AGREEMENT OF PURCHASE AND SALE between EQUISTAR ARLINGTON PARTNERS, L.P., the SELLER and INTERSTATE ARLINGTON, LP, the BUYER Dated as of September 11, 2006
Exhibit 10.6
AGREEMENT OF PURCHASE AND SALE
between
EQUISTAR ARLINGTON PARTNERS, L.P., the SELLER
and
INTERSTATE ARLINGTON, LP, the BUYER
Dated as of September 11, 2006
Table of Contents
Page | ||||
ARTICLE I DEFINITIONS |
1 | |||
SECTION 1.1. Defined Terms |
1 | |||
ARTICLE II SALE, PURCHASE PRICE AND CLOSING |
8 | |||
SECTION 2.1. Sale of Asset |
8 | |||
SECTION 2.2. Purchase Price |
10 | |||
SECTION 2.3. Xxxxxxx Money |
11 | |||
SECTION 2.4. The Closing |
11 | |||
ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER |
12 | |||
SECTION 3.1. General Seller Representations and Warranties |
12 | |||
SECTION 3.2. Representations and Warranties of the Seller as to the Asset |
14 | |||
SECTION 3.3. Limitations on Representations and Warranties of the Seller |
16 | |||
SECTION 3.4. Covenants of the Seller Prior to Closing |
16 | |||
SECTION 3.5. Amendment to Schedules |
17 | |||
ARTICLE IV REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BUYER |
17 | |||
SECTION 4.1. Representations and Warranties of the Buyer |
17 | |||
SECTION 4.2. Covenants of the Buyer Prior to Closing |
19 | |||
SECTION 4.3. Employee Matters |
20 | |||
SECTION 4.4. Bookings |
21 | |||
SECTION 4.5. Franchise Agreement |
21 | |||
SECTION 4.6. Manager Defaults |
22 | |||
ARTICLE V CONDITIONS PRECEDENT TO CLOSING |
24 | |||
SECTION 5.1. Conditions Precedent to the Seller’s Obligations |
24 | |||
SECTION 5.2. Conditions to the Buyer’s Obligations |
24 | |||
SECTION 5.3. Waiver of Conditions Precedent |
25 | |||
ARTICLE VI CLOSING DELIVERIES |
25 | |||
SECTION 6.1. The Buyer Closing Deliveries |
25 | |||
SECTION 6.2. The Seller Closing Deliveries |
26 | |||
ARTICLE VII INSPECTIONS; RELEASE |
28 | |||
SECTION 7.1. Right of Inspection |
28 | |||
SECTION 7.2. Examination; No Contingencies |
28 | |||
SECTION 7.3. Release |
31 |
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Page | ||||
ARTICLE VIII TITLE AND PERMITTED EXCEPTIONS |
32 | |||
SECTION 8.1. Title Insurance and Survey |
32 | |||
SECTION 8.2. Title Commitment; Survey |
32 | |||
SECTION 8.3. Delivery of Title |
32 | |||
SECTION 8.4. Cooperation |
33 | |||
ARTICLE IX TRANSACTION COSTS; RISK OF LOSS |
33 | |||
SECTION 9.1. Transaction Costs |
33 | |||
SECTION 9.2. Risk of Loss |
34 | |||
ARTICLE X ADJUSTMENTS |
35 | |||
SECTION 10.1. Adjustments |
35 | |||
SECTION 10.2. Re-Adjustment |
38 | |||
SECTION 10.3. Accounts Receivable |
39 | |||
SECTION 10.4. Interstate Letter Agreement |
40 | |||
ARTICLE XI INDEMNIFICATION |
40 | |||
SECTION 11.1. Indemnification by the Seller |
40 | |||
SECTION 11.2. Indemnification by the Buyer |
40 | |||
SECTION 11.3. Limitations on Indemnification |
41 | |||
SECTION 11.4. Survival |
41 | |||
SECTION 11.5. Indemnification as Sole Remedy |
41 | |||
ARTICLE XII DEFAULT AND TERMINATION |
42 | |||
SECTION 12.1. The Seller’s Termination |
42 | |||
SECTION 12.2. The Buyer’s Termination |
43 | |||
ARTICLE XIII TAX CERTIORARI PROCEEDINGS |
43 | |||
SECTION 13.1. Prosecution and Settlement of Proceedings |
43 | |||
SECTION 13.2. Application of Refunds or Savings |
44 | |||
SECTION 13.3. Survival |
44 | |||
ARTICLE XIV MISCELLANEOUS |
44 | |||
SECTION 14.1. Use of Blackstone Name and Address |
44 | |||
SECTION 14.2. Exculpation of the Seller |
44 | |||
SECTION 14.3. Brokers |
44 | |||
SECTION 14.4. Confidentiality; Press Release; IRS Reporting Requirements |
45 | |||
SECTION 14.5. Escrow Provisions |
46 | |||
SECTION 14.6. Successors and Assigns; No Third-Party Beneficiaries |
46 | |||
SECTION 14.7. Assignment |
47 | |||
SECTION 14.8. Further Assurances |
47 | |||
SECTION 14.9. Notices |
47 | |||
SECTION 14.10. Entire Agreement |
49 | |||
SECTION 14.11. Amendments |
49 |
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Page | ||||
SECTION 14.12. No Waiver |
49 | |||
SECTION
14.13. Governing Law |
49 | |||
SECTION 14.14. Intentionally Omitted |
49 | |||
SECTION
14.15. Severability |
49 | |||
SECTION
14.16. Section Headings |
49 | |||
SECTION 14.17. Counterparts |
49 | |||
SECTION
14.18. Acceptance of Deed |
49 | |||
SECTION 14.19. Construction |
49 | |||
SECTION
14.20. Recordation |
49 | |||
SECTION 14.21. Waiver of Jury Trial |
