AGREEMENT OF SALE AND PURCHASE
EXHIBIT 10.2
THIS AGREEMENT OF SALE AND PURCHASE (this “Agreement”), dated as of March 10, 2006 (the
“Effective Date”), is made by and between XXXXXX PLACE HOTEL, LLC, an Arkansas limited liability
company, having an address at
(“Seller”), and INTERSTATE
OPERATING COMPANY. L.P., a Delaware limited partnership having an address at 0000 X. Xxxxxxx Xxxxx,
Xxxxxxxxx, XX 00000 (“Purchaser”).
I.
Definitions; Sale and Purchase
1.01 Definitions. In addition to terms defined elsewhere in this Agreement, the
following terms shall have the meanings indicated:
(a) Bookings shall mean contracts or reservations for the use or occupancy of
guest rooms, meeting rooms and/or the banquet facilities of the Hotel.
(b) Books and Records shall mean all books, records, room rates, customer
lists, banquet and function room records with respect to the Hotel (whether in electronic
format or reduced to paper).
(c) Closing Date shall mean the date specified in Section 7.01.
(d) Consumables shall mean all opened and unopened food and beverages
(alcoholic and non-alcoholic) located at, or purchased to be used or sold at but not yet
delivered to, the Hotel.
(e) Cut-off Time shall mean 11:59 p.m. on the date preceding the Closing Date.
(f) Effective Date shall mean the date of this Agreement.
(g) Expendables shall mean all expendable supplies including but not limited to
china, glassware, linens, silverware, kitchen and bar small goods, paper goods, guest
supplies, cleaning supplies, operating supplies, printing, stationary and uniforms, and
other operating supplies and inventories whether in use or held in reserve storage for
future use in connection with the operation of the Hotel.
(h) Existing Franchise Agreement shall mean the existing franchise agreement
between Hilton Inns, Inc. (“Hilton”), as franchisor, and Seller, as franchisee, with respect
to the Hotel.
(i) Furnishings shall mean all fixtures, furniture, furnishings, fittings,
equipment, machinery, apparatus, appliances, computer hardware and equipment, software,
reservations terminals, vehicles, building materials, telephones and other communication
equipment, copiers, facsimile machines, postal machines, televisions, signs, vacuum
cleaners, video equipment and other articles of personal property located on or used or
usable in connection with any part of the Hotel.
(j) Hotel shall mean the hotel located at 0000 Xxxxxxx Xxxxxxxxx, Xxxxx Xxxxx,
Xxxxxxxxx 00000, and known as the Hilton Garden Inn – Baton Rouge.
(k) Hotel Contracts shall mean all service and maintenance contracts,
employment agreements, union contracts, purchase orders, equipment leases, volume transient
agreements and other contracts or agreements relating to the maintenance, operation,
provisioning or equipping of the Hotel, together with all related written warranties and
guaranties.
(l) Hotel Employees shall mean the persons employed to operate the Hotel.
(m) Improvements shall mean the buildings, structures (surface and
sub-surface), installations and other improvements, including such fixtures and
appurtenances as shall constitute real property located on the Land.
(n) Land shall mean the land and all appurtenances thereto, having a street
address at 0000 Xxxxxxx Xxxxxxxxx, Xxxxx Xxxxx, Xxxxxxxxx 00000, more particularly described
in Exhibit A to this Agreement upon which the Hotel is situated together with all
appurtenances to the Land.
(o) Miscellaneous Personal Property shall mean (i) any and all trademarks,
service marks, trade names, brand names and copyrights owned by Seller or any affiliate of
Seller relating to the Hotel, (ii) any and all goodwill associated with the Hotel, (iii) the
Hotel’s website and web address, if any, (iv) the Hotel’s telephone numbers, and (v) printed
marketing materials, if any, relating to the Hotel, and any slides, proofs or drawings used
to produce such materials, to the extent such slides, proofs or drawings are in Seller’s or
its manager’s possession or control.
(p) Permits shall mean all licenses, franchises, permits, certificates of
occupancy, authorizations and approvals used in or relating to the ownership, occupancy or
operation of any part of the Hotel.
(q) Property shall mean the Land and Improvements.
(r) Space Leases shall mean all leases and other agreements (written or oral)
for the use of space at the Property, including but not limited to, agreements for the use
of rooftop space on the Hotel for the installation of cellular telephone antennas
(s) Warranties shall mean any assignable warranties benefiting Seller with
respect to the Furnishings, Miscellaneous Personal Property and Improvements.
1.02 Sale and Purchase. Seller agrees to sell and convey the Hotel to Purchaser, and
Purchaser agrees to purchase and accept the Hotel from Seller, for the price and subject to the
terms, covenants, conditions and provisions set forth in this Agreement. The sale and purchase
shall include the Property and all right, title and interest of Seller in and to the Bookings, the
Books and Records, the Consumables, the Furnishings, the Expendables, the Permits, the Space
Leases, the Hotel Contracts, the Miscellaneous Personal Property and the Warranties (the Property,
the Bookings, the Books and Records, the Consumables, the Furnishings, the Expendables, the
Permits, the Space Leases, the Hotel Contracts, the Miscellaneous Personal Property and the
Warranties being hereinafter collectively referred to as the “Purchased Assets”).
1.03 Condition of Property. (a) Purchaser acknowledges for Purchaser and
Purchaser’s successors, heirs and assignees, (i) that Purchaser will be given a reasonable
opportunity to inspect and investigate the Property, all improvements thereon and all aspects
relating thereto, including, without limitation, all of the physical, environmental and operational
aspects of the Property, either independently or through agents and experts of Purchaser’s choosing
and (ii) that Purchaser will acquire the Property based upon Purchaser’s own investigation and
inspection thereof. SELLER AND PURCHASER AGREE THAT, EXCEPT AS PROVIDED FOR IN THIS AGREEMENT OR
ANY CLOSING DOCUMENT, THE PROPERTY SHALL BE SOLD AND THAT PURCHASER SHALL ACCEPT POSSESSION OF THE
PROPERTY ON THE CLOSING DATE AS IS, WHERE IS, WITH ALL FAULTS WITH NO RIGHT OF SET-OFF OR REDUCTION
IN THE PURCHASE PRICE, AND THAT, EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT OR ANY CLOSING
DOCUMENT SUCH SALE SHALL BE WITHOUT REPRESENTATION OR WARRANTY OF ANY KIND, WHETHER EXPRESS,
IMPLIED, STATUTORY OR OTHERWISE, EXCEPT FOR THOSE SET FORTH IN THIS AGREEMENT OR ANY CLOSING
DOCUMENT, INCLUDING, WITHOUT LIMITATION, WARRANTY OF INCOME POTENTIAL, OPERATING EXPENSES, USES,
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. PURCHASER SPECIFICALLY ACKNOWLEDGES THAT,
EXCEPT AS PROVIDED FOR IN THIS AGREEMENT OR ANY CLOSING DOCUMENT, PURCHASER IS NOT RELYING AND
SHALL NOT RELY ON ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND WHATSOEVER, WHETHER EXPRESS,
IMPLIED, STATUTORY OR OTHERWISE, FROM SELLER AS TO ANY MATTERS CONCERNING THE PROPERTY
INCLUDING WITHOUT LIMITATION: (A) THE CONDITION OR
SAFETY OF THE PROPERTY OR ANY IMPROVEMENTS
THEREON, INCLUDING, BUT NOT LIMITED TO, PLUMBING, SEWER, HEATING AND ELECTRICAL SYSTEMS, ROOFING,
AIR CONDITIONING, IF ANY FOUNDATIONS, SOILS AND GEOLOGY INCLUDING HAZARDOUS MATERIALS, LOT SIZE, OR
SUITABILITY OF THE PROPERTY OR IMPROVEMENTS FOR A PARTICULAR PURPOSE; (B) WHETHER THE APPLIANCES,
PLUMBING OR UTILITIES AND ANY ASSOCIATED MATTERS ARE IN WORKING ORDER; (C) THE LIABILITY OR
SUITABILITY FOR OCCUPANCY OF ANY STRUCTURE AND THE QUALITY OF ITS CONSTRUCTION; (D) THE FITNESS OF
ANY PERSONAL PROPERTY; OR (E) WHETHER THE IMPROVEMENTS ARE STRUCTURALLY SOUND, IN GOOD CONDITION,
OR IN COMPLIANCE WITH APPLICABLE CITY, PARISH, STATE OR FEDERAL STATUTES, CODES OR ORDINANCES.
EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT OR ANY CLOSING DOCUMENT, PURCHASER WAIVES ANY
WARRANTY TO WHICH IT MIGHT BE ENTITLED UNDER ARTICLE 2524 OF THE LOUISIANA CIVIL CODE THAT THE
PROPERTY BE REASONABLY FIT FOR ITS ORDINARY USE. EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT OR
ANY CLOSING DOCUMENT PURCHASER HEREBY EXPRESSLY WAIVES ALL RIGHTS IN REDHIBITION PURSUANT TO
LOUISIANA CIVIL CODE ARTICLE 2520, ET SEQ., THE WARRANTIES OF OWNERSHIP AND PEACEABLE POSSESSION OF
THE PROPERTY, THE WARRANTIES AGAINST HIDDEN OR REDHIBITORY DEFECTS IN THE PROPERTY, AND THE
WARRANTY THAT THE PROPERTY IS FIT FOR ITS INTENDED USE, EACH OF WHICH WOULD OTHERWISE BE IMPOSED
UPON SELLER BY LOUISIANA CIVIL CODE ARTICLE 2475. EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT
OR ANY CLOSING DOCUMENT PURCHASER HEREBY RELEASES SELLER FROM ANY LIABILITY FOR HIDDEN, REDHIBITORY
OR LATENT DEFECTS OR VICES UNDER LOUISIANA CIVIL CODE ARTICLE 2520 THROUGH 2549.
