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EXHIBIT 2.6
HOTEL PURCHASE AGREEMENT
C.I. NASHVILLE, INC.
THIS AGREEMENT, made as of the 23rd day of July, 1997 (the
"AGREEMENT"), by and between WYNDHAM HOTEL CORPORATION, a Delaware corporation,
or its assignee (the "PURCHASER"), and C.I. NASHVILLE, INC., a Kansas
corporation (the "SELLER"). K.D.F., a partnership ("KDF"), joins in this
Agreement only for purposes of Section 10.5b.
R E C I T A T I O N S:
A. The Seller is the owner of the Hotel Property.
B. The Hotel Property is managed by Manager pursuant to the
Management Agreement.
C. All defined terms have the meaning ascribed to them on the
schedule of definitions attached to and made a part of this Agreement.
NOW, THEREFORE, in consideration of the premises and in consideration
of the mutual covenants, promises and undertakings of the parties hereinafter
set forth, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties, it is agreed as
follows:
1. PURCHASE AND SALE OF HOTEL PROPERTY: Subject to the terms of
this Agreement, the Seller agrees to sell and convey to Purchaser and the
Purchaser agrees to purchase the Hotel Property from the Seller for the
Purchase Price. Subject to the terms of this Agreement, including, without
limitation, the indemnity provisions contained herein, the Purchaser agrees to
assume all liabilities of the Seller; provided, however, the Purchaser shall
not assume (a) any long-term debt of the Seller or any such debt as it affects
the Hotel, (b) the Seller's liabilities and obligations under this Agreement,
and (c) the Seller's liability to pay income taxes.
2. ALLOCATIONS. Subject to adjustments in accordance with the
terms of this Agreement, the Purchase Price shall be allocated among the
components of the Hotel Property in the manner determined by Purchaser and
Seller. A certificate setting forth these allocations will be executed by the
parties at closing.
3. CLOSING: Subject to the Conditions Precedent to Closing in
Article 7, the Closing shall take place at the offices of the Title Company on
the Closing Date, or as otherwise set by agreement of the parties. At the
Closing and subject to the fulfillment of such conditions, (a) the Purchaser
will deliver to Seller all that is required under Sections 8.2 and 8.3 , and
(b) the Seller will deliver to Purchaser all that is required under Sections
8.1 and 8.3.
4. SELLER'S REPRESENTATIONS AND WARRANTIES: Seller hereby
represents and warrants unto Purchaser that each and every one of the following
statements is true, correct and complete in every material respect as of the
date of this Agreement.
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4.1 Organization and Power. The Seller is a Kansas
corporation duly incorporated and validly existing in good standing
under the laws of the State of Kansas and is in good standing and
qualified to conduct business in Tennessee. The Seller has all
requisite corporate power and all material governmental and regulatory
licenses, authorizations, consents and approvals to carry on its
business as now conducted, to own and operate its properties,
including, but not limited to the Hotel Property, to execute and
deliver this Agreement and any document or instrument required to be
executed and delivered on behalf of the Seller hereunder, to perform
its obligations under this Agreement and any such other documents or
instruments and to consummate the sale of the Hotel Property and the
other transactions contemplated hereby.
4.2 Authorization. Except as shown on Schedule 4.2, the
execution, delivery and performance of this Agreement by the Seller
and the consummation of the transactions contemplated hereby have been
duly authorized, adopted and approved by all necessary action on
behalf of the Seller and require no further action or approval of
Seller's shareholders, directors, members, managers or partners (as
the case may be) or of any other individuals or entities in order to
constitute this Agreement as a binding and enforceable obligation of
the Seller. No other proceedings on the part of the Seller are
necessary to authorize the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby. This
Agreement has been duly executed and delivered by the Seller and is
the valid and binding obligation of the Seller, enforceable against
the Seller in accordance with its terms (except as such enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other laws affecting the enforcement of
creditors' rights generally, and by legal and equitable limitations on
the availability of specific performance and other equitable
remedies). The individuals and/or entities signing below in the
indicated representative capacities are fully authorized so to act.
No person or entity owns any interest in the Hotel Property other than
the Seller, except Manager pursuant to the terms of the Management
Agreement.
4.3 No Special Taxes. To the Seller's actual knowledge,
except as provided in the Permitted Exceptions (defined below), there
are no, and the Seller has not received any written notice of, any
special taxes or assessments relating to the Hotel Property or any
part thereof or any planned public improvements that may result in a
special tax or assessment against the Hotel Property. Otherwise, all
real estate, personal property, sales, and other taxes assessed
against the Seller in connection with the Hotel Property or the
operation of the Hotel Property which are due and payable have been
paid in full.
4.4 Personal Property. Except as set forth in Schedule
4.4 and except as caused by actions of the Manager pursuant to the
Management Agreement, the Tangible Personal Property, Intangible
Personal Property and Inventory of the Seller are free and clear of
all liens and encumbrances, and the Seller has good and marketable
title thereto.
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4.5 Title and Survey Matters. The Seller has fee simple
title to the Hotel, subject only to (a) the Permitted Exceptions and
(b) instruments evidencing and securing the indebtedness of the Seller
described on Schedule 4.5 and indicated on such schedule as mortgage
indebtedness of the Seller; provided, however, the liens associated
with such indebtedness (other than mortgages and security interests
that are not in default), in the aggregate, do not interfere with the
ownership's use or operation of the Hotel Property and do not
constitute a Material Adverse Effect. The Seller has never owned,
operated or leased any real property other than the Hotel.
4.6 No Violation. The execution and delivery of this
Agreement by the Seller and the performance by the Seller of its
obligations hereunder do not and will not (a) contravene, or
constitute a default under, any (i) provisions of the Seller's
articles of incorporation, or bylaws, (ii) applicable law or
regulation, permit, restrictive covenant, or statute (except
anti-trust laws), (iii) assuming the receipt of the approvals listed
on Schedule 4.6, agreement, note, mortgage, indenture, lease,
franchise, license or other instrument to which the Seller is a party
or by which its assets are bound, or (iv) judgment, injunction, order,
decree or other instrument binding upon the Seller or its assets, or
(b) result in the creation of any lien or other encumbrance on the
Hotel Property, or upon the Seller or its assets.
4.7 No Litigation/Pending Claims. Except as shown on
Schedule 4.7 and to the Seller's best knowledge, with respect to the
Seller or the Hotel Property, there (i) are no (a) unsatisfied
arbitration awards or orders with respect thereto, (b) unsatisfied
unfair labor practice orders or judicial proceedings or orders with
respect thereto, (c) unremedied orders by city, state or federal civil
or human rights agencies or judicial proceedings or orders with
respect thereto or with respect to obligations under city, state or
federal civil or human rights or antidiscrimination laws or executive
orders, or (d) other unsatisfied orders by or before any
administrative agency or court, (ii) are no pending unfair labor
practice charges or complaints, labor disputes, charges or complaints
with or by city, state or federal civil or human rights agencies, and
(iii) no action, suit or proceeding, pending or threatened, against or
affecting the Seller or the Hotel Property in any court or before any
arbitrator or before any governmental body or agency or, with respect
to (i) and (ii) above, which in any manner challenges the validity or
enforceability of this Agreement or might become a lien on the Hotel
Property.
4.8 Condemnation Proceedings; Roadways. The Seller has
not received any notice of any condemnation or eminent domain
proceeding pending or threatened against the Hotel Property or any
part thereof. The Seller does not have any knowledge of any change or
proposed change in the route, grade or width of, or otherwise
affecting, any street or road adjacent to or serving the Hotel
Property.
4.9 Corporate Documents. The Seller's articles of
incorporation and bylaws, true and complete copies of which have been
delivered to the Purchaser, are in full force and effect and have not
been amended, modified or supplemented.
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4.10 No Broker. The Seller has not retained any Broker in
connection with the purchase and sale of the Hotel Property hereunder.
4.11 Bankruptcy. No Act of Bankruptcy has occurred with
respect to the Seller.
4.12 Environmental Matters. The Seller has not received
any notice that the Seller is in violation of, nor, during the last
three years, has the Seller been subject to any administrative or
judicial proceeding pursuant to any Environmental Requirements. The
Purchaser has engaged one or more qualified environmental engineering
firms to conduct a Phase I environmental review and issue ESA Reports,
copies of which have been provided to the Seller. To the knowledge of
the Seller, except as reflected in the ESA Reports, (i) there are no
environmental conditions at the Hotel that would have a Material
Adverse Effect on the Seller or the Hotel Property, including any such
conditions relating to the use, treatment, storage, release or
disposal of Hazardous Substances, (ii) the ownership of the Hotel by
the Seller or by any third party, and any use, storage, treatment,
disposal, or transaction of Hazardous Substances by the Seller or by
any third party, that have occurred in or on the Hotel prior to the
date of this Agreement have been in compliance with Environmental
Requirements, except for such non-compliance that could not reasonably
be expected to have a Material Adverse Effect on the Seller or Hotel
Property, (iii) during the ownership of the Hotel by the Seller and
prior to the ownership thereof by the Seller, no release, leak,
discharge, spill, disposal, or emission of Hazardous Substances has
occurred in, on, or under the Hotel in a quantity or manner that
violates or required further investigation or remediation under
Environmental Requirements, (iv) the Hotel is free of Hazardous
Substances as of the date of this Agreement, except for the presence
of small quantities of Hazardous Substances utilized by the Manager in
the ordinary course of their business that are used and stored in
compliance with Environmental Requirements, except for such
non-compliance that could not reasonably be expected to have a
Material Adverse Effect on the Seller or Hotel Property, (v) there is
no pending or threatened litigation or administrative investigation,
inquiry, concern, or proceeding concerning the Hotel involving
Hazardous Substances or Environmental Requirements, and (vi) there is
no ACM within the Hotel, whether friable or non-friable, and there are
no above-ground or underground storage tank systems located at the
Hotel.
4.13 Fuel Stored At Hotel. There is no fuel stored at the
Hotel.
4.14 Financial Statements. Schedule 4.14 contains true
and complete copies of (i) the audited balance sheet of the Seller as
of December 31, 1996 and December 31, 1995, and the audited statement
of income and statement of cash flows of the Seller for the fiscal
years ended December 31, 1996 and 1995, together with the reports
thereon prepared by Ernst & Young, independent public accountants, and
the footnotes thereto, and (ii) the unaudited balance sheet of the
Seller and the unaudited consolidated statement of income and
statement of cash flows of the Seller for the three month period ended
March 31, 1997. The financial statements have been prepared from and
are
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materially in accordance with the books and records of the Seller and
present fairly the position of the Seller as at the respective dates
thereof, and the related statement of income and statement of cash
flows for the periods therein referred to, all in accordance with
GAAP, except as may be otherwise indicated therein. To the extent
within its control, the Seller shall permit the Purchaser full access
to the work papers pertaining to the financial statements, including
those work papers in the possession of Seller prepared by Ernst &
Young, and Seller will instruct ▇▇▇▇▇▇ & ▇▇▇▇▇ to permit Purchaser
full access thereto.
4.15 Labor Disputes and Agreements. To the best of the
Seller's knowledge, there are no labor disputes pending or, to the
best of the Seller's knowledge, threatened as to the operation or
maintenance of the Hotel Property or any part thereof. The Seller is
not a party to any union or other collective bargaining agreement with
employees employed in connection with the ownership, operation or
maintenance of the Hotel Property. The Seller is not a party to any
employment contracts, except for any contract entered into by Manager
of which the Seller has no knowledge.
