of lesser of five (5) years or the remaining Term
under this Agreement; (c) such subleases and concessions do not demise, (i) in
the aggregate, in excess of
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Five Thousand (5,000) square feet of any Hotel, or (ii) for any single sublease,
in excess of One Thousand (1,000) square feet of any Hotel; (d) any such
sublease, license or concession to an Affiliate of a Manager shall be on terms
consistent with those that would be reached through arms-length negotiation; (e)
for so long as Purchaser or any Affiliate of Purchaser shall seek to qualify as
a real estate investment trust under the Code, anything contained in this
Agreement to the contrary notwithstanding, Manager shall not sublet or otherwise
enter into any agreement with respect to a Hotel on any basis such that in the
opinion of the Owner the rental or other fees to be paid by any sublessee
thereunder would be based, in whole or in part, on either (i) the income or
profits derived by the business activities of such sublessee, or (ii) any other
formula such that any portion of such sublease rental would fail to qualify as
"rents from real property" within the meaning of Section 865(d) of the Internal
Revenue Code of 1986, as amended, or any similar or successor provision thereto;
(f) such lease or concession will not violate or affect any Legal Requirement or
Insurance Requirement; (g) Manager shall obtain or cause the subtenant to obtain
such additional insurance coverage applicable to the activities to be conducted
in such subleased space as Owner and any mortgagee under an Authorized Mortgage
may reasonably require; and (h) not less than twenty (20) days prior to the date
on which Manager proposes to enter into any sublease or concession, Manager
shall provide a copy thereof to Owner.
24.19 Nonliability of Trustees.
(a) THE DECLARATION OF TRUST ESTABLISHING ____________________, A COPY
OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (COLLECTIVELY, THE
"DECLARATION"), IS DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF
THE STATE OF MARYLAND, PROVIDES THAT, AND MANAGER HEREBY AGREES THAT, THE NAME
"___________________" REFERS TO THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY
AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER,
SHAREHOLDER, EMPLOYEE OR AGENT SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY
OR SEVERALLY, FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION
OF, OR CLAIM AGAINST, SUCH ENTITY. ALL PERSONS DEALING WITH SUCH ENTITY, IN ANY
WAY, SHALL LOOK ONLY TO THE ASSETS OF SUCH ENTITY FOR THE SATISFACTION OF ANY
OBLIGATION.
(b) THE DECLARATION OF TRUST ESTABLISHING ____________________, A COPY
OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (COLLECTIVELY, THE
"DECLARATION"), IS DULY
94
FILED WITH THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND,
PROVIDES THAT, AND MANAGER HEREBY AGREES THAT, THE NAME "___________________"
REFERS TO THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT
INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE
OR AGENT SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR THE
PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION OF, OR CLAIM AGAINST,
SUCH ENTITY. ALL PERSONS DEALING WITH SUCH ENTITY, IN ANY WAY, SHALL LOOK ONLY
TO THE ASSETS OF SUCH ENTITY FOR THE SATISFACTION OF ANY OBLIGATION.
24.20 Arbitration.
(a) Whenever in this Agreement it is provided that a dispute is to be
resolved by an Arbitration, such dispute shall be finally resolved pursuant to
an arbitration before a panel of three (3) arbitrators who will conduct the
arbitration proceeding in accordance with the provisions of this Agreement and
the rules of the American Arbitration Association. Unless otherwise mutually
agreed by Owner and Manager, the arbitration proceedings will be conducted in
New York, New York. All arbitrators appointed by or on behalf of either party
shall be independent persons with recognized expertise in the operation of
hotels of similar size and class as the Hotels with not less than five (5)
years' experience in the hotel industry. The party desiring arbitration will
give written notice to that effect to the other party, specifying in such notice
the name, address and professional qualifications of the person designated as
arbitrator on its behalf. Within fifteen (15) days after service of such notice,
the other party will give written notice to the party desiring such arbitration
specifying the name, address and professional qualifications of the person
designated to act as arbitrator on its behalf. The two arbitrators will, within
fifteen (15) days thereafter, select a third, neutral arbitrator. As soon as
possible after the selection of the third arbitrator, and no later than fifteen
(15) days thereafter, the parties will submit their positions on each disputed
item in writing to the three arbitrators. The decision of the arbitrators so
chosen shall be given within a period of twenty (20) days after the appointment
of such third arbitrator. The arbitrators must, by majority vote, agree upon and
approve the substantive position of either Owner or Manager with respect to each
disputed item, and are not authorized to agree upon or impose any other
substantive position which has not been presented to the arbitrators by Manager
or Owner. It is the intention of the parties that the arbitrators rule only on
the
95
substantive positions submitted to them by the parties and the arbitrators are
not authorized to render rulings which are a compromise as to any such
substantive position. A decision in which any two (2) arbitrators so appointed
and acting hereunder concur in writing with respect to each disputed item shall
in all cases be binding and conclusive upon Owner and Manager and a copy of said
decision shall be forwarded to the parties. The parties will request that the
arbitrators assess the costs and expenses of the Arbitration and their fees
against the parties based on a finding as to which parties' substantive
positions were not upheld. Otherwise the fees and expenses of the Arbitration
will be treated as an Operating Cost unless otherwise determined by the
arbitrators.
