AGREEMENT TO JOINT VENTURE
THIS AGREEMENT TO JOINT VENTURE (the "Agreement") is made and entered
into as of May 12, 1997, by and among Apollo Real Estate Advisors II, L.P., a
Delaware limited partnership, having its principal place of business at 0000
Xxxxxx xx xxx Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000 ("APOLLO"), Hospitality
Worldwide Services, Inc., a New York corporation, having its principal place of
business at 000 Xxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, XX 00000 ("HWS"), and
Watermark Investments Limited, LLC, a Delaware limited liability company, having
its principal place of business at 000 X. Xxxxxxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxxxxx 00000, ("WATERMARK") (Apollo, HWS, and Watermark collectively
referred to herein as the "Parties").
RECITALS:
WHEREAS, the Parties desire to collectively identify, acquire,
renovate, refurbish, operate and sell hotel properties (the "BUSINESS") through
individual joint venture limited liability companies (each a "Company" and
together the "COMPANIES"), each formed for the exclusive purpose of developing a
single hotel property (each a "PROJECT") acquired pursuant to the Business; and
WHEREAS, the Parties desire to set forth the terms and conditions of
their agreement to operate the Business, form the Companies, and develop the
Projects.
NOW, THEREFORE, in consideration of the mutual agreements, promises,
and undertakings hereinafter set forth, the receipt and sufficiency of which are
hereby acknowledged, Apollo, HWS and Watermark agree that the following shall
constitute the Agreement among the Parties:
AGREEMENT:
ARTICLE I
OPERATION OF THE BUSINESS
1.1 IDENTIFICATION OF PROJECTS. HWS and Watermark shall have the
responsibility of identifying Projects for the Business. Upon the identification
of a potential Project, HWS and Watermark shall submit to Apollo, in the form of
a written proposal, all essential information pertaining to the Project. Within
fifteen (15) days after receipt of such proposal and all information Apollo
reasonably deems essential to its review thereof, Apollo shall deliver to HWS
and Watermark its written election to participate in the Project, or to reject
such participation in the Project. Apollo's election shall be made in its sole
discretion, and its election shall be the final decision regarding the
participation of the Business in such Project. In the event that Apollo elects
not to participate in any Project, the provisions of Section 3.6 of this
Agreement shall apply to the participation of HWS and Watermark in such Project.
1.2 FORMATION OF COMPANIES. Should Apollo elect to participate in any
Project under Section 1.1 hereof, the Parties shall move as expeditiously as
possible, but in any case within 30 days of Apollo's election, to form a Company
for the purpose of acquiring, renovating, refurbishing, operating and selling
such Project. The Operating Agreement for any such Company created pursuant to
this Section 1.2 shall be in the form of the Operating Agreement attached hereto
as EXHIBIT A and incorporated herein by this reference (the "Operating
Agreement"). Notwithstanding any election by Apollo under Section 1.1, or the
formation of a Company under this Section 1.2, funding by Apollo for each
Project shall be subject to (i) Apollo's completion of its due diligence review
with respect to such Project, (ii) Apollo's satisfaction with any physical,
environmental and feasibility studies which Apollo may perform, (iii) no
material adverse change with respect to HWS, Watermark or such Project, (iv)
Apollo's obtaining a satisfactory opinion of its counsel on the transaction
structure for the Project, (v) all necessary and appropriate approvals of
Apollo's committees, and (vi) documentation for such Project being satisfactory
to Apollo.
