PURCHASE AND SALE AGREEMENT
Exhibit 10.132
THIS PURCHASE AND SALE AGREEMENT (this “Agreement”) is made and entered into as of April 3,
2006 by and between MARRIOTT HOTEL SERVICES, INC., a Delaware corporation, (the “Seller”) and CNL
DRR INVESTOR, LP, a Delaware limited partnership (the “Purchaser”), which together constitute the
“Parties”.
RECITALS:
WHEREAS, the Seller and Purchaser are parties to that certain Limited Liability Company
Agreement (the “LLC Agreement”), dated December 21, 2000, for Desert Ridge Resort Partners, LLC, a
Delaware limited liability company (“Company”); and
WHEREAS, the Seller owns a TEN AND 16/100 PERCENT (10.16%) membership interest in the Company
and has agreed to sell to the Purchaser its entire membership interest in the Company, including,
without limitation, all of its rights to management in the Company distributions, tax allocations,
capital accounts, and equity interests (in the aggregate called the “Interest”), pursuant to the
terms of this Agreement; and
WHEREAS, Company owns all of the equity of DRR Junior Mezz, LLC, a Delaware limited liability
company (“Junior Mezz Borrower”), which owns all of the equity of DRR Senior Mezz, LLC, a Delaware
limited liability company (“Senior Mezz Borrower”), which in turn owns all of the equity of Desert
Ridge Resort, LLC, a Delaware limited liability company (“Owner”) which owns the fee interest in
the JW Marriott Desert Ridge Resort (the “Resort”); and
WHEREAS, an appraisal (“Appraisal”) was conducted by HVS International (“Appraiser”) in March
2005 in connection with the closing of the Owner’s refinancing of its outstanding debt, which
appraised the stabilized value of the Resort at FOUR HUNDRED SIXTEEN MILLION SIX HUNDRED THOUSAND
DOLLARS ($416,600,000) (the “Appraised Value”); and
WHEREAS, the Purchase Price (as defined below) for the Interest represents TEN AND 16/100
PERCENT (10.16%) of the Appraised Value less THREE HUNDRED MILLION DOLLARS ($300,000,000) of
existing debt (such net appraised value is hereafter referred to as “Resort Value”); and
WHEREAS, the Appraiser is independent of the Seller and the Purchaser, and the Purchase Price
(as defined below) of the Interest, including Seller’s direct and indirect interest in Junior Mezz
Borrower, Senior Mezz Borrower and Owner, equals a pro-rated portion of the Resort Value. The
parties agree that the Purchase Price is a negotiated price that constitutes fair value for the
Interest; and
WHEREAS, the Purchaser is making this Agreement without any contingency for outside financing
of the Closing Payment (as defined below); and
WHEREAS, this Agreement contains the entire understanding of the Parties regarding the
purchase of the Interest by the Purchaser and the sale of the Interest by the Seller.
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AGREEMENT
NOW, THEREFORE, for and in consideration of the foregoing premises, the mutual covenants and
agreements set forth below, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by each of the Parties, the Parties agree as follows:
ARTICLE 1
RECITALS
1.1 Incorporation of Recitals. The Parties hereby acknowledge and agree that the
foregoing recitals are true and correct and incorporated into this Agreement by this reference.
ARTICLE 2
DEFINITIONS
2.1 As used in this Agreement, the following terms shall have the respective meanings set
forth below and other defined terms shall have the meaning as set forth elsewhere in this
Agreement:
“45.84% Interest” means the 45.84% Class A membership interest owned by Desert Ridge Resort,
Ltd., a Florida limited partnership, in the Company.
“Affiliates” of any Person means (a) any other Person which (i) directly or indirectly, owns
more than forty-nine percent (49%) of the beneficial or equity interests in such Person or (ii)
directly or indirectly, is in control of, is controlled by or is under common control with, such
Person; or (b) any other Person who is a director or officer of (i) such Person, (ii) any
subsidiary of such Person, or (iii) any Person described in clause (a) above.
“Agreed Adjustment Amount” shall have the meaning specified in Section 7.2.
“Applicable Laws” means the laws of Delaware.
“Appraisal” shall have the meaning specified in the Recitals.
“Carveout Guaranties” means the Mortgage Carveout Guaranty and the Senior Mezz Carveout
Guaranty.
“CHP” means CNL Hospitality Partners, LP, a Delaware limited partnership.
“Closing Documents” means (i) an assignment (the “Assignment”) of the Interest to be executed
by Seller in favor of Purchaser, in the form attached hereto as Exhibit A, (ii) a FIRPTA
Certificate to be executed by Seller, and (iii) a Closing Statement to be executed by both Parties
and such other documents and certificates as are customary for transactions of this nature and
approved by Seller and Purchaser in their sole, good faith discretion.
“Closing Payment” shall have the meaning specified in Section 3.3.
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“Company” shall have the meaning specified in the Recitals.
“Current Fiscal Year” means the Fiscal Year of the Company in which the Closing Date occurs.
“Deductible” shall have the meaning specified in Section 11.5.
“Deemed Annual Discretionary Cash Flow” shall equal $15,437,379.00.
“Deemed Discretionary Cash Flow” shall have the meaning specified in Section 7.2.
“Deemed Working Capital Amount” shall equal $10,321,930.00.
“Deposit” shall have the meaning specified in Section 3.4.
“Diligent Efforts” shall have the meaning specified in Section 3.4.
“Distributions” shall have the meaning specified in the LLC Agreement.
“Escrow Agent” means Lowndes, Drosdick, Doster, Xxxxxx & Xxxx, P.A.
“Fiscal Year” shall have the meaning specified in the Management Agreement.
“Hotel” shall mean the hotel building that is part of the Resort.