(b) If the party receiving a request for Arbitration fails to appoint
its arbitrator within the time above specified, or if the two arbitrators so
selected cannot agree on the selection of the third arbitrator within the time
above specified, then either party, on behalf of both parties, may request such
appointment of such second or third arbitrator, as the case may be, by
application to any judge of any court in New York County, New York of competent
jurisdiction upon ten (10) days' prior written notice to the other party of such
intent.
(c) If there shall be a dispute with respect to whether a party has
unreasonably withheld, conditioned or delayed its consent with respect to a
matter for which such party has agreed herein not to unreasonably withhold its
consent, such dispute shall be resolved by Arbitration.
(d) Any disputes under Sections 2.1 or 7.6 shall be resolved by
Arbitration; provided, however, notwithstanding the foregoing, Owner shall be
entitled to seek and obtain injunctive and other equitable relief if it believes
there has been a breach of Manager's obligation under either of said Sections.
24.21 Estoppel Certificates. Each party to this Agreement shall at any
time and from time to time, upon not less than fifteen (15) days' prior notice
from the other party, execute, acknowledge and deliver to such other party, or
to any third party specified by such other party, a statement in writing: (a)
certifying that this Agreement is unmodified and in full force and effect (or if
there have been modifications, that the same, as modified, is in full force and
effect and stating the modifications); (b) stating whether or not to the best
knowledge of the certifying party (i) there is a continuing default by the
non-certifying party in the performance or observance of any covenant, agreement
or condition contained in
96
this Agreement, or (ii) there shall have occurred any event which, with the
giving of notice or passage of time or both, would become such a default, and,
if so, specifying each such default or occurrence of which the certifying party
may have knowledge; (c) stating the date to which distributions of Operating
Profits have been made; and (d) stating such other information as the
non-certifying party may reasonably request. Such statement shall be binding
upon the certifying party and may be relied upon by the non-certifying party
and/or such third party specified by the non-certifying party as aforesaid,
including, without limitation, its and its Affiliates' lenders and any
prospective purchaser or mortgagee of any Hotel.
24.22 Confidentiality.
(a) The parties hereto agree that the matters set forth in this
Agreement and the information provided pursuant to the terms hereof are strictly
confidential and each party will make every effort to ensure that the
information is not disclosed to any outside person or entities (including the
press) without the prior written consent of the other party except as may be
required by law and as may be reasonably necessary to obtain licenses, permits,
and other public approvals necessary for the refurbishment or operation of the
Hotels, or in connection with financing, proposed financing, sale or proposed
sale or as may be required pursuant to any ground lease of the Hotels.
(b) No reference to Manager or to any of its Affiliates will be made in
any prospectus, private placement memorandum, offering circular or offering
documentation related thereto (collectively referred to as the "Prospectus"),
issued by Owner or any of its Affiliates, which is designated to interest
potential investors in a Hotel, unless Manager has previously received a copy of
all such references. However, regardless of whether Manager does or does not so
receive a copy of all such references, neither Manager nor any of its Affiliates
will be deemed a sponsor of the offering described in the Prospectus, nor will
it have any responsibility for the Prospectus, and the Prospectus will so state.
Unless Manager agrees in advance, the Prospectus will not include any trademark,
symbols, logos or designs of Manager or any of its Affiliates.