1.3 MODIFICATIONS TO STRUCTURE.
(a) In order to qualify and/or preserve the status of Apollo, the
Companies or any entity in which the Parties and/or the Companies own an
interest and which owns any portion of the Company Assets as an "operating
company" under the plan asset rules of ERISA at 29 C.F.R. Section 2510.3-101
("PLAN ASSET RULES"), to avoid the imposition of a corporate tax on any income
of the Companies, or to minimize the effects of any UBTI on Apollo and its
partners, HWS and Watermark agree to consent to modifications proposed from time
to time by Apollo to the structure of any of the Companies (but in no event
changes to the Percentage Interests) and/or the Companies' investments in, and
ownership of the Company Assets and/or to the terms of the Operating Agreement,
including, without limitation, the capital contribution and allocation and
distribution provisions set forth in Articles III, IV and V of the Operating
Agreement, if in any case the modifications will not materially adversely affect
the aggregate amount or timing of Capital Contributions, payment of fees,
distributions of Net Cash Flow and liquidation proceeds or the aggregate
allocations of Profits and Losses; provided, however, that if the modifications
do adversely affect the aggregate amount of timing of Capital Contributions,
fees payable or distributions of Net Cash Flow and liquidation proceeds or the
aggregate allocations of Profits and Losses (an "ADVERSE CHANGE"), the
provisions of Section 1.3(b) shall apply. Subject to and specifically limited by
the foregoing, any such modifications may include, without limitation, the
formation by the Parties of other partnerships, corporations or other entities
(including, without limitation, corporations and trusts that qualify as real
estate investment trusts under Section 856 of the Internal Revenue Code of 1986,
as amended (the "Code")) to be owned by the Parties or their Affiliates and
which will own a portion of the Company Assets. In any such event, the Companies
and such other entities shall be treated as a single partnership for federal
income tax purposes and the fees payable to, the amounts distributable to, the
Profits and Losses allocable to, the Capital Contributions required to be
contributed by, the maintenance of Capital Accounts, and the buy-sell rights and
obligations pursuant to the Operating Agreement and the organic documents
governing such other entities shall be calculated, determined and applied on an
aggregate basis as if the Company Assets were owned by the Companies pursuant to
the Operating Agreement as of its effective date unless Apollo determines in its
sole discretion that such provisions must be calculated, determined and
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applied on an entity by entity basis and not on an aggregate basis to qualify or
preserve the status of Apollo, the Companies or any entity in which the Parties
and/or the Companies own an interest and which owns any portion of the Company
Assets as an operating company under the Plan Asset Rules. If Apollo determines
that such provisions must be calculated, determined and applied on an entity by
entity basis and not an aggregate basis, the Parties agree to negotiate in good
faith modifications to the terms of the Operating Agreement and to the organic
documents governing such other entities so as to preserve as nearly as possible
without any material adverse affect to HWS or Watermark the same overall
economic benefits and burdens relating to the Company Assets as exist under the
Operating Agreement as in effect on the date hereof; provided, however, that if
the modifications do cause an Adverse Change, the provisions of Section 1.3(b)
shall apply. HWS and Watermark agree to cooperate with Apollo and to execute,
acknowledge, deliver, file, record and publish all such documents, agreements
and instruments and to do all such other acts and things as Apollo determines
are reasonably necessary to implement the foregoing, subject to the limitations
set forth in the first sentence of this Section.
(b) In the event of an Adverse Change, HWS or Watermark shall notify
Apollo thereof in writing including an estimate of the economic value of the
Adverse Change incurred by HWS or Watermark. If the Parties are unable to
mutually agree upon the amount thereof within 30 days, the value of such Adverse
Change shall be determined by the following valuation procedure. Apollo and HWS
and Watermark shall, within ten days after the expiration of the foregoing 30
day period, mutually agree on an independent third party ("VALUATION AGENT") to
determine the economic value to HWS and Watermark arising from the Adverse
Change resulting from a modification described in Section 1.3(a). If the parties
are unable to agree on a Valuation Agent within such ten day period, the
Valuation Agent shall be appointed by a Judge of the District Court of the
United States of America for the Southern District of New York acting as an
individual. In making its determination of the economic value of the Adverse
Change, the Valuation Agent shall only consider the impact of the modifications
to the amounts and timing of Capital Contributions, fees payable and
distributions of Net Cash Flow and liquidation proceeds and the allocations of
Profits and Losses. Any Valuation Agent selected shall be independent and shall
not have performed any appraisal or valuation services for the Company, Apollo,
HWS or Watermark or any Affiliate of the Company, Apollo, HWS or Watermark at
any time during the two year period prior to its selection. Within 60 days of
the Parties' selection of the Valuation Agent, the Valuation Agent shall deliver
to the Parties a written report of the foregoing valuation, and the
determination of the Valuation Agent thereon shall be conclusive and binding
upon the Parties. Within 30 days of the receipt of such report, Apollo shall pay
(in such proportions as they shall agree) to HWS and Watermark the amount of the
economic value of the Adverse Change determined by the Valuation Agent.