“Indemnity” shall have the meaning specified in Section 10.1.
“Interest” shall have the meaning specified in the Recitals.
“Knowledge of Seller” or similar phrases shall mean the actual knowledge of Xxxxxxx Xxxxxxx.
“LLC Agreement” shall have the meaning specified in the Recitals.
“LFL Lender” means Marriott International Capital Corporation, a Delaware corporation. The
LFL Lender is the holder of the security interest in the 100% ownership interest which the Company
owns in the Junior Mezz Borrower and the 100% ownership interest which the Junior Mezz Borrower
owns in the Senior Mezz Borrower.
“Management Agreement” shall mean that certain Management Agreement by and between Manager and
DRR Tenant Corporation dated as of December 21, 2000, as amended from time to time.
“Manager” means Marriott International, Inc., a Delaware corporation.
“Mortgage Carveout Guaranty” means that certain Guaranty (Exceptions to Nonrecourse
Liability), dated as of June 15, 2005, in favor of Mortgage Lender, by CHP and Seller, as amended.
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“Mortgage Debt” means the principal amount outstanding under that certain Loan Agreement
(Floating Rate) between Owner and Mortgage Lender, dated as of June 15, 2005, as amended. The
outstanding principal balance of the Mortgage Debt on the date of this Agreement is $270,000,000.
“Mortgage Lender” means Barclays Capital Real Estate Inc. or any subsequent holder of the
Mortgage Debt.
“Outside Date” shall have the meaning specified in Section 4.1.
“Parties” shall have the meaning specified in the Recitals.
“Person” means an individual, corporation, trust, association, unincorporated association,
estate, partnership, joint venture, limited liability company or other legal entity, including a
governmental entity.
“Purchase Price” shall have the meaning specified in Section 3.3.
“Purchaser” shall have the meaning specified in the Recitals.
“Purchaser Default” shall have the meaning specified in Section 11.2.
“Releases” means (i) an unconditional release executed by Mortgage Lender (“Barclays
Release”), in form reasonably satisfactory to Seller, releasing Seller from all of its obligations
under the Mortgage Carveout Guaranty, and (ii) an unconditional release executed by Senior Mezz
Lender (“Marriott Release”), in form reasonably satisfactory to Seller, releasing Seller from all
of its obligations under the Senior Mezz Carveout Guaranty.
“Required Consents” means, collectively, the consent to the sale of the Interest given by (i)
the Mortgage Lender (“Barclays Consent”), (ii) the Senior Mezz Lender (“Senior Mezz Lender
Consent”), (iii) the LFL Lender (“LFL Consent”) and (iv) the Manager (“Manager Consent”).
“Seller” shall have the meaning specified in the Recitals.
“Seller Default” shall have the meaning specified in Section 11.1.
“Senior Mezz Carveout Guaranty” means that certain Guaranty (Exceptions to Nonrecourse
Liability), dated as of June 15, 2005, in favor of Senior Mezz Lender, by CHP and Seller, as
amended.
“Senior Mezz Debt” means the principal amount outstanding under that certain Mezzanine Loan
Agreement (Floating Rate) between Senior Mezz Borrower and Barclays Capital Real Estate Inc., dated
as of June 15, 2005, as amended. The outstanding principal balance of the Senior Mezz Debt on the
date of this Agreement is $30,000,000.
“Senior Mezz Lender” means Barclays Capital Real Estate Inc. or any subsequent holder of the
Senior Mezz Debt.
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ARTICLE 3
SALE OF INTEREST
3.1 Sale of Interest. The Seller hereby agrees to sell to the Purchaser, and the
Purchaser hereby agrees to purchase from the Seller, the Interest pursuant to the terms and
conditions set forth herein.
3.2 Effective Date. The effective date (“Effective Date”) of the purchase and sale of
the Interest hereunder will be the date of the closing and transfer of the Closing Payment (as
defined below) from the Purchaser to the Seller (“Closing”).
3.3 Purchase Price. The aggregate purchase price (“Purchase Price”) for the Interest
to be purchased hereunder is ELEVEN MILLION EIGHT HUNDRED FORTY-SIX THOUSAND FIVE HUNDRED AND SIXTY
DOLLARS ($11,846,560). In addition to the Purchase Price, Purchaser shall pay to Seller the Agreed
Adjustment Amount, as determined in accordance with Section 7.2. The total amount payable
by Purchaser at Closing (the “Closing Payment”) shall be the sum of the Purchase Price and the
Agreed Adjustment Amount.
3.4 Deposit. During the fifteen (15) day period following the execution and delivery
of this Agreement by Seller and Purchaser, Purchaser shall use diligent and commercially reasonable
good faith efforts (“Diligent Efforts”) to obtain the Barclays Consent and the Senior Mezz Lender
Consent. If Purchaser does not obtain such Consents within such fifteen (15) day period, Purchaser
and Seller shall each have the right to terminate this Agreement by written notice to the other
party. If neither party terminates, Purchaser shall, wihin two (2) business days after such
fifteen (15) day period, deposit an amount equal to Eighty Eight Thousand and No/100 Dollars
($88,000.00) (plus any interest or earnings accrued thereon, the “Deposit”), by wire transfer,
official bank check, or other immediately available funds, with the Escrow Agent. In the event
that the Deposit has not been deposited with Escrow Agent within two (2) business days following
the expiration of the aforesaid fifteen (15) day period, this Agreement shall immediately
terminate. The Deposit shall be deposited by the Escrow Agent into an interest-bearing, fully
insured account, as directed by the Purchaser. The Deposit shall be applied to payment of the
Closing Payment at Closing or shall otherwise be paid as herein provided. The Purchaser
acknowledges and agrees that the Deposit, when made, is “At Risk” with respect to a default by the
Purchaser of its obligations to close the purchase and sale of the Interest as set forth in this
Agreement (as specifically set forth in Section 11.2). All interest earned in said
account of the Escrow Agent shall be for the account of the Purchaser and reported by the Escrow
Agent to the Internal Revenue Service as income to the Purchaser (and the Purchaser agrees to
execute a Form W-9 and any other tax documents necessary in connection therewith).