II.
Consideration
2.01 Purchase Price. The purchase price (“Purchase Price”) to be paid by Purchaser to
Seller at the closing of the purchase and sale of the Property (the “Closing”) shall be FOURTEEN
MILLION FIVE HUNDRED THOUSAND DOLLARS ($14,500,000). The Purchase Price shall be payable by
Purchaser as follows:
(a) FIVE HUNDRED THOUSAND DOLLARS ($500,000) as a deposit (together with any interest
earned thereon, the “Deposit”), by check or wire transfer payable to First American Title
Insurance Company (in its capacity as holder of the Deposit, the “Escrow Agent”), through
its Washington, D.C. office, within three (3) business days after the date hereof; and
(b) The balance (as adjusted for the prorations and credits hereinafter set forth) at
the Closing by wire transfer of good funds to an account to be designated by Seller prior to
the Closing.
2.02 Deposit. The Deposit shall be delivered to and held by Escrow Agent in
escrow in an interest-bearing account pursuant to terms of this Agreement. If the Closing occurs
in accordance with the terms and provisions of this Agreement, the Deposit shall be paid to Seller
and credited against the Purchase Price. If the Closing does not occur, the Deposit shall be held
and delivered as provided in this Agreement.
2.03 Allocation. The Purchase Price shall be allocated between the Land, the
Improvements and the other Purchased Assets as set forth on Exhibit B attached hereto subject to
such changes as the parties may reasonably and in good faith agree upon prior to the expiration of
the Inspection Period.
III.
Survey
3.01 Survey. Within fifteen (15) business days after the Effective Date, Seller will
obtain, at Seller’s cost and expense, a current survey (the “Survey”) of the Property prepared by a
surveyor licensed in the State of Louisiana and approved by Purchaser. The Survey, which shall be
certified to Purchaser, Purchaser’s lender, if any, and Purchaser’s title insurer, shall indicate
the metes and bounds of the Land, shall indicate the Improvements and the location of any
easements, servitudes, utility lines, rights-of-way, water courses, drains, sewers, driveways,
roads and encroachments affecting the Property, and shall indicate that all Improvements are
located within the record and setback lines of the Property and that no easements, servitudes or
other encroachments located on the Property interfere with the use of the Property and shall
otherwise be in accordance with the Minimum Standard Detail Requirements and Classifications for
ALTA/ACSM Land Title Surveys (including without limitation items 1, 2, 3, 6, 7A, 7B, 7C, 8, 9, 10,
11 and 13 of Table A thereof) and the standards of any board or organization promulgating standards
for surveys in the State of Louisiana.
IV.
Title Insurance
4.01 Title Commitment. Within five (5) business days after the Effective Date, Seller
will cause First American Title Insurance Company (in its capacity as title insurer, the “Title
Company”), through its National Accounts Office in Washington, D.C., to deliver to Purchaser an
up-to-date and complete commitment for an ALTA Owner’s Policy of Title Insurance with extended
coverage (the “Title Commitment”) accompanied by a legible copy of all recorded documents relating
to liens, easements, servitudes, rights-of-way, restrictions and other matters affecting title to
the Property.
4.02 Title Objections. Purchaser shall have thirty (30) days from the last to
be received of the Title Commitment and the Survey to notify Seller as to any items that are
unsatisfactory to Purchaser. Unless Purchaser or its attorney so notifies Seller within such
30-day period, Purchaser shall be deemed to have approved the condition of title to the Property as
reflected by the Title Commitment and Survey. If within such period Purchaser notifies Seller that
any of the items are unacceptable (“Objections”), Seller shall within five (5) business days after
receipt of such notice notify Purchaser whether Seller shall elect to cure any or all of such
Objections (provided, however, that Seller must satisfy and remove of record or cure, as the case
may be, and shall not have any right to elect not to cure, any matter which it is required to cure
pursuant to Section 4.04 below). If Seller elects to cure any such Objections, then Seller shall
promptly cure the Objections which it has elected to cure to Purchaser’s and the Title Company’s
satisfaction. If Seller elects not to cure any such Objections, or is unable to cure any such
Objections, then Purchaser at its sole and absolute option may either (i) accept title to the
Property subject to such Objections or (ii) terminate this Agreement by written notice to Seller,
whereupon the Deposit shall be promptly returned to Purchaser and the parties shall have no further
rights or liabilities under this Agreement other than those which expressly survive the termination
of this Agreement. Purchaser shall make such election by written notice to Seller or on before the
Closing Date or within five business days after Seller has advised Purchaser in writing that has
elected not to cure any such Objections or is unable to cure any such Objections, whichever occurs
first, and in the event Purchaser does not make such election, Purchaser shall be conclusively
deemed to have waived such Objections. Those restrictions, liens, encumbrances, easements,
servitudes, rights of way and other matters as are not objected to or are waived by Purchaser in
the manner provided in this Section shall be deemed “Permitted Exceptions”. Nothing herein shall
be deemed to prohibit Purchaser from objecting to title or survey matters revealed subsequent to
approval of the title reflected by the Title Commitment and the Survey, and any such objections
will be treated as “Objections” in accordance with this Section.
4.03 Title Conveyed. Seller shall, on the Closing Date, convey to Purchaser good,
merchantable, marketable and insurable fee simple title to the Property subject only to the
Permitted Exceptions.
4.04 Monetary Liens. Notwithstanding anything to the contrary set forth in Section
4.02 above, Seller shall satisfy and remove of record or cure, as the case may be, at or before the
Closing any mortgage or deed of trust lien affecting the Property and any other Objection which may
be removed by the payment of a liquidated sum of money,
including without limitation any liens for
unpaid taxes, and Seller may not refuse to cure the same. Seller may use all or any portion of the
Purchase Price to affect such cure at the Closing.
4.05 Searches. Promptly after the Effective Date, Purchaser shall have the right to
obtain, at Purchaser’s expense, written reports of searches (the “Searches”) of the records of the
appropriate governmental agencies confirming the absence of security interests, judgments, tax
liens and bankruptcy proceedings which affect or could affect the Purchased Assets or any interest
therein. If such Searches disclose the existence of any security interests, judgments, tax liens
or bankruptcy proceedings which affect or could affect the Purchased Assets or any interest
therein, Purchaser shall notify Seller thereof in writing and Seller shall have thirty (30) days
from the date of such notice to secure the release, or commit in writing to secure on or prior to
the Closing the release, of all such security interests, judgments, tax liens and bankruptcy
proceedings and provide evidence of such release to Purchaser. Purchaser shall have the right to
update said Searches, at Purchaser’s expense, on or prior to the Closing Date confirming that there
are no security interests, judgments, tax liens or bankruptcy proceedings affecting the Purchased
Assets or any interest therein. If Seller fails to secure all such releases or commit to secure
such releases within such thirty (30) day period, and/or (with respect to any releases Seller has
committed to securing or releases with respect to any security interests, judgments, tax liens or
bankruptcy proceedings affecting the Purchased Assets or any interest therein shown by the
aforesaid update of said Searches) fails to secure such releases on or prior to the Closing)
without limiting any other obligation which Seller may have under this Agreement, and/or right or
remedy which Purchaser may have with respect thereto under this Agreement, Purchaser may elect,
upon notice to Seller on or before the Closing Date, to (i) terminate this Agreement, in which
event the Deposit shall promptly be returned to Purchaser, or (ii) accept title subject only to
such then unreleased security interests, judgments and tax liens with the further right to deduct
from the Purchase Price amounts secured by any such security interests, judgments and tax liens of
a definite or ascertainable amount.
V.
Representations, Warranties, Covenants
And Conditions Precedent
And Conditions Precedent
5.01 Seller’s Representations and Warranties. Seller represents and warrants to
Purchaser that:
(a) Seller is a duly organized and validly existing Arkansas limited liability company,
is qualified to do business and in good standing in the State of Louisiana and in the state
of its formation, if different, and has full power to enter into this Agreement and to
perform its obligations under this Agreement.
(b) The execution and delivery of this Agreement has been duly authorized by all
necessary and appropriate action of Seller. This Agreement constitutes a legal, valid and
binding obligation of Seller enforceable in accordance with its terms, subject to
bankruptcy, fraudulent conveyance, moratorium or other creditor’s rights and
limitations on equitable remedies.
(c) No consent or approval of any person, entity, or governmental authority is
required with respect to the execution and delivery of this Agreement by Seller or the
consummation by Seller of the transactions contemplated hereby or the performance by Seller
of its obligations under this Agreement.
(d) There are no Space Leases, ground leases, license agreements, occupancy agreements
or other similar agreements affecting all or any portion of the Property except for the
leases (collectively, the “Space Leases”) listed in Exhibit C to this Agreement. All of the
Space Leases described in Exhibit C are in full force and effect, there are no defaults by
any party thereunder nor has any event occurred which, with passage of time or the giving of
notice or both, would constitute a default by Seller or, to the knowledge of Seller, by any
other party thereunder, and true and complete copies of the Space Leases and all instruments
and documents related to the Space Leases have been provided to Purchaser.