1.4 OPERATING COMPANY STATUS. The Parties will endeavor to qualify and
preserve the status of all of the Companies and each other limited liability
company, partnership, corporation or entity in which the Parties owns an
interest, as an "operating company" under the Plan Asset Rules and, if a Company
and/or any such entity so qualifies, the Parties will use their best efforts to
operate the Company and/or any such entity and exercise its management rights
with respect to the Company Assets in a manner that will permit the Company
and/or any such entity to qualify and continue to qualify as an operating
company.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE PARTIES
2.1 IN GENERAL. As of the date hereof, each of the Parties hereby makes
each of the representations and warranties applicable to such Party as set forth
in Section 2.2 hereof, and such warranties and representations shall survive the
execution of this Agreement.
2.2 REPRESENTATIONS AND WARRANTIES. Each Party hereby represents and
warrants that:
(a) DUE INCORPORATION OR FORMATION; AUTHORIZATION OF
AGREEMENT. If such Party is a corporation or a
company, it is duly organized or duly formed, validly
existing, and in good standing under the laws of the
jurisdiction of its incorporation or formation and
has the corporate or company power and authority to
own its property and carry on its business as owned
and carried on at the date hereof and as contemplated
hereby. Such Party is duly licensed or qualified to
do business and in good standing in each of the
jurisdictions in which the failure to be so licensed
or qualified would have a material adverse effect on
its financial condition or its ability to perform its
obligations hereunder. Such Party has the individual,
corporate, or company power and authority to execute
and deliver this Agreement and to perform its
obligations hereunder and, if such Party is a
corporation or partnership, the execution, delivery,
and performance of this Agreement has been duly
authorized by all necessary corporate or partnership
action. This Agreement constitutes the legal, valid,
and binding obligation of such Party.
(b) NO CONFLICT WITH RESTRICTIONS; NO DEFAULT. Neither
the execution, deliv- ery, and performance of this
Agreement nor the consummation by such Party of the
transactions contemplated hereby (i) will conflict
with, violate, or result in a breach of any of the
terms, conditions, or provisions of any law,
regulation, order, writ, injunction, decree,
determination, or award of any court, any
governmental department, board, agency, or
instrumentality, domestic or foreign, or any
arbitrator, applicable to such Party or any of its
Wholly Owned Affiliates, (ii) will conflict with,
violate, result in a breach of, or constitute a
default under any of the terms, conditions, or
provisions of the articles of incorporation, bylaws,
or company agreement of such Party or any of its
Wholly Owned Affiliates, if such Party is a
corporation or company, or of any material agreement
or instrument to which such Party or any of its
Wholly Owned Affiliates is a party or by which such
Party or any of its Wholly Owned Affiliates is or may
be bound or to which any of its material properties
or assets is subject, (iii) will conflict with,
violate, result in a breach of, constitute a default
under (whether with notice or lapse of time or both),
accelerate or permit the acceleration of the
performance required by, give
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to others any material interests or rights, or
require any consent, authorization, or approval under
any indenture, mortgage, lease agreement, or
instrument to which such Party or any of its Wholly
Owned Affiliates is a party or by which such Party or
any of its Wholly Owned Affiliates is or may be
bound, or (iv) will result in the creation or
imposition of any lien upon any of the material
properties or assets of such Party or any of its
Wholly Owned Affiliates.
(c) GOVERNMENTAL AUTHORIZATIONS. Any registration,
declaration or filing with or consent, approval,
license, permit or other authorization or order by,
any governmental or regulatory authority, domestic or
foreign, that is required in connection with the
valid execution, delivery, acceptance, and
performance by such Party under this Agreement or the
consummation by such Party of any transaction
contemplated hereby has been completed, made, or
obtained on or before the effective date of this
Agreement.