3.5 Payment of the Closing Payment. At the Closing, the Purchaser shall pay the
Closing Payment (less the Deposit) to the Seller and the Escrow Agent shall pay the Deposit to
Seller, in each case by wire transfer, official bank check, or other immediately available funds.
3.6 Escrow Agent. The Escrow Agent, in its capacity as holder of the Deposit in
escrow, joins in the execution of this Agreement for the limited purpose of acknowledging and
agreeing to the provisions of this Section 3.6.
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A. The duties of the Escrow Agent shall be as follows:
(i) The Escrow Agent shall deposit, hold and disburse the Deposit in accordance with the terms
and provisions of this Agreement.
(ii) If this Agreement shall be terminated by the mutual written agreement of the Purchaser
and the Seller, or if the Escrow Agent shall be unable to determine at any time to whom the Deposit
should be paid, or if a dispute shall develop between the Seller and the Purchaser concerning to
whom the Deposit should be paid and delivered, then and in any such event, the Escrow Agent may
request the joint written instructions of the Seller and the Purchaser and pay and deliver the
Deposit in accordance therewith. In the event that such written instruction shall not be received
by the Escrow Agent within ten (10) days after the Escrow Agent has served a written request for
instructions upon the Seller and the Purchaser, then the Escrow Agent shall have the right to pay
and deliver the Deposit into an appropriate court of proper jurisdiction in the State of Florida,
and interplead the Seller and the Purchaser in respect thereof, and thereupon the Escrow Agent
shall be discharged of any obligations in connection with this Agreement.
B. If costs or expenses are incurred by the Escrow Agent in its capacity as holder of the
Deposit in escrow because of litigation or a dispute between the Seller and the Purchaser arising
out of the holding of the Deposit in escrow, the Seller and the Purchaser shall each pay the Escrow
Agent one-half of such reasonable costs and expenses.
C. By joining herein, the Escrow Agent undertakes only to perform the duties and obligations
imposed upon the Escrow Agent under the terms of this Agreement and expressly does not undertake to
perform any of the other covenants, terms and provisions incumbent upon the Seller and the
Purchaser hereunder.
D. The Purchaser and the Seller hereby agree and acknowledge that the Escrow Agent assumes no
liability in connection herewith except for its willful misconduct or gross negligence; that the
Escrow Agent shall never be responsible for the validity, correctness or genuineness of any
document or notice referred to under this Agreement; and that in the event of any dispute under
this Agreement, the Escrow Agent may seek advice from its own legal counsel and shall be fully
protected in any action taken by it in good faith in accordance with the good faith opinion of its
legal counsel.
E. Purchaser and Seller agree that Escrow Agent shall be free to represent Purchaser in any
dispute relating to this Agreement in addition to acting as Escrow Agent, including without
limitation, a dispute relating to the Deposit.
ARTICLE 4
CLOSING
Closing. Unless otherwise expedited by agreement of the parties, the Closing will
take place on a date (the “Closing Date”) which is the earlier to occur of (i) ninety (90) days
after the
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date of this Agreement (such date, or if extended in accordance herewith, such extended date,
shall be the “Outside Date” for the purposes of this Agreement), which date may be extended for an
additional thirty (30) days by either Party by written notice delivered to the other Party and the
Escrow Agent (provided that neither Party shall be entitled to initiate such extension unless it
has complied with its obligations under Section 8.3 hereof at all times following the
execution and delivery of this Agreement), or (ii) the third (3rd) business day after the date on
which each of the Parties has confirmed in writing that the conditions to its obligation to close
have been satisfied (or that it has agreed to waive such condition). In the event that the Closing
Date determined in accordance with this Agreement is not a Friday, the Closing Date shall be
extended to the first Friday thereafter. The Closing shall take place at the offices of Lowndes,
Drosdick, Doster, Xxxxxx & Xxxx, P.A. in Orlando, Florida. At the Closing, the Seller shall
execute and deliver to the Purchaser the Assignment, free and clear of any and all liens, claims
and encumbrances of any kind or nature whatsoever, the Parties shall execute the other Closing
Documents and the Escrow Agent shall pay the Deposit to the Seller and the Purchaser shall pay the
balance of the Closing Payment to Seller in each case by wire transfer, official bank check or
other immediately available funds.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SELLER
To induce the Purchaser to enter into this Agreement, and to consummate the transactions
contemplated hereby, the Seller represents and warrants to the Purchaser on the Effective Date, as
follows:
5.1 General Representations and Warranty of the Seller. (i) The Seller is a
corporation, duly incorporated and organized, validly existing, and in good standing under the laws
of Delaware; and (ii) the Seller has the full legal right, capacity and power to enter into this
Agreement and to perform all of its obligations hereunder.
5.2 Authorization and Execution. (i) The execution and delivery of this Agreement by
the Seller and the performance of its obligations hereunder, including the sale and transfer of the
Interest hereunder, have been duly authorized and approved pursuant to the applicable provisions of
the corporate entity documents of the Seller and by all other necessary corporate authorizing
action on the part of the Seller and, except for the Required Consents, no other approvals or
consents of any third party or governmental authority are required in connection with the
transactions contemplated hereunder; (ii) this Agreement has been duly executed and delivered by
the Seller, constitutes the valid and binding agreement of the Seller enforceable against the
Seller in accordance with its terms; (iii) the Person executing this Agreement on behalf of the
Seller has the authority to do so; (iv) the Seller owns good title to the Interest, free and clear
of any and all liens, claims and encumbrances of any kind or nature whatsoever, and has the legal
right to sell the Interest to the Purchaser pursuant to the terms of this Agreement; and (v) the
Interest comprises the entire equity interest of the Seller in the Company and the Seller has no
other legal or beneficial interest in the Company or any of its assets.