50 | |||
SECTION 14.22. Time is of the Essence |
50 |
Schedules
Schedule A
|
— | Land | ||
Schedule 1.1
|
— | Title Commitment | ||
Schedule 3.l(c)
|
— | Consents | ||
Schedule 3.2(a)
|
— | Operating Agreements | ||
Schedule 3.2(c)
|
— | Tenant Leases | ||
Schedule 3.2(d)
|
— | Brokerage Commissions | ||
Schedule 3.2(f)
|
— | Litigation | ||
Schedule 3.2(g)
|
— | Bookings | ||
Schedule 10.4
|
— | Interstate Payment |
Exhibits
Exhibit A
|
— | Form of Assignment of Leases | ||
Exhibit B
|
— | Form of Assignment of Contracts | ||
Exhibit C
|
— | Form of Special Warranty Deed | ||
Exhibit D
|
— | Form of Xxxx of Sale | ||
Exhibit E
|
— | Form of Assignment of Intangibles | ||
Exhibit F
|
— | Form of FIRPTA Certificate | ||
Exhibit G
|
— | Form of Title Affidavit | ||
Exhibit H
|
— | Form of Memorandum of Sale |
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AGREEMENT OF PURCHASE AND SALE
AGREEMENT OF PURCHASE AND SALE (this “Agreement”), made as of the 11th
day of September, 2006 between EQUISTAR ARLINGTON PARTNERS, L.P., a Delaware limited partnership
(the “Seller”), and INTERSTATE ARLINGTON, LP, a Delaware limited partnership (the
“Buyer”).
A.
The Seller is the owner of the land more particularly described in Schedule A attached hereto (the “Land”). The Seller is also the owner of the hotel facility
located on the
Land having an address at 0000 X. Xxxxx Xxxxxxxxx, Xxxxxxxxx, Xxxxx and commonly known as
the “Hilton Arlington” (the “Hotel”). The Land and the Hotel shall be referred to
herein,
collectively, as the “Property”; the Property and the Asset-Related Property (as defined
below)
shall be referred to herein as the “Asset”.
B. The Seller desires to sell to the Buyer, and the Buyer desires to purchase
from the Seller, the Asset on the terms and conditions hereinafter set forth.
ARTICLE I
DEFINITIONS
SECTION
1.1. Defined Terms. The capitalized terms used herein will have the
following meanings.
“Accounts
Receivable” means all amounts which the Seller is entitled to receive from
the operation of the Hotel, but are not paid as of the Closing, including, without limitation,
charges for the use or occupancy of any guest, conference, meeting or banquet rooms or other
facilities at the Hotel, or any other goods or services provided by or on behalf of the Seller at
the Hotel, but expressly excluding any credit card charges and checks which the Seller has
submitted for payment as of the Closing.
“Agreement” shall mean this Agreement of Purchase and Sale, together with the
exhibits and schedules attached hereto, as the same may be amended, restated, supplemented or
otherwise modified.
“Allocation”
shall have the meaning assigned thereto in subsection 2.2(c).
“Anti-Money Laundering and Anti-Terrorism Laws” shall have the meaning assigned
thereto in subsection 3.1(f)(i).
“Asset” shall have the meaning assigned thereto in “Background” paragraph A.
“Asset File” shall mean the materials with respect to the Asset previously delivered to the
Buyer or its representatives by or on behalf of the Seller or made available to the Buyer at the
Property or in Manager’s possession.
“Asset-Related Property” shall have the meaning assigned thereto in
subsection 2.1(b).
“Assigned Accounts Receivable” shall have the meaning assigned thereto in
subsection 10.3(b)(i).
“Assignment of Contracts” shall have the meaning assigned thereto in
subsection 6.1(a)(ii).
“Assignment of Intangibles” shall have the meaning assigned thereto in
subsection 6.2(a)(v).
“Assignment of Leases” shall have the meaning assigned thereto in
subsection 6.1(a)(i).
“Basket Limitation” shall mean an amount equal to $100,000.
“Xxxx of Sale” shall have the meaning assigned thereto in subsection
6.2(a)(ii).
“Bookings” shall have the meaning assigned thereto in subsection
2.1(b)(viii).
“Books and Records” shall have the meaning assigned thereto in subsection
2.1(b)(xvi).
“Brookhollow Estoppel” shall have the meaning assigned thereto in section 4.7(b).
“Business Day” shall mean any day other than a Saturday, Sunday or other day on which
banks are authorized or required by law to be closed in New York City, New York.
“Buyer” shall have the meaning assigned thereto in the Preamble to this
Agreement.
“Buyer-Related Entities” shall have the meaning assigned thereto in Section
11.1.