(d) LITIGATION. There are no actions, suits, proceedings,
or investigations pending or, to the knowledge of
such Party or any of its Wholly Owned Affiliates,
threatened against or affecting such Party or any of
its Wholly Owned Affiliates or any of their
properties, assets, or businesses in any court or
before or by any governmental department, board,
agency, or instrumentality, domestic or foreign, or
any arbitrator which could, if adversely determined
(or, in the case of an investigation could lead to
any action, suit, or proceeding, which if adversely
determined could) reasonably be expected to
materially impair such Party's ability to perform its
obligations under this Agreement or to have a
material adverse effect on the consolidated financial
condition of such Party; and such Party or any of its
Wholly Owned Affiliates has not received any
currently effective notice of any default, and such
Party or any of its Wholly Owned Affiliates is not in
default, under any applicable order, writ,
injunction, decree, permit, determination, or award
of any court, any governmental department, board,
agency, or instrumentality, domestic or foreign, or
any arbitrator which could reasonably be expected to
materially impair such Party's ability to perform its
obligations under this Agreement or to have a
material adverse effect on the consolidated financial
condition of such Party.
(e) INVESTIGATION. Such Party is acquiring its interest
in the Business based upon its own investigation, and
the exercise by such Party of its rights and the
performance of its obligations under this Agreement
will be based upon its own investigation, analysis,
and expertise. Such Party's acquisition of its
interest in the Business is being made for its own
account for investment, and not with a view to the
sale of distribution thereof.
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ARTICLE III
INDEPENDENT COVENANTS OF THE PARTIES
3.1 OWNERSHIP OF COMPANY PROJECTS. The Parties agree to endeavor to own
and operate any hotels acquired pursuant to the Business of the Company for only
the time necessary to upgrade such hotel and market it for resale.
3.2 WATERMARK MANAGEMENT FEE. For each Project, a management agreement
shall be executed under which Watermark will receive a management fee of one and
one-half percent (1 1/2%) of all costs (other than Soft Costs) incurred in
acquiring and rehabilitating the particular Project (the "MANAGEMENT FEE") which
is intended to be a payment to a Party other than in its capacity as a partner
under Code ss.707(a). However, in no event will Watermark be entitled to a
Management Fee until (a) the Project is acquired by the Company formed for the
purpose of owning such Project, and (b) the Project expenditures are funded by
the Company, in its sole discretion. A total budget and schedule for each
Project will be determined prior to the closing of the acquisition of the
Project by the Company. The aggregate scheduled time needed for Project
completion shall be divided into four (4) equal periods (each a "Quarterly
Period"). The Management Fee will be paid to Watermark in the following
fractions at the following times: (i) 1/6 of the Management Fee at the time the
Project is acquired by the Company; (ii) 1/6 of the Management Fee at the end of
the first Quarterly Period; (iii) 1/6 of the Management Fee at the end of the
second Quarterly Period; (iv) 1/6 of the Management Fee at the end of the third
Quarterly Period; (v) 1/6 at the end of the fourth Quarterly Period; and (vi)
1/6 of the Management Fee when the Project is sold by the Company. At monthly
intervals the Company shall make a reasonable determination of any adjustments
to the aggregate time needed for Project completion, and any resulting
adjustment to the Quarterly Periods. In the event of any such adjustment, the
payment dates for the Management Fee shall be adjusted accordingly.
3.3 AFFILIATE TRANSACTIONS. Any of the Companies, or subsidiaries
thereof, shall not enter into any contract, obligation or other commitment to
which an Affiliate of any Party is, or is to be, a party (an "AFFILIATE
TRANSACTION") without compliance with this Section 3.3.