4.16 Compliance with Existing Laws. To the knowledge of
the Seller (i) to the extent that not possessing the following would
cause a Material Adverse Effect, the Seller possesses all
Authorizations, each of which is valid, unexpired, unconditional, and
in full force and effect, and no provision, condition or limitation of
any of the Authorizations has been breached or violated which breach
or violation would cause a Material Adverse Effect; and (ii) the
Seller has not misrepresented or failed to disclose any relevant fact
in obtaining all Authorizations, and the Seller has no knowledge of
any change in the circumstances under which those Authorizations were
obtained that result in their termination, suspension, modification or
limitation. The Seller has no knowledge, nor has it received notice
within the past three years, of any existing or threatened violation
of any provision of any applicable building, zoning, subdivision,
environmental or other governmental ordinance, resolution, statute,
rule, order or regulation, including but not limited to those of
insurance boards of underwriters, with respect to the ownership,
operation, use, maintenance or condition of the Hotel Property or any
part thereof, or requiring any repairs or alterations other than those
that have been made prior to the date hereof. The Seller has received
no notice, and has no actual knowledge, that it lacks any
Authorizations necessary for the present use and occupancy of the
Improvements.
4.17 Insurance. All of the Seller's insurance policies
are valid and in full force and effect.
4.18 Liquor License. The Liquor License is in full force
and effect.
4.19 Operating Agreements. Except as set forth on
Schedule 4.19, the Operating Agreements may be terminated by the
Seller or the Purchaser upon not more than 30 days' prior written
notice and without the payment of any penalty, fee, premium or other
amount. To the Seller's knowledge, the Seller has performed all of
its obligations under
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each of the Operating Agreements and, to the Seller's knowledge, no
fact or circumstance has occurred which, by itself or with the passage
of time or the giving of notice or both, would constitute a default
under any of the Operating Agreements, except for the failure to
obtain the third party consents listed on Schedule 4.6.
4.20 Option to Purchase. No party has any right or option
to acquire the Hotel Property or any portion thereof, other than the
Purchaser.
4.21 Property Condition. To the Seller's actual
knowledge, there is no material defect in the condition of the Hotel
Property, or any portion thereof, which has not been corrected or
which would have a Material Adverse Effect.
4.22 Access Agreements. Not in limitation on any other
provision hereof, except as shown in the Title Commitment, to the
Seller's actual knowledge, there are no unrecorded cross-use, mutual
access or similar agreements of any kind binding upon the Seller or
the Hotel Property and benefiting any other person, entity, or
property.
4.23 Inspection Reports. To the best knowledge of the
Seller, during the period of time that Seller has owned the Hotel
Property and Manager has been manager, Manager has not issued to the
Seller any written inspection reports or written deficiency reports
with respect to the Hotel Property, the subject of which remains
unsatisfied or otherwise uncured as of the date of this Agreement.
4.24 Intentionally Omitted.
4.25 Mechanics Liens. The Seller hereby represents,
warrants, and covenants that all work required by the 1997 Capital
Budget to be done prior to the Closing Date under the terms of any
Lease or License has been or will be performed and fully paid for by
the Seller prior to the Closing Date in accordance with the terms of
such Lease or License, and all mechanics' and materialmen's liens
arising from any labor or material furnished prior to the Closing Date
and related to such work will be discharged so as to be omitted from
Purchaser's Policy.
4.26 ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Act. By virtue of the consummation
of the purchase and sale of the Hotel Property as contemplated in this
Agreement, no filing must be made under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act.
4.27 Liabilities of Seller. There are no liabilities or
obligations (whether absolute, accrued, fixed or contingent) of the
Seller other than as (a) shown on the financial statements attached as
Schedule 4.14, (b) included in the calculation of the Working Capital
Adjustment Amount, (c) listed on Schedule 4.27, and (d) otherwise
specifically disclosed in this Agreement and on the schedules attached
hereto.
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5. PURCHASER'S REPRESENTATIONS AND WARRANTIES: Purchaser hereby
represents and warrants unto Seller that each and every one of the following
statements is true, correct and complete in every material respect as of the
date of this Agreement.
5.1 Organization and Power. The Purchaser is a
corporation duly incorporated, validly existing and in good standing
under the laws of the State of Delaware, and has full corporate power
and authority to enter into and perform its obligations under this
Agreement.
5.2 Authority and Binding Effect. The execution and
delivery of this Agreement and the performance by the Purchaser of its
obligations hereunder have been duly authorized by all necessary
corporate action on behalf of the Purchaser and require no further
action or approval of Purchaser's shareholders, directors, member,
managers or partners (as the case may be) or of any other individuals
or entities in order to constitute this Agreement as a binding and
enforceable obligation of Purchaser. This Agreement constitutes the
legal, valid and binding agreement of the Purchaser, enforceable
against the Purchaser in accordance with its terms (except as such
enforceability may be limited by bankruptcy, insolvency, moratorium,
fraudulent conveyance or other laws affecting the enforcement of
creditors' rights generally, and by legal and equitable limitations on
the availability of specific performance and other equitable
remedies).
5.3 No Violation. The execution and delivery of this
Agreement by the Purchaser and the performance by the Purchaser of its
obligations hereunder do not and will not (a) contravene, or
constitute a default under, any (i) provisions of its corporate
charter, articles of incorporation or bylaws, (ii) applicable law or
regulation, (iii) agreement, note, mortgage, indenture, lease,
franchise, license or other instrument to which the Purchaser is a
party or by which it is bound, or (iv) judgment, injunction, order,
decree or other instrument binding upon the Purchaser or its assets.
5.4 No Litigation. There is no action, suit or
proceeding pending or, to the Purchaser's knowledge, threatened,
against or affecting the Purchaser in any court or before any
arbitrator or before any governmental body or agency which in any
manner challenges the validity or enforceability of this Agreement.
5.5 No Broker. The Purchaser has not retained any Broker
in connection with the purchase and sale of the Hotel Property
hereunder.
5.6 ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Act. By virtue of the consummation
of the purchase and sale of the Hotel Property as contemplated in this
Agreement, no filing must be made under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act.
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6. COVENANTS, DUE DILIGENCE, INSPECTION AND DELIVERIES:
6.1 Title and Survey Documents. Purchaser has obtained
the Title Commitment and Supporting Documents and shall obtain the
Survey. If different from the description contained in Exhibit A
attached to this Agreement, the legal description of the Land
contained in the Survey, once the correctness thereof has been
confirmed by Seller, Purchaser and the Title Company, shall be
substituted for the description of the Land contained in said Exhibit
A and this Agreement shall be deemed amended by the substitution of
the legal description of the Land contained in the Survey as a new
Exhibit A without the necessity of the parties executing any
additional written amendments to this Agreement provided that the
Title Company shall accept such description to be used in the Owner
Policy of Title Insurance, in Seller's Deed, and in any Loan Policy of
Title Insurance and any mortgage to be delivered to any lender at
Closing.
6.2 UCC Search. Seller has provided Purchaser, at
Seller's sole cost and expense, with a UCC Search.
6.3 Access to Records and Financial Information.
Purchaser and Purchaser's authorized representatives, auditors,
agents, employees and lenders shall have the right, prior to Closing,
at Purchaser's sole cost, risk and expense, and upon reasonable
notice, to examine and inspect, at reasonable times during normal
business hours, the then existing books, records, surveys, plans,
specifications, permits, certificates of occupancy and other files
that are relevant to the management, ownership, operation, use,
occupancy, construction or leasing of the Hotel Property, which are in
Seller's possession or control, and which have not been otherwise
provided to Purchaser as required elsewhere herein. In addition,
Purchaser, at its sole cost and expense, may have its agents,
employees or auditors conduct an audit of the books and records of the
Hotel Property. In connection with Purchaser's inspections and
studies Purchaser may engage in discussions with the hotel's General
Manager, Controller, Director of Engineering, and Director of
Marketing and other hotel personnel. Purchaser and its
representatives and employees shall not unreasonably interfere with
the operation of the Hotel Property or the right to privacy or, guests
and patrons of the hotel. Further, Purchaser's independent public
accountant shall have access to all financial and other existing
information relating to the Hotel Property sufficient to enable them
to prepare audited financial statements in conformity with Regulation
S-X of the SEC and to enable them to prepare a registration statement,
report or disclosure statement for filing with the SEC on behalf of
the Purchaser and/or its affiliates. Prior to Closing, Seller shall
also provide to Purchaser's representatives a signed representation
letter sufficient to enable such independent public accountant to
render an opinion on the financial statements related to the Hotel
Property; provided, however, that any information provided by Seller
in such letter shall be limited to Seller's actual knowledge.
6.4 Inspections. Prior to Closing, the Seller shall give
the Purchaser and the Purchaser's agents and representatives
reasonable access to the Hotel Property, during
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normal business hours and on reasonable prior notice, and the right to
physically inspect the Hotel Property and to conduct soil tests,
environmental tests and inspections, and other tests and inspections
(so long as such tests and inspections do not unreasonably interfere
with the use and occupancy of the Hotel by Seller, by guests or
patrons of the Hotel property, or by tenants). Seller may accompany
Purchaser and its agents and representatives in any such inspections.
The costs and expenses of Purchaser's investigation shall be borne
solely by Purchaser and Purchaser shall indemnify and hold Seller
harmless from any cost, claim or expense in connection therewith.
Purchaser shall have the obligation to repair any damage caused by
Purchaser's inspections and tests to the condition prior to
Purchaser's entry, which obligation shall survive any termination of
this Agreement. The terms of this Agreement and all information
furnished by Seller to Purchaser in accordance with the provisions of
this Agreement or obtained by Purchaser in the course of its
investigations shall be treated as confidential information by
Purchaser, except that Purchaser may disclose such information as
provided in Section 10.17 and/or to prospective investors and lenders,
to attorneys and other parties assisting or representing Purchaser in
connection with the subject transaction, and to others as may be
required by lawful order. The foregoing obligation to treat such
information as confidential shall survive any termination of this
Agreement but shall not survive Closing. In all cases, Purchaser
shall have access only upon reasonable notice and during reasonable
hours.
6.5 Permitted Exceptions. Notwithstanding any other
provision herein set forth, Purchaser shall not be entitled to make
any objection or terminate this Agreement on the basis of any lien,
encumbrance or security interest which Seller is to discharge
contemporaneous with Closing or which are created by Purchaser at
Closing in connection with Purchaser's acquisition of the Hotel
Property or any Permitted Exceptions.
6.6 Third Party Consents. Prior to the Closing Date,
Seller shall, provided there is no material expense to Seller, use
reasonable good faith efforts and cooperate with Purchaser to obtain
all third party consents and approvals required in order for Purchaser
to purchase the Hotel Property but obtaining such consents shall not
be a condition precedent to Purchaser's obligations hereunder.
6.7 Intentionally Omitted.
6.8 Intentionally Omitted.
6.9 Fees and Expenses. The Seller and the Purchaser each
has paid or will pay all expenses that they have incurred in
connection with the negotiation, execution, delivery and performance
of this Agreement, except as otherwise provided in this Agreement.
6.10 Activities. Prior to the Closing Date, the Seller
will not engage in any activity other than the ownership of the Hotel
Property and will not enter into any agreement with respect to the
sale or lease of the Hotel Property. Seller will instruct
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Manager to not take any action, or fail to take any action, which
would result in the creation of any lien, claim, encumbrance or
security interest in respect of the Hotel Property. The Seller will
not engage any party other than the Manager as manager of the Hotel
Property.
6.11 Warranties and Guaranties. The Seller shall not
before or after Closing, release or modify any warranties or
guarantees, if any, of manufacturers, suppliers and installers
relating to the Improvements and the Tangible Personal Property or any
part thereof, except with the prior written consent of the Purchaser.
6.12 Subsequent Developments. After the date of this
Agreement and until the Closing Date, Seller shall keep Purchaser
fully informed of all Subsequent Developments. Without limiting the
foregoing, Seller shall instruct Manager to deliver to Purchaser by
Closing (i) summaries of occupancies, rates, and total food and
beverage volumes, (ii) updated Financial Statements, and (iii) an
update, if any is necessary, of the Schedule of Service Contracts, the
Schedule of Tangible Personal Property Leases, the Schedule of Leases,
and the Schedule of Deposits and Utility Reservations, along with a
true copy of any new written agreements described therein.
6.13 Limitation on Further Sales Efforts. Seller shall
not execute other offers to sell the Hotel Property prior to the
termination of this Agreement in accordance with its terms and shall
not market the Hotel Property.