5.3 Non-Contravention. Assuming the Barclays Consent and the Senior Mezz Lender
Consent are obtained on or before the Closing Date, the execution, delivery, and performance by
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the Seller of this Agreement, and the transfer of the Interest by the Seller to the Purchaser
as contemplated hereby (i) does not and will not violate any statute, regulation, rule, injunction,
judgment, order decree, ruling charge or other restriction of any government, governmental agency
or court to which the Seller is subject or any provision of the Seller’s Certificate of
Incorporation, Bylaws, or other applicable organizational documents, and (ii) does not and will not
result in any breach of, constitute a default under, result in the acceleration of, create in any
party the right to accelerate, terminate, modify or cancel or require any notice under any
agreement, contract, lease license, instrument or other arrangement to which the Seller, or to the
knowledge of the Seller, the Company is a party, or by which either is bound or to which any of the
assets of either are subject.
5.4 Bankruptcy. The Seller is not subject to any pending, or to the knowledge of the
Seller, any threatened bankruptcy proceeding, receivership proceeding or other insolvency,
dissolution, reorganization or similar proceeding.
5.5 Seller Is Not a “Foreign Person”. The Seller is not a “foreign person” within the
meaning of that term as used in Section 1445 of the Internal Revenue Code.
5.6 Litigation. Except for suits publicly disclosed by Marriott International, Inc.
in its SEC filings through the date hereof, the Seller knows of no action, suit or proceeding,
pending or known to be threatened against the Seller in any court or before any arbitrator or
before any governmental authority which (i) in any manner raises any question affecting the
validity or enforceability of this Agreement or any other agreement or instrument to which the
Seller is a party or by which it is bound and that is to be used in connection with, or is
contemplated by, this Agreement or which in any manner affects the Interest, (ii) would materially
and adversely affect the business, financial position or results of operations of the Seller, or
(iii) would materially and adversely affect the ability of the Seller to perform its obligations
hereunder, or under any document to be delivered pursuant hereto.
5.7 Undisclosed Liabilities. The Seller has no knowledge of any pending or overtly
threatened claims against either the Company or the Seller (excluding claims which (i) have arisen
in the ordinary course of business, (ii) are disclosed in the financial statements of the Company
or (iii) have been disclosed by the Seller to the Purchaser in writing).
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PURCHASER
To induce the Seller to enter into this Agreement and to consummate the transactions
contemplated hereby, the Purchaser represents and warrants to the Seller on the Effective Date, as
follows:
6.1 General Representation and Warranty of the Purchaser. (i) The Purchaser is a
limited partnership, duly formed and organized, validly existing, and in good standing under the
laws of Delaware; (ii) the Purchaser’s general partner has full power and authority to execute and
deliver this Agreement and perform Purchaser’s respective obligations hereunder.
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6.2 Authorization and Execution. The execution and delivery of this Agreement by
Purchaser and the performance of its obligations hereunder have been duly authorized and approved
pursuant to the applicable provisions of Purchaser’s partnership documents and by all other
necessary partnership authorizing action on the part of Purchaser and except for the Required
Consents, no other approvals or consents of any third party or governmental authority are required
in connection with the transactions contemplated hereunder; this Agreement has been duly executed
and delivered by the Purchaser, and constitutes the valid and binding agreement of the Purchaser
enforceable against the Purchaser in accordance with its terms. The Person executing this
Agreement on behalf of the Purchaser’s general partner has the authority to do so.
6.3 Non-contravention. Assuming all Required Consents are obtained on or before the
Closing Date, the execution and delivery of this Agreement and the other agreements contemplated
hereby and the performance by the Purchaser of its obligations hereunder do not and will not
contravene, or constitute a default under, any judgment, injunction, order, decree or other
instrument binding upon the Purchaser or result in the creation of any lien on any asset of the
Purchaser.
6.4 Litigation. Except for suits publicly disclosed by Purchaser in its SEC filings
through the date hereof, the Purchaser knows of no action, suit or proceeding, pending or known to
be threatened against the Purchaser in any court or before any arbitrator or before any
governmental authority which (i) in any manner raises any question affecting the validity or
enforceability of this Agreement or any other agreement or instrument to which the Purchaser is a
party or by which it is bound and that is to be used in connection with, or is contemplated by,
this Agreement, (ii) would materially and adversely affect the business, financial position or
results of operations of the Purchaser, or (iii) would materially and adversely affect the ability
of the Purchaser to perform its obligations hereunder, or under any document to be delivered
pursuant hereto.
ARTICLE 7
EXPENSES AND ADJUSTMENTS
7.1 Expenses. Each of the Parties shall be responsible for, and shall pay, any and
all costs and expenses incurred by such Party in connection with this Agreement and the
transactions contemplated hereunder, including, but not limited to, the fees and costs of such
Party’s legal counsel.