(a) Each Party shall promptly notify the other Parties of
any proposed Affiliate Transaction involving an
Affiliate of the notifying party ("AFFILIATED
PARTY"). The Parties whose Affiliates are not a party
or proposed party to the Affiliate Transaction in
question (the "NON- AFFILIATED PARTIES") shall,
notwithstanding anything to the contrary in this
Agreement be entitled (i) to determine whether the
Company enters into such proposed Affiliate
Transaction in question and (ii) if the Company
enters into such Affiliate Transaction to act
exclusively for the Company in connection with
enforcing, waiving, pursuing, exercising, litigating
or settling any right, remedy or claim of the Company
thereunder, or modifying, amending or terminating
such Affiliate Transaction. Such right of the
Non-Affiliated Parties to act exclusively for the
Company with respect to any such Affiliate
Transaction is generally intended to permit
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the Non-Affiliated Parties to exercise any rights or
remedies, including without limitation any right of
termination of the Affiliate, without being prevented
from doing so by the Affiliated Party; provided, that
such right does not include the right to act
exclusively for the Company with respect to any other
decisions to be made by the Company with respect to
such Affiliate Transaction.
(b) Notwithstanding the provisions of Section 3.3(a),
HWS, through its renovation and purchasing
subsidiaries will provide through fixed price
contracts with the Companies the necessary
renovation, refurbishment and purchasing services
required for each Project. Pricing for such services
will be subject to review and approval by Apollo.
(c) To the extent any Party (or an Affiliate of a Party)
is providing design, development, manufacturing,
distribution, or marketing services to or on behalf
of any Company, such Party (or Affiliate) may enter
into subcontracts with others for the performance of
such services. Pricing for such services will be
subject to review and approval by Apollo and
Watermark.
3.4 HWS WARRANTS TO APOLLO. As an inducement to become a Party to this
Agreement and to contribute its Initial Capital Contributions to any of the
Companies formed hereunder, HWS will issue Apollo 750,000 seven-year warrants
priced at 115% of the average market price for the previous twenty consecutive
trading days from the date of execution hereof (the "Warrant") in substantially
the form of EXHIBIT B attached hereto and incorporated herein by this reference.
Such Warrant shall be exercisable, with respect to 250,000 warrants, at the
earlier of any announcement of this Agreement or the formation of any Company
hereunder. Such Warrant shall be exercisable, with respect to the remaining
500,000 warrants, as follows: 100,000 for every $7.5 million of revenues paid by
the Companies to HWS's renovation subsidiary and/or fees paid by the Companies
to HWS's purchasing subsidiary.
3.5 RIGHT OF FIRST OFFER. HWS and Watermark (the "RESTRICTED PARTY")
hereby covenants to and agrees with Apollo (the "PROTECTED PARTY") that so long
as the Restricted Party is a Party of the Company (the "TRIGGER DATE"), the
Restricted Party shall not, without first offering to the Protected Party the
opportunity to do any or all of the following (which offer shall be made in
accordance with Section 1.1 hereof), directly or indirectly, acting alone or as
a member of a partnership, limited liability company or other business entity or
as a holder of any security of any class issued by a corporation, limited
liability company or other business entity or as an officer, director, partner,
employee, consultant, agent or representative of any corporation, partnership,
limited liability company or other business entity, be or become:
(a) interested or engaged in the Business in the United
States of America other than through or in
association with the Protected Party, or
(b) directly or indirectly, as a stockholder, bondholder
or officer, director or employee of, or in any manner
associated with, or aid or abet or give
7
information or financial assistance to any business
which is or may be competitive with any of the
Companies with respect to the Business; provided that
the provisions of this Section 3.5 shall not be
deemed to prohibit a purchase or ownership by the
Restricted Party or any of its affiliates, as a
passive investment, of less than five percent (5%) of
the outstanding capital shares of any publicly held
corporation.
The offer to the Protected Party shall include all financial and legal
information needed by the Protected Party to decide whether to pursue such
opportunity, and shall be supplemented by such information as is reasonably
requested by the Protected Party. Any decision by the Protected Party to pursue
or not to pursue any such opportunity shall be made by such Protected Party in
their sole discretion. In the event the Protected Party decides to not pursue
any such opportunity, then the Restricted Party shall be free to pursue such
opportunity independent of the Protected Party so long as the terms of such
opportunity are no more favorable to the Restricted Party as those offered to
such Protected Party, and so long as such opportunity does not compete with any
other properties that any of the Companies have previously purchased. In the
event the terms offered to the Restricted Party are more favorable than those
previously offered to the Protected Party, the Restricted Party will once again
be required to offer such opportunity to the Protected Party on the basis of the
more favorable terms.