(c) Notwithstanding anything to the contrary contained in this
Agreement, the parties (and each employee, representative, or other agent of the
parties) may disclose to any and all persons, without limitation of any kind,
the tax treatment and tax structure of the transaction, and all materials of any
kind (including opinions or other tax analyses) that are provided to
97
the taxpayer relating to such tax treatment and tax structure; provided,
however, that neither party (nor any employee, representative or other agent
thereof) may disclose any information that is not necessary to understanding the
tax treatment and tax structure of the transaction (including the identity of
the parties and any information that could lead another to determine the
identity of the parties), or any other information to the extent that such
disclosure could result in a violation of any federal or state securities law.
24.23 Hotel Warranties. Manager shall be entitled to enforce in the
name of Owner any warranties held by Owner with respect to the Hotels or any
portion thereof.
24.24 Currency.
(a) Except as otherwise specifically provided herein, each reference
herein to any dollar amount is a reference to such amount of United States
dollars. All remittances to Owner hereunder shall be in United States dollars.
To the extent that any amount to be so remitted to Owner or transferred to the
Reserve Account is held by Manager in another currency, Manager shall exchange
such currency to United States dollars, at the best rates then commercially
reasonably available to Manager at the time of such exchange for such purpose,
and all costs of such exchange shall be an Operating Cost. Manager shall bear no
risk or responsibility and makes herein no covenant of protection to Owner in
respect of exchange rate movements which may work adversely to the interests of
Owner hereunder.
(b) All revenues and expenses of the Hotels which are denominated in a
currency other than United States dollars shall be recorded and reported both in
United States dollars and in the currency(ies) in which such amounts are earned
or expended. Such other currency(ies) shall be converted to United States
dollars using a reasonable method consistent with the Accounting Principles then
employed by Manager and its Affiliates when accounting for foreign currencies.
24.25 Independent Covenants. The obligations of each party hereunder
shall be separate and independent covenants and agreements.
98
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement effective as of the day and year first above written.
OWNER:
HPT TRS IHG-2, INC.
By: ___________________________________
Name:__________________________________
Title:
MANAGER:
IHG MANAGEMENT (MARYLAND) LLC
By: ___________________________________
Name:__________________________________
Title:
99
Each of the parties comprising Purchaser in consideration of good and valuable
consideration, joins in the foregoing Agreement to evidence its agreement to be
bound by the terms of Sections 4.1 through and including 4.7 and Articles 15 and
16 thereof, in each case to the extent applicable to it, subject to the terms of
Section 24.19.
PURCHASER:
_______________________________________
By: ___________________________________
Name:__________________________________
Title:
Date of Execution:
_______________________________________
By: ___________________________________
Name:__________________________________
Title:
Date of Execution:
_______________________________________
By: ___________________________________
Name:__________________________________
Title:
Date of Execution:
100
_______________________________________
By: ___________________________________
Name:__________________________________
Title:
Date of Execution:
101
EXHIBIT A
The Sites
[See Attached]
A-1
EXHIBIT B
[Intentionally deleted.]
B-1
EXHIBIT C
Allocation of Owner's Fixed Priority
Hotel Portion of Owner's Fixed Priority
----- ---------------------------------
C-1
EXHIBIT D
Restricted Area
---------------
[See Attached]
D-1
EXHIBIT E
Assignment and Assumption
of Management Agreement
[See Attached]
Annex 1
This Annex has been omitted and will be supplementally furnished to the
Securities Exchange Commission upon request. The Annex lists, for each managed
hotel, its allocated purchase price, raw base priority for 2005 and second raw
priority, the aggregate adjustments to the raw priorities beginning January 1,
2006 and the base rent for the San ▇▇▇▇ hotel for 2005 and thereafter, and
provides other data. The total allocated purchase price for the 12 managed
hotels is stated as $306,000,000, the total raw base priorities plus base rent
for 2005 is stated as $30,292,500, going to $36,837,500 thereafter, and the
total raw second priority is stated as $3,037,500.
ii
Exhibit Q
---------
HPT GUARANTY
(Attached)
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT (this "Agreement") is made and given as of
___________, 2005 by HOSPITALITY PROPERTIES TRUST, a Maryland real estate
investment trust (the "Guarantor"), for the benefit of IHG MANAGEMENT (MARYLAND)
LLC, a Maryland limited liability company(together with its successors and
assigns, the "Manager") and Intercontinental Hotels (Puerto Rico) Inc., a
_____________________________ (together with its successors and assigns, the "PR
Tenant").