7.2 Agreed Adjustment Amount. In lieu of making adjustments or apportionments in
respect of distributable income, working capital or other amounts, the parties have agreed to make
one aggregate adjustment by Purchaser’s payment to Seller on the Closing Date of the Agreed
Adjustment Amount. The “Agreed Adjustment Amount” shall equal 10.16% of the sum of (i) the Deemed
Discretionary Cash Flow and (ii) the Deemed Working Capital Amount. The “Deemed Discretionary Cash
Flow” shall equal:
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(“A”/365 x “B”) minus “C”, where
“A” = the number of days in the Current Fiscal Year which occur prior to the Closing Date,
“B” = the Deemed Annual Discretionary Cash Flow, and
“C” = the amount of Distributions of the Company previously distributed by the Company in
respect of the Current Fiscal Year. For avoidance of doubt, such amount shall not include
the Distribution by the Company in the total amount of $1,656,155.46 related to the fourth
quarter of the 2005 Fiscal Year.
The Deemed Annual Discretionary Cash Flow was computed by the parties based on the Purchaser’s
good faith calculation of discretionary cash flow, and shall not be adjusted for any reason, even
if the amount calculated by Purchaser proves erroneous or other methods of determining the
estimated amounts could have been used. The Deemed Working Capital Amount was computed by the
parties based on the amount of net working capital on hand (net of cash held for distributions) as
of December 31, 2005, and shall not be adjusted for any reason, even if such amounts prove
erroneous or other methods of determining such amounts could have been used.
ARTICLE 8
CONDITIONS PRECEDENT TO CLOSE
8.1 Conditions As to the Purchaser’s Obligations to Close. The obligations of the
Purchaser to consummate the Closing and pay the Closing Payment to the Seller are subject to
satisfaction or waiver by the Purchaser of the following conditions:
A. Consent to the sale of the Interest on or before the Closing from the LFL Lender, which
consent is being obtained by Seller concurrently with the execution of this Agreement.
B. Consent to the sale of the Interest from Manager, which consent is being obtained by Seller
concurrently with the execution of this Agreement.
C. The simultaneous closing by the Purchaser of its purchase, of the 45.84% Interest, at a
purchase price that is calculated on the same basis as the Purchase Price herein, with the same
proportionate adjustment applicable to such 45.84% Interest as set forth in Section 7.2
hereof.
D. The representations and warranties made in this Agreement by the Seller shall be true and
correct in all respects when made and as of the Closing, and the Seller shall have performed in all
material respects its obligations under this Agreement.
E. Delivery by the Seller to the Purchaser of an Officer’s Certificate in the form attached
hereto as Exhibit B, reconfirming Seller’s representations.
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F. There shall be no unrepaired damage by fire or other casualty to any portion of the Hotel
if the estimated cost of repair exceeds $20,000,000.
G. No portion of the Hotel, the value of which portion exceeds $20,000,000 shall have been
acquired by a governmental authority (or shall be subject to a condemnation proceeding of a
governmental authority).
8.2 Conditions As to Seller’s Obligations to Close: The obligations of the Seller to
consummate the sale and take the actions to be performed by it in connection with the Closing are
subject to the satisfaction or waiver by the Seller of the following conditions:
A. Receipt of the Releases; (provided, Seller may waive this condition and proceed to Closing
provided Purchaser delivers the Indemnity to Seller).
B. The simultaneous closing with the Closing by the Purchaser of its purchase, of the 45.84%
Interest, at a price that is calculated on the same basis as the Purchase Price herein, with the
same proportionate adjustment applicable to such 45.84% Interest as forth in Section 7.2
hereof. Purchaser’s closing under this Agreement shall constitute its representation and warranty
to Seller that this condition has been satisfied.
C. The representations and warranties made in this Agreement by the Purchaser shall be true
and correct in all material respects when made and as of the Closing and the Purchaser shall have
performed in all material respects its obligations under this Agreement.
8.3 Efforts of the Parties. The Parties hereby agree to use Diligent Efforts to cause
each of the conditions precedent to their respective obligations to be fully satisfied, performed
and discharged, on and as of the Closing; provided that the Purchaser shall be solely responsible
for obtaining the Barclays Consent and the Senior Mezz Lender Consent and the Releases, in
accordance with its obligations under Section 10.1, and the Seller shall be solely
responsible for obtaining the LFL Consent and the Manager’s Consent in accordance with its
obligations under Section 10.1.
8.4 Mutual Condition. The obligations of each of the Parties to consummate the
purchase and sale of the Interest and the other transactions contemplated by this Agreement shall
be subject to the following conditions: (i) no temporary restraining order, preliminary or
permanent injunction or other order or decree which prevents the consummation of the purchase and
sale of the Interest and the other transactions contemplated by this Agreement shall have been
issued and remain in effect, and (ii) no statute, rule or regulation shall have been enacted by any
state or federal government or governmental agency which would prevent the consummation of the
purchase and sale of the Interest and the other transactions contemplated by this Agreement.
ARTICLE 9
CLOSING PROCEDURES
9.1 Seller’s Deliveries. At the Closing, the Seller shall deliver to the Purchaser
the Closing Documents, signed by the Seller.
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9.2 Purchaser’s Deliveries. At the Closing, the Purchaser shall deliver to the Seller
(i) the Closing Payment (less the Deposit) and, (ii) the Closing Documents, signed by the Purchaser
and (iii) the Releases or Indemnity, to the extent required by Section 10.1.
ARTICLE 10
COVENANTS OF PARTIES
10.1 Required Consents; Releases and Indemnity. Purchaser shall use diligent and
commercially reasonable good faith efforts to obtain the Barclays Consent and the Senior Mezz
Lender Consent and the Releases, and to deliver same to Seller at the Closing. In the event that
Purchaser fails to obtain the Releases on or before Closing, and Seller has agreed to waive its
condition to close in Section 8.2(A) hereof and accept the Indemnity as provided therein, Purchaser
shall deliver to Seller at Closing an indemnification (the “Indemnity”), executed by CHP, in form
attached hereto as Exhibit C, pursuant to which CHP indemnifies the Seller from and against
any liability Seller may incur under the Carveout Guaranties. The Seller shall use diligent and
commercially reasonable good faith efforts to obtain the LFL Consent and the Manager Consent.