6.14 Interim Operation of Hotel. Seller hereby covenants
and agrees that between the date of this Agreement and the Closing,
Seller shall instruct Manager to (in all cases consistent with past
practices):
a. Operate, manage, and maintain the Hotel
Property in all material respects consistent with Seller's
prior practice and as a reasonable and prudent operator of
like-kind hotels in the same competitive market would operate,
manage, and maintain the Hotel Property, including, without
limitation, (i) using reasonable efforts to keep available the
services of its present employees at the Improvements and to
preserve its relations with guests, suppliers and other
parties doing business with Seller with respect to the Hotel
Property, (ii) accepting booking contracts for the use of the
Hotel facilities on terms not less favorable than the terms
typically arranged by Seller as of the date of this Agreement
and retaining such bookings consistent with prior practice,
(iii) maintaining the current level of advertising and other
promotional activities for Hotel facilities, (iv) maintaining
its books of accounts and records in the usual, regular,
timely, and ordinary manner, in accordance with accounting
principles applied on a basis consistent with the basis used
in keeping its books in prior years, (v) remaining in
substantial compliance with all current license and franchise
agreements, and (vi) maintaining the present level of
insurance with respect to the Hotel Property.
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b. Not commit waste of any portion of the Hotel
Property affecting the value of the Hotel Property in any
material respect.
c. Keep and maintain the Hotel in a state of
repair and condition consistent with the requirements of
Section 6.14a above.
d. Keep, observe, and perform all its material
obligations under the Leases, the Tangible Personal Property
Leases, the Service Contracts, the Licenses (in particular,
the license agreement between Seller and Clubhouse Inns of
America for the Hotel), and all other applicable contractual
arrangements relating to the Hotel Property.
e. Not enter into (i) any new agreements of the
nature of the Occupancy Agreements and Operating Agreements or
any amendments, modifications, renewals or extensions of any
existing Occupancy Agreements or Operating Agreements that are
not consistent with Seller's prior practice at the Hotel, or
(ii) any new agreements of the nature of the Service
Contracts, Tangible Personal Property Leases, or Leases or any
amendments, modifications, renewals or extensions of any
existing Service Contracts, Tangible Personal Property Leases,
or Leases without Purchaser's prior written consent, except
that Seller shall not be required to obtain Purchaser's
consent to any new agreement or to any renewal or extension
specifically permitted under the terms of an existing Service
Contract, Tangible Personal Property Lease, or Lease on terms
consistent with prudent commercial practice, provided that any
such new agreement or renewal or extension shall be terminable
without penalty on not more than thirty (30) days' notice, for
Service Contracts and Tangible Personal Property Leases, and
shall not exceed a term of six (6) months, for Leases, or in
any case cost in excess of $10,000.00, without Purchaser's
prior written consent, such consent not to be unreasonably
withheld or delayed; provided that Seller shall deliver to
Purchaser a copy of any such new agreement or renewal or
extension whether or not such consent is required under this
Section 6.14e at the time that Seller updates the Schedules as
provided in Section 6.12.
f. Not cause or permit the removal of Tangible
Personal Property from the Hotel except for the purpose of
discarding and replacing, where needed or appropriate, worn
items, and timely make all repairs, maintenance, and
replacements to keep the Hotel Property and all Tangible
Personal Property in good operating condition in all material
respects, ordinary wear and tear excluded.
g. Keep Inventory adequately stocked, consistent
with Seller's prior practice, as if the sale of the Hotel
Property hereunder were not to occur, including without
limitation, maintaining linens and bath towels and washcloths
at least at a 3-par level for all guest rooms in the Hotel.
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h. Not grant any bonus, free rent, rebate or
other concession to any present or future Tenant, not
otherwise specifically granted in the operative Lease, without
Purchaser's prior written consent.
i. Advise Purchaser promptly of any litigation,
arbitration, or administrative hearing before any court or
governmental agency concerning or affecting the Hotel which is
instituted or threatened after the date of this Agreement.
j. Comply with all matters of the nature of the
matters described in Sections 4.12 and 4.16.
k. Not sell or assign or enter into any
agreement to sell or assign, or to create or permit to exist
(as of Closing) any lien or encumbrance (other than a
Permitted Exception) on, the Hotel Property or any portion
thereof.
l. Use best efforts to not allow any License or
other right currently in existence with respect to the
operation, use, occupancy or maintenance of the Hotel to
expire, be canceled or otherwise terminated without
Purchaser's prior written consent.
m. Except to the extent consistent with prior
practice, not cancel any existing booking contracts for the
use of Hotel facilities or new booking contracts obtained by
Seller after the date of this Agreement.
n. Pay or cause to be paid all taxes,
assessments and other impositions levied or assessed on the
Hotel Property or any part thereof prior to the date on which
the payment thereof is due, unless said taxes, assessments,
and other impositions are being contested; provided, however,
if by law said taxes must be paid despite a contest, Seller
shall pay said taxes, assessments and other impositions.
o. Not, between the date hereof and the date of
Closing, enter into any new employment contracts, union
contracts, collective bargaining agreements or agreements for
management level personnel or hire any new employees at the
management level except with the prior written consent of the
Purchaser, which consent shall not be unreasonably withheld,
conditioned or delayed. All of Seller's employees at the
Hotel shall be terminated as of the Closing Date. At all
times prior to Closing, the Purchaser shall follow the
commercially reasonable requests of the Seller to minimize the
interference with the Seller's business.
p. Until Closing all insurance premiums for such
policies (and any replacements thereof) shall be paid by the
Seller on or before the due date therefor. The Seller shall
pay all premiums on, and shall not cancel or voluntarily
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allow to expire, any of the Seller's insurance polices unless
such policy is replaced, without any lapse of coverage, by
another policy or policies providing coverage at least as
extensive as the policy or policies being replaced if such
coverage is available.
q. Not enter into any new management agreement,
maintenance or repair contract, supply contract, lease in
which it is lessee or other agreements with respect to the
Hotel Property, nor shall the Seller enter into any agreements
modifying the Operating Agreements except in the ordinary
course of business, unless (a) any such agreement or
modification will not bind the Purchaser or the Hotel Property
after the date of Closing or (b) the Seller has obtained the
Purchaser's prior written consent to such agreement or
modification.
6.15 Notice of Violations. The Seller hereby covenants
and agrees that any and all notices of violation with respect to
Authorizations shall be promptly disclosed to the Purchaser upon the
Seller receiving notice thereof.
7. CONDITIONS PRECEDENT:
Each of the provisions in this Article constitute conditions precedent
to Closing to be satisfied prior to or simultaneously with Closing.
7.1 Purchaser's Conditions. The Purchaser's obligations
hereunder, including, without limitation, the Purchaser's obligation
to close the purchase of the Hotel Property and to pay to the Seller
the Purchase Price as contemplated hereby, are subject to the
satisfaction of the following conditions precedent and the compliance
by the Seller with the following covenants:
a. Seller Deliveries. Simultaneously with the
Purchaser's delivery to the Seller of the Purchase Price, the
Seller shall have delivered to the Purchaser all of the
documents and other information required of Seller pursuant to
Section 8.1 and 8.3.
b. Representations and Warranties True and
Correct. The Purchaser shall have received at Closing
Seller's Certificate.
c. Title to Hotel Property. The Purchaser shall
have determined that the Seller is the sole owner of good and
marketable fee simple title to the Hotel. The Seller shall
not have taken any action from the date hereof and through and
including the date of Closing that would adversely affect the
status of title to the Hotel Property.
d. Hotel Property Free of Tenancies. On the
Closing Date, Seller shall have delivered to the Purchaser
possession of the Hotel Property free and clear of
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all tenancies of every kind and parties in possession, except
for the tenants under the Leases and guests in the Hotel, and
with all parts of the Hotel Property (including, without
limitation, the Improvements and Tangible Personal Property),
excluding those disposed of and/or replaced in the ordinary
course of business, in substantially the same condition as the
same were on the date of this Agreement, normal wear and tear
only excepted.
e. Conveyance Standard. The Hotel Property
shall have been conveyed, assigned, and transferred to
Purchaser at Closing, (i) free and clear of all mortgages,
debts, liens, encumbrances, security interests, other
encumbrances, and prior assignments and conveyances, (ii) free
and clear of the franchise agreement and Management Agreement,
and (iii) free and clear of all licenses, leases, and other
agreements (other than the Permitted Exceptions), and (iv)
subject only to the Permitted Exceptions (the "CONVEYANCE
STANDARD").
f. Merger. The Merger and Simultaneous Purchase
shall have been consummated or simultaneously be occurring.
g. Opinion of Counsel. The Purchaser shall have
received the opinion of ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, counsel
to the Seller, with respect to the matters set forth in
Sections 4.1, 4.2, and 4.6.
h. Condition of Hotel Property Upon Closing.
The Hotel Property will be in materially good operating
condition on the Closing Date.
i. Title Policy. Seller shall have delivered
title to the Hotel which is insurable in accordance with and
pursuant to the Title Commitment, subject only to the
Conveyance Standard.
j. Management Agreement. Consent and agreement
of Manager for the termination of the Management Agreement
without payment of a termination fee or similar penalty,
together with a confirmation from Manager of Seller's
representations and warranties made herein.
7.2 Seller's Conditions. The obligations of the Seller
hereunder, including the Seller's obligation to sell and assign the
Hotel Property as contemplated hereby, are subject to the satisfaction
of the following conditions precedent and the compliance by the
Purchaser with the following covenants:
a. Receipt of Purchase Price. Simultaneous with
the Seller's delivery of the Seller's Deed to the Hotel
Property and the other documents described in Section 8.1 and
8.3 of this Agreement, the Seller shall have received the
Purchase Price, subject to Section 8.5.
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b. Representations and Warranties True and
Correct. The Seller shall have received at Closing
Purchaser's Certificate.
c. Merger. The Merger shall have been
consummated or simultaneously be occurring.
d. Opinion of Counsel. Seller shall have
received the opinion of ▇▇▇▇▇ ▇▇▇▇▇▇▇ Rain ▇▇▇▇▇▇▇, counsel to
the Purchaser, with respect to the matters set forth in
Sections 5.1, 5.2, and 5.3.
e. Closing of Warrant Conversion Agreement. The
transaction contemplated in the Warrant Conversion Agreement
(as described in the Merger Agreement) shall have been
consummated or simultaneously be occurring.
f. Management Agreement. Consent and agreement
of Manager for the termination of the Management Agreement
without payment of a termination fee or similar penalty,
together with a confirmation from Manager of Seller's
representations and warranties made herein.
7.3 Conditions Precedent to Closing. Unless the Merger
and Simultaneous Purchase occur, pursuant to their terms, by no later
than July 31, 1997, or such other designated date in the Merger
Agreement (if such date is extended in the Merger Agreement by
agreement of the parties thereto), Closing shall not occur and this
Agreement shall automatically terminate and shall have no further
force or effect, and the parties hereto shall have no obligation to
each other.
7.4 Intentionally Omitted.
7.5 Intentionally Omitted.
7.6 Intentionally Omitted.
8. CLOSING.
8.1 Seller's Deliveries. At Closing the Seller, at
Seller's sole cost and expense, shall deliver to Purchaser or the
Title Company on behalf of Purchaser all of the following instruments,
each of which shall have been duly executed and, where applicable,
acknowledged on behalf of the Seller and shall be dated as of the date
of Closing:
a. Instruments sufficiently evidencing the
release of any mortgages, pledges, or similar or like liens
affecting the Hotel, described on Schedule 4.5.
b. Seller's Certificate.