W I T N E S S E T H :
WHEREAS, HPT TRS IHG-2, Inc. (the "Tenant") and the Manager are, on the
date hereof, entering into a Management Agreement (as the same may be amended,
modified, supplemented, severed or otherwise altered, the "Management
Agreement") with respect to certain hotels, all as more particularly set forth
in the Management Agreement; and
WHEREAS, HPT IHG PR, Inc. (the "PR Landlord") and the PR Tenant are, on
the date hereof, entering into a Lease Agreement (as the same may be amended,
modified, supplemented, severed or otherwise altered, the "PR Lease") with
respect to a certain hotel, as more particularly set forth in the PR Lease; and
WHEREAS, it is a condition precedent to the Manager's entering into the
Management Agreement, the PR Tenant's entering into the PR Lease and the
consummation of certain other transactions contemplated by the Transaction
Documents (as defined in the Management Agreement) that the Guarantor enter into
this Agreement; and
WHEREAS, the transactions contemplated by the Management Agreement, the
PR Lease and the other Transaction Documents are of direct material benefit to
the Guarantor;
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the mutual receipt and legal sufficiency of which
are hereby acknowledged, the parties hereto hereby agree as follows:
1. Certain Terms. Capitalized terms used and not otherwise defined in
this Agreement shall have the meanings ascribed to such terms in the Management
Agreement. The term "Guaranteed Obligations" as used in this Agreement shall
mean
the timely disbursement of required funds to (a) the Manager pursuant to
Section 5.2(c) of the Management Agreement and, (b) the PR Tenant pursuant to
Section 5.1.3 of the PR Lease.
2. Representations and Covenants. The Guarantor represents, warrants,
covenants and agrees that:
2.1 Validity of Agreement. The Guarantor has duly and validly
executed and delivered this Agreement; this Agreement constitutes the legal,
valid and binding obligation of the Guarantor, enforceable against the Guarantor
in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws of general
application affecting the rights and remedies of creditors; and the execution,
delivery and performance of this Agreement have been duly authorized by all
requisite action of the Guarantor and such execution, delivery and performance
by the Guarantor will not result in any breach of the terms, conditions or
provisions of, or conflict with or constitute a default under, or result in the
creation of any lien, charge or encumbrance upon any of the property or assets
of the Guarantor pursuant to the terms of, any indenture, mortgage, deed of
trust, note, other evidence of indebtedness, agreement or other instrument to
which the Guarantor is a party or by which the Guarantor or any property or
assets of the Guarantor is bound, or violate any provision of law applicable to
the Guarantor, or any order, writ, injunction, judgement or decree of any court
applicable to the Guarantor or any order or other public regulation of any
governmental commission, bureau or administrative agency applicable to the
Guarantor.
2.2 Payment of Expenses. The Guarantor agrees, as principal
obligor and not as guarantor only, to pay to the Manager or the PR Tenant, as
the case may be, forthwith, upon demand, in immediately available federal funds,
all costs and expenses (including court costs and reasonable legal expenses)
incurred or expended by either the Manager or the PR Tenant or both in
connection with the enforcement of this Agreement, together with interest at the
Interest Rate on amounts recoverable under this Agreement from the time such
amounts become due until payment.
2.3 Legal Existence. The Guarantor shall do or cause to be done
all things necessary to preserve and keep in full force and effect its existence
as a Maryland real estate investment trust.
-2-
2.4 Financial Statements. The Guarantor shall furnish to the
Manager and the PR Tenant within ten (10) days after the filing by the Guarantor
of any financial statement with any governmental agency, quasi-governmental
agency or stock exchange, a copy of the same; provided, however, if the
Guarantor is not required to file interim and annual financial statements with
the Securities and Exchange Commission the Guarantor shall furnish the following
statements to the Manager and the PR Tenant:
(a) Within forty-five (45) days after each interim period for
which the Guarantor prepares Consolidated Financials, the Consolidated
Financials of the Guarantor for such period; and
(b) within ninety (90) days after each fiscal year of the
Guarantor, the Consolidated Financials of the Guarantor for such fiscal year
audited by a firm of independent certified public accountants.