(e) There are no Hotel Contracts or similar agreements affecting the Property except as
set forth in Exhibit D to this Agreement. All of the Hotel Contracts are in full force and
effect, there are no defaults by
any party thereunder nor has any event occurred which, with
passage of time or the giving of notice or both, would constitute a default by Seller or, to
the knowledge of Seller, by any other party thereunder, and true and complete
copies of the Hotel Contracts and all instruments and documents related to the Hotel
Contracts have been provided to Purchaser.
(f) The Existing Franchise Agreement is in full force and effect and has not been
extended, amended, modified or otherwise supplemented. There are no defaults by Seller
under the Existing Franchise Agreement or, to the knowledge of Seller, by any other party
thereunder, nor has any event occurred which, with passage of time or the giving of notice
or both, would constitute a default by Seller or, to the knowledge of Seller, by any other
party thereunder. True and complete copies of the Existing Franchise Agreement have been
provided to Purchaser.
(g) All Permits necessary for the operation of the Hotel are set forth in Exhibit E to
this Agreement. The Permits are in full force and effect, Seller has received no notice of
any violations thereof, and true and complete copies of all of the Permits have been
delivered to Purchaser.
(h) All Hotel Employees are employed by Seller or the Hotel’s property manager. Except
as set forth in Exhibit F to this Agreement, there are no written or oral employment
agreements, representation agreements, labor agreements, collective bargaining agreements or
similar agreements affecting the Hotel or any of the Hotel Employees. Neither Seller nor
Seller’s property manager has received any notice from any labor union or group of employees
that such union or group represents or believes or claims it represents or intends to
represent any of the Hotel Employees. There are no current strikes or work stoppages at the
Hotel nor, to Seller’s knowledge, has any such strike or work stoppage been threatened.
(i) Seller has received no notice of, and, to Seller’s knowledge, there are no,
violations of laws, ordinances, orders or regulations (“Laws”) of governmental or
quasi-governmental authorities with respect to the Property (including, without limitation,
those related to environmental, labor or employment matters), and the current use of the
Property is in compliance with all zoning and land-use laws and ordinances.
(j) To Seller’s knowledge, no asbestos or petroleum or any substances defined as
hazardous materials or hazardous wastes under any applicable Laws are or have been used,
stored, generated or released at the Property.
(k) Except as set forth in Exhibit G to this Agreement, there is no litigation,
action, or proceeding pending or, to the best of Seller’s knowledge, threatened relating to
the Property or the transactions contemplated by this Agreement, including, but not limited
to, those alleging the violation of any Laws pertaining to employment or employment
practices or those alleging violation of the Americans with Disabilities Act, nor is the
Hotel affected by any settlement agreement, consent decree or other resolution to any prior
litigation, action or proceeding.
(l) Seller has provided to Purchaser (i) true and complete copies of all bills for real
estate and personal property taxes and assessments for the 2006 tax year and the two
immediately preceding tax years and (ii) a true and complete list of the current Hotel
Employees together with a schedule setting forth the compensation and fringe benefits
(including, but not limited to, benefit plans) accorded to such Hotel Employees.
(m) Seller has provided to Purchaser unaudited financial statements and STR reports for
the period from the opening of the Hotel through December 31, 2005 and year-to-date
financial statements for the 2006 calendar year. All such statements for the Hotel are, and
any financial statements for later periods to be provided by Seller pursuant to this
Agreement shall be, true and correct and accurately reflect in all material respects the
financial condition of the Hotel for the applicable period. There have been no material
adverse changes in the financial condition of the Hotel since the date of the last such
statement delivered to Purchaser prior to the execution of this Agreement.
(n) No Hotel Employees are employed under union agreements, collective
bargaining, written or oral employment agreements or similar arrangements.
(o) Seller owns good, merchantable and marketable fee simple title to the Purchased
Assets subject only to the Permitted Exceptions.
(p) Seller has not granted to any person or entity, other than Hilton pursuant to the
Existing Franchise Agreement, any options or other agreements of any kind, whereby any
person or entity other than Purchaser will have acquired or will have any right to acquire
title to all or any portion of the Purchased Assets.
(q) Seller has paid all taxes (including, without limitation, transient occupancy (bed)
taxes), assessments and other governmental charges relating to the operation of the Hotel
were due and payable prior to the Effective Date.
(r) Other than the agreements disclosed in this Agreement, there are no agreements,
written or oral, affecting the Property, which would be binding on Purchaser following the
Closing.
(s) Seller is not a “foreign person” as defined in the Internal Revenue Code of 1986,
as amended.
(t) Neither Seller nor any person who owns a controlling interest in or otherwise
controls Seller, nor to the best knowledge of Seller any other person or entity to whom
Purchaser directly or indirectly pays amounts on behalf of or for the benefit of Seller
pursuant to a provision of this Agreement, is (i) listed on the Specially Designated
Nationals and Blocked Persons List or any similar list maintained by the Office of Foreign
Assets Control, Department of the Treasury, pursuant to any authorizing statute, executive
order or regulation, (ii) a “specially designated global terrorist” or other person listed
in Appendix A to Chapter V of 31 C.F.R., as the same has been from time to time updated and
amended, or (iii) a person either (A) included within the term “designated national” as
defined in the Cuban Assets Control Regulations, 31 C.F.R. Part 515 or (B) designated under
Sections 1(a), 1(b), 1(c) or 1(d) of Executive Order No. 13224, 66 Fed. Reg. 49079
(published September 25, 2001) or a person similarly designated under any related enabling
legislation or any other similar Executive Orders.
As used in this Agreement, the term “Seller’s knowledge” or “known to Seller” shall mean the
current actual knowledge of Seller on the particular date that the representation or warranty is
deemed to be made, without independent inquiry or investigation of third parties other than
inquiries of the general manager and executive staff of the Property. Notwithstanding the foregoing
or any other provision of this Agreement to the contrary, however, it shall be a condition
precedent to Purchaser’s obligation to close the transactions set forth herein that each
representation and warranty of Seller which is limited to or by Seller’s knowledge be true and
correct as if it were not so limited.
5.02 Purchaser’s Representations and Warranties. Purchaser represents and warrants to
Seller that:
(a) Purchaser is a duly organized and validly existing Delaware limited partnership, is
in good standing in the State of Delaware; has full power to enter into this Agreement and
to perform its obligations under this Agreement; and is or will be as of the Closing Date in
good standing in Louisiana.
(b) The execution and delivery of this Agreement has been duly authorized by all
necessary and appropriate partnership action of Purchaser. This Agreement constitutes a
legal, valid and binding obligation of Seller enforceable in accordance with its terms,
subject to bankruptcy, fraudulent conveyance, moratorium or other creditor’s rights
and limitations on equitable remedies.
5.03 Remedies Regarding Representations and Warranties. By executing and
delivering the documents required of such party in Section 7.04 below, (i) Seller shall be deemed
to have remade all of the foregoing representations and warranties of Seller in Section 5.01 as of
Closing and (ii) Purchaser shall (subject to changes in such representations and warranties
resulting from any assignment of this Agreement permitted pursuant to Section 9.02 below) be deemed
to have made all of the foregoing representations and warranties of Purchaser in Section 5.02 as of
Closing. Should any of such representations and warranties of Seller be found to be incorrect
prior to Closing, Seller shall attempt to cure the same by Closing. If Seller is unable to cure
same by Closing, at Purchaser’s option the Closing shall be postponed until five (5)
business days following Purchaser’s receipt of proof satisfactory to Purchaser that such
matters have been cured, provided, however, if Seller is unable to cure the same within thirty (30)
days from the date of notice of the same, Purchaser shall be entitled either to waive the same and
close this transaction, exercise its rights pursuant to Article VI of this Agreement or to
terminate this Agreement. In the event Purchaser elects to terminate this Agreement, Escrow Agent
shall return the Deposit to Purchaser and neither party to this Agreement shall thereafter have any
further rights or liabilities under this Agreement. The representations and warranties of each
party shall survive the Closing for a period of two (2) years. Seller shall indemnify and hold
Purchaser harmless from and against any loss, damage, liability, claim, cost or expense (including,
without limitation, reasonable attorneys’ fees) that may be incurred by or asserted against
Purchaser and arises from a breach of Seller’s representation or warranty. The provisions of this
Section 5.03 shall survive the Closing.
5.04 Seller’s Covenants. Seller covenants and agrees with Purchaser that prior to the
Closing:
(a) Seller will assist Purchaser and Purchaser’s agents, on or before Closing, in
acquiring all information necessary to enable Purchaser’s agents and Seller’s agents to
compute the prorations described in Section 7.02 of this Agreement.
(b) Seller will not sell, exchange, assign, transfer, convey, lease or otherwise
dispose of all or any part of the Purchased Assets or any interest therein except for
Consumables and Expendables which are sold or consumed in the ordinary course of business.
(c) Seller will keep the Space Leases, the Hotel Contracts, the Existing Franchise
Agreement and the Permits in full force and effect, will pay all charges when due thereunder
and will perform all of its obligations thereunder.
(d) Seller will keep the Purchased Assets free and clear of liens and encumbrances
other than the Permitted Exceptions and the lien of taxes not yet due and payable and other
than such items a will be cured or removed by Seller pursuant to Section 4.02.