“Buyer’s Knowledge” shall mean the actual knowledge of the Buyer based upon the
actual knowledge of Xxxxxx Xx, Xxxxx Xxx and Xxxxxxxxxxx Xxxxxxx without any duty on the part of
such Person to conduct any independent investigation or make any inquiry of any Person.
“Buyer Waived Breach” shall have the meaning assigned thereto in 11.3.
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“Cap Limitation” shall mean an amount equal to $1,500,000.
“Claims” shall have the meaning assigned thereto in Section 7.3.
“Closing” shall have the meaning assigned thereto in subsection
2.4(a).
“Closing Date” shall have the meaning assigned thereto in
subsection 2.4(a).
“Closing
Documents” shall mean any certificate, assignment, instrument or other
document delivered pursuant to this Agreement.
“Code” means the Internal Revenue Code of 1986, as amended from time to time, or any
successor statute. Any reference herein to a particular provision of the Code shall mean, where
appropriate, the corresponding provision in any successor statute.
“Condition
of the Asset” shall have the meaning assigned thereto in
subsection 7.2(b).
“Cut-Off Time” shall have the meaning assigned thereto in subsection 10.1.
“Deed” shall have the meaning assigned thereto in subsection 6.2(a)(i).
“Xxxxxxx Money” shall have the meaning assigned thereto in subsection
2.3(a).
“Employees” shall mean, at any time, all persons who are employed by the Seller or
Manager (whether on a full-time or part-time basis) at the Hotel at such time to operate the Hotel.
“Environmental Laws” shall have the meaning assigned thereto in
subsection 3.2(h).
“Equipment Leases” shall have the meaning assigned thereto in
subsection 2.1(b)(vii).
“Escrow Account” shall have the meaning assigned thereto in subsection
14.5(a).
“Escrow Agent” shall have the meaning assigned thereto in
subsection 2.3(a).
“Executive Order” shall have the meaning assigned thereto
in subsection 3.1(f)(i).
“Existing Survey” shall mean that certain survey of the Property prepared by
Xxxxxx X. Xxxxxxx, RDLS #5017, Halff Associates, Inc. and dated June 24, 1998.
“Extension Option” shall have the meaning assigned thereto in subsection
2.4(b).
“FIRPTA” shall have the meaning assigned thereto in subsection
6.2(a)(vii).
“Financing Liens” shall have the meaning assigned thereto in
subsection 8.3(a).
3
“FF&E” shall have the meaning assigned thereto in subsection 2.1(b)(ii).
“Franchise Agreement” shall mean that certain Amended and Restated Franchise Agreement
dated May 2, 2006 by and between Franchisor and the Seller.
“Franchisor” shall mean Hilton Inns, Inc., a Delaware corporation.
“Governmental Authority” shall mean any federal, state or local government or other
political subdivision thereof, including, without limitation, any agency or entity exercising
executive, legislative, judicial, regulatory or administrative governmental powers or functions, in
each case to the extent the same has jurisdiction over the Person or property in question.
“Government List” shall mean any of (i) the two lists maintained by the United States
Department of Commerce (Denied Persons and Entities), (ii) the list maintained by the United States
Department of Treasury (Specially Designated Nationals and Blocked Persons), and (iii) the two
lists maintained by the United States Department of State (Terrorist Organizations and Debarred
Parties).
“Guest Ledger” means any and all charges accrued to the open accounts of any guests or
customers at the Hotel as of the Cut-Off Time for the use and occupancy of any guest, conference,
meeting or banquet rooms or other facilities at the Hotel, any restaurant, bar or banquet services,
or any other goods or services provided by or on behalf of the Seller.
“Hazardous Materials” shall have the meaning assigned thereto in subsection
7.2(b)(i).
“Hotel” shall have the meaning assigned thereto in “Background” paragraph A.
“Intangible Property” shall have the meaning assigned thereto in subsection
2.1(b)(xiii).
“Interstate Letter” shall have the meaning assigned thereto in Section 10.4.
“Interstate Payment” shall have the meaning assigned thereto in Section
10.4.
“Inventories” shall have the meaning assigned thereto in subsection
2.1(b)(xi).
“IRS” shall mean the Internal Revenue Service.
“Inventories” shall have the meaning assigned thereto in subsection
2.1(b)(xi).
“IRS” shall mean the Internal Revenue Service.
“IRS Reporting Requirements” shall have the meaning assigned thereto in
subsection 14.4(c).
“Land” shall have the meaning assigned thereto in “Background” paragraph A.
“Licenses and Permits” shall have the meaning assigned thereto in
subsection 2.1(b)(iii).
“Liquor Holder” shall have the meaning assigned thereto in subsection 4.2(a)(ii).
4
“Liquor Authorities” shall have the meaning assigned thereto in subsection
4.2(a)(iii).
“Memorandum of Sale” shall have the meaning assigned thereto in subsection 4.2(a)(ii).
“Losses” shall have the meaning assigned thereto in Section 11.1.
“Management Agreement” shall mean that certain Hotel Management Agreement, which is
dated as of January 1, 2001 between MeriStar
SPE Leasing Corp. and Manager, as assigned to the Seller pursuant to that certain Assignment
and Assumption Agreement dated as of May 2, 2006 among MerStar CMBS 2005 Lessee, LLC, the Seller
and MeriStar Hospitality Operating Partnership, L.P., pursuant to which Manager is to provide
management and other services with respect to the Property.