3. Guarantee. The Guarantor hereby unconditionally guarantees that the
Guaranteed Obligations which become due and payable during the term of the
Management Agreement and the PR Lease shall be paid in full when due and
payable, whether upon demand, at the stated or accelerated maturity thereof or
upon any mandatory or voluntary prepayment pursuant to any Transaction Document,
or otherwise. This guarantee is a guarantee of payment and not of collectibility
and is absolute and in no way conditional or contingent. In case any part of the
Guaranteed Obligations shall not have been paid when due and payable or
performed at the time performance is required, the Guarantor shall, within five
(5) days after receipt of notice from the Manager or the PR Tenant, as the case
may be, pay or cause to be paid to either such Person providing such notice, the
amount thereof as is then due and payable and unpaid (including interest and
other charges, if any, due thereon through the date of payment in accordance
with the applicable provisions of the Transaction Documents) or perform or cause
to be performed such obligations in accordance with the Transaction Documents.
4. Unenforceability of Guaranteed Obligations, Etc. If the Tenant or
the PR Landlord is for any reason under no legal obligation to discharge any of
the Guaranteed Obligations as such may apply to it, or if any other moneys
included in the Guaranteed Obligations with respect to (a) the Tenant have
-3-
become unrecoverable from the Tenant or (b) the PR Landlord have become
unrecoverable from the PR Landlord, in each case by operation of law or for any
other reason, including, without limitation, the invalidity or irregularity in
whole or in part of any Guaranteed Obligation or of any Transaction Document or
any limitation on the liability of the Tenant or the PR Landlord, as the case
may be, thereunder or any limitation on the method or terms of payment
thereunder which may now or hereafter be caused or imposed in any manner
whatsoever, the guarantees contained in this Agreement shall nevertheless remain
in full force and effect in accordance with the terms set forth herein and shall
be binding upon the Guarantor to the same extent as if the Guarantor at all
times had been the principal debtor on all such Guaranteed Obligations.
5. Additional Guarantees. This Agreement shall be in addition to any
other guarantee or other security for the Guaranteed Obligations and it shall
not be prejudiced or rendered unenforceable by the invalidity of any such other
guarantee or security or by any waiver, amendment, release or modification
thereof.
6. Consents and Waivers, Etc. The Guarantor hereby acknowledges receipt
of correct and complete copies of each of the Transaction Documents and consents
to all of the terms and provisions thereof, as the same may be from time to time
hereafter amended or changed in accordance therewith, and waives, to the extent
the Guarantor lawfully may do so, (a) presentment, demand for payment, and
protest of nonpayment, of any of the Guaranteed Obligations, (b) notice of
acceptance of this Agreement and of diligence, presentment, demand and protest,
(c) notice of any default hereunder and any default, breach or nonperformance or
a default under any of the Guaranteed Obligations or the Transaction Documents,
except as expressly provided in Section 3, (d) notice of the terms, time and
place of any private or public sale of collateral held as security for the
Guaranteed Obligations, (e) demand for performance or observance of, and any
enforcement of any provision of, or any pursuit or exhaustion of rights or
remedies against the Tenant, the PR Landlord or any other guarantor of the
Guaranteed Obligations, under or pursuant to the Transaction Documents, or any
agreement directly or indirectly relating thereto and any requirements of
diligence or promptness on the part of the holders of the Guaranteed Obligations
in connection therewith, and (f) any and all demands and notices of every kind
-4-
and description with respect to the foregoing or which may be required to be
given by any statute or rule of law.
7. No Impairment, Etc. The obligations, covenants, agreements and
duties of the Guarantor under this Agreement shall not be affected or impaired
by any assignment or transfer in whole or in part of any of the Guaranteed
Obligations without notice to the Guarantor, or any waiver by the Manager, the
PR Tenant or any holder of any of the Guaranteed Obligations or by the holders
of all of the Guaranteed Obligations of the performance or observance by the
Tenant, the PR Landlord or any other guarantor of any of the agreements,
covenants, terms or conditions contained in the Guaranteed Obligations or the
Transaction Documents or any indulgence in or the extension of the time for
payment by the Tenant, the PR Landlord or any other guarantor of any amounts
payable under or in connection with the Guaranteed Obligations or the
Transaction Documents or any other instrument or agreement relating to the
Guaranteed Obligations or of the time for performance by the Tenant, the PR
Landlord or any other guarantor of any other obligations under or arising out of
any of the foregoing or the extension or renewal thereof, or the modification or
amendment (whether material or otherwise) of any duty, agreement or obligation
of the Tenant, the PR Landlord or any other guarantor set forth in any of the
foregoing, or the voluntary or involuntary sale or other disposition of all or
substantially all the assets of the Tenant, the PR Landlord or any other
guarantor or insolvency, bankruptcy, or other similar proceedings affecting the
Tenant, the PR Landlord or any other guarantor or any assets of the Tenant, the
PR Landlord or any such other guarantor, or the release or discharge of the
Tenant, the PR Landlord or any such other guarantor from the performance or
observance of any agreement, covenant, term or condition contained in any of the
foregoing without the consent of the holders of the Guaranteed Obligations by
operation of law.