(e) Seller will not enter into any contracts, leases, licenses, easements or other
agreements relating to the Purchased Assets which will obligate Purchaser or be a charge or
lien against the Property, except those necessary to continue the operation of the Hotel in
the ordinary course of business and which are terminable by the owner of the Property
without penalty on thirty or fewer days’ notice.
(f) Seller will cause the Property to be operated and maintained in the manner in which
it is being operated and maintained as of the date of this Agreement which undertaking
includes, but is not limited to, (i) maintaining Consumables, Expendables and Furnishings in
those quantities and at those levels present as of the Effective Date and, with respect to
Expendables subject to measurement on a PAR basis, not less than 3.0 PAR of each applicable
Expendable on the Closing Date, (ii) entering into Bookings in the ordinary course of
business and in accordance with Seller’s historical practice at the Hotel, (iii) performing
all repairs and maintenance necessary to keep the Property in good repair, to comply with
Laws and to maintain at least the same condition as exists on the Effective Date and (iv)
keeping the Hotel staffed with Hotel Employees in accordance with Seller’s historical
practice at the Hotel.
(g) Seller shall permit Purchaser and its representatives, employees, contractors and
agents to enter upon and inspect the Property and perform such investigations of the
Property and all applicable Books and Records as Purchaser may from time to time deem
desirable. Purchaser and Purchaser’s agents and contractors shall have the right during the
term of this Agreement to enter upon the Property at reasonable times and upon reasonable
prior notice to Seller. Purchaser acknowledges and agrees that any and all inspections of
the Property shall be conducted in a manner not unreasonably disruptive to tenants, guests,
or otherwise to the operation of the Property and shall be performed upon reasonable prior
notice to Seller. In the event Purchaser desires to conduct any physically intrusive due
diligence such as sampling of soils or drilling xxxxx, Purchaser
will request Seller’s prior
consent thereto, which consent shall not be unreasonably withheld. Purchaser agrees to
indemnify Seller and hold Seller, Seller’s affiliates, officers, directors, employees,
agents and representatives harmless from and against any and all losses, costs, damages,
claims or liabilities, including reasonable attorneys fees but excluding
consequential and punitive damages, arising out of any personal injury or property
damage resulting from such entry and/or activities upon the Property by Purchaser, its
agents, contractors and/or subcontractors pursuant to this Section except to the extent the
same arise from the misconduct or negligence of Seller or Seller’s agents and/or
representatives. Purchaser’s indemnity and hold harmless provisions pursuant to this
Section shall survive the closing of this transaction or earlier termination of this
Agreement. In addition to the foregoing, Seller shall assist Purchaser and provide such
other information as shall be required to enable an accounting firm of Purchaser’s choosing
to prepare audited financial statements of the Property for calendar years 2004 through
2005, the cost of which shall be borne by Purchaser.
(h) Within fifteen (15) days after the end of each calendar month until the Closing
Date, Seller shall provide to Purchaser financial statements and STR reports for such month
and on a year-to-date basis which statements shall be prepared in accordance with the
Uniform System of Accounts for Hotels and Motels and otherwise in form reasonably acceptable
to Purchaser.
(i) Upon Purchaser’s request, Seller shall from time to time make available a senior
representative of Seller and the general manager of the Hotel at a reasonable time to meet
with an asset manager of Purchaser to review the operations of the Hotel in reasonable
detail, provided that Purchaser shall not contact the general manager or other executives of
the Hotel until they have been advised by Purchaser of the pending sale. Seller shall advise
such persons of the pending sale with reasonable promptness.
(j) Seller will promptly notify Purchaser of any matter arising prior to Closing which
might materially and adversely affect the condition or operation of the Hotel including,
without limitation, the commencement of any litigation or proceeding or any notice of a
violation of Laws issued by any governmental or quasi-governmental authority.
(k) Seller will cooperate with Purchaser in all reasonable respects (which shall
include, without limitation, supplying information known to Seller and execution of such
documents as may be legally required) in connection with the transfer of any alcoholic
beverage licenses used in connection with the operation of the Hotel (the “Liquor License”)
to Purchaser to Purchaser or Purchaser’s application for a new Liquor License. If the
Purchaser does not obtain the transfer of the Liquor License or obtain a new Liquor License
on or prior to the Closing Date then, on the Closing Date, Seller shall enter, or if Seller
is not the holder of the existing Liquor License cause the holder of the existing Liquor
License to enter, into an agreement (the “Interim Arrangement”) with Purchaser, in form and
content reasonably acceptable to Purchaser and Seller, providing for an interim arrangement
whereby Seller or such holder, as applicable, shall operate (or if legally permissible allow
Purchaser or its manager to operate) the alcoholic beverage concessions at the Hotel under
the existing Liquor License on behalf of Purchaser pending the transfer or issuance of the
Liquor License to Purchaser or its designee. Purchaser shall indemnify, defend and hold
such licensee harmless against any liabilities incurred in such operation (unless caused by
such licensee’s willful or negligent conduct or omission or breach of its agreement with
Purchaser) and provide adequate dram-shop insurance naming Seller and the licensee as
additional insureds.
(l) Seller will promptly provide Purchaser with notice of any actual or proposed
change in the assessed value of the Property or any portion of the Property (including any
tentative or preliminary assessment) and of the institution or proposed institution of any
proceeding (whether formal, informal, judicial or administrative) relating to any such
change or proposed change. Seller will not take any action with respect to the contesting
and/or resolution of the taxable assessed value of the Land and Improvements without the
prior written consent of Purchaser, which consent shall not be unreasonably withheld.
(m) Seller shall not request or initiate any proceeding or other action to change any
zoning classification applicable to the Property or any other Law which governs the use or
occupancy of the Property.
(n) Seller shall terminate and pay off all equipment leases with respect to the
Property and shall deliver to Purchaser at the Closing all equipment or other items leased
thereunder free and clear of all liens and encumbrances.
(o) Seller shall prior to the Closing obtain an estoppel certificate, in the form and
substance required by Purchaser’s lender and reasonably acceptable to Purchaser and dated no
earlier than thirty (30) days prior to the Closing Date, from each tenant under a Space
Lease and from any owner’s association to which the Property is subject.
(p) Seller shall within ten days after the Effective Date deliver to Purchaser a
supplement to Exhibits C and D listing, for each Space Lease and Hotel Contract set forth
thereon, (i) a brief description of (x) the space demised under each such Space Lease and
(y) the services or materials provided under each such Hotel Contract, (ii) the date on
which the current term of such Space Lease or Hotel Contract expires, (iii) a brief
description of any automatic renewal provisions in each such Space Lease or Hotel Contract
and (iv) the current monthly rent payable under each such Space Lease and the current
payments due under each Hotel Contract (on a monthly or quarterly basis, as applicable). To
the extent any equipment lease is listed on Exhibit D and is not identified as such on
Exhibit D as attached hereto, such supplement shall specifically identify such equipment
lease as an equipment lease.
5.05 Inspection Period. Purchaser and its representatives, employees, contractors and
agents shall have a period from the Effective Date through the close of business on the date (or,
if such date is not a business day, the next succeeding business day) forty-five (45) days after
the Effective Date (the “Inspection Period”) within which to undertake such inspections and
investigations of the Purchased Assets (including, but not limited to, engineering and
environmental studies, financial analysis, and feasibility studies) as Purchaser deems desirable to
evaluate the financial and physical condition of the Purchased Assets and such other matters that
Purchaser may deem relevant. If Purchaser shall, in its sole and absolute discretion, (x)
determine that the Purchased Assets or any matters related to the Purchased Assets or Purchaser’s
acquisition thereof are unsatisfactory in any respect, and/or (y) otherwise decide not to acquire
the Purchased Assets for any reason or no reason, then Purchaser may terminate this Agreement by
written notice (the “Termination Notice”) given to Seller prior to the close of
business on the last day of the Inspection Period. Upon the giving of the Termination Notice, this
Agreement shall terminate, Escrow Agent shall return the Deposit (less Fifty and no/100 Dollars
($50.00) to be disbursed to Seller as sole consideration hereunder) to Purchaser and neither party
to this Agreement shall thereafter have any further rights or liabilities under this Agreement.
5.06 Conditions Precedent to Purchaser’s Obligations. Purchaser’s obligation to close
the transactions set forth in this Agreement are conditioned upon the satisfaction of the following
conditions as of the Closing:
(a) Purchaser shall not have terminated this Agreement pursuant to Section 5.05 or any
other applicable provision of this Agreement.
(b) Seller’s representations and warranties set forth in this Agreement shall continue
to be true and accurate in all material respects (provided, furthermore, and notwithstanding
any provision of this Agreement to the contrary, it shall be a condition precedent to
Purchaser’s obligation to close the transactions set forth in this Agreement that each
representation and warranty of Seller which is limited to or by Seller’s knowledge be true
and correct as if it were not so limited).
(c) Seller shall have delivered all of the documents required under this Agreement and
performed all of its obligations under this Agreement in all material respects.
(d) There shall be no unpaid charges, judgments, debts, liabilities, claims, liens or
obligations which burden the Property other than the Permitted Exceptions other than such
items as Seller shall cause to be cured or removed at Closing.
(e) The Property shall on the Closing Date be in the same condition as on the
last day of the Inspection Period except as attributable to ordinary wear and tear.
(f) There shall have been no material adverse change in the condition or operations of
the Hotel from the last day of the Inspection Period through the date of Closing (which
change may include, but shall not be
limited to, the existence of violation of any Laws or the revocation or suspension of
any Permit or the right to operate the Hotel or any of its facilities).