3.6 OTHER ACTIVITIES. Except as restricted by Section 3.5, each of the
Parties and its Affiliates shall be free to engage in any other businesses or
activities and to receive the income and benefits thereof (and no other Party
shall have any interest therein by reason of this Agreement), and no Party shall
have any duty or obligation to present to the Business or any other Party any
such other business opportunities that are outside the scope of the purposes of
the Business.
3.7 DUE DILIGENCE COSTS. On the Closing Date of the first Company
formed pursuant to this Agreement, such Company will reimburse Apollo for its
out-of-pocket and third-party costs associated with and incurred in connection
with formation and creation of such Company. Subject to Apollo's approval, on
such Closing Date, the Company will reimburse HWS and Watermark for their
out-of-pocket and third-party costs associated with and incurred in connection
with formation and creation of such Company. On the Closing Date of any
subsequent Company formed pursuant to this Agreement, such Company will
reimburse Apollo for its out-of-pocket and third-party costs associated with and
incurred in connection with formation and creation of that Company, and, subject
to Apollo's approval, on such Closing Date, the Company will reimburse HWS and
Watermark for their out-of-pocket and third-party costs associated with and
incurred in connection with formation and creation of that Company.
3.8 CLOSING COSTS AND EXPENSES. Apollo, HWS and Watermark represent
that, aside from the advisory relationship between HWS and Resource Holdings
Ltd., no brokers have been involved in either the consummation of this Agreement
or any Company formed hereunder and that no commissions, finder's fees or other
compensation are due to any brokers or agents, including Resource Holdings Ltd.
with regard to any Company or this Agreement. Each party will be separately
responsible for their respective costs incurred prior to execution of this
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Agreement and the formation of any Company hereunder, subject to Section 3.7 of
this Agreement.
3.9 EXPENSES OF IDENTIFYING PROJECTS. No party shall be entitled to
reimbursement for expenses, costs or liabilities incurred in identifying
potential Projects for the Business. The Parties agree that any Company formed
to operate a specific Project may reimburse a Party for actual costs and
expenses incurred and directly related to the acquisition of such Project. Such
reimbursement will occur only (i) upon the execution by the Company of a binding
contract for the acquisition of the Project in question; (ii) upon the submittal
by the requesting Party of verification of all costs and expenses to the
reasonable satisfaction of Apollo; and (iii) upon the written approval of
Apollo.
ARTICLE IV
NONDISCLOSURE OF INFORMATION
4.1 CONFIDENTIALITY. All disclosures of trade secrets, know-how,
financial information, or other confidential information made by the Business to
any Party or made by any Party under or in connection with this Agreement or the
Associated Agreements, as well as the terms of this Agreement and all Associated
Agreements, shall be received and maintained in confidence by the recipient
during the term hereof and for three (3) years after dissolution of the Business
and each Party shall treat all such trade secrets, know-how, financial
information or other confidential information as confidential except:
(a) as to the persons directly responsible for the
performance of the obligations of this Agreement and
for the effective operation of the Business;
(b) as to the professional advisers of the Parties and
the Companies;
(c) as to such disclosures to Customers of the Companies
as are necessary for the effective carrying on of
business by the Companies;
(d) as to such information as is required by law to be
disclosed by the Parties or the Companies; and
(e) as to such information as is or may fall within the
public domain otherwise than in violation of the
provisions of this Article.
4.2 DUTY OF CARE. Each Party will take such steps as lie within its
power to assure that all managers, officers and employees of the Companies, to
whom confidential information is disclosed, take all proper precautions to
prevent the unauthorized disclosure and use of the confidential information
referenced in this Article.
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ARTICLE V
TERMINATION AND DISSOLUTION
5.1 RIGHT TO TERMINATE. Notwithstanding any other provision of this
Agreement to the contrary, either Apollo, HWS or Watermark may terminate this
Agreement (the "TERMINATION OPTION"). The Termination Option may be exercised by
either Apollo, HWS or Watermark at any time after the fifth-year anniversary of
date of this Agreement by giving 180 days' written notice to the other Party.