8. Reimbursement, Subrogation, Etc. The Guarantor hereby covenants and
agrees that the Guarantor will not enforce or otherwise exercise any rights of
reimbursement, subrogation, contribution or other similar rights against the
Tenant, the PR Landlord or any other person with respect to the Guaranteed
Obligations prior to the irrevocable payment in full of all amounts then due and
owing but unpaid under the Management Agreement, and until the Guaranteed
Obligations have been satisfied in full, the Guarantor shall not have any right
of subrogation, and the Guarantor waives any defense it may have
-5-
based upon any election of remedies by the Manager or the PR Tenant which
destroys the Guarantor's subrogation rights or the Guarantor's rights to proceed
against the Tenant or the PR Landlord, as the case may be, for reimbursement,
including, without limitation, any loss of rights the Guarantor may suffer by
reason of any rights, powers or remedies of the Tenant or the PR Landlord in
connection with any anti-deficiency laws or any other laws limiting, qualifying
or discharging the indebtedness to the Manager or the PR Tenant. Until all
obligations of the Tenant or the PR Landlord, as the case may be, pursuant to
the Transaction Documents shall have been irrevocably paid and satisfied in
full, the Guarantor waives any right to enforce any remedy which the Manager or
the PR Tenant now has or may in the future have against the Tenant, the PR
Landlord, any other guarantor or any other person and any benefit of, or any
right to participate in, any security whatsoever now or in the future held by
the Manager or the PR Tenant.
9. Defeasance; Guaranty Limitations. The Guarantor's obligations
hereunder shall terminate upon the date on which the Guaranteed Obligations have
been paid and performed in full and all other obligations of the Guarantor to
the Manager and the PR Tenant under this Agreement have been irrevocably
satisfied in full; provided, however, if at any time, all or any part of any
payment applied on account of the Guaranteed Obligations is or must be rescinded
or returned for any reason whatsoever (including, without limitation, the
insolvency, bankruptcy or reorganization of the Tenant or the PR Landlord), this
Agreement, to the extent such payment is or must be rescinded or returned, shall
be deemed to have continued in existence notwithstanding any such termination.
10. Notices. (a) Any and all notices, demands, consents, approvals,
offers, elections and other communications required or permitted under this
Agreement shall be deemed adequately given if in writing and the same shall be
delivered either in hand, by telecopier with written acknowledgment of receipt,
or by mail or Federal Express or similar expedited commercial carrier, addressed
to the recipient of the notice, postpaid and registered or certified with return
receipt requested (if by mail), or with all freight charges prepaid (if by
Federal Express or similar carrier).
(b) All notices required or permitted to be sent hereunder shall be
deemed to have been given for all purposes of this Agreement upon the date of
acknowledged receipt, in the case of
-6-
a notice by telecopier, and, in all other cases, upon the date of receipt or
refusal, except that whenever under this Agreement a notice is either received
on a day which is not a Business Day or is required to be delivered on or before
a specific day which is not a Business Day, the day of receipt or required
delivery shall automatically be extended to the next Business Day.
(c) All such notices shall be addressed,
if to the Guarantor to:
HPT TRS IHG-2, Inc.
c/o Hospitality Properties Trust
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ & Worcester LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Esq.
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
if to the Manager to: IHG Management (Maryland) LLC and if
to the PR Tenant to: HPT IHG PR, Inc.
in each case at the following address:
c/o Six Continents Hotels, Inc.
▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Vice President of Operations
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Intercontinental Hotels Group
Resources, Inc.
c/o Six Continents Hotels, Inc.
▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel - Operations
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
-7-
with a copy to:
▇▇▇▇▇▇ & Bird LLP
One Atlantic Center
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(d) By notice given as herein provided, the parties hereto and their
respective successors and assigns shall have the right from time to time and at
any time during the term of this Agreement to change their respective addresses
effective upon receipt by the other parties of such notice and each shall have
the right to specify as its address any other address within the United States
of America.