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c. Seller's Deed.
d. ▇▇▇▇ of Sale.
e. An assignment of all Intangible Personal
Property, Inventory, Deposits, and Cash and Equivalents from
Seller to Purchaser, which is intended to be all of the assets
of the Seller (except for the Hotel, Tangible Personal
Property and Receivables which will have been conveyed or
assigned to the Purchaser by the Seller's Deed, ▇▇▇▇ of Sale,
and UCC-17, respectively, in a form reasonably acceptable to
both Purchaser and Seller.
f. UCC-1 Financing Statement conveying the
Receivables from the Seller to the Purchaser.
g. FIRPTA Affidavit.
h. Items required from Manager with respect to
the termination of the Management Agreement and as further
provided in Section 7.1j and 7.2f.
i. A written instrument executed by the Seller,
conveying and transferring to the Purchaser all of the
Seller's right, title and interest in any telephone numbers
and facsimile numbers relating to the Hotel Property, and, if
the Seller maintains a post office box relating to the Hotel
Property, conveying to the Purchaser all of its interest in
and to such post office box and the number associated
therewith, so as to assure a continuity in operation and
communication.
j. A list of the Receivables as of midnight on
the date prior to the Closing, specifying the name of each
account and the amount due with respect thereto.
k. An affidavit from the general manager of the
Hotel setting forth the date through which all employees have
been paid and setting forth and describing in detail, as to
each employee, all accrued but unpaid vacation pay and other
fringe benefits, and, to the extent permitted by law, a
document transferring to Purchaser Seller's employment rating
for workers' compensation and state unemployment tax purposes.
l. An updated schedule of employees, showing
salaries and duties with a statement of the length of service
of each such employee, brought current to a date not more than
48 hours prior to the Closing.
m. Written notice executed by Seller notifying
all interested parties under the Leases, Occupancy Agreements,
Operating Agreements, and Service Contracts that the Hotel
Property has been conveyed to the Purchaser and directing
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that all payments, inquiries and the like be forwarded to the
Purchaser at the address to be provided by the Purchaser.
n. Certified copies of the Seller's bylaws,
articles of incorporation and Certificate of account status
issued by the Secretaries of State of Tennessee and Kansas.
o. Resolutions.
p. All Plans and Specs, keys, access cards and
combinations (properly tagged for identification), to the
extent in the Seller's possession.
q. All books, records, operating reports,
appraisal reports, files and other materials in the Seller's
possession or control which are necessary in the Purchaser's
reasonable discretion to maintain continuity of operation of
the Hotel Property.
r. Certificates and/or registration of title and
keys for any vehicle owned by the Seller and used in
connection with the Hotel Property.
s. A valid, final and unconditional certificate
of occupancy for the Hotel Property, issued by the appropriate
governmental authority.
t. All current real estate and personal property
tax bills in the Seller's possession or under its control.
u. A complete set of all guest registration
cards, guest transcripts, guest histories, and all other
available guest information, to the extent in the Seller's
possession.
v. A complete list of all advance room
reservations, functions and the like, in reasonable detail, so
as to enable the Purchaser to honor the Seller's commitments
in that regard.
w. To the extent transferable under applicable
law, any and all other items, certificates and documents
necessary to own, operate and manage the Hotel Property,
including, without limitation, leases, service contracts, and
certificates and permits, especially as such certificates and
permits pertain to zoning, food and alcohol.
x. Opinion of Counsel, pursuant to Section 7.1g.
8.2 Purchaser's Deliveries. At the Closing and at
Purchaser's sole cost and expense, Purchaser shall deliver the
following to the Title Company for delivery to Seller:
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a. The Purchase Price, subject to the terms of
Section 8.5.
b. Resolutions evidencing that the person or
persons executing the closing documents on behalf of Purchaser
have full right, power and authority to do so.
c. Purchaser's Certificate.
d. Opinion of Counsel, pursuant to Section 7.2d.
e. An assumption agreement, in a form acceptable
to the Seller and the Purchaser.
8.3 Mutual Deliveries. At Closing, the Purchaser and the
Seller shall mutually execute and deliver each to the other:
a. A closing statement reflecting the Purchase
Price and the adjustment and prorations required hereunder and
the allocation of income and expenses required hereunder.
b. A certificate setting forth the allocations
described in Article 2, signed by both the Seller and the
Purchaser.
c. Such other and further instruments or
documents as may be reasonably required by either party hereto
or their respective counsel to effectuate the purchase and
sale of the Hotel Property in the jurisdiction in which the
Hotel Property is located, as contemplated in this Agreement.
8.4 Document Preparation and Closing Costs. The cost of
preparing or obtaining documents to be delivered by Purchaser to
Seller pursuant to this Agreement and Purchaser's attorney's fees and
expenses shall be paid by Purchaser. The cost of preparing or
obtaining documents to be delivered by Seller to Purchaser pursuant to
this Agreement and Seller's attorneys fees and expenses shall be paid
by Seller. At Closing, the Purchaser shall pay for all transfer and
recording fees and taxes incurred by reason of this transaction, all
termination fees payable to the Manager (if any), title policy
premiums for the title policy to be issued to Purchaser's lender,
Survey costs, and all transfer, assumption and/or assignment fees and
charges imposed by any party with whom Seller has privity having an
interest in the Hotel. At Closing, the Seller shall pay for all title
policy premiums for the Policy to be issued to the Purchaser pursuant
to the Title Commitment in the amount of the Purchase Price (provided
however, any additional endorsements and any loan title policy shall
be Purchaser's expense). Purchaser shall pay all fees and charges
with respect to Purchaser's debt instruments.
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8.5 Estimation of Working Capital. At Closing, the
Purchaser shall pay to the Seller $5,068,500, in addition to or less
the amount representing Estimated Working Capital, subject to the
terms of Section 8.6.
8.6 Post-Closing Adjustment.
a. Closing Balance Sheet. Within 30 days
subsequent to the Closing, the Purchaser in consultation with the
Seller shall prepare, in accordance with GAAP, a consolidated balance
sheet of the Seller as of 6:00 a.m. on the Closing Date, including all
normal year-end adjustments pro-rated for any partial year
(collectively, the "CLOSING BALANCE SHEET"). Upon completion of the
Closing Balance Sheet, the Purchaser shall determine the Working
Capital Adjustment Amount. The Purchaser shall thereupon deliver to
the Seller: (i) a copy of the Closing Balance Sheet and (ii) a
reasonably detailed calculation of the Working Capital Adjustment
Amount, along with an explanation in reasonable detail of the basis
for such calculation.
b. Objections; Resolution of Objections. If the
Seller does not object to the Working Capital Adjustment Amount, as
determined by the Purchaser, within twenty (20) days after the receipt
of the Closing Balance Sheet, such determination of the Working
Capital Adjustment Amount shall be final, binding and conclusive for
all purposes. If the Seller objects to the Working Capital Adjustment
Amount, as determined by the Purchaser, it shall notify the Purchaser
within twenty (20) days following receipt of the Closing Balance
Sheet, setting forth in reasonable detail the basis for its objection
and its proposal for any adjustments to the Working Capital Adjustment
Amount. The Purchaser and the Seller shall seek in good faith to
reach agreement as to any such proposed adjustment or that no such
adjustment is necessary within thirty (30) days following receipt of
notice of the Seller's objection. If agreement is reached in writing
within such period as to all proposed further adjustments, or that no
adjustments are necessary, the parties shall make such adjustments, if
any, and the Working Capital Adjustment Amount shall be based thereon.
If the Seller and the Purchaser are unable to reach agreement within
thirty (30) days following receipt of notice of the Seller's
objection, then such "Big-6" accounting firm as shall be agreed upon
by the Seller and the Purchaser (the "Third Party Accounting Firm")
shall be engaged to review the proposed Working Capital Adjustment
Amount and, to the extent necessary, the Closing Balance Sheet, and
shall make a determination as to the resolution of any adjustments
necessary to cause the Working Capital Adjustment Amount to have been
properly prepared in accordance with this Agreement. All such
resolutions shall relate only to such matters as are still in dispute
and were properly included in the notice of the Seller's objection and
shall represent either agreement with the position taken by the Seller
or by the Purchaser or a compromise between such positions. The
determination of the Third Party Accounting Firm shall be delivered as
soon as practicable following selection of the Third Party Accounting
Firm and shall be final, conclusive and binding upon the Seller and
the Purchaser. If the Working Capital Adjustment Amount as determined
by the Third Party Accounting Firm would result in a number that is
more than ten percent
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(10%) greater than the number that would result from the Working
Capital Adjustment Amount as last proposed by the Purchaser prior to
engagement of the Third Party Accounting Firm, then the Purchaser
shall pay the costs and expenses of the Third Party Accounting Firm.
In all other cases the Seller shall pay such costs and expenses.
c. Final Reconciliation of Working Capital
Adjustment Amount. Upon final determination of the Working Capital
Adjustment Amount, (i) if the Working Capital Adjustment Amount is a
positive number, the Purchaser shall promptly deliver to the Seller
the amount representing the difference between the Estimated Working
Capital as estimated at Closing and the Working Capital Adjustment
Amount or (ii) if the Working Capital Adjustment Amount is a negative
number, then Seller shall promptly deliver to Purchaser the amount
representing the difference between the Estimated Working Capital as
estimated at Closing and the Working Capital Adjustment Amount. The
party which owes the other party any sums hereunder shall pay such
party such sums within ten (10) days after the reconciliation of such
sums. The obligations to provide the Closing Balance Sheet, make such
reconciliations and pay any such sums shall survive the Closing.
d. Definitions. For purposes of this Agreement,
(1) Net Working Capital. "NET WORKING
CAPITAL" shall mean the aggregate of the working capital plus
all cash reserves of the Seller, as reflected on the Closing
Balance Sheet. For purposes of determining Net Working
Capital, there shall be excluded from the Net Working Capital
(A) the amount of long-term indebtedness of the Seller
becoming due within 12 months of Closing, (B) an amount equal
to $25,000 in connection with capital expenditures, and (C)
all amounts paid or payable by the Seller under Section 8.4
hereof or otherwise under this Agreement. The amounts in (C),
to the extent actually paid by the Seller at, or prior to,
Closing, shall be deemed excluded from the Net Working Capital
at that time, so during the period of reconciliation, said
amounts shall not be excluded again from Net Working Capital.
(2) Reference Net Working Capital Amount.
The "REFERENCE NET WORKING CAPITAL AMOUNT" shall equal a
negative $50,000.
(3) Working Capital Adjustment Amount.
i) If the Net Working Capital is
zero or is a positive number, then the "Working
Capital Adjustment Amount" shall be a positive number
and shall be equal to the Net Working Capital plus
the Reference Net Working Capital Amount (taken as a
positive number),
ii) If the Net Working Capital is a
negative number but is greater (i.e., closer to zero)
than the Reference Net Working Capital Amount, then
the "Working Capital Adjustment Amount" shall be a
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positive number and shall be equal to the difference
between the Reference Net Working Capital Amount
(taken as a positive number) and the Net Working
Capital (taken as a positive number), or
iii) If the Net Working Capital is a
negative number but is less (i.e., further from zero)
than the Reference Net Working Capital Amount, then
the "Working Capital Adjustment Amount" shall be a
negative number and shall be equal to the difference
between the Net Working Capital (taken as a positive
number) and the Reference Net Working Capital Amount
(taken as a positive number).
8.7 Intentionally Omitted.
9. DEFAULT:
9.1 (a) Seller's Default. If, at or prior to
Closing, for any reason other than termination hereof pursuant to a
right granted to the Seller hereunder to do so or because of an
uncured default by the Purchaser (i) the Seller refuses or fails to
consummate the transaction contemplated by this Agreement, or (ii) the
Seller otherwise wrongfully fails to perform any of its obligations or
agreements hereunder, or if, at or prior to Closing, any
representation or warranty made by or on behalf of Seller herein shall
have been materially incorrect when made, then Purchaser shall give
Seller and the Title Company written notice specifying the nature of
the default, and Seller shall have ten (10) days from receipt of
Purchaser's notice within which to cure the specified default. If at
the end of the ten (10) day period, the default is still not cured,
then Purchaser may terminate this Agreement or seek specific
performance of this Agreement.