“Manager” shall mean Interstate Management Company L.L.C., successor in interest to
MeriStar Management Company, L.L.C.
“Material Casualty” shall have the meaning assigned thereto in subsection
9.2(b).
“Material Condemnation” shall have the meaning assigned thereto in subsection 9.2(b).
“Miscellaneous Personal Property” shall have the meaning assigned thereto in
subsection 2.1(b)(xv).
“Natural Hazard Expert” shall have the meaning assigned thereto in subsection 7.4(b).
“Operating Agreements” shall mean all maintenance, service and supply contracts,
management agreements, credit card service agreements, booking and reservation agreements, and all
other contracts and agreements which are held by the Seller in connection with the operation of the
Hotel, other than the Franchise Agreement, the Management Agreement, Tenant Leases, Equipment
Leases, the Bookings and Licenses and Permits.
“Outside Closing Date” shall have the meaning assigned thereto in subsection 4.5(b).
“Permitted Exceptions” shall mean (i) the items set forth in exceptions 1, 2, 3,4, 5
(subject to the Seller’s and the Buyer’s proration obligations under subsection 10.1(a)) and 6 (but
as to 6(f), limited to only those Tenant Leases as contemplated under clause (iii) below) in the
Title Commitment, (ii) the matters shown on the Existing Survey, (iii) the Tenant Leases set forth
in Schedule 3.2(c) attached hereto and the Operating Agreements and any Tenant Leases,
Operating Agreements or other contracts entered into after the date hereof, and in accordance with
the terms of this Agreement, (iv) liens for current real estate taxes which are not yet due and
payable, (v) discrepancies, conflicts in boundary lines, shortages in area, encroachments and any
other state of facts as disclosed on a new survey of the property that were not shown on the
Existing Survey and that do not have a material adverse effect on the use or value of the
5
Property, (vi) subject to the adjustments provided for herein, any service, installation,
connection or maintenance charge, and charges for sewer, water, electricity, telephone, cable
television or gas first due from and after the Cut-Off Time, (vii) rights of tenants to remove
trade fixtures at the expiration of the term of the Tenant Leases of such tenants to the extent set
forth in the applicable Tenant Lease, (viii) right of tenants as tenants only under the Tenant
Leases permitted in clause (iii) above, (ix) laws, regulations, resolutions or ordinances,
including, without limitation, building, zoning and environmental protection, as to the use,
occupancy, subdivision, development, conversion or redevelopment of the Property currently or
hereinafter imposed by any governmental or quasi governmental body or authority, and (x) any title
exception which is waived by the Buyer pursuant to subsection 8.3(b).
“Person” shall mean a natural person, partnership, limited partnership, limited liability
company, corporation, trust, estate, association, unincorporated association or other entity.
“Post Effective Date Monetary Encumbrance” shall have the meaning assigned thereto in
subsection 8.3(c).
“Post Effective Date Seller Encumbrance” shall have the meaning assigned thereto
in subsection 8.3(a).
“Property” shall have the meaning assigned thereto in “Background” paragraph A.
“Property and Equipment” shall have the meaning assigned thereto in subsection
2.1(b)(x).
“Purchase Price” shall have the meaning assigned thereto in subsection 2.2(a).
“Releasees” shall have the meaning assigned thereto in Section 7.3.
“Reporting Person” shall have the meaning assigned thereto in subsection
14.4(c).
“Retail Merchandise” shall have the meaning assigned thereto in
subsection 2.1(b)(xii).
“Retained Accounts Receivable” shall have the meaning assigned thereto in
subsection 10.3(b)(ii)
“Seller” shall have the meaning assigned thereto in the Preamble to this Agreement.
“Seller-Related Entities” shall have the meaning assigned thereto in Section
11.2.
“Seller’s Knowledge” shall mean the actual knowledge of the Seller based upon the
actual knowledge of Xxxxxx Xxxxxx, Xxxxxxx Xxxxxx and Xxxxx Xxxxx without any duty on the part of
such Person to conduct any independent investigation or make any inquiry of any Person.
6
“Survival Period” shall have the meaning assigned thereto in Section 11.4.
“Tax Clearance Certificates” shall have the meaning assigned thereto in Section
4.7(a).
“Tax Liens” shall have the meaning assigned thereto in subsection
8.3(a).
“Tenant
Leases” shall have the meaning assigned thereto in subsection 2.1(b)(vi).
“Termination Option” shall have the meaning assigned thereto in subsection
4.5(b).
“Title Company” shall mean First American Title Insurance Company.
“Title Commitment” shall mean that certain Owner Pro Forma issued by the Title
Company, and referred to as GF No. or File No. 06R32664 ND6 and attached hereto as Schedule 1.1.
“Title Policy” shall mean a standard form TLTA T-l Owner’s Policy of Title Insurance without
endorsements issued by the Title Company pursuant to the Title Commitment insuring the Buyer’s
title to the Property subject only to the Permitted Exceptions in an amount equal to the Purchase
Price.
“Trade Payables” shall have the meaning assigned thereto in subsection 10.1(k).
“Transferred Employees” shall have the meaning assigned thereto in subsection 4.3(b).
“UCC” shall mean the Uniform Commercial Code.