11. Successors and Assigns. Whenever in this Agreement, any of the
parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party, including without limitation the holders,
from time to time, of the Guaranteed Obligations; and all representations,
warranties, covenants and agreements by or on behalf of the Guarantor which are
contained in this Agreement shall inure to the benefit of the Manager's and the
PR Tenant's respective successors and assigns, including, without limitation,
such holders, whether so expressed or not.
12. Applicable Law. This Agreement and any other instruments executed
and delivered to evidence, complete or perfect the transactions contemplated
hereby shall be interpreted, construed, applied and enforced in accordance with
the laws of New York applicable to contracts between residents of New York which
are to be performed entirely within New York, regardless of (i) where any such
instrument is executed or delivered; or (ii) where any payment or other
performance required by any such instrument is made or required to be made; or
(iii) where any breach of any provision of any such instrument occurs, or any
cause of action otherwise accrues; or (iv) where any action or other proceeding
is instituted or pending; or (v) the nationality, citizenship, domicile,
principal place of business, or jurisdiction of organization or domestication of
any party; or (vi) whether the laws of the forum jurisdiction otherwise would
apply the laws of a jurisdiction other than New York; or (vii) any combination
of the foregoing.
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All actions and proceedings arising out of or in any way relating to
this Agreement shall be brought, heard, and determined exclusively in an
otherwise appropriate federal or state court located within the State of New
York. Guarantor hereby (i) submits to the exclusive jurisdiction of any New York
federal or state court of otherwise competent jurisdiction for the purpose of
any action or proceeding arising out of or relating to this Agreement and (ii)
voluntarily and irrevocably waives, and agrees not to assert by way of motion,
defense, or otherwise in any such action or proceeding, any claim or defense
that it is not personally subject to the jurisdiction of such a court, that such
a court lacks personal jurisdiction over Guarantor or the matter, that the
action or proceeding has been brought in an inconvenient or improper forum, that
the venue of the action or proceeding is improper, or that this Agreement may
not be enforced in or by such a court. To the maximum extent permitted by
applicable law, Guarantor consents to service of process by registered mail,
return receipt requested, or by any other manner provided by law.
To the maximum extent permitted by applicable law, each of the parties
hereto waives its rights to trial by jury with respect to this Agreement or any
matter arising in connection herewith.
13. Modification of Agreement. No modification or waiver of any
provision of this Agreement, nor any consent to any departure by the Guarantor
therefrom, shall in any event be effective unless the same shall be in writing
and signed by both the Manager and the PR Tenant, and such modification, waiver
or consent shall be effective only in the specific instances and for the purpose
for which given. No notice to or demand on the Guarantor in any case shall
entitle the Guarantor to any other or further notice or demand in the same,
similar or other circumstances.
14. Waiver of Rights by the Manager and the PR Tenant. Neither any
failure nor any delay on the part of the Manager or the PR Tenant in exercising
any right, power or privilege under this Agreement shall operate as a waiver
thereof, nor shall a single or partial exercise thereof preclude any other or
further exercise, or the exercise of any other right, power or privilege.
15. Severability. In case any one or more of the provisions contained
in this Agreement should be invalid,
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illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby, but this Agreement shall be reformed and
construed and enforced to the maximum extent permitted by applicable law.
16. Entire Contract. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and shall
supersede and take the place of any other instruments purporting to be an
agreement of the parties hereto relating to the subject matter hereof.
17. Headings; Counterparts. Headings in this Agreement are for purposes
of reference only and shall not limit or otherwise affect the meaning hereof.
This Agreement may be executed in any number of counterparts, each of which
shall be an original, but all of which together shall constitute one instrument,
and in pleading or proving any provision of this Agreement, it shall not be
necessary to produce more than one of such counterparts.
18. Remedies Cumulative. No remedy herein conferred upon the Manager
and/or the PR Tenant is intended to be exclusive of any other remedy, and each
and every remedy shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law or in equity or by
statute or otherwise.
19. NONLIABILITY OF TRUSTEES. THE DECLARATION OF TRUST ESTABLISHING THE
GUARANTOR, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE
"DECLARATION"), IS DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF
THE STATE OF MARYLAND, PROVIDES THAT, AND THE MANAGER AND THE PR TENANT BY THEIR
ACCEPTANCE HEREOF AGREE THAT, THE NAME "HOSPITALITY PROPERTIES TRUST" REFERS TO
THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT
INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE
OR AGENT OF THE GUARANTOR SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR
SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, THE GUARANTOR. ALL PERSONS
DEALING WITH THE GUARANTOR, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF THE
GUARANTOR FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.