(b) Purchaser's Default. If, at or prior to
Closing, for any reason other than termination hereof pursuant to a
right granted to the Purchaser hereunder to do so or because of an
uncured default by the Seller (i) the Purchaser refuses or fails to
consummate the transaction contemplated by this Agreement, or (ii) the
Purchaser otherwise wrongfully fails to perform any of its obligations
or agreements hereunder, or if, at or prior to Closing, any
representation or warranty made by or on behalf of Purchaser herein
shall have been materially incorrect when made, then Seller shall give
Purchaser and the Title Company written notice specifying the nature
of the default, and Purchaser shall have ten (10) days from receipt of
Seller's notice within which to cure the specified default. If at the
end of the ten (10) day period, the default is still not cured, then
Seller may terminate this Agreement or seek specific performance of
this Agreement.
9.2 Litigation. In the event of any litigation between
the parties arising out of or in any way connected with this
Agreement, then the prevailing party in such litigation shall be
entitled to recover its costs of prosecuting and/or defending such
action, including, without limitation, reasonable attorneys' fees and
costs at trial and all appellate levels. The provisions of this
paragraph shall survive the Closing of the purchase and sale
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of the Hotel Property hereunder. 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, the
nonprevailing party in any action pursued in a court of competent
jurisdiction (the finality of which is not legally contested) agrees
to pay to the prevailing party all reasonable costs, damages, and
expenses, including attorneys' fees, expended or incurred in
connection therewith.
10. MISCELLANEOUS:
10.1 Completeness; Modification; Waiver. This Agreement
constitutes the entire agreement between the parties hereto with
respect to the transactions contemplated hereby and supersedes all
prior discussions, understandings, agreements and negotiations between
the parties hereto. This Agreement may be modified only by a written
instrument duly executed by the parties hereto. No term or condition
of this Agreement shall be deemed waived in whole or in part, except
by an instrument in writing signed by an authorized representative of
the waiving party which references specifically the term or condition
to be waived and which states explicitly that the term or condition is
waived. No waiver of any term or condition hereof by any party hereto
shall be deemed or construed to be (a) a waiver by such party of any
other term or condition hereof or (b) a waiver of such term or
condition for any party, any period or any purpose other than as
expressly set forth in the written instrument.
10.2 Seller's Indemnities.
a. On the terms set forth in this Section 10.2,
the Seller hereby agrees to indemnify and hold harmless the
Purchaser from and against, and agrees to defend promptly the
Purchaser from and reimburse the Purchaser for Losses, which
the Purchaser may suffer or incur, or become subject to, as a
result of or in connection with (i) any breach or inaccuracy
of any of the representations, warranties or covenants made by
the Seller in or pursuant to this Agreement or any other
agreement or document executed by them in connection with the
transactions contemplated hereby; or (ii) the presence of
Hazardous Substances in, on, under, at, or emanating from, the
Hotel Property on the Closing Date or any violation of
Environmental Requirements by the Seller or any other third
party in connection with the Hotel Property or the use of the
Hotel Property occurring prior to the Closing Date, provided,
that the Seller shall not be required to indemnify the
Purchaser hereunder unless and until the aggregate amount of
Losses for which indemnification is sought first exceeds
$50,000, in which event the Purchaser may seek indemnification
for all Losses exceeding the initial $50,000; and provided
further, that the total indemnification liability of the
Seller shall in no event exceed $250,000, in the aggregate.
In other words, Seller shall in no event be required to pay to
Purchaser more than $250,000 for purposes of this Section
10.2a.
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b. Any amounts for which the Seller shall be
liable under Section 10.2a shall be net of any insurance
proceeds received by the Purchaser in connection with the
facts giving rise to the right of indemnification.
c. Promptly after acquiring knowledge of any
claim in respect of which the Purchaser may seek
indemnification from the Seller hereunder, the Purchaser shall
provide the Seller with a written notice of the facts
surrounding the claim and shall also provide the Seller copies
of any materials in the Purchaser's possession describing the
facts or containing information with respect to the claim and
Losses for which indemnification is sought. Notwithstanding
the preceding sentence, failure of the Purchaser to give
notice hereunder shall not release the Seller from its
obligations under this Section 10.2, except to the extent the
Seller is actually prejudiced by such failure to give notice.
d. In the event of claims that are covered by
the indemnity provisions of Section 10.2a, the Seller shall
have the right, at its sole cost and expense (subject to the
indemnification limitations set forth herein), to defend any
and all such claims and, in connection with such defense, to
control all settlements (subject to the consent of the
Purchaser, which consent the Purchaser may withhold in its
sole discretion if the proposed settlement would result in any
cost, expense or liability to the Purchaser that is not fully
and immediately paid by the Seller or in any material adverse
effect on the financial condition, business or prospects of
the Purchaser but which consent otherwise will not be
unreasonably withheld or delayed). After written notice by
the Seller to the Purchaser of its election to assume control
of the defense of any such action, the Seller shall not be
liable to the Purchaser hereunder for any legal expenses
subsequently incurred by the Purchaser in connection with the
defense thereof except as otherwise provided herein. The
Purchaser shall have the right, but not the obligation, to
participate at its own expense in the defense thereof by
counsel of its own choosing, but the Seller shall be entitled
to control the defense unless the Purchaser has relieved the
Seller from liability with respect to such action or the
Seller fails to assume the defense thereof. If the Seller
does not promptly assume control of the defense of such action
as provided in this Section 10.2d, the Purchaser shall have
the right to defend such action in such manner as it may deem
appropriate at the cost and expense of the Seller, and the
Seller will promptly reimburse the Purchaser therefor. In the
event the Purchaser shall assume the defense of any claim, it
shall not effect any settlement that could result in any cost,
expense or liability to the Seller unless the Seller consents
in writing to such settlement (which consent will not be
unreasonably withheld or delayed; provided, that the financial
responsibility of the Seller with respect to such settlement
shall not exceed the amounts required to be paid by the Seller
pursuant to Section 10.2a). In connection with any claim,
action or proceeding, the parties shall cooperate with each
other and provide each other with access to relevant books and
records in their possession.
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e. This Section 10.2 shall be the sole remedy of
the Purchaser against the Seller for any claim arising in
connection with (i) and (ii) of Section 10.2a. The provisions
of this Section 10.2 shall apply to any assignee of the
Purchaser. The Seller's representations and warranties
contained in this Agreement and the Seller's indemnity
contained in Section 10.2a(ii) shall survive for a period of
one year following the Closing.
f. Seller agrees to, and hereby does, indemnify
and save harmless Purchaser against and from any loss,
liability or expense, including reasonable attorneys' fees,
arising out of any claim or claims for commissions or other
compensation for bringing about this Agreement or the
transactions contemplated hereby made by any Broker if such
claim or claims made by any such Broker are based in whole or
in part on any agreements entered into by Seller or its
representatives for a commission or other compensation.
Seller shall likewise indemnify and save harmless Purchaser
and its affiliates and their respective successors and assigns
against and from any loss, liability or expense, including
reasonable attorneys' fees, arising out of any claim or claims
for commissions or other compensation relating to the Leases.
g. Intentionally Omitted.
h. Intentionally Omitted.
10.3 The Purchaser's Indemnity.
a. On the terms set forth in this Section 10.3,
the Purchaser hereby agrees to indemnify and hold harmless the
Seller from and against, and agrees promptly to defend the
Seller from and reimburse the Seller for Losses which the
Seller may suffer or incur, or become subject to, as a result
of or in connection with any breach or inaccuracy of any of
the representations, warranties or covenants made by the
Purchaser in or pursuant to this Agreement; provided, that the
Purchaser shall not be required to indemnify the Seller
pursuant to this Section 10.3a unless and until the amount of
Losses for which indemnification is sought first exceeds
$50,000, in which event the Seller may seek indemnification
for all Losses exceeding the initial $50,000; and, provided
further, that the total indemnification liability of the
Purchaser to the Seller shall in no event exceed $250,000, in
the aggregate. In other words, Purchaser shall in no event be
required to pay to Seller more than $250,000 for purposes of
this Section 10.3a.
b. Any amounts for which the Purchaser shall be
liable under Section 10.3a shall be net of any insurance
proceeds received by the Seller in connection with the facts
giving rise to the right of indemnification.
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c. Promptly after acquiring knowledge of any
claim in respect of which any Seller may seek indemnification
from the Purchaser hereunder, the Seller shall provide, or
cause to be provided, to the Purchaser a written notice of the
facts surrounding the Losses and the claim and shall also
provide, or cause to be provided, to the Purchaser, copies of
any materials in the Seller's possession describing the facts
or containing information with respect to the Losses for which
indemnification is sought. Notwithstanding the preceding
sentence, failure of the Seller to give notice hereunder shall
not release the Purchaser from its obligation under this
Section 10.3, except to the extent the Purchaser is actually
prejudiced by such failure to give notice.
d. In the event of claims that are covered by
the indemnity provisions of Section 10.3a, the Purchaser shall
have the right, at its sole cost and expense (subject to the
indemnification limitations set forth herein), to defend any
and all such claims and, in connection with such defense, to
control all settlements (subject to the consent of the Seller,
which consent the Seller may withhold in its sole discretion
if the proposed settlement would result in any cost, expense
or liability to the Seller that is not fully and immediately
paid by the Purchaser or in any material adverse effect on the
financial condition, business or prospects of the Seller, but
which consent otherwise will not be unreasonably withheld or
delayed). After written notice by the Purchaser to the Seller
of its election to assume control of the defense of any such
action, the Purchaser shall not be liable to the Seller for
any legal expenses subsequently incurred by the Seller in
connection with the defense thereof. The Seller shall have
the right, but not the obligation, to participate at its own
expense in the defense thereof by counsel of its own choosing,
but the Purchaser shall be entitled to control the defense
unless the Seller has relieved the Purchaser from liability
with respect to such action or the Purchaser fails to assume
the defense thereof. If the Purchaser does not promptly
assume control of the defense of such action as provided in
this Section 10.3d, the Seller shall have the right to defend
such action in such manner as it may deem appropriate at the
cost and expense of the Purchaser, and Purchaser will promptly
reimburse the Seller therefor. In the event the Seller shall
assume the defense of any claim, it shall not effect any
settlement that could result in any cost, expense or liability
to the Purchaser unless the Purchaser consents in writing to
such settlement (which consent will not be unreasonably
withheld or delayed; provided, that the financial
responsibility of the Purchaser with respect to such
settlement shall not exceed the amounts required to be paid by
the Purchaser pursuant to Section 10.3a). In connection with
any claim, action or proceeding, the parties shall cooperate
with each other and provide each other with access to relevant
books and records in their possession.
e. This Section 10.3 shall be the sole remedy of
the Seller against the Purchaser for any claim arising in
connection with the transactions contemplated herein. This
Section 10.3 shall apply to any assignee of the Purchaser.
The
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Purchaser's representations and warranties made herein shall
survive for a period of one year following the Closing.
f. Purchaser agrees to, and hereby does,
indemnify and save harmless Seller against and from any loss,
liability or expense, including reasonable attorneys' fees,
arising out of any claim or claims for commissions or other
compensation for bringing about this Agreement or the
transactions contemplated hereby made by any Broker if such
claim or claims made by any such Broker are based on any
agreements entered into by Purchaser or its representatives
for a commission or other compensation.
g. Purchaser hereby indemnifies and agrees to
hold Seller harmless of and from all Losses which the Seller
may suffer or incur by reason of any liabilities assumed by
the Purchaser hereunder, or, any debt, act or cause of action
occurring and accruing subsequent to the Closing Date and
arising from the ownership or operation of the Hotel Property
by Purchaser subsequent to the Closing Date.
10.4 Post Closing Matters. After the Closing Date the
Seller will execute and deliver such further documentation as the
Purchaser may reasonably request to evidence the acquisition and
ownership of the Hotel Property by the Purchaser.