10.2 Obligation for Simultaneous Closing. Unless this Agreement is terminated due to
a Seller Default, Purchaser shall not purchase the 45.84% Interest without simultaneously
purchasing the Interest under, and in accordance with all of the terms of, this Agreement. The
Purchaser shall advise the Seller’s counsel as to the status of its purchase of the 45.84% Interest
and shall share with Seller’s counsel (but not the Seller), and Seller’s counsel shall not share
with Seller, any documents executed in connection therewith.
ARTICLE 11
DEFAULT; TERMINATION RIGHTS; INDEMNITY
11.1 Termination; Default by Seller. If the Closing does not occur because of the
failure of a condition precedent under Section 8.1, Purchaser may terminate this Agreement without
liability to either party except as otherwise provided herein. If (a) the Seller defaults under
this Agreement (a “Seller Default”) or (b) the Purchaser has confirmed in writing that the
conditions to its obligation to close in Section 8.1 of this Agreement have been satisfied
(or that it has agreed to waive such conditions) and a Closing fails to occur on or prior to the
Outside Date for any reason other than a Purchaser Default or the failure of any of those
conditions precedent to the Seller’s obligations set forth in Section 8.2 of this
Agreement, or (c) Seller is prevented from consummating the sale of the Interest and the other
transactions contemplated by this Agreement as a result of a condition in Section 8.4, then
any one, and only one, of the following shall be available to the Purchaser as its sole and
exclusive remedy: (i) to terminate this Agreement by giving the Seller written notice of such
election and a five (5) business day cure period after the Seller’s receipt of such written notice,
prior to or at the Closing (which five (5) business day period shall, if necessary, automatically
extend the Closing to the expiration of such five (5) business day period) whereupon, the Escrow
Agent shall promptly return to the Purchaser the Deposit and Seller shall promptly reimburse the
Purchaser for all reasonable costs and expenses incurred by Purchaser in connection with this
Agreement and the purchase of the
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Interest (not to exceed $88,000.00), and the Parties shall have no further rights or
liabilities under this Agreement except for those provisions which specifically provide that they
survive the termination of this Agreement; or (ii) with respect to a default contemplated in (a) or
(b) of this Section 11.1, seek specific performance of the Seller’s obligations hereunder,
provided that the Purchaser must file a suit for specific performance in the appropriate
jurisdiction within ninety (90) days from the earlier of (x) the Outside Date, or (y) the date of
delivery by the Purchaser to the Seller of written notice of such default.
11.2 Termination; Default by the Purchaser. If the Closing does not occur because of
the failure of a condition precedent under Section 8.2, the Seller may terminate this Agreement,
without liability to either party except as otherwise provided herein. If (a) the Purchaser
defaults under this Agreement (a “Purchaser Default”) or (b) the Seller has confirmed in writing
that the conditions to its obligation to close in Section 8.2 of this Agreement have been
satisfied (or that it has agreed to waive such conditions) and a Closing fails to occur on or prior
to the Outside Date for any reason other than a Seller Default or the failure of any of those
conditions precedent to the Purchaser’s obligations set forth in Section 8.1(C) (but only
to the extent such failure is not due to the Purchaser’s failure to fulfill any of its obligations
to close the purchase of the 45.84% Interest on or before the Closing Date), Section
8.1(A), Section 8.1(B), Section 8.1(D), Section 8.1(E), Section
8.1(F), or Section 8.1(G) of this Agreement, or (c) Purchaser is prevented from
consummating the purchase of the Interest and the other transactions contemplated by this Agreement
as a result of a condition in Section 8.4, then the Seller may, after written notice to the
Purchaser of such default and a five (5) business day cure period after the Purchaser’s receipt of
such written notice prior to or at the Closing (which five (5) business day period shall, if
necessary, automatically extend the Closing to the expiration of such five (5) business day
period), as its sole and exclusive remedy, terminate this Agreement by written notice to the
Purchaser in which event the Seller shall receive the Deposit as liquidated damages for such
default, the amount of which Deposit the Purchaser and the Seller agree is not punitive or a
penalty but is just, fair and reasonable, and the Escrow Agent shall immediately pay the Deposit to
the Seller. Upon payment of the Deposit to the Seller, the Parties shall have no further rights or
liabilities under this Agreement except for those provisions which specifically provide that they
survive the termination of this Agreement.
11.3 Termination by Mutual Consent. This Agreement may be terminated at any time
prior to the Closing, by mutual written consent of the Parties, in which case the Parties shall
jointly instruct the Escrow Agent to return the Deposit to the Purchaser and the Parties shall have
no further rights or liabilities under this Agreement except for those provision which specifically
provide that they survive the termination of this Agreement.
11.4 Indemnity.
A. Effective upon and following the Closing, the Seller shall indemnify the Purchaser, its
Affiliates and its and their respective officers, directors, employees, agents and representatives
(each a “Purchaser Indemnified Party”) and hold each of them harmless against any out-of-pocket
damages, costs, liabilities, losses, judgments, taxes, penalties, fines, expenses or other costs,
including reasonable attorney’s fees, costs of defense and costs of collection but not lost
profits, consequential damages or punitive damages (collectively, “Losses”) incurred by the
Purchaser Indemnified Parties with respect to: (i) any breach of any of the representations
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and warranties made by the Seller in this Agreement; and (ii) any breach of the covenants and
agreements made by the Seller in this Agreement or any of the Closing Documents; provided, however,
that (x) no amounts shall be payable by the Seller unless and until the aggregate amount otherwise
payable by the Seller in the absence of this clause exceeds the sum of Twenty Thousand Dollars
($20,000) (the “Deductible”), in which event the Seller shall be liable to the Purchaser for the
amount (if any) in excess of the Deductible up to a maximum amount not to exceed twenty percent
(20%) of the Closing Payment; provided, however, with respect to any defect in Seller’s title to
the Interest or liens or claims upon the Interest at the time of Closing, Seller shall be liable to
the Purchaser for damages not to exceed the amount of the Closing Payment. All representations and
warranties shall terminate one (1) year after Closing if no written claim has been made.