“Uniform System of Accounts” shall have the meaning assigned thereto in
subsection 2.1(b)(x).
“WARN Act” means the Worker’s Adjustment and Retraining Notification Act of 1988, 29 U.S.C. §
2101, et seq., and any similar state and local applicable law, as amended from time to
time, and any regulations, rules and guidance issued pursuant thereto.
7
ARTICLE II
SALE, PURCHASE PRICE AND CLOSING
SECTION 2.1. Sale of Asset.
(a) On the Closing Date and pursuant to the terms and subject to the conditions set forth
in this Agreement, the Seller shall sell to the Buyer, and the Buyer shall purchase from the
Seller, the Asset.
(b) The transfer of the Asset to the Buyer shall include the transfer of all Asset-Related
Property. For purposes of this Agreement, “Asset-Related Property” shall mean the
following:
(i) all of the Seller’s right, title and interest in and to all
easements, covenants and other rights appurtenant to the Land and all right, title
and interest of the Seller, if any, in and to any (A) land lying in the bed of any
street, road, avenue or alley, open or closed, in front of or adjoining the Land and
to the center line thereof, and (B) unpaid award or payment which may hereafter be
payable with respect to any taking by condemnation;
(ii) all furniture, furnishings, fixtures, vehicles, rugs, mats,
carpeting, appliances, devices, engines, telephone and other communications
equipment, televisions and other video equipment, plumbing fixtures and other
equipment, and all other equipment and other personal property which are now, or may
hereafter prior to the Closing Date be, placed in or on or attached to the Property
and are used in connection with the operation of the Property (but not including
items owned or leased by tenants or which are leased under the Equipment Leases by
the Seller or Manager) (the “FF&E”);
(iii) all of the Seller’s right, title and interest in and to and to the
extent transferable under applicable law, all licenses, permits and authorizations
presently issued in connection with the operation of all or any part of the Property
as it is presently being operated, other than the existing Liquor License (the
“Licenses and Permits”);
(iv) all of the Seller’s right, title and interest in and to and to the
extent assignable, all warranties, if any, issued to the Seller by any
manufacturer or contractor in connection with construction or installation of
equipment or any component of the improvements included as part of the Property or
FF&E;
(v) all of the Seller’s right, title and interest in and to and to the
extent assignable all Operating Agreements;
8
(vi) all of the Seller’s right, title and interest in and to all leases,
subleases, licenses, contracts and other agreements, granting a real property interest to any other
Person for the use and occupancy of all or any part of the Property, other than the Bookings (the
“Tenant Leases”) and all security and escrow deposits or other security held by or for the
benefit of, or granted to the Seller in connection with, such Tenant Leases;
(vii) all of the Seller’s right, title and interest in and to all leases and
purchase money security agreements for any equipment, machinery, vehicles, furniture or other
personal property located at the Hotel and used in the operation of the Hotel which are held by or
on behalf of the Seller (the “Equipment Leases”), together with all deposits made
thereunder;
(viii) all of the Seller’s right, title and interest in and to all bookings and
reservations for guest, conference, meeting and banquet rooms or other facilities at the Hotel for
dates from and after the Closing Date (the “Bookings”), together with all deposits held by
the Seller with respect thereto;
(ix) all of the Seller’s right, title and interest in and to all Assigned
Accounts Receivable as set forth in Section 10.3;
(x) all items included within the definition of “Property and
Equipment” under the Uniform System of Accounts for the Lodging Industry, Ninth Revised Edition, as
published by the Hotel Association of New York City, Inc. (the “Uniform System of
Accounts”) and used in the operation of the Hotel, including, without limitation, linen, china,
glassware, tableware, uniforms and similar items (“Property and Equipment”);
(xi) all “Inventories” as defined in the Uniform System of Accounts
and used in the operation of the Hotel, such as provisions in storerooms, refrigerators, pantries,
and kitchens, beverages in wine cellars and bars, other merchandise intended for sale or resale,
fuel, mechanical supplies, stationery, guest supplies, maintenance and housekeeping supplies and
other expensed supplies and similar items and including all food and beverages which are located at
the Hotel, or ordered for future use at the Hotel as of the Closing, but expressly excluding any
alcoholic beverages to the extent the sale or transfer of the same is not permitted under
applicable law (the “Inventories”);
(xii) all merchandise located at the Hotel and held for sale to guests
and customers of the Hotel, or ordered for future sale at the Hotel as of the Cut-Off Time, but not
including any such merchandise owned by any tenant at the Property or by Manager (“Retail
Merchandise”);
(xiii) all of the Seller’s right, title and interest in and to and to the extent the
Seller’s rights and interests therein are assignable, all names, tradenames, trademarks, service
marks, logos, and other similar proprietary rights
9
and all registrations or applications for registration of such rights to the used by
the Seller in the operation of the Hotel (the “Intangible
Property”);
(xiv)
Intentionally Omitted;
(xv) all of the Seller’s right, title and interest in and to and to the
extent not included in subsection 2.1(b)(ii) above and to the extent owned by the
Seller, the Hotel’s telephone numbers, printed marketing materials and any slides,
proofs or drawings used by the Seller to produce such materials, to the extent such
slides, proofs or drawings are in the Seller’s possession (“Miscellaneous
Personal Property”; and
(xvi) to the extent in the Seller’s possession or control, all surveys,
architectural, consulting and engineering blueprints, plans and specifications and
reports, if any, related to the Hotel, all books and records, if any, related to the
Hotel (collectively, “Books and Records”), and any goodwill of the Seller
related to the Hotel; provided, however, that the Seller may retain a copy
of all such books and records.