(g) Purchaser shall as of the Closing have either (i) obtained Hilton’s consent to the
assumption by Purchaser of, and assumed, the Existing Franchise Agreement, or (ii) entered
into a franchise or license agreement with Hilton with respect to the Hotel, in either case
on terms satisfactory to Purchaser in Purchaser’s sole and absolute discretion. In no event
shall Purchaser be required to assume or have any liability or obligation under the Existing
Franchise Agreement for (x) any franchise or other fees under the Existing Franchise
Agreement accrued and unpaid with respect to all periods on or prior to the Closing Date or
(y) with respect to any monetary or other default under the Existing Franchise Agreement.
(h) Purchaser shall have obtained the transfer or the issuance of the Liquor License or
Seller and Purchaser shall have entered into the Interim Arrangement.
The conditions precedent set forth in this Section 5.06 are solely for the benefit of Purchaser and
may be waived only by Purchaser, which waiver may be granted or withheld by Purchaser in its sole
and absolute discretion. Without limiting and without prejudice to any of Purchaser’s other rights
or remedies under this Agreement in the event any such failure of condition is the result of or
arises out of Seller’s default under this Agreement, if any condition precedent to Purchaser’s
obligation to close the transactions set forth in this Agreement has not been satisfied as of the
Closing Date or waived by Purchaser, then Purchaser shall be entitled in its sole and absolute
discretion to terminate this Agreement by giving Seller and Escrow Agent written notice to such
effect, whereupon Escrow Agent shall return the Deposit to Purchaser and the parties shall
thereafter have no further rights or liabilities under this Agreement.
5.07 Conditions Precedent to Seller’s Obligations. Seller’s obligation to close the
transactions set forth in this Agreement are conditioned upon the satisfaction of the following
conditions as of the Closing Date:
(a) Purchaser’s representations and warranties set forth in this Agreement shall
continue to be true and accurate in all material respects.
(b) Purchaser shall have performed all of its obligations under this Agreement in all
material respects.
(c) Hilton shall have waived in writing its existing right to purchase the Property as
set forth in the Existing Franchise Agreement and Purchaser shall as of the Closing have
either (i) obtained Hilton’s consent to the assumption by Purchaser of, and assumed, the
Existing Franchise Agreement, or (ii) entered into a franchise or license agreement with
Hilton with respect to the Hotel, in either case on terms satisfactory to Purchaser in
Purchaser’s sole and absolute discretion.
The conditions precedent set forth in this Section 5.07 are solely for the benefit of Seller and
may be waived only by Seller, which waiver may be granted or withheld by Seller in its sole and
absolute discretion. Without limiting and without prejudice to any of Seller’s other rights or
remedies under this Agreement in the event any such failure of condition is the result of or arises
out of Purchaser’s default under this Agreement, if any condition precedent to Seller’s obligation
to close the transactions set forth in this Agreement has not been satisfied as of the Closing Date
or waived by Seller, then Seller shall be entitled in its sole and absolute discretion to terminate
this Agreement by giving Purchaser and Escrow Agent written notice to such effect, whereupon Escrow
Agent shall return the Deposit to Purchaser and the parties shall thereafter have no further rights
or liabilities under this Agreement.
VI.
Remedies
6.01 SELLER’S REMEDIES. IF PURCHASER DEFAULTS UNDER THIS AGREEMENT OR OTHERWISE FAILS
TO CLOSE THE TRANSACTIONS SET FORTH IN THIS AGREEMENT, FOR ANY REASON EXCEPT (A) THE FAILURE OF ANY
CONDITION PRECEDENT TO PURCHASER’S OBLIGATION TO CLOSE THE TRANSACTIONS SET FORTH IN THIS AGREEMENT
OR (B) PURCHASER’S TERMINATION OF THIS AGREEMENT IN ACCORDANCE WITH ITS TERMS, SELLER SHALL BE
ENTITLED AS ITS SOLE REMEDY UNDER THIS AGREEMENT TO TERMINATE THIS AGREEMENT AND RECOVER THE
DEPOSIT (IN ADDITION TO ATTORNEYS’ FEES PURSUANT TO SECTION 6.03 BELOW) AS LIQUIDATED DAMAGES AND
NOT AS A PENALTY, IN FULL SATISFACTION OF ANY CLAIMS AGAINST PURCHASER UNDER THIS AGREEMENT. IN
CONNECTION THEREWITH, SELLER WAIVES ITS RIGHT TO SEEK SPECIFIC PERFORMANCE OF THIS AGREEMENT FROM
PURCHASER. SELLER AND PURCHASER AGREE THAT THE SELLER’S DAMAGES RESULTING FROM PURCHASER’S DEFAULT
ARE DIFFICULT TO DETERMINE AND THE AMOUNT OF THE DEPOSIT IS A FAIR ESTIMATE OF THOSE DAMAGES. EACH
PARTY HEREBY WAIVES ANY AND ALL RIGHTS TO CONTEST THE VALIDITY OF THE FOREGOING LIQUIDATED DAMAGES
PROVISIONS FOR ANY REASON WHATSOEVER, INCLUDING, BUT NOT LIMITED TO, SUCH PROVISION BEING
UNREASONABLE UNDER CIRCUMSTANCES EXISTING ON THE EFFECTIVE DATE OR AT THE TIME OF DEFAULT.
6.02 PURCHASER’S REMEDIES. IF SELLER DEFAULTS UNDER THIS AGREEMENT, OR OTHERWISE
FAILS TO PERFORM ITS OBLIGATIONS UNDER THIS AGREEMENT FOR ANY REASON EXCEPT THE FAILURE OF ANY
CONDITION PRECEDENT TO SELLER’S OBLIGATION TO CLOSE THE TRANSACTIONS SET FORTH IN THIS AGREEMENT,
THEN PURCHASER’S SOLE REMEDIES SHALL BE: (A) TO TERMINATE THIS AGREEMENT BY GIVING SELLER WRITTEN
NOTICE OF SUCH ELECTION PRIOR TO OR AT CLOSING WHEREUPON (X) THE ESCROW AGENT SHALL PROMPTLY RETURN
TO PURCHASER THE DEPOSIT AND (Y) SELLER SHALL PAY TO PURCHASER ON DEMAND ALL OUT-OF-POCKET COSTS
(INCLUDING, BUT NOT LIMITED TO, DUE DILIGENCE COSTS AND REASONABLE ATTORNEYS’ FEES) INCURRED BY
PURCHASER IN CONNECTION WITH THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT;
(B) TO WAIVE THE DEFAULT AND CLOSE; OR (C) TO ENFORCE SPECIFIC PERFORMANCE OF THIS AGREEMENT.
6.03 Attorney’s Fees. In the event either party hereto is required to employ an
attorney because of the other party’s default, then the defaulting party shall pay the
nondefaulting party’s reasonable attorney’s fees incurred in the enforcement of this Agreement. The
provisions of this Section 6.03 shall be in addition to and not limited by the provisions of
Sections 6.01 and/or 6.02 above.
VII.
Closing Matters
7.01 Closing Date. The delivery of the conveyancing instruments with respect to the
Purchased Assets and other documents required hereunder (the “Closing”) shall be held at the Title
Company’s offices or by mail, or through escrow with the Escrow Agent, on the date thirty (30) days
after the expiration of the Inspection Period (provided that if such date is not a business day
then the Closing Date shall be the next succeeding business day) (the “Closing Date”), or such
earlier date as may be agreed to by Seller and Purchaser in their sole and absolute discretion.
7.02 Adjustment and Prorations. The matters and items set forth below shall be
apportioned between Seller and Purchaser or, where applicable, credited in total to a particular
party:
(a) Taxes. All real and personal property taxes and special assessments, if
any, whether payable in installments or not, shall be prorated as of the Cut-Off Time. If
such taxes for the tax year in which the Closing occurs have not been finally determined on
the Closing Date, then such taxes shall be prorated on an estimated basis using the most
current information available. When such taxes have been finally determined, the parties
shall recalculate such prorations and any amount payable by Seller or Purchaser shall be
paid to the other party within fifteen days after such taxes are finally determined. Seller
shall pay or cause to be paid, in accordance with Louisiana law and on or before the dates
the same are due, any sales and use taxes with respect to the Purchased Assets which arise
out of sales at the Property prior to the Closing Date.
(b) Room Rentals. One-half (50%) of the room rentals attributable to the night
prior to the Closing Date shall be the property of Seller and the remaining one-half (50%)
shall be the property of Purchaser. Room rentals attributable to any night prior to the
night prior to the Closing Date shall be the property of Seller.
(c) Reservation Deposits. Prepaid and unearned reservation deposits and other
items prepaid by guests of the Hotel shall be transferred to Purchaser at the Closing.
(d) Utility Charges. Utility charges for telephone, gas, electricity, sewer,
water and other services shall not be prorated to the extent that Seller can make
arrangements for the rendering of final bills based on meter readings as of the Cut-Off
Time. Seller shall be responsible for the payment at the Closing of all bills for utility
charges up to and including the Cut-Off Time. To the extent that utility bills cannot be
rendered as of the Closing Date, such charges for the period through the Cut-Off Time shall
be prorated as of the Cut-Off Time based upon the most recent available bills and readjusted
on the basis of the actual bills as and when received. Any utility deposits shall be either
returned to Seller or transferred to Purchaser and credited to Seller.