Should any Party exercise the Termination Option, such party shall not be in
default of this Agreement. Further, the Parties thereafter be released from any
obligations under Section 3.5 hereof. The exercise of the Termination Option by
any Party shall not affect the rights, responsibilities and obligations of the
Parties under any previously executed Operating Agreement.
ARTICLE VI
DISPUTE RESOLUTION
6.1 ARBITRATION. Any dispute, controversy or claim (except an action
for a temporary restraining order, preliminary injunction or similar equitable
relief) asserted by any Party against another Party arising out of or relating
to this Agreement or any document or agreement executed pursuant to this
Agreement or the breach thereof, shall be settled by arbitration if so requested
by any Party pursuant to Section 6.2. The arbitration shall be conducted by one
arbitrator, who shall be appointed pursuant to the Commercial Arbitration Rules
of the American Arbitration Association ("AAA"). The arbitration shall be held
in New York, New York, and shall be conducted in accordance with the Commercial
Arbitration Rules of the AAA, except that the rules set forth in this Article
shall govern such arbitration to the extent that they conflict with the rules of
the AAA.
6.2 NOTICE. Upon written notice by a Party to another Party of a
request for arbitration hereunder, the Parties shall use their best efforts to
cause the arbitration to be conducted in an expeditious manner with such
arbitration to be completed within sixty (60) days after selection of the
arbitrator. In the arbitration, New York law shall govern, except to the extent
those laws conflict with the Commercial Arbitration Rules of the AAA and the
provisions of this Article. There shall be no discovery except as the arbitrator
shall permit following a determination by the arbitrator that the Party seeking
such discovery has a substantial demonstrable need. All other procedural matters
shall be within the discretion of the arbitrator. In the event a Party fails to
comply with the procedures in any arbitration in any manner as determined by the
arbitrator, the arbitrator shall fix a reasonable period of time for compliance
and, if the Party fails to comply within such period, a remedy deemed just by
the arbitrator, including without limitation, an award of default, may be
imposed. The arbitrator shall have the right to award costs, including without
limitation, attorneys' fees, to a Party to the arbitration.
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6.3 BINDING NATURE. The determination of the arbitrator shall be final
and binding on the parties. Judgement upon the award rendered by the arbitrator
may be entered in any court having jurisdiction thereof.
ARTICLE VII
MISCELLANEOUS
7.1 AMENDMENTS. Amendments to this Agreement may only be made by the
unanimous written consent of all of the Parties hereto.
7.2 NOTICES. All notices and other communications required or permitted
to be given or made under this Agreement shall be given or made in writing. Such
notices shall be delivered by hand delivery, by telecopy, or similar electronic
means, by nationally recognized overnight courier, fees prepaid, addressed as
follows:
If to Apollo: Apollo Real Estate Advisors II, L.P.
0000 Xxxxxx xx xxx Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxxx
Copy to: Apollo Advisors, L.P.
0000 Xxxxxx xx xxx Xxxxx
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
with a copy to: Xxxxxxxxxx Xxxxx Xxxxxx & Xxxxxxxxxx, P.C.
000 Xxxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxx 00000-0000
Attn: Xxxxxx X. Xxxxx, Esq.
If to HWS: Hospitality Worldwide Services, Inc.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx
with a copy to: Xxxxxx Xxxxxxxx Frome & Xxxxxxxxxx, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxxxx, Esq.
If to Watermark: Watermark Investments Limited, LLC
000 X. Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxxxx
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with a copy to: Varner, Stephens, Xxxxxxxxx & White, LLP
0000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000 Xxxxxxxxx
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
Any Party may change its address for the purpose of this Section 7.2 by
notice to the other given in the manner set forth above.
7.3 GOVERNING LAW. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of New York in a like manner as an
agreement made and wholly to be performed in the State of New York.
7.4 VENUE. Each of the Parties consents to the jurisdiction of any
court in New York County, New York, for any action arising out of matters
related to this Agreement. Each of the Parties waives the right to commence an
action in connection with this Agreement in any court outside of such County.