B. Effective upon and following the Closing, the Purchaser shall indemnify the Seller, its
Affiliates and its and their respective officers, directors, employees, agents and representatives
(each a “Seller Indemnified Party”) and hold each of them harmless against any out-of-pocket
damages, costs, liabilities, losses, judgments, taxes, penalties, fines, expenses or other costs,
including reasonable attorney’s fees, costs of defense and costs of collection but not lost
profits, consequential damages or punitive damages (collectively, “Losses”) incurred by the Seller
Indemnified Parties with respect to: (i) any breach of any of the representations and warranties
made by the Purchaser in this Agreement; and (ii) any breach of the covenants and agreements made
by the Purchaser in this Agreement or any of the Closing Documents; provided, however, that (x) no
amounts shall be payable by the Purchaser unless and until the aggregate amount otherwise payable
by the Purchaser in the absence of this clause exceeds the Deductible, in which event the Purchaser
shall be liable to Seller for the amount (if any) in excess of the Deductible up to a maximum
amount not to exceed twenty percent (20%) of the Closing Payment. All representations and
warranties shall terminate one (1) year after Closing if no written claim has been made.
11.5 Indemnification Procedures. Upon the occurrence of any event giving rise to a
claim for indemnification (an “Indemnification Claim”) under any provision of this Agreement or any
Closing Document, the Party seeking indemnification (the “Indemnified Party”) shall promptly notify
the other Party (the “Indemnitor”) of such Indemnification Claim and provide the Indemnitor with
copies of any documents describing or otherwise bearing on the subject matter of such
indemnification obligation; provided, however, that the failure to notify Indemnitor shall not
relieve Indemnitor from any liability which Indemnitor may have under the Indemnification Claim
except to the extent that it has been materially prejudiced by such failure. Indemnitor shall be
entitled to participate in any pending or threatened claim, action, suit or proceeding in respect
of the Indemnification Claim and, to the extent that it wishes, assume the defense thereof with
counsel reasonably satisfactory to the Indemnified Party.
The Indemnitor will not settle or compromise or consent to the entry of any judgment in any
pending or threatened claim, action, suit or proceeding in respect of the Indemnification Claim
unless, (i) Indemnitor shall have given the Indemnified Party reasonable prior written notice
thereof and shall have obtained an unconditional release of the Indemnified Party from all
liability arising out of such claim, action, suit or proceeding, or (ii) Indemnitor reaffirms in
writing its indemnity obligations hereunder regardless of Applicable Laws to the contrary. As long
as Indemnitor has complied with its obligations to defend and indemnify, Indemnitor shall
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not be liable for any settlement made by the Indemnified Party without the consent of
Indemnitor (which consent shall not be unreasonably withheld or delayed).
ARTICLE 12
MISCELLANEOUS PROVISIONS
12.1 Notices. All notices shall be given by certified mail, overnight delivery
service, telecopier, or hand delivery, and addressed as follows:
If to the Seller:
| Marriott Hotel Services, Inc. | ||
| c/o Marriott International, Inc. | ||
| 00000 Xxxxxxxx Xxxx | ||
| Xxxxxxxx, XX 00000 | ||
| Attention: Treasurer | ||
| Fax: 000-000-0000 | ||
| with a copy to: | ||
| Marriott International, Inc. | ||
| 00000 Xxxxxxxx Xxxx | ||
| Xxxxxxxx, XX 00000 | ||
| Attention: General Counsel | ||
| Fax: 000-000-0000 | ||
| and | ||
| Arent Fox PLLC | ||
| 0000 Xxxxxxxxxxx Xxxxxx, XX | ||
| Xxxxxxxxxx, XX 00000-0000 | ||
| Attention: Xxxxxx X. Xxxxxxxx, Esq. | ||
| Fax: 000-000-0000 |
If to Purchaser:
| c/o CNL Hotels & Resorts, Inc. | ||
| CNL Center at City Commons | ||
| Attention: Chief General Counsel | ||
| 000 Xxxxx Xxxxxx Xxxxxx | ||
| Xxxxxxx, Xxxxxxx 00000-0000 | ||
| Fax: 000-000-0000 |
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| With a copy to: | ||
| Xxxxxxx X. Xxxxxx, Esq. | ||
| Lowndes, Drosdick, Doster, Xxxxxx & Xxxx | ||
| 000 Xxxxx Xxxx Xxxxx | ||
| Xxxxxxx, Xxxxxxx 00000 | ||
| Fax: 000-000-0000 |
12.2 Availability of Counsel. Each of the parties acknowledges that it has reviewed
this Agreement with independent legal counsel of its choosing or has waived its right to do so.
The Parties acknowledge that this Agreement has been negotiated and that each of them has had equal
input as to the drafting and construction of this Agreement and, accordingly, the Parties intend
that a court construing this Agreement shall not construe it more strictly against either of them
for any reason whatsoever.
12.3 Survival. The provisions of this Agreement, other than the obligations of the
Parties to be fulfilled at the Closing, will survive the Closing and remain fully enforceable.
Representations and warranties shall survive for a period of one (1) year from the Closing.