(e) Operating Expenses and Trade Accounts. Seller shall be responsible
for all operating expenses and trade accounts of the Property (including charges and fees
payable under the Hotel Contracts) up to and including the Cut-Off Time. To the extent the
amounts of such items are then known, Seller shall pay such items at Closing and shall pay
the balance of such amounts in the ordinary course of business but in no event later than 45
days after the Closing Date. Seller agrees to indemnify and hold Purchaser harmless from
and against any such amounts. Purchaser shall assume responsibility for purchase orders
made by Seller in the ordinary course of business for Expendables or Consumables not
delivered to the Hotel as of the Closing Date.
(f) Food, Beverage and Other Income. Revenues from food, beverage and banquet
services, room service, public room revenues, health club revenues and other services
rendered to guests of the Hotel shall be prorated as of the Cut-Off Time, if, as and when
collected, provided that with respect to food, beverage and banquet services, such revenues
shall be prorated as of the end of the employee shift on the night preceding the Closing.
(g) Rents. All rentals under the Space Leases (including fixed rents and
charges in respect of electricity, operating expenses and taxes) shall be prorated as of the
Cut-Off Time if, as and when collected. Payments from tenants for electricity, operating
expenses and taxes which are billed to tenants in arrears or on an estimated basis shall be
prorated on such basis and readjusted if, as and when such amounts are finally determined
and collected.
(h) Employees. Wages and fringe benefits (including, but not limited to,
accrued vacation pay) of Hotel Employees shall be paid or prorated as provided in Section
7.07.
(i) Security Deposits. Any security deposits under the Space Leases shall be
transferred to Purchaser at the Closing or credited against the Purchase Price.
(j) Cash. All cash on hand in house banks on the morning of the Closing Date
shall become the property of Purchaser and the amount thereof shall be credited to Seller.
(k) Ledger and other receivables. All accounts receivable attributable to
guests in the Hotel on the night preceding the Closing (the “Ledger”) shall be prorated as
provided in this Agreement, Seller’s share shall be
credited to Seller and the Ledger shall become the property of Purchaser. All other
accounts receivable that are the property of Seller under this Agreement shall be set forth
in a schedule on the Closing Date and shall remain the property of Seller. Purchaser shall
have no obligation to collect such accounts receivable, but shall cooperate with Seller, at
Seller’s cost, in reasonable respects in connection with any collection efforts. If any
receivables which are the property of Seller under this Agreement shall be collected by
Purchaser, Purchaser shall remit the same to Seller within 90 days after the Closing Date,
provided that Purchaser may offset against such collections any amounts unpaid by Seller
under Section 7.02(e).
(l) Gift Certificates. On the Closing Date, Seller will provide Purchaser with a
complete schedule of all outstanding (i) gift certificates, donations and other similar
obligations which have been distributed by Seller and (ii) trade credits, trade-out or
barter arrangements payable by Seller to any other party for services rendered in the past
or to be rendered in the future. Purchaser shall receive a credit at Closing for all
obligations of Seller pursuant to any trade-out or barter arrangements with any other party
with respect to the Hotel. In addition, Purchaser shall receive a credit at Closing for the
value of any outstanding gift certificates, donations or other similar obligations with
respect to the Hotel which have been distributed by Seller prior to Closing. Seller shall
indemnify, defend, and hold Purchaser harmless against any liability arising prior to the
Closing Date out of or with respect to any such trade-out or barter arrangements and any
such gift certificates, donations or other similar obligations not credited to Purchaser at
Closing.
(m) Consumables and Expendables. Seller shall not receive a credit for any item of
Consumables, Furnishings or Expendables.
(n) Prepaid Advertising. Seller shall not receive a credit for any
prepaid advertising.
(o) Delayed Adjustments. If at any time following the Closing Date the amount of an
item listed in this Section 7.02 shall prove to be incorrect, the party in whose favor the
error was made shall pay to the other party within fifteen (15) days after request the sum
necessary to correct such error upon receipt of proof of such error, provided that such
proof is delivered to the party from whom payment is requested on or before sixty (60) days
after the Closing Date. The acceptance of the closing statement by either party shall not
prevent later readjustment pursuant to this Section. After the Closing Date, each party
shall have reasonable access to the books and records of the other party with respect to all
matters set forth in this Section 7.02 for the purposes of determining the accuracy of all
adjustments and the performance of the obligations of the parties under this Section.
7.03 Guest Property in Seller’s Possession on Closing Date. Property of guests of the
Hotel in Seller’s care, possession or control (excluding that in guest rooms) on the Closing Date
shall be handled in the following manner:
(a) Safe Deposit Boxes. On the Closing Date, Seller shall cause notice to be
sent to all guests of the Hotel who have safe deposit boxes advising them of the pending
sale of the Property and requesting the removal and verification of the contents of such
safe deposit boxes within three days after the Closing Date. Seller may have a
representative present at the Hotel during such three-day period for the purpose of viewing
such removal and verification. Boxes of guests not responding to the written notice shall
be listed at the end of such three day period. Such boxes shall be opened on the following
day in the presence of representatives of Seller and Purchaser to be agreed upon between
Seller and Purchaser and the contents thereof shall be recorded. Any property contained in
the safe deposit boxes and so recorded and thereafter remaining in the hands of Purchaser
shall be the responsibility of Purchaser; and Purchaser hereby agrees to indemnify and save
and hold Seller harmless from and against any claim or obligation arising out of or with
respect to such property.
(b) Baggage Inventory. All guest baggage checked and left in the possession,
care and control of Seller shall be listed in an inventory to be prepared in duplicate and
signed by Seller’s and Purchaser’s representatives on the Closing Date. Purchaser shall be
responsible from and after the Closing Date for all
baggage listed in inventory, and Purchaser hereby agrees to indemnify and save and hold Seller harmless from and against any
claim arising out of or with respect to the baggage listed in the inventory.
(c) Other Property. All other guest property left in the possession, care or
control of Seller prior to the Closing Date shall be returned by Seller to guests prior to
the Closing Date and if not so returned prior to the Closing Date shall be the sole
responsibility of Seller subsequent to the Closing Date.
7.04 Closing Documents.
(a) At Closing, Seller shall deliver or cause to be delivered to Purchaser the following:
(i) an Act of Sale in the form attached to this Agreement as Exhibit F conveying the
fee estate in the Property to Purchaser subject only to the Permitted Exceptions.
(ii) an owner’s policy of title insurance issued by the Title Company in the amount of
the Purchase Price meeting the requirements of the commitment as provided in Article IV, and
containing such affirmative coverage and endorsements as Purchaser shall reasonably request.
(iii) a warranty xxxx of sale transferring to Purchaser all of the Furnishings,
Expendables, Consumables and other tangible personal property free of all liens and
encumbrances.
(iv) an assignment conveying and transferring to Purchaser all of the Bookings, Books
and Records, Space Leases, assignable Permits and Hotel Contracts, Miscellaneous Personal
Property and Warranties, and containing an indemnity by Seller benefiting Purchaser with
respect to matters arising under the Bookings, Books and Records, Space Leases, assignable
Permits and Hotel Contracts, Miscellaneous Personal Property and Warranties prior to the
Closing Date.
(v) an appropriate instrument executed by Seller and other necessary parties pursuant
to which any existing management agreement will be terminated as of the Cut-off Time.
(vi) possession of the Property.
(vii) a certified copy of such corporate or partnership authorizations, approvals and
incumbencies of Seller as Purchaser or the Title Company shall reasonably require.
(viii) a FIRPTA Affidavit in form required by the Internal Revenue Service.
(ix) all Books and Records relating to the Property and the Hotel in Seller’s
possession.
(x) any and all plans and specifications for the Improvements on the Property in
Seller’s possession.
(xi) the certificate of occupancy with respect to the Property.
(xii) such notices of the sale to third parties as may be reasonably requested by the
Purchaser.
(xiii) such affidavits, indemnities and related matters as the Title Company may
reasonably request including without limitation such affidavits and indemnities as may be
required to permit the Title Company to delete any exceptions for mechanic’s liens.
(xiv) tax clearance certificates from the applicable regulatory authorities.
(xv) such transfer and sales tax returns as may be required by law to be executed by
Seller.
(b) Purchaser shall deliver or cause to be delivered to Seller the following:
(i) the balance of the Purchase Price.
(ii) such corporate or partnership authorizations, approvals and incumbencies as Seller
or the Title Company shall reasonably require.
(iii) an assumption of the obligations of Seller from and after the Closing under the
Bookings, the Space Leases, and Hotel Contracts, and containing an indemnity by Purchaser
benefiting Seller with respect to matters arising under the Bookings, the Space Leases, and
Hotel Contracts prior to the Closing Date.
(iv) such transfer and sales tax returns as may be required by law to be executed by
Purchaser.
7.05 Closing Costs.
(a) Purchaser shall pay (i) the premiums for the Title Policy, (ii) the costs of its
due diligence investigation of the Purchased Assets, (iii) all amounts incurred in
connection with the issuance of a new franchise agreement or license agreement for the
Hotel, including, but not limited to, application fees, transfer fees, and costs of
implementing a property improvement plan (but specifically excluding any cost of terminating
the Existing Franchise Agreement), (v) any costs to obtain the Liquor License, (vi) one-half
of the escrow fees, if any, of the Escrow Agent and (vi) the fees and disbursements of
Purchaser’s attorneys.