(c) Excluded Property. Notwithstanding anything to the contrary in Section
2.1(a) and (b), the property, assets, rights and interests set forth in this subsection 2.1(c) are
expressly excluded from the Asset:
(i) Cash. Except for deposits expressly included in subsections
2.1(a) and (b) and except for any cash on hand or in house banks for which the
Seller receives a credit under subsection 10.1(1), all cash on hand or on deposit in
any house bank, operating account or other account maintained in connection with the
ownership of the Hotel, including, without limitation, any reserves maintained by
the Seller or Manager required by the Management Agreement (subject to subsection
10.1(1)); and
(ii) Third Party Property. Any fixtures, personal property or
equipment owned by (A) the lessor under any Equipment Leases, (B) the supplier or
vendor under any other Operating Agreements, (C) the tenant under any Tenant Lease,
(D) any Employees, (E) Manager or (F) any guests or customers of the Hotel,
including, without limitation, those items set forth on Schedule 2.1(c)
attached hereto.
SECTION 2.2. Purchase Price.
(a) The consideration for the purchase of the Asset shall be $36,300,000 (the
“Purchase Price”), which shall be paid by the Buyer to the Seller at the Closing in
immediately available funds by wire transfer to such accounts or accounts that the Seller shall
designate to the Buyer; provided that such amount shall be reduced by the Xxxxxxx Money and
adjusted for Closing adjustments and credits provided for in Article X and elsewhere in the
Agreement and the Interstate Payment as described in Article X below.
10
(b) No adjustment shall be made to the Purchase Price except as explicitly set forth in
this Agreement.
(c) The Seller and the Buyer agree that the Purchase Price shall be allocated among the Assets
as determined by agreement of the parties prior to the Closing for federal, state and local tax
purposes in accordance with Section 1060 of the Code. The Buyer shall, within 10 days after the
date of this Agreement, prepare and deliver to the Seller for its review a schedule allocating the
Purchase Price (and any other items that are required for federal income tax purposes to be treated
as part of the purchase price) among the Assets (such schedule, the “Allocation”). The Seller shall
review such Allocation and provide any objections to the Buyer within 10 days after the receipt
thereof. If the Seller raises any objection to the Allocation, the parties hereto will negotiate in
good faith to resolve such objection(s). Upon reaching an agreement on the Allocation, the Buyer
and the Seller shall (i) cooperate in the filing of any forms (including Form 8594 under Section
1060 of the Code) with respect to the Allocation as finally resolved, including any amendments to
such forms required pursuant to this Agreement with respect to any adjustment to the Purchase Price
and (ii) shall file all federal, state and local tax returns and related tax documents consistent
with such allocation, as the same may be adjusted pursuant to Section 9.1 or any other provisions
of this Agreement. Notwithstanding the foregoing, if, after negotiating in good faith, the parties
hereto are unable to agree on a mutually satisfactory Allocation, each of the Buyer and the Seller
shall use its own allocation for purposes of this Section 2.4.
SECTION 2.3. Xxxxxxx Money.
(a) On the date hereof, the Buyer shall deposit with the Title Company, as escrow agent (in
such capacity, “Escrow Agent”), cash in an amount equal to $2,000,000 (together with all accrued
interest thereon, the “Xxxxxxx Money”) in immediately available funds by wire to such account as
Escrow Agent shall designate to the Buyer. The Xxxxxxx Money shall be nonrefundable to the Buyer
except as otherwise expressly provided in this Agreement. If the Xxxxxxx Money is not deposited by
the Buyer by 5:00 p.m. (New York Time) on the date of this Agreement, the Seller shall have the
right, in the Seller’s sole and absolute discretion, upon written notice to the Buyer delivered
prior to the Buyer’s deposit of the Xxxxxxx Money with the Title Company, to terminate this
Agreement whereupon neither party hereto shall have any further rights or obligations hereunder
except for those that expressly survive the termination of this Agreement.
(b) Upon delivery by the Buyer to Escrow Agent and upon receipt of an executed form W-9, the
Xxxxxxx Money will be deposited by Escrow Agent in an interest-bearing account acceptable to the
Buyer and the Seller and shall be held in escrow in accordance with the provisions of Section 14.5.
All interest earned on the Xxxxxxx Money while held by Escrow Agent shall be paid to the party to
whom the Xxxxxxx Money is paid, except that if the Closing occurs, the Buyer shall receive a credit
for such interest in accordance with subsection 2.2(a).
SECTION 2.4. The Closing.
(a) The closing of the sale and purchase of the Asset (the “Closing”) shall take place
on September 26, 2006 (such date, the “Closing Date”), Time Being Of The Essence
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with respect to the Buyer’s and the Seller’s obligations hereunder on the Closing Date,
subject only to the rights to extend and/or adjourn the Closing Date as are expressly
permitted in this Agreement.