10.5 No Assignments by Seller/Covenant of KDF.
a. The Seller may not assign this Agreement or
its rights hereunder without the prior written consent of the
Purchaser, except that 18 months after Closing, the Seller,
without the Purchaser's prior written consent, may assign this
Agreement or its rights hereunder to its shareholder, KDF,
upon Seller's liquidation. Any assignment or attempted
assignment that does not comply with all of the terms and
conditions hereof shall be null and void.
b. By its consent and joinder below, KDF, as the
sole shareholder of the Seller, covenants to the Purchaser
that KDF (1) will not liquidate the Seller and (2) will
otherwise keep the Seller (i) in existence and in good
standing in the State of Kansas, (ii) duly qualified to
conduct business and in good standing in the State of
Tennessee, and (iii) with a net worth of not less than
$250,000 for a period of 18 months after Closing.
Notwithstanding anything to the contrary contained in Section
10.5b, KDF may liquidate the Seller but only if, at any time
within the period of 18 months following Closing, Purchaser
first receives a guaranty agreement, in a form reasonably
acceptable to both the Purchaser and the Seller and executed
by KDF, whereby KDF unconditionally and irrevocably guarantees
to the Purchaser that all of the Seller's liability and
obligations contained within Section 10.2 of this Agreement,
such amounts not to exceed $250,000, will be punctually paid
and performed.
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10.6 Successors and Assigns. This Agreement shall bind
and inure to the benefit of the parties hereto and their respective
permitted successors and assigns. Whenever a reference is made in
this Agreement to Purchaser, it shall include Purchaser's successors
and assigns under this Agreement.
10.7 Governing Law; Venue. This Agreement and all
documents referred to herein shall be governed by and construed and
interpreted in accordance with the laws of the State of Tennessee.
Any and all disputes, unless all of the parties to the dispute
otherwise agree, shall be brought and maintained within that state,
and the parties hereby waive any right to bring an action in any other
jurisdiction. If any judicial authority holds or declares that the
law of another jurisdiction is applicable, this Agreement shall remain
enforceable under the laws of that jurisdiction.
10.8 Counterparts. To facilitate execution, this
Agreement may be executed in as many counterparts as may be required.
It shall not be necessary that the signature on behalf of all parties
hereto appear on each counterpart hereof. All counterparts hereof
shall collectively constitute a single agreement.
10.9 Severability. If any term, covenant or condition of
this Agreement, or the application thereof to any person or
circumstance, shall to any extent be invalid or unenforceable, the
remainder of this Agreement, or the application of such term, covenant
or condition to other persons or circumstances, shall not be affected
thereby, and each term, covenant or condition of this Agreement shall
be valid and enforceable to the fullest extent permitted by law.
10.10 Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be delivered by
hand, transmitted by facsimile transmission (to be followed by a copy
of said transmission mailed by U.S. mail), sent prepaid by or
overnight delivery service, at the addresses and with such copies as
designated below. Any notice, request, demand or other communication
delivered or sent in the manner aforesaid shall be deemed given or
made (as the case may be) by hand or confirmed by facsimile
transmission, or in the case of delivery by courier, when actually
delivered to the intended recipient.
If to the Purchaser:
Wyndham Hotel Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Tel: 214/▇▇▇-▇▇▇▇
Facsimile: 214/863-1262
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With a copy to:
▇▇▇▇▇ ▇▇▇▇▇▇▇ Rain ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Tel: 214/▇▇▇-▇▇▇▇
Facsimile: 214/740-8800
If to the Seller:
C.I. Nashville, Inc.
c/o Pacholder Associates, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Tel: 513/▇▇▇-▇▇▇▇
Facsimile: 513/985-3217
With a copy to:
▇▇▇▇, Stettinius & Hollister
1800 Star Bank Center
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Tel: 513/▇▇▇-▇▇▇▇
Facsimile: 513/381-0205
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Kansas Public Employees Retirement System
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
Tel: 913/▇▇▇-▇▇▇▇
Facsimile: 913/296-2422
or to such other address as the intended recipient may have specified
in a notice to the other party. Any party hereto may change its
address or designate different or other persons or entities to receive
copies by notifying the other party in a manner described in this
paragraph. Any assignee of the Purchaser may notify the Seller of one
or more addresses for purposes of notices hereunder.
Any notice, demand or other communication shall be deemed
given and effective as of the date of delivery in person or receipt
set forth on the return receipt. The inability to deliver because of
changed address of which no notice was given, or rejection or other
refusal to accept any notice, demand or other communication, shall be
deemed to be receipt of the notice, demand or other communication as
of the date of such attempt to deliver or rejection or refusal to
accept.
10.11 Survival. All covenants, agreements and indemnities
contained in the Agreement which contemplate performance after the
Closing Date shall survive the Closing. All representations and
warranties contained in this Agreement shall expressly survive the
Closing for a period of one (1) year. None of the foregoing shall be
deemed to merge into, or be waived by, Seller's Deed or any other
closing documents. Each of Seller's representations, warranties and
covenants contained in this Agreement is intended for the benefit of
Purchaser and may be waived in whole or in part by Purchaser, but only
by an instrument in writing signed by Purchaser. No investigation,
audit, inspection, review or the like conducted by or on behalf of
Purchaser shall be deemed to terminate the effect of any such
representations, warranties and covenants. Purchaser has the right to
rely thereon and that each such representation, warranty and covenant
constitutes a material inducement to Purchaser to execute this
Agreement and to close the transaction contemplated hereby and to pay
the Purchase Price to Seller. Except as expressly set forth herein,
Seller makes no other representation or warranty with respect to any
matter relating to the Hotel Property or any part thereof.
10.12 Third Party Beneficiary. Except for an assignee of
the Purchaser, no person or party is intended to be or shall be
construed to be a third party beneficiary of this agreement or any
provision hereof.
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10.13 Headings. Headings are included herein for
convenience of reference only, and shall in no way be construed to
define, alter, or modify any of the provisions hereof.
10.14 Reasonable Efforts; Further Assurances. Subject to
the other provisions of this Agreement, the parties hereto shall each
use their reasonable, good faith efforts to perform their obligations
herein and to take, or cause to be taken, or do, or cause to be done,
all things necessary, proper or advisable to satisfy all conditions to
the obligations of the parties under this Agreement and to cause the
transactions contemplated herein to be effected in accordance with the
terms hereof. However, the foregoing shall not be deemed to require
Seller to expend a sum of money which it could not reasonably have
anticipated on the date of execution of this Agreement.
10.15 Exhibits. All exhibits referred to in this Agreement
and attached hereto are hereby incorporated in this Agreement by
reference.
10.16 Time Periods. If the final day of any time period or
limitation set out in any provision of this Agreement falls on a
Saturday, Sunday or legal holiday under the laws of the State where
the Hotel Property is located or of the federal government, then and
in such event the time of such period shall be extended to the next
clay which is not a Saturday, Sunday or legal holiday. Time is of the
essence in this Agreement.
10.17 Qualification on Confidentiality. Notwithstanding
any confidentiality requirements herein contained, it is acknowledged
that Purchaser is an affiliate of a company whose shares are traded to
the general public. In connection therewith, Purchaser will have the
absolute and unbridled right to market such securities and prepare all
statements and other papers, documents and instruments necessary or
reasonably required in Purchaser's judgment as the case may be and
that of its respective attorneys and underwriters, to file same with
the U.S. Securities and Exchange Commission and/or similar state or
foreign authorities, and to disclose therein and thus to its
underwriters, to the U.S. Securities and Exchange Commission and/or to
similar state or foreign authorities and to the public all of the
terms, conditions and provisions of this Agreement.
10.18 Rules of Construction. Singular words shall connote
the plural number as well as the singular and vice versa, and the
masculine shall include the feminine and the neuter. Each party
hereto and its counsel have reviewed and revised (or requested
revisions of) this Agreement, and therefore any usual rules of
construction requiring that ambiguities are to be resolved against a
particular parry shall not be applicable in the construction and
interpretation of this Agreement or any exhibits hereto.
10.19 Liquor Licenses.
a. Purchaser and Seller recognize that the
issuance of the Liquor License (defined below) is statutorily
regulated pursuant to Tennessee law, and is subject to the
approval of certain governmental authorities (the "ABC"). In
order
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to comply with these statutory requirements, Purchaser and any
other parties to be holding a Liquor License shall execute
applications for issuance of the Liquor License, and Seller
shall cooperate in completing applications to the ABC. To the
extent legally permissible, pending issuance of the Liquor
License, Purchaser or its designee (in this context,
"OPERATOR") may enter into an interim arrangement with Seller
for the use of the original Liquor License, and, upon request
of Purchaser, Seller shall join in such agreement with
Operator; provided, however, this interim arrangement shall be
a temporary measure until issuance of the Liquor License can
be accomplished but in no event without Seller's consent,
longer than ninety (90) days following Closing. This
provision shall survive the Closing.
b. Purchaser shall be responsible for complying
at its sole cost and expense, with all statutes and
regulations applicable to the issuance of the Liquor License
including, without limitation, paying all license and transfer
fees and costs of recordation and publication.
c. If Operator and Seller enter into the interim
agreement described in Section 10.19a above, (i) Purchaser and
Operator, jointly and severally, shall indemnify, defend and
hold Seller harmless from Losses encountered by Seller in
connection with, arising out of, or growing from such
operations and the sale of alcoholic beverages at and from the
restaurants, bars and lounges located at the Hotel during said
period of time, and (ii) Purchaser and Operator, jointly and
severally, shall reimburse Seller for Seller's costs in
maintaining the Liquor Licenses in full force and effect. In
no event shall Seller be required to obtain any additional
liquor or alcoholic beverage licenses which Seller does not
possess at the time of Closing. Purchaser shall be
responsible for all application and issuance fees for the
transfer and/or issuance to Purchaser of the Liquor Licenses.
10.20 Casualty and Condemnation.
a. Risk of Loss; Notice. Prior to Closing and
the delivery of possession of the Hotel Property to Purchaser
in accordance with this Agreement, all risk of loss to the
Hotel Property (whether by casualty, condemnation or
otherwise) shall be borne by Seller. In the event that (a)
any loss or damage to the Hotel Property shall occur prior to
the Closing Date as a result of fire or other casualty, or (b)
Seller receives notice that a governmental authority has
initiated or threatened to initiate a condemnation proceeding
affecting the Hotel Property, Seller shall give Purchaser
immediate written notice of such loss, damage or condemnation
proceeding.
b. Purchaser's Termination Right. If, prior to
Closing and the delivery of possession of the Hotel Property
to Purchaser in accordance with this Agreement, (a) any
condemnation proceeding shall be pending against a substantial
portion of the Hotel Property or (b) there is any substantial
casualty loss or
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damage to the Hotel Property, Purchaser shall have the option
to terminate this Agreement provided it delivers written
notice to Seller of its election so to terminate this
Agreement within thirty (30) days after the date Seller has
delivered Purchaser written notice of any such loss, damage or
condemnation (which notice shall include a certification of
(i) the amounts of insurance coverages in effect with respect
to the loss or damage and (ii) if known, the amount of the
award to be received in such condemnation), and in such event
thereafter no party shall have any further obligation or
liability to the other under this Agreement. In the context
of condemnation, "substantial" shall mean condemnation of such
portion of the Hotel Property as would, in Purchaser's sole
judgment, render use of the remainder impractical or
unfeasible for the uses herein contemplated, and, in the
context of casualty loss or damage, "substantial" shall mean a
loss or damage in excess of $500,000 in value.
c. Procedure for Closing. If Purchaser shall not
timely elect to terminate this Agreement under Section 10.20b,
or if the loss, damage or condemnation is not substantial,
Seller agrees to pay to Purchaser at the Closing all insurance
proceeds or condemnation awards which Seller has received as a
result of the same plus an amount equal to the insurance
deductible, if any, and assign to Purchaser all insurance
proceeds and condemnation awards payable as a result of the
same in which event the Closing shall occur without Seller
replacing or repairing such damage.
10.21 Seller's Actual Knowledge. For the purpose of this
Agreement, (a) the phrase "Seller's knowledge" or "Seller's actual
knowledge" means the Actual Knowledge of the Identified Persons and
(b) "Seller's best knowledge" means Actual Knowledge of the Identified
Persons after due diligence on their part.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Seller and the Purchaser have executed this
Agreement as of the date set forth above.