(b) Seller shall pay (i) any parish or city transfer taxes, deed stamps, documentary
stamps, recording fees and the like imposed in connection with the conveyance of the
Property, (ii) all sales taxes payable in connection with the transactions set forth in this
Agreement, (iii) the cost of the Survey, (iii) any costs of terminating the Existing
Franchise Agreement and any property management agreement affecting the Hotel, (v) one-half
of the escrow fees, if any, of the Escrow Agent and (vi) the fees and disbursements of
Seller’s attorneys.
(c) Any other closing cost not specifically allocated by this Agreement shall be
allocated in accordance with closing customs for similar properties in Baton Rouge,
Louisiana.
(d) The provisions of this Section 7.05 shall survive the Closing or any termination of
this Agreement.
7.06 Real Estate Commissions. Seller and Purchaser each represent and warrant to the
other that it has not dealt with any broker in the negotiation of this transaction other than The
Lodging Group, Inc. (the “Broker”). Each party agrees to and does hereby indemnify and hold the
other harmless against the payment of any brokerage commission to any person or entity claiming by,
through or under Seller or Purchaser, as applicable. Seller shall pay the commission of Broker
pursuant to separate agreement. The provisions of this Section 7.06 shall survive the Closing.
7.07 Staff. Seller shall terminate or arrange for the termination of
all Hotel Employees as of the Closing Date and shall pay all wages and fringe benefits, including,
but not limited to, accrued vacation and sick pay (whether earned or not) and payroll taxes,
through the Closing Date. Purchaser shall hire, subject to its standard interview and
qualification procedures, criteria and staffing guidelines, the Hotel Employees employed in
non-managerial capacities, which such Hotel Employees shall at or in connection with the Closing be
offered the standard health and fringe benefit package provided by Interstate Management Company,
as operator of the Hotel after the Closing, to the majority of its other hotel employees in the
area of the Hotel. If Purchaser or its management company shall rehire any of such Hotel
Employees pursuant to the foregoing sentence or otherwise, then such wages and fringe benefits
shall be
apportioned as of the Cut-off Time. Seller will indemnify and hold Purchaser harmless
from and against any loss, damage, liability, claim, cost or expense (including, without
limitation, reasonable attorney’s fees) that may be incurred by, or asserted against, Purchaser
after Closing which involves any matter relating to a past or present Hotel Employee concerning
acts or omissions occurring prior to the Closing Date. Notwithstanding the foregoing, Purchaser
agrees to indemnify and hold Seller harmless from and against any loss, damage, liability, claim,
cost or expense (including, without limitation, reasonable attorney’s fees) that may be incurred
by, or asserted against, Seller arising out of or relating to Purchaser’s or Seller’s failure, if
any, to comply with the Worker
Adjustment Retraining and Notification Act (the “WARN
Act”) with respect to the
Hotel Employees and arising out of or in connection with the transactions contemplated by this
Agreement. Seller agrees not to give any termination notices under the WARN Act to its Hotel
Employees without the prior written consent of Purchaser, which consent may be withheld in
Purchaser’s sole and absolute discretion.
7.08 Indemnities. (a) Purchaser shall indemnify, defend and hold Seller harmless
from any and all actual costs, loss, damages (excluding consequential and punitive damages) or
expenses (including without limitation reasonable attorneys’ fees) incurred by Seller with respect
to the breach by Purchaser of any provision of this Agreement which survives the Closing and,
except as may be the obligation of Seller pursuant to an express provision of this Agreement, the
existence, use, ownership, occupancy, operation and/or maintenance of the Property arising from
acts, commissions, omissions, occurrences or other matters that occur from and after the Closing.
(b) Seller shall indemnify, defend and hold Purchaser harmless from any and all actual costs,
loss, damages (excluding consequential and punitive damages) or expenses (including without
limitation reasonable attorneys’ fees) incurred by Purchaser with respect to the breach of any
provision of this Agreement by Seller which survives the Closing and, except as may be the
obligation of Purchaser pursuant to an express provision of this Agreement, the existence, use,
ownership, occupancy, operation and/or maintenance of the Property arising from acts, commissions,
omissions, occurrences or other matters that occur prior to the Closing.
7.09 Survival. The provisions of Article VII shall survive the Closing.
VIII.
Condemnation and Risk of Loss
8.01 Condemnation. If, prior to Closing, any governmental authority or other entity
having condemnation authority shall institute an eminent domain proceeding or take any steps
preliminary thereto (including the giving of any direct or indirect notice of intent to institute
such proceedings) with regard to the Property, and the same is not dismissed on or before ten (10)
days prior to Closing, Purchaser shall be entitled either to terminate this Agreement upon written
notice to Seller or to waive such right of termination and receive all such condemnation proceeds
or an assignment thereof at the Closing. In the event Purchaser elects to terminate this Agreement
under this Section 8.01, Escrow Agent shall promptly return to Purchaser the Deposit and neither
party to this Agreement shall thereafter have any further rights or obligations hereunder.
8.02 Risk of Loss. Until Closing, Seller shall bear the risk of loss should there be
damage to any of the Improvements by fire or other casualty. If prior to the Closing any of the
improvements shall be damaged by fire or other casualty, Seller shall take all action necessary to
preserve and protect the Improvements from further loss or damage, and within ten (10) business
days after such loss deliver to Purchaser the following items (collectively “Casualty Loss
Information”): (a) copies of all casualty and business interruption policies relating to the
Property; (b) the names, addresses and telephone numbers of the adjustors assigned to adjust the
loss; (c) letters addressed to each insurance company issuing a policy covering such loss and
executed by Seller authorizing said company and its adjustors to discuss all matters relating to
such loss with purchaser, its agents and attorneys; and (d) a detailed written description of the
damages incurred and an estimate of the cost of restoration. If the Improvements suffer material
damage by a casualty, which, for the purpose of this Agreement, shall mean damage in excess of
$300,000 or damage of a lesser amount to any area of the Hotel necessary for the day to day
operation of the Hotel that cannot reasonably be expected to be repaired within ten business days,
Purchaser may within five business days after delivery of the Casualty Loss Information either:
| (a) | terminate this Agreement by delivering written notice of same to Seller, in which event Escrow Agent shall promptly return to Purchaser the Deposit and neither party to this Agreement shall thereafter have any further rights or obligations hereunder; or | ||
| (b) | waive its right of termination, by delivering written notice of same to Seller, and proceed to close this transaction in accordance with the terms hereof. |
At Closing, (i) all insurance proceeds received prior to Closing shall be delivered to Purchaser at
Closing, (ii) Purchaser and Seller shall each notify all appropriate insurance companies of
Purchaser’s interest in the insurance proceeds, (iii) all casualty insurance proceeds payable
as a result of the loss and Purchaser’s pro rata share of any rental or business loss proceeds
shall be assigned to Purchaser at Closing and in such event Purchaser as a condition precedent to
its obligation to close the transactions set forth in this Agreement shall have received the
written recognition of and consent to such assignment (as well as to any assignment of such
proceeds from Purchaser to Purchaser’s lender) from the applicable insurance company or companies,
in form and content reasonably acceptable to Purchaser and acceptable to Purchaser’s lender, and
(iv) Purchaser shall receive a credit against the Purchase Price in the amount of any applicable
deductible or self-insured amounts.
IX.
Miscellaneous
9.01 Entire Agreement. This Agreement contains the entire agreement of the parties
hereto. There are no other agreements, oral or written, and this Agreement can be amended only by
written agreement signed by Seller and Purchaser.
9.02 Binding Effect; Assignment. This Agreement shall inure to the benefit of and be
binding upon the heirs, personal representatives, successors and assigns of each of the parties to
this Agreement. Purchaser may assign its rights under this Agreement without Seller’s consent to
(i) any successor of Purchaser or its direct or indirect parent entity or entities by merger,
reorganization or sale of assets; (ii) any entity directly or indirectly controlling, controlled by
or under common control with Purchaser or such successor or entity, (iii) any partnership or
limited liability company in which Purchaser, or any entity directly or indirectly controlling,
controlled by or under common control with Purchaser, is a partner or limited liability company
member, (iv) any entity in which Purchaser, or any entity which is a permitted assignee under any
of the foregoing clauses (i), (ii) or (iii), owns, directly or indirectly, an economic interest, or
(v) any other entity provided that such entity enters into (x) a sublease of the entire Property
with Purchaser or any entity to whom this Agreement could have been assigned under clauses (i),
(ii) or (iii) above and/or (y) a management agreement with respect to the entire Property with
Interstate Management Company, LLC or its successors or assigns; provided, however, that no such
assignment shall relieve Purchaser of its obligations hereunder. Except as set forth in the
foregoing sentence, Purchaser may assign its rights under this Agreement to any other entity only
with the prior consent of Seller which shall not be unreasonably withheld or delayed.
9.03 Notices. Any notice, communication, request, reply or advice (collectively,
“Notice”) provided for or permitted by this Agreement to be made or accepted by either party must
be in writing except as otherwise provided in this Agreement. Written Notice shall be delivered by
overnight courier or by facsimile transmission. Notice by overnight courier shall be effective one
(1) business day after deposit with the courier service. Notice given by facsimile transmission
shall be effective on the business date delivered. For the purposes of Notice, the addresses of
the parties shall be:
| Seller: | Xxxxxx Place Hotel, LLC | ||||||
| Attn: | |||||||
| Fax No.: | |||||||
| with copy to: | Xxxxxxx X. Xxxxxxx, Esq. | ||||||
| Fax. No: | |||||||
| Purchaser: | 0000 X. Xxxxxxx Xxxxxxxxx | ||||||
| Xxxxxxxxx, XX 00000 | |||||||
| Attn: Xxxxxxxxxxx X. Xxxxxxx, Esq. | |||||||
| Fax No.: 000-000-0000 | |||||||
| with copy to: | XxXxxxx, Diamond & Ash | ||||||
| Attn: | |||||||
| Fax No.: | |||||||
The parties shall have the right from time to time to change their respective addresses for notice
by at least five days’ written notice to the other party.