(b) The Buyer shall have the right to extend the Closing Date (as it may have otherwise been
extended in accordance with Section 4.5) for up to 15 days (the “Extension Option”) in
accordance with the terms of this subsection 2.4(b). In order to exercise the Extension Option, the
Buyer must deliver written notice to the Seller and Escrow Agent of such extension no later than
two Business Days prior to the then scheduled Closing Date. Notwithstanding the provisions of
subsection 2.4(b), the parties agree and acknowledge that in no event shall the Buyer have the
right to extend the Closing Date under subsection 2.4(b) beyond the Outside Closing Date. If the
Closing Date is extended under any other provision of this Agreement, the length of the Extension
Option shall be reduced accordingly so that the Closing Date shall not be extended under subsection
2.4(b) beyond the Outside Closing Date.
(c) The Closing shall be held on the Closing Date at 10:00 A.M. at the offices of Xxxxxxx
Xxxxxxx & Xxxxxxxx LLP, 425 Lexington Avenue, New York, New York, or at such other location agreed
upon by the parties hereto.
(d) Notwithstanding the provisions of subsection 2.4(b), there shall be no requirement that
the Seller and the Buyer physically attend the Closing, and all funds and documents to be delivered
at the Closing may be delivered to Escrow Agent unless the parties hereto mutually agree otherwise.
The Buyer and the Seller hereby authorize their respective attorneys to execute and deliver to
Escrow Agent any additional or supplementary instructions as may be necessary or convenient to
implement the terms of this Agreement and facilitate the closing of the transactions contemplated
hereby, provided that such instructions are consistent with and merely supplement this Agreement
and shall not in any way modify, amend or supersede this Agreement.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER
SECTION 3.1. General Seller Representations and Warranties. The Seller hereby
represents and warrants to the Buyer as follows:
(a)
Formation; Existence. It is a limited partnership, duly formed, validly existing
and in good standing under the laws of the State of Delaware and the State of Texas.
(b) Power and Authority. It has all requisite power and authority to enter into this
Agreement, to perform its obligations hereunder and to consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement, the sale of the Assets and the
consummation of the transactions provided for in this Agreement have been duly authorized by all
necessary action on its part. This Agreement has been duly executed and
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delivered by it and constitutes its legal, valid and binding obligation, enforceable against
it in accordance with its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors’ rights and by general
principles of equity (whether applied in a proceeding at law or in equity).
(c) No Consents. Except as set forth in Schedule 3.1(c). no consent, license,
approval, order, permit or authorization of, or registration, filing or declaration with, any
court, administrative agency or commission or other Governmental Authority or instrumentality,
domestic or foreign, is required to be obtained or made in connection with the execution, delivery
and performance of this Agreement or any of the transactions required or contemplated hereby.
(d) No Conflicts. The execution, delivery and compliance with, and
performance of the terms and provisions of, this Agreement, and the sale of the Asset, will not (i)
conflict with or result in any violation of its organizational documents, (ii) conflict with or
result in any violation of any provision of any bond, note or other instrument of indebtedness,
contract, indenture, mortgage, deed of trust, loan agreement, lease or other agreement or
instrument to which it is a party in its individual capacity, or (iii) violate any existing term or
provision of any order, writ, judgment, injunction, decree, statute, law, rule or regulation
applicable to it or its assets or properties.
(e) Foreign Person. It is not a “foreign person” as defined in Internal Revenue Code
Section 1445 and the regulations issued thereunder.
(f) Anti-Terrorism Laws.
(i) None of the Seller or, to Seller’s Knowledge, its affiliates, is in
violation of any laws relating to terrorism, money laundering or the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Action of 2001, Public Law 107-56 and Executive Order No. 13224
(Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to
Commit, or Support Terrorism) (the “Executive Order”) (collectively, the
“Anti-Money Laundering and Anti-Terrorism Laws”).
(ii) None of the Seller or, to Seller’s Knowledge, its affiliates, is
acting, directly or indirectly, on behalf of terrorists, terrorist organizations or
narcotics traffickers, including those persons or entities that appear on the Annex
to the Executive Order, or are included on any relevant lists maintained by the
Office of Foreign Assets Control of U.S. Department of Treasury, U.S. Department of
State, or other U.S. government agencies, all as may be amended from time to time.
(iii) None of the Seller or, to Seller’s Knowledge, its affiliates or,
without inquiry, any of its brokers or other agents, in any capacity in connection
with the purchase of the Property (A) conducts any business or engages in making or
receiving any contribution of funds, goods or services to or for the benefit of any
person included in the lists set forth in the preceding paragraph; (B) deals in,
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or otherwise engages in any transaction relating to, any property or interests
in property blocked pursuant to the Executive Order; or (C) engages in or conspires
to engage in any transaction that evades or avoids, or has the purpose of evading or
avoiding, or attempts to violate, any of the prohibitions set forth in any
Anti-Money Laundering and Anti-Terrorism Laws.
(iv) The Seller understands and acknowledges that the Buyer may
become subject to further anti-money laundering regulations, and agrees to execute
instruments, provide information, or perform any other acts as may reasonably be
requested by the Buyer, for the purpose of: (A) carrying out due diligence as may be
required by applicable law to establish the Seller’s identity and source of funds;
(B) maintaining records of such identities and sources of funds, or verifications or
certifications as to the same; and (C) taking any other actions as may be required
to comply with and remain in compliance with anti-money laundering regulations
applicable to the Seller.