7.5 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HEREBY WAIVES TRIAL BY
JURY IN ANY ACTION ARISING OUT OF MATTERS RELATED TO THIS AGREEMENT, WHICH
WAIVER IS INFORMED AND VOLUNTARY.
7.6 ATTORNEY FEES. If any Party obtains a judgment against any other
Party by reason of the breach of this Agreement or the failure to comply with
the terms hereof, reasonable attorneys' fees and costs as fixed by the court
shall be included in such judgment.
7.7 HEADINGS. The Article and Section headings of this Agreement are
for convenience only, do not form a part of this Agreement, and shall not in any
way affect the interpretation hereof.
7.8 CAPITALIZED TERMS. Any capitalized terms not defined herein shall
have the meaning ascribed to such term in the Operating Agreement.
7.9 EXTENSION NOT A WAIVER. No delay or omission in the exercise of any
power, remedy or right herein provided or otherwise available to a Party shall
impair or affect the right of such Party thereafter to exercise the same. Any
extension of time or other indulgence granted to a Party hereunder shall not
otherwise alter or affect any power, remedy or right of any other Party, or the
obligations of the Party to whom such extension or indulgence is granted.
7.10 CREDITORS NOT BENEFITED. Nothing contained in this Agreement is
intended or shall be deemed to benefit any creditor of the Parties or any other
third party.
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7.11 PUBLICITY. No Party shall issue any press release or otherwise
publicize or disclose the terms of this Agreement or the terms of the Parties'
acquisition of the interests in any Company, without the consent of the other
Parties, except as such disclosure may be made in the course of normal reporting
practices by a Party to its partners, shareholders, consultants or members or as
otherwise required by law.
7.12 CONSTRUCTION AND AMENDMENT. No oral explanation of or oral
information relating to this Agreement offered by either party hereto shall
alter the meaning or interpretation of this Agreement.
7.13 FURTHER ACTION. Each Party agrees to perform all further acts and
execute, acknowledge, and deliver any documents which may be reasonably
necessary, appropriate, or desirable to carry out the provisions of this
Agreement.
7.14 VARIATION OF PRONOUNS. All pronouns and any variations thereof
shall be deemed to refer to masculine, feminine, or neuter, singular or plural,
as the identity of the person or persons may require.
7.15 SUCCESSORS AND ASSIGNS. Subject to the restrictions on
transferability set forth in the Operating Agreement, this Agreement shall bind
and inure to the benefit of the parties hereto and their respective successors.
This Agreement may not be assigned by the Parties, except that Apollo shall be
entitled to assign this Agreement to any Affiliate. For purposes of this Section
7.14, assignment shall include any change in ownership or control, by merger,
acquisition, operation of law, or otherwise.
7.16 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
shall constitute one and the same agreement.
7.17 AMBIGUITIES. All of the parties to this Agreement have
participated in the negotiation and drafting hereof. Accordingly, it is
understood and agreed that the general rule that ambiguities are to be construed
against the drafter shall not apply to this Agreement. In the event that any
language of this Agreement is found to be ambiguous, each Party shall have an
opportunity, in any legal proceeding, to present evidence as to the actual
intent of the parties with respect to any such ambiguous language.
7.18 ENTIRE AGREEMENT. The terms and conditions contained herein
constitute the entire agreement between the Parties concerning the subject
matter hereof, and shall supersede all previous communications, either oral or
written, between the parties hereto, and no agreement or understanding varying
or extending this Agreement shall be binding upon any Party unless in writing,
signed by a duly authorized officer or representative of each Party.
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
set forth above.
Apollo Real Estate Advisors II, L.P., a Delaware
limited partnership
By: Apollo Real Estate Capital Advisors II, Inc.,
its general partner
By: /s/ Illegible
-----------------------------------------------
Title: Vice President
Hospitality Worldwide Services, Inc., a New York
corporation
By:/s/ Illegible
-----------------------------------------------
Title: President/Chief Executive Officer
Watermark Investments Limited, LLC, a Delaware
limited liability company
By: /s/ Illegible
----------------------------------------------
Title: Manager
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