PURCHASER:
---------
WYNDHAM HOTEL CORPORATION,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Title: Executive Vice President
-----------------------------------
SELLER:
------
C.I. NASHVILLE, INC.,
a Kansas corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Title: Vice President and Secretary
-----------------------------------
KDF joins in and agrees hereto only for purposes of Section 10.5b:
ACKNOWLEDGED ON THIS 23RD DAY OF JULY, 1997:
K.D.F.,
a Massachusetts general partnership
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Attorney-In-Fact
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DEFINITIONS
"ABC" is defined in Section 19a.
"ACT OF BANKRUPTCY" means (a) application for or consent to the appointment of,
or the taking of possession by, a receiver, custodian, trustee or liquidator of
itself or of all or a substantial part of its property; (b) admitting in
writing an inability to pay debts as they become due; (c) making a general
assignment for the benefit of creditors; (d) filing a voluntary petition or
commencing a voluntary case or proceeding under the federal Bankruptcy Code (as
now or hereafter in effect); (e) being adjudicated a bankrupt or insolvent; (f)
filing a petition seeking to take advantage of any other law relating to
bankruptcy, insolvency, reorganization, winding-up or composition or adjustment
of debts; (g) failing to controvert in a timely and appropriate manner, or
acquiesce in writing to, any petition filed in an involuntary case or
proceeding under the federal Bankruptcy Code (as now or hereafter in effect);
or (h) taking any action for the purpose of effecting any of the foregoing; or
if a proceeding or case has been commenced, without the application or consent
of a party hereto or any principal thereof, in any court of competent
jurisdiction seeking (a) the liquidation, reorganization, dissolution or
winding-up, or the composition or readjustment of debts, (b) the appointment of
a receiver, custodian, trustee or liquidator for all or any substantial part of
its assets, or (c) other similar relief under any law relating to bankruptcy,
insolvency, reorganization, winding-up or composition or adjustment of debts,
and such proceeding or case shall continue undismissed, or an order (including
an order for relief entered in an involuntary case under the federal Bankruptcy
Code, as now or hereafter in effect) judgment or decree approving or ordering
any of the foregoing shall be entered and continued unstayed and in effect, for
a period of 60 consecutive days.
"ACM" means asbestos-containing material.
"ACTUAL KNOWLEDGE" shall mean (a) facts that are actually known to the
Identified Persons and shall not include facts that on any theory of law might
be attributable to Seller or the Identified Persons by reason of a
principal-agent or other similar relationship but which are not actually known
to the Identified Persons; and (b) without inquiry, so that neither Seller nor
the Identified Persons shall be required to have performed any due diligence,
other than review of their files as to the subject matter of the
representations or warranties contained herein, with respect to the matters
covered by this Agreement.
"APPURTENANCES" means all rights, titles, and interests of Seller appurtenant
to the Land and Improvements, including, but not limited to, (i) all easements,
rights of way, rights of ingress and egress, tenements, hereditaments,
privileges, and appurtenances in any way belonging to the Land or Improvements,
(ii) any land lying in the bed of any alley, highway, street, road or avenue,
open or proposed, in front of or abutting or adjoining the Land, (iii) any
strips or gores of real estate adjacent to the Land, and (iv) the use of all
alleys, easements and rights-of-way, if any, abutting, adjacent or contiguous
to or adjoining the Land.
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"AUTHORIZATIONS" means all notices, licenses, permits, registrations,
applications, consents, codes, certificates, and approvals required by any
third party, governmental or quasi-governmental agency, body or officer having
jurisdiction over the Hotel Property or for the ownership, operation and use of
the Hotel Property or any part thereof.
"▇▇▇▇ OF SALE" means the ▇▇▇▇ of sale, in a form reasonably acceptable to both
Purchaser and Seller, conveying good title to Seller's interest in all Tangible
Personal Property, in accordance with the Conveyance Standard.
"BROKER" means any finder, real estate broker, business broker, consultant or
like agent or other person entitled to a commission or other compensation in
connection with this Agreement or the transactions contemplated which has been
engaged to assist as broker in the sale of the Hotel Property.
"CASH AND EQUIVALENTS" is defined as Seller's active guest ledger, tray ledger,
▇▇▇▇▇ cash, cash drawers, and house accounts as of 6:00 A.M. on the Closing
Date but excluding Receivables. "CLOSING" is defined as the closing and
consummation of the transaction contemplated under this Agreement.
"CLOSING BALANCE SHEET" is defined in Section 8.6.
"CLOSING DATE" is defined as the date and time that is simultaneous with the
closing of the Merger, Simultaneous Purchase, and Warrant Conversion Agreement.
"CLUBHOUSE" means Clubhouse Hotels, Inc..
"CONVEYANCE STANDARD:" see Section 7.1e.
"DEPOSITS" is defined as, to the extent owned by Seller and assignable, all
prepaid rents and deposits, including, but not limited to, utility deposits,
refundable security deposits and rental deposits, and all other deposits for
advance reservations, banquets or future services, made in connection with the
use or occupancy of the Improvements.
"ENVIRONMENTAL REQUIREMENTS" means all laws, statutes, rules, regulations,
ordinances, judgments, decrees, orders, agreements and other restrictions and
requirements (now in effect) of any governmental authority, including, without
limitation, federal, state and local authorities, relating to the regulation or
protection of natural resources, conservation, the environment, or the storage,
treatment, disposal, transportation, handling, or other management of
industrial or solid waste, hazardous waste, hazardous or toxic substances or
chemicals, or pollutants.
"ESA REPORTS" Phase I environmental report and other reports to characterize
the environmental condition of the Hotel, as ordered and commissioned and paid
for by Purchaser.
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"ESTIMATED WORKING CAPITAL" means the excess of the current assets and cash
reserves of the Seller as of 6:00 a.m. on the Closing Date over current
liabilities of the Seller as of 6:00 a.m. on the Closing Date, except for long
term indebtedness becoming due within 12 months of Closing and all other liens
to be paid or satisfied by the Seller at closing, as estimated by the Purchaser
and Manager.
"FIRPTA AFFIDAVIT" means a duly executed and acknowledged affidavit dated as of
the Closing Date setting forth the Seller's address and Federal tax
identification number and certifying that the Seller is not a "foreign person"
for purposes of the provisions of Section 1445 of the United States Internal
Revenue Service Code.
"GAAP" shall mean generally accepted accounting principles, consistently
applied.
"▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ ACT" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Anti-Trust Improvements Act
of 1976.
"HAZARDOUS SUBSTANCE" means (i) any hazardous substance, hazardous waste,
hazardous material, solid waste, regulated substance, contaminant, or pollutant
as those terms are defined in Environmental Requirements; (ii) petroleum and
petroleum by-products; (iii) asbestos or ACM; or (iv) any additional substances
or materials which have been or are currently classified or considered to be
pollutants, hazardous or toxic under Environmental Requirements.
"HOTEL" is defined as the Land and Improvements.
"HOTEL PROPERTY" means and includes the Hotel, Tangible Personal Property,
Intangible Personal Property, Inventory, Deposits, Cash and Equivalents, and
Receivables, which is intended to be all of the assets of Seller, except the
rights of the Seller under the Tax Appeal and this Agreement.
"IDENTIFIED PERSONS" means Seller's board of directors and officers.
"IMPROVEMENTS" is defined as the three (3) story, 135-room hotel, parking
garage, and all other buildings, structures, fixtures, parking areas, and other
improvements presently located upon the Land.
"INTANGIBLE PERSONAL PROPERTY" is defined all intangible personal property
owned or possessed by the Seller and used in connection with the ownership,
operation, leasing, occupancy or maintenance of the Hotel, including, without
limitation, the insurance policies, escrow accounts, general intangibles,
business records, plans and specifications, surveys and title insurance
policies pertaining to the Hotel, all transferable contracts, leases, licenses,
permits and approvals with respect to the construction, ownership, operation,
leasing, occupancy or maintenance of the property and all accounts receivable.
The definition of Intangible Personal Property shall also include Leases and
Occupancy Agreements, to the extent owned by Seller and assignable. The
definition of Intangible Personal Property shall also include any and all of
the following, to the extent owned by Seller and assignable, that relate to or
affect in any way, the design,
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construction, ownership, use, occupancy, leasing, maintenance, service, or
operation of the Land, Improvements, Leases, Deposits, Inventory, or Tangible
Personal Property: Appurtenances, Licenses, Plans and Specs, Records, Service
Contracts, Tangible Personal Property Leases, Tradenames, Utility Reservations,
and Warranties.
"INVENTORY" is defined as all merchandise, supplies, inventory and other items
owned by Seller and used for the operation and maintenance of guest rooms,
guest services, restaurants, lounges, swimming pools, health clubs, and other
common areas and recreational areas located within or relating to the
Improvements, including, without limitation, all food and beverage (alcoholic
and non-alcoholic) inventory except to the extent any applicable law prohibits
the transfer of unopened alcoholic beverages (if applicable, the Purchase Price
shall be reduced by Seller's substantiated cost thereof), office supplies and
stationery, advertising and promotional materials, towels, washcloths,
mattresses, pillows, linens and bedding, cleaning, paper and other supplies,
napkins and tablecloths, upholstery material, carpets, rugs, furniture,
engineers' supplies, paint and painters' supplies, employee uniforms, and pool,
tennis court and other recreational area cleaning and maintenance supplies.
"LAND" is defined as the real property located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ as more particularly described in Exhibit A hereto.
"LEASES" means all leases, licenses, and other agreements with respect to
tenancies of the nature of space leases pertaining to the Hotel, together with
all amendments, modifications, renewals and extensions thereof and all
guaranties by third parties of the obligations of tenants, licensees, and
similarly situated parties thereunder.
"LICENSES" means all licenses (including without limitation liquor, beer, wine,
bar and similar licenses, unless otherwise herein provided), permits, utility
reservations, certificates of occupancy, and similar documents pertaining to
the Hotel issued by any federal, state, or municipal authority or by any
private party so long as assignment can be made without material cost to
Seller, to the extent assignable.
"LIQUOR LICENSE" means and includes collectively any alcoholic beverage,
liquor, beer and/or wine licenses and/or permits which are necessary for the
operation of the Hotel Property.
"LOSSES" means any and all losses, damages, costs, expenses, liabilities,
obligations and claims of any kind, including, without limitation, reasonable
attorneys' fees and other legal costs and expenses.
"MANAGEMENT AGREEMENT" is defined as the Management Agreement dated December 1,
1987, between the Manager and the Seller.
"MANAGER" is defined as ClubHouse Inns of America, Inc..
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"MATERIAL ADVERSE EFFECT" is defined as a material adverse effect on the
business, assets, financial condition, results of operation or operations of
the Hotel Property.
"MERGER" means the merger of Newco into Clubhouse, pursuant to that certain
Agreement and Plan of Merger by and among Purchaser, Clubhouse, Newco, ▇▇▇▇▇ ▇.
▇▇▇▇ and ▇▇▇▇▇▇ ▇. Samples dated July 21, 1997.
"NET WORKING CAPITAL" is defined in Section 8.6d.
"NEWCO" means a wholly-owned Delaware corporation subsidiary of Purchaser.
"OCCUPANCY AGREEMENTS" means all occupancy agreements, "trade-out" agreements,
advance booking agreements, convention reservation agreements, or other similar
agreements, other than Leases and other than guest or room bookings, demising
space in, providing for the use or occupancy of, or otherwise similarly
affecting or relating to the use or occupancy of the Improvements or Land
together with all amendments, modifications, renewals and extensions thereof,
and all guaranties by third parties of the obligations of the holder of the
occupancy right and similarly situated parties thereunder.
"OPERATING AGREEMENTS" means each of the management agreements, service
contracts, supply contracts, leases and other agreements other than leases, if
any, in effect with respect to the construction, ownership, operation,
occupancy or maintenance of the Hotel Property, other than the Management
Agreement.