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WITNESS the execution hereof under seal as of the date above first
written.
HOSPITALITY PROPERTIES TRUST
By:___________________________
Its:_______________________
ACKNOWLEDGED AND AGREED:
IHG MANAGEMENT (MARYLAND) LLC
By:_________________________
Its:_____________________
Intercontinental Hotels (Puerto Rico) Inc.
By:_________________________
Its:_____________________
Exhibit R
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AMENDMENT TO MANAGEMENT AGREEMENT
(Attached)
AMENDMENT TO MANAGEMENT AGREEMENT
THIS FIRST AMENDMENT TO MANAGEMENT AGREEMENT (this "Amendment") is made
as of ________________, 2005 by and between IHG MANAGEMENT (MARYLAND) LLC, a
Maryland limited liability company ("Manager"), and HPT TRS IHG-2, INC., a
Maryland corporation ("Owner").
WHEREAS, Manager and Owner entered into that certain Management
Agreement, dated as of ___________, 2005 (the "Management Agreement"); and
WHEREAS, Manager and Owner wish to amend the Management Agreement to
include , among other things, the Hotel located at the Site listed on Exhibit A
attached hereto(the "Additional Hotel");
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are herein acknowledged, Owner and Manager, intending to be
legally bound, hereby agree as follows:
1. Capitalized terms used in this Amendment and not otherwise defined
herein shall have the meaning ascribed thereto in the Management Agreement.
2. Section 1.10 of the Management Agreement is amended by adding the
following sentence at the end thereof: "The Base Priority Amount shall be
increased on ________, 2005 by $_____________."
3. Section 1.83 of the Management Agreement is amended by deleting the
phrase "Three Million Thirty Seven Thousand Five Hundred Dollars ($3,037,500)"
in the second and third lines thereof and replacing it with the following:
"________________ ($_______________)."
4. Section 1.34 of the Management Agreement is deleted in its entirety
and the following inserted into its place:
"1.34 "Effective Date" shall mean ________, 2005 with respect to all
Hotels hereunder except for the Austin, TX InterContinental Hotel, for which the
"Effective Date: shall be ___________, 2005."
5. Section 1.110 of the Management Agreement is deleted in its entirety
and the following inserted in its place:
"1.110 "Sites" shall mean, collectively, the parcels of real estate
more particularly described in Exhibits A-1 and A-2."
6. Exhibit A to the Management Agreement is hereby amended by renaming
it Exhibit A-1. Exhibit A to this Amendment is inserted as Exhibit A-2 to the
Management Agreement after such Exhibit A-1.
7. Exhibit C to the Management Agreement is hereby deleted in its
entirety and replaced with the Exhibit C attached hereto.
8. There is added to the end of Exhibit D to the Management Agreement
the maps showing, or other descriptions of, the Restricted Area for the
Additional Hotel set forth in Exhibit D hereto.
9. As of the date hereof, no event has occurred and is continuing under
the Management Agreement that constitutes a Manager Default or Manager Event of
Default.
10. Manager hereby consents to the amendment to the Lease of even date
herewith pursuant to which Owner leases the Additional Hotel from Purchaser.
11. All references in the Management Agreement to the Management
Agreement shall be deemed to be references thereto as amended hereby.
12. As modified hereby, the Management Agreement is in full force and
effect and is hereby ratified and confirmed.
13. This Amendment may be executed in one or more counterparts, all of
which counterparts shall constitute but one and the same document.
[Remainder of Page Intentionally Blank]
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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Amendment effective as of the day and year first above written.
OWNER:
HPT TRS IHG-2, INC.
By:_____________________________
Name:___________________________
Title: _________________________
MANAGER:
IHG MANAGEMENT (MARYLAND) LLC
By:_____________________________
Name:___________________________
Title: _________________________
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Exhibit A
Exhibit A-2 to the Management Agreement
Exhibit A-2
Legal Descriptions
Additional Hotel
Exhibit C
Substitute Exhibit C to the Management Agreement
EXHIBIT C
ALLOCATIONS
Exhibit D
RESTRICTED AREAS FOR THE ADDITIONAL HOTEL