12.4 Severability. If any provision of this Agreement is determined by appropriate
judicial authority to be illegal or otherwise unenforceable, such provision shall be given its
nearest legal meaning or otherwise be construed as such authority determines, and the remainder of
this Agreement shall remain in full force and effect.
12.5 Binding Effect. This Agreement is binding upon and shall inure to the benefit of
the Parties and their successors and the permitted assigns of the Purchaser. The Purchaser may not
assign this Agreement, except to an entity affiliated with the Purchaser; provided that the
assignee assumes the obligations of the Purchaser hereunder. Notwithstanding the foregoing, any
permitted assignment by Purchaser shall not relieve the Purchaser of any of its obligations under
this Agreement. Seller may not assign this Agreement.
12.6 Entire Agreement. This Agreement contains the entire agreement (including the
representations and warranties) between the Parties pertaining to the subject matter set forth
herein and the Parties have not made any representations or warranties to each other, either oral
or written, other than those contained herein or in the documents contemplated hereunder. This
Agreement may not be amended or otherwise modified, except by a writing executed by both of the
Parties.
12.7 Brokers. Each of the Parties represents and warrants that it has not contracted
for the services of any brokers in connection with this Agreement, and each of such Parties shall
indemnify, defend and hold the other Party harmless from any damages (including attorney’s fees and
costs) in the event that any claim is made against such other Parties on account of any services
provided by a broker hired by the indemnifying Parties.
12.8 Public Announcements. Each of the Parties shall have the right to make a public
announcement regarding the transaction described in this Agreement, provided, however, that,
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prior to and as a condition precedent to such public announcement, the other Party shall
approve the timing, form and substance of any such public announcement, except if any of the
Parties is required to make a public announcement under any securities law, the Party making such
public announcement may do so only after having provided the other Party with a copy of such public
announcement and only as long as such public announcement is made in strict accordance with the
applicable law requiring such public announcement be made. Further the Purchaser and the Seller
may also make such other disclosures to their respective officers, directors, legal counsel,
advisors and accountants and other service providers with a need to know and as may be required by
applicable law. In all other respects, the Parties agree that this Agreement shall be confidential
and neither Party may make any disclosures or announcements concerning the same without the prior
written consent of the other Party, except (i) the Purchaser may communicate fully to any other
member of the Company, and (ii) the Seller may include a copy of this Agreement, together with any
and all schedules and exhibits hereto, and any description or summary thereof, in any proxy
statement or other similar communication the Seller deems necessary, appropriate or desirable,
delivered to its limited partners.
12.9 Governing Law. This Agreement shall be construed under, and governed by, the
Applicable Laws without regard to its conflict of laws principles.
12.10 Jurisdiction and Venue. Each Party hereto agrees and submits to the personal
jurisdiction of the state and federal courts sitting in the State of Maryland or Florida. The
Parties further agree that all disputes and causes of action arising out of this Agreement may be
resolved in either the state or federal courts sitting in Xxxxxxxxxx County, Maryland, or Orange
County, Florida, and each Party hereby waives all questions of personal jurisdiction and venue of
such courts, including, without limitation, the claim or defense therein that such courts
constitute an inconvenient forum.
12.11 Attorney Fees. In any action or proceeding between any of the Parties regarding
this Agreement or its enforcement, the prevailing party in such action or proceeding shall be
entitled to collect and recover from the non-prevailing Party or Parties all costs of such action
or proceeding incurred by such prevailing Party, including, but not limited to, reasonable attorney
fees and costs through all levels of proceedings, including appeals.
12.12 Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original and all of which shall together constitute one and the same instrument.
A facsimile, telecopy or other reproduction of this Agreement may be executed by the Parties (in
counterparts or otherwise). Signatures received through facsimile transmission shall bind the
Party whose signature is so received as if such signature were an original. At the request of any
Party, the parties hereto agree to execute an original of this Agreement as well as any facsimile,
telecopy or other reproduction.
12.13 No Third Party Beneficiaries. No Person other than Seller and Purchaser is
intended to be a beneficiary of the rights and obligations of either Seller or Purchaser under this
Agreement.
(THE REMAINDER OF THIS PAGE WAS LEFT BLANK INTENTIONALLY; THE PARTIES’ SIGNATURES ARE ON THE
FOLLOWING PAGE)
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date and year first
above written.
| MARRIOTT HOTEL SERVICES, INC. a Delaware corporation (“Seller”) | ||||||
| By: | /s/ Xxxxxxx X. Xxxxxxx | |||||
| Name: | Xxxxxxx X. Xxxxxxx | |||||
| Title: | Authorized Signatory | |||||
| CNL DRR INVESTOR, LP a Delaware limited partnership (“Purchaser”) |
||||||||
| By: CNL Phoenix GP Corp., its general partner | ||||||||
| By: | /s/ Xxxxxx Xxxxxxx | |||||||
| Name: | Xxxxxx Xxxxxxx | |||||||
| Title: | Senior Vice President | |||||||
JOINDER OF ESCROW AGENT
Escrow Agent hereby joins in the execution of this Agreement for the purpose of acknowledging
and agreeing to the provisions of Section 3.6 hereof.
| Lowndes, Drosdick, Doster, Xxxxxx & Xxxx, P.A.(“Escrow Agent”) | ||||
| /s/ Xxxxxxx X. Xxxxxx | ||||
| By: Xxxxxxx X. Xxxxxx |
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EXHIBIT A
FORM OF ASSIGNMENT
[TO BE DRAFTED]
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EXHIBIT B
FORM OF OFFICER’S CERTIFICATE
[TO BE DRAFTED]
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EXHIBIT C
FORM OF INDEMNITY
[TO BE DRAFTED]
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