"OPERATOR" is defined in Section 10.19a.
"PERMITTED EXCEPTIONS" is defined as:
(i) Real estate taxes and installments of assessments not yet
delinquent;
(ii) The Revised Plan of record in Book 6200, Page 669, Register's
Office for Davidson County, Tennessee;
(iii) Declaration of Covenants, Conditions, Restrictions and
Easements for the Atrium, of record in Book 6306, Page 80,
Register's Office for Davidson County, Tennessee, as amended
by First Amendment of record in Book 6363, Page 442,
Register's Office for Davidson County, Tennessee;
(iv) By-Laws of the Atrium Property Owner's Association, of record
in Book 6306, Page 108, Register's Office for Davidson County,
Tennessee;
(v) The rights of the public in public ways;
(vi) Zoning matters and similar governmental regulations and
ordinances;
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(vii) Encroachments and other matters which would be disclosed by an
accurate survey and inspection of the property; and
(viii) Covenants, easements, restrictions and other matters of record
as of the date hereof.
"PLANS AND SPECS" means all plans, drawings, specifications, surveys, soil
reports, engineering reports, inspection reports, environmental audits and
other technical descriptions and reports to the extent in Seller's possession
or control.
"POLICY" means an Owner Policy of Title Insurance and/or Loan or Mortgagee
Policy of Title Insurance on the most recent form of ALTA comprehensive
coverage owner's policy and loan policy, endorsed as Purchaser may reasonably
require and as permitted.
"PURCHASE PRICE" is defined as an aggregate purchase price of FIVE MILLION
SIXTY-EIGHT THOUSAND FIVE HUNDRED DOLLARS ($5,068,500), subject to adjustment
on the basis of the Working Capital Adjustment Amount as described in Section
8.6.
"PURCHASER'S CERTIFICATE" means a certificate signed on behalf of the Purchaser
stating that the representations and warranties of the Purchaser in this
Agreement are true and correct in all material respects as of the date of the
Closing as if then made and that the Purchaser has performed in all material
respects all of its covenants and other obligations under this Agreement.
"RECEIVABLES" is defined as (i) guest ledger accounts receivables of Seller
(the "GUEST LEDGER ACCOUNTS") and (ii) general business receivables (i.e.,
those receivables arising in the normal, day-to-day operation of the Hotel
included within the city ledger accounts receivable of Seller (the "GENERAL
BUSINESS ACCOUNTS") which remain uncollected on the Closing Date, and Purchaser
shall have all rights to collect such items for its own account. The amount to
be paid by Purchaser for the General Business Accounts and the Guest Ledger
Accounts (collectively, "ACCOUNTS"), shall be included in the calculation of
working capital and shall be in an amount equal to: (i) 100% of the face amount
of all Guest Ledger Accounts, regardless of age, for which payment was made or
guaranteed by credit card, (ii) 90% of the face amount of Accounts less than
thirty (30) days old, (iii) 75% of the face amount of Accounts thirty (30) or
more and less than sixty (60) days old, (iv) 25% of the face amount of Accounts
sixty (60) or more and less than ninety (90) days old. Seller shall retain all
rights to collect the Accounts ninety (90) or more days old or not otherwise
purchased by Purchaser (the "NON-PURCHASED ACCOUNTS") for its own account.
Purchaser agrees to remit all amounts collected on Non- Purchased Accounts
promptly to Seller. Collections from obligors who owe Non-Purchased Accounts
with respect to the Hotel Property for periods before and after 6:00 a.m. of
the Closing Date and who do not specify against which account such amount shall
be applied (i) if received within sixty (60) days after the Closing Date, shall
be applied to the Non- Purchased Accounts, and (ii) if received after such
sixty (60) day period, shall be applied pro rata by Purchaser to Purchaser's
post-Closing Date receivables, based upon a fraction, the denominator of which
shall be all receivables owing by such obligor to Purchaser and Seller with
respect to the Property at the time such collection
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is received, and the numerator of which shall be the Purchaser's post-Closing
Date receivables owing by such obligor with respect to the Property, with the
remainder to be paid to Seller. All other payments received from such obligors
shall be applied as specified by the obligor. Purchaser shall deliver to
Seller the amount to which Seller is entitled pursuant to the pro rata
application of the collections described in the preceding sentence, together
with a statement of such pro rata calculation and, upon the reasonable request
of Seller, the documents and invoices supporting such calculation.
"RECORDS" means all books and records, promotional material, telephone numbers,
tenant data, marketing and leasing material and forms, market studies, keys,
and other materials of any kind owned by Seller and in Seller's possession or
control, or to which Seller has access or may obtain and has the right to
convey and deliver which are or may be used in Seller's ownership or use of the
Land, the Improvements or the Tangible Personal Property, whether any of the
foregoing are in hard copy form or in computerized data storage form; provided,
however, (i) that a copy of any such material which constitutes a part of
Seller's continuing business or financial records may be retained by Seller and
(ii) that Seller's and Seller's manager's accounting software shall not be
conveyed.
"REFERENCE NET WORKING CAPITAL AMOUNT" is defined in Section 8.6d.
"RESOLUTIONS" means appropriate resolutions of the board of directors and
shareholder of the Seller, certified by the secretary or an assistant secretary
of the Seller, as applicable, together with all other necessary approvals and
consents of the Seller, authorizing (1) the execution on behalf of the Seller
of this Agreement and the documents to be executed and delivered by the Seller
prior to, at or otherwise in connection with Closing, and (2) the performance
by the Seller of its obligations hereunder and under such documents.
"SCHEDULE OF DEPOSITS AND UTILITY RESERVATIONS" means a schedule of the
Deposits and the Utility Reservations.
"SCHEDULE OF LEASES" means all Leases, a schedule of such Leases and all
agreements for real estate commissions, brokerage fees, finder's fees or other
compensation payable by Seller in connection therewith which would be binding
on Purchaser after Closing.
"SCHEDULE OF SERVICE CONTRACTS" means all Service Contracts and a schedule of
such Service Contracts including, without limitation, a schedule of media and
advertising commitments and programs.
"SCHEDULE OF TANGIBLE PERSONAL PROPERTY LEASES" means all Tangible Personal
Property Leases and a schedule of such Tangible Personal Property Leases.
"SEC" means Securities and Exchange Commission.
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"SELLER'S CERTIFICATE" means a certificate signed on behalf of the Seller
stating that the representations and warranties of the Seller made in this
Agreement are true and correct in all material respects as of the date of
Closing as if then made and that the Seller has performed in all material
respects all of its covenants and other obligations under this Agreement.
"SELLER'S DEED" means the form of special warranty deed attached to this
Agreement as Schedule 8.1.
"SERVICE CONTRACTS" means all contracts and agreements to which the Seller is a
party, such as labor, collective bargaining, service, or maintenance contracts,
employment agreements, utility contracts, contracts for the purchase of
supplies, insurance contracts, airline agreements, corporate account
agreements, travel agency agreements, telephone service agreements, and yellow
pages or other advertising agreements.
"SIMULTANEOUS PURCHASE" means the simultaneous purchase by Purchaser of various
partnership interests from various parties unrelated to Clubhouse.
"SUBSEQUENT DEVELOPMENTS" means all subsequent developments of which Seller has
knowledge which would cause any of Seller's representations or warranties
contained in this Agreement to be no longer accurate in any material respect.
"SUPPORTING DOCUMENTS" means a true, complete, and legible copy of all
documents and instruments (as recorded, where applicable) referred to or
identified in the Title Commitment, including, but not limited to, all deeds
and other conveyance documents evidencing transfer of title into Seller, lien
instruments, leases, plats, surveys, reservations, restrictions, and easements;
"SURVEY" means a current "as built" survey of the Hotel made on the ground and
certified by a Surveyor.
"SURVEYOR" means a professional land surveyor licensed in the state in which
the Hotel is located and approved by the Title Company and Purchaser.
"TANGIBLE PERSONAL PROPERTY" is defined as the tangible personal property
consisting of all furniture, fixtures, machinery, equipment and other personal
property of every kind situated on, attached to, or used in the operation of
the Hotel and owned by Seller. In addition, Tangible Personal Property shall
include the following: all tangible personal property and fixtures (which are
not part of the Improvements) of any kind attached to, or located upon and used
in connection with the ownership, maintenance, use or operation of the Land or
Improvements as of the date hereof and owned by Seller (or acquired by Seller
and so employed prior to Closing, as defined below), including, but not limited
to, all furniture, furnishings, fixtures, equipment, signs; all heating,
lighting, plumbing, drainage, electrical, air conditioning, and other
mechanical fixtures and equipment and systems; all elevators, escalators, and
related motors and electrical equipment and systems; all hot water heaters,
furnaces, heating controls, motors and boiler pressure systems and equipment,
all shelving and partitions, all ventilating equipment, and all incinerating
and
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disposal equipment; all tennis, pool and health club and fitness equipment and
furnishings; all vans, automobiles and other motor vehicles; all carpet,
drapes, beds, furniture, televisions, telephones and other furnishings; and all
stoves, ovens, freezers, refrigerators, dishwashers, disposals, kitchen
equipment and utensils, tables, chairs, plates and other dishes, glasses,
silverware, serving pieces and other restaurant and bar equipment, apparatus
and utensils.
"TANGIBLE PERSONAL PROPERTY LEASES" means all leases of any Tangible Personal
Property and other contracts permitting the use of any Tangible Personal
Property at the Improvements (including, without limitation, vehicles,
satellite programming leases and contracts), to the extent assignable.
"TAX APPEAL" means Cause Number 96-2143-II pending in the Chancery Court for
Davidson County, Tennessee, wherein the plaintiffs are Nashville Clubhouse Inn,
Clubhouse Inn of Knoxville, and Clubhouse Inn and Conference Center and the
defendant is ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Commissioner of Revenue, State of Tennessee.
"TENANT(S)" shall mean all tenants, licensees, franchisees, concessionaires or
other persons or entities.
"THIRD PARTY ACCOUNTING FIRM" is defined in Section 8.6.
"TITLE COMMITMENT" means that certain Commitment for Title Insurance issued by
the Title Company dated effective May 28, 1997 and numbered as 00283225jeg,
covering the Hotel, in the full amount of the Purchase Price and endorsed as
Purchaser or its lender may reasonably require and as permitted, setting forth
the current status of the title to the Hotel, showing all liens, claims,
encumbrances, easements, rights of way, encroachments, reservations,
restrictions, and any other matters affecting the Hotel, and pursuant to which
the Title Company agrees to issue to Purchaser at Closing a Policy.
"TITLE COMPANY" is defined as American Title Company, as agent for Chicago
Title Insurance Company, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ @ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇, Attention, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (972-789-8426)
"TRADENAMES" means all trade names, trade styles, trade marks, service marks,
and other identifying material, and all variations thereof, together with all
related goodwill (it being understood and agreed that the name of the hotel
chain to which the Hotel is affiliated by franchise or other license agreement
is a protected name or registered service ▇▇▇▇ of such hotel chain and cannot
be transferred to Purchaser by this Agreement).
"UCC SEARCH" means current written reports on those names requested by
Purchaser from the Office of the Secretary of State of the State where the
Hotel is located and the deed recording offices of the county where the Hotel
is located reflecting the results of current searches of the Uniform Commercial
Code Records maintained by such offices.
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"UTILITY RESERVATIONS" means, to the extent owned by Seller and assignable,
Seller's interest in the right to receive immediately on and after Closing and
continuously consume thereafter water service, sanitary and storm sewer
service, electrical service, gas service, and telephone service on and for the
Land and Improvements, and the foregoing right shall include, but not be
limited to the following, to the extent assignable and owned by Seller, (i) the
right to the present and future use of wastewater, drainage, water and other
utility facilities to the extent such use benefits the Land or Improvements,
(ii) all reservations of or commitments covering any such use in the future,
and (iii) all wastewater capacity reservations ever issued and relating to the
Land or Improvements.
"WARRANTIES" means all warranties, guaranties, indemnities, and claims for the
benefit of Seller.
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