9.04 Governing Law. This Agreement shall be construed in accordance with the laws of
the State of Louisiana.
9.05 Section Headings. The section headings contained in this Agreement are for
convenience only and shall in no way enlarge or limit the scope or meaning of the various and
several sections of this Agreement.
9.06 Obligations. To the extent necessary to carry out the terms and provisions of
this Agreement, the terms, conditions, warranties, representations, obligations, indemnities and
rights set forth in this Agreement shall not be terminated at the time of Closing, nor will they
merge into the various documents executed and delivered at the time of Closing.
9.07 Counterparts; Facsimile Transmission. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of which together shall
constitute one and the same instrument. Executed counterparts of this Agreement exchanged by
facsimile transmission shall be fully enforceable.
9.08 No Third-Party Beneficiaries. Seller and Purchaser agree that there are no third
parties who are intended to benefit from or who are entitled to rely on any of the provisions of
this Agreement. No third party shall be entitled to assert any claims or to enforce any rights
whatsoever pursuant to this Agreement. The covenants and agreements provided in this Agreement are
solely for the benefit of Seller and Purchaser and their permitted successors and assigns
respectively.
9.09 Contract Construction. In the event of litigation between the parties hereto this
Agreement shall not be construed against any party on the basis of which party’s counsel drafted
this Agreement.
9.10 Saturdays, Sundays, Legal Holidays. If the time period by which any right,
option, or election provided under this Agreement must be exercised or by which any acts or
payments required hereunder must be
performed or paid, or by which any notice must be given, or by
which the Closing must be held, expires on a Saturday, Sunday, legal or bank holiday, then such
time period shall be automatically extended to the next regularly scheduled business day.
9.11 Confidentiality. (a) Purchaser and Seller agree that any materials provided by
Seller in the course of Purchaser’s investigations of the Property, other than materials which are
otherwise available to the public, shall be treated as confidential information by Purchaser and
its agents, employees and representatives, and shall not be disclosed by Purchaser or such parties,
except disclosures required by law to be made to Purchaser’s lenders (or prospective lenders),
investors (or prospective investors), underwriters, accountants, attorneys, engineers and other
professionals who need to know such information in connection with making a loan to, sponsoring an
offering for or otherwise advising Purchaser, or as may be required by law, litigation or court
order, or in connection with the offering of securities or by any applicable rule, regulation or
requirement of the New York Stock Exchange. Purchaser may however make appropriate disclosures
to its investors and lenders and to its and their respective attorneys, accountants and consultants
engaged in connection with this transaction or to such other persons or entities to which
disclosure is legally required.
(b) If Purchaser does not acquire the Property for any reason whatsoever, Purchaser shall
deliver to Seller promptly upon demand at no cost to Seller, all materials and documents previously
obtained by Purchaser from Seller (with no retention by Purchaser of copies of any such materials
and documents).
(c) Prior to the Closing, neither party shall, without the prior written consent of the other
party (which consent shall not be unreasonably withheld), issue any press release or other public
statement (except such statements as may be required by law) in connection with the transactions
contemplated hereby. From and after the Closing, the parties may issue such a press release or
other public statement provided that the same does not describe the economic terms of this
transaction except to the extent required by law.
(d) Each party is authorized to disclose the tax treatment and tax structure of the
transactions set forth in this Agreement.
(e) Notwithstanding any provision in this Agreement to the contrary, this Section shall
survive the expiration or termination of this Agreement for one (1) year or, if the Closing shall
occur, shall expire and terminate as of the Closing Date except for the provisions of Section
9.11(c) and (d) above, which shall survive the Closing.
9.12 Bulk Transfers. Seller and Purchaser specifically waive compliance with the Uniform
Commercial Code of the State in which the Property is located with respect to bulk transfers, with
any similar provision under any applicable law of such State or the county and city in which the
Property is located. In the event such waiver is ineffective, Seller shall indemnify Purchaser for
any claims made by creditors under the applicable bulk sales laws relating solely to any
pre-Closing payment obligations to such creditors and only in the amount of the payments due such
creditors. The provisions of this Section 9.12shall survive the Closing.
9.13 Exclusivity. From the Effective Date through the Closing or the earlier termination of
this Agreement, Seller shall (i) discontinue any marketing activities with respect to the Property
and any current negotiations for the sale or lease of the Property with any party other than
Purchaser, (ii) not enter into any new marketing activities with respect to the Property or any
negotiations with any third parties for the sale or lease of the Property, and (iii) not solicit or
accept any offers from third parties with respect to the sale or lease of the Property.
IN WITNESS WHEREOF, Seller and Purchaser have executed this Agreement as of the year and date
first written above.
XXXXXX PLACE HOTEL, LLC, an Arkansas limited liability company
By: |
/s/ XXXXXXX X. XXXXXXX | |||
Name:
|
||||
Title: |
Authorized Member |
INTERSTATE OPERATING COMPANY, L.P., a Delaware limited partnership
| By: | Interstate Hotels & Resorts, Inc., a Delaware corporation, general partnership | |||||
| By: | /s/ XXXXXXXXXXX X. XXXXXXX | |||||
| Name: | ||||||
| Title: | Senior Vice President and General Counsel | |||||
AMENDMENT TO AGREEMENT OF SALE AND PURCHASE
THIS AMENDMENT TO AGREEMENT OF SALE AND PURCHASE (“Amendment”) is made as of
April 21, 2006, between XXXXXX PLACE HOTEL, LLC (“Seller”) and INTERSTATE OPERATING COMPANY, L.P.
(“Purchaser”).
WHEREAS:
A. Seller and Purchaser entered into that certain Agreement of Sale and Purchase
(the “Agreement”), dated as of March 10, 2006, relating to the property known as the Hilton
garden Inn — Baton Rouge.
B. Seller and Purchaser desire to amend the Agreement as set forth in this
Amendment.
NOW, THEREFORE, Seller and Purchaser agree as follows:
1. The “Inspection Period” (as defined in Section 5.05 of the Agreement) is hereby
extended by twenty-one (21) days and shall expire on May 15, 2006.
2. As amended hereby, the Agreement is ratified and shall remain in full force and
effect.
IN WITNESS WHEREOF, the parties have executed and delivered this Amendment as of the date
first written above.
XXXXXX PLACE HOTEL, LLC, an Arkansas limited liability company
By: |
/s/ XXXXXXX X. XXXXXXX | |||
Name: |
Xxxxxxx X. Xxxxxxx | |||
Title: |
Authorized Member |
INTERSTATE OPERATING COMPANY, L.P., a Delaware limited partnership
By: Interstate Hotels & Resorts, Inc., a Delaware corporation, general partnership
| By: | /s/ XXXXXXXXXXX X. XXXXXXX | |||||
| Name: | Xxxxxxxxxxx X. Xxxxxxx | |||||
| Title: | Senior Vice President and General Counsel |
SECOND AMENDMENT TO AGREEMENT OF SALE AND PURCHASE
THIS SECOND AMENDMENT TO AGREEMENT OF SALE AND PURCHASE (“Amendment”) is made as of May 10,
2006, between XXXXXX PLACE HOTEL, LLC (“Seller”) and INTERSTATE OPERATING COMPANY, L.P.
(“Purchaser”).
WHEREAS:
A. Seller and Purchaser entered into that certain Agreement of Sale tad Purchase (as
amended, the “Agreement”), dated as of March 10, 2006, and amended by Amendment dated
April 21, 2006, relating to the property known as the Hilton
Garden Inn — Baton Rouge.
B. Seller and Purchaser desire to amend the Agreement as set forth in this
Amendment.
NOW,
THEREFORE, Seller and Purchaser agree as follows:
1. The “Inspection Period” (as defined in Section 5.05 of the Agreement) is hereby
extended for seven (7) days and shall expire on May 22,
2006.
2. The “Purchase Price” (as defined in Section 2.01 of the Agreement) is hereby
reduced by the amount of One Hundred Thousand Dollars ($100,000) and shall be Fourteen
Million Four Hundred Thousand Dollars ($14,400,000).
3. As
amended hereby, the Agreement is ratified and shall remain in full force and
effect.
IN WITNESS WHEREOF, the parties have executed and delivered this Amendment as of the date
first written above.
XXXXXX PLACE HOTEL, LLC, an Arkansas limited liability company
By:
|
/s/ XXXXXXX X. XXXXXXX | |||
Name:
|
Xxxxxxx X. Xxxxxxx | |||
Title:
|
Authorized Member |
INTERSTATE OPERATING COMPANY, L.P., a Delaware limited partnership
By: Interstate Hotels & Resorts, Inc., a Delaware corporation, general partnership
| By: | /s/ XXXXX X. XXXXXXXXXXXX | |||||
| Name: | Xxxxx X. Xxxxxxxxxxxx | |||||
| Title: | Vice President Human Resources and Senior Corporate Counsel | |||||