(v) Neither the Seller, nor any person controlling or controlled by
the Seller, is a country, territory, individual or entity named on a Government
List, and the monies used in connection with this Agreement and amounts committed
with respect thereto, were not and are not derived from any activities that
contravene any applicable anti-money laundering or anti-bribery laws and regulations
(including funds being derived from any person, entity, country or territory on a
Government List or engaged in any unlawful activity defined under Title 18 of the
United States Code, Section 1956(c)(7)).
SECTION 3.2. Representations and Warranties of the Seller as to the Asset. The
Seller hereby represents and warrants to the Buyer as follows:
(a) Operating Agreements. To Seller’s Knowledge, (i) all material Operating Agreements
(and any amendments or modification thereof) affecting the Property as of the date hereof are set
forth on Schedule 3.2(a) attached hereto, (ii) the same have not been modified or amended,
except as shown in such documents, (iii) all material Operating Agreements are in full force and
effect, (iv) the Seller has delivered to the Buyer true and complete copies of each material
Operating Agreement to the extent in the Seller’s possession and (v) there are no material defaults
by any party under any material Operating Agreement.
(b) Employees. The Seller does not have any employees. The Seller is not a party to
any collective bargaining agreement or other contract or agreement with any labor organization. The
Seller has not entered into any agreements with any Employees except through Manager.
(c) Tenant Leases and Equipment Leases. To Seller’s Knowledge, Schedule 3.2(c)
sets forth a correct and complete list of the Tenant Leases and all material Equipment Leases for
the Hotel as of the date hereof. Except as set forth in Schedule 3.2(c), as of the date
hereof, (i) to Seller’s Knowledge, all material Equipment Leases and Tenant Leases are in full
force and effect and the Seller has delivered to the Buyer true and complete copies of all material
Equipment Leases and Tenant Leases to the extent in the Seller’s possession, and (ii) the Seller
14
has not given or, to Seller’s Knowledge, received any written notice of any breach or default
under any of the Tenant Leases or Equipment Leases that has not been cured.
(d) Brokerage Commissions. To Seller’s Knowledge, there are no unpaid brokerage
commissions or finders’ fees payable by the landlord with respect to the current or any renewal
term of any of the Tenant Leases other than those set forth on Schedule 3.2(d) attached
hereto and the Seller has no agreement with any broker with respect to any renewal term of any
Tenant Lease except as set forth in Schedule 3.2(d).
(e) Condemnation. As of the date hereof, there is no pending condemnation or similar
proceedings affecting the Property, and to Seller’s Knowledge, no such action is threatened or
contemplated.
(f) Litigation. To Seller’s Knowledge and except as disclosed in Schedule
3.2(f) attached hereto, as of the date hereof, there are no actions, suits or proceedings
pending against or affecting the Asset or the Seller in any court or before or by an arbitration
tribunal or regulatory commission, department or agency and to Seller’s Knowledge, no such actions,
suits or proceedings has been threatened or contemplated.
(g) Bookings. To Seller’s Knowledge, Schedule 3.2(g) sets forth a correct list
of all Bookings for the Hotel as of the date hereof.
(h) Environmental Matters. The Seller has not received any written notice from
any governmental or regulatory authority of a violation of any applicable Environmental Laws, which
have not been corrected. For the purposes of this subsection 3.2(h), “Environmental Laws”
means any and all federal, state, county and local statutes, laws, regulations and rules in effect
on the date of this Agreement relating to the protection of the environment or to the use,
transportation and disposal of Hazardous Materials.
(i) Title to Personal Property. Other than FF&E, Property and Equipment, Retail
Merchandise and Inventories covered by an Equipment Lease or as it relates to the rights, if any,
of Franchisor under the Franchise Agreement therein, the Seller shall own the FF&E, Property and
Equipment, Retail Merchandise and Inventories free and clear of all liens and encumbrances as of
the Closing Date.
(j) Franchise Agreement. The Seller has delivered to the Buyer a true and
complete copy of the Franchise Agreement. To Seller’s Knowledge, (i) the Franchise Agreement is in
full force and effect and (ii) there are no material defaults by any party thereunder as of the
date hereof.
(k) Violation of Law. The Seller has not received any written notice from any
governmental or regulatory authority of a violation of any applicable material law within the past
two years, which have not been remedied.
(l) Liquor Holder. All of the issued and outstanding shares of Liquor
Holder is held by MeriStar SPE Leasing LLC (f/k/a MeriStar SPE Leasing Corp.) and such
interest will not be encumbered as of the Closing.
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SECTION 3.3. Limitations on Representations and Warranties of the Seller. If the
representations and warranties relating to the Operating Agreements set forth in Section 3.2 and
the status of the contract parties thereunder (other than the Seller or its affiliates) contained
herein were true and correct as of the date of this Agreement, no change in circumstances or status
of such contract party (e.g., defaults, bankruptcies or other adverse matters relating to such
contract party) occurring after the date hereof shall permit the Buyer to terminate this Agreement
or constitute grounds for the Buyer’s failure to close.
SECTION 3.4. Covenants of the Seller Prior to Closing. From the date hereof until
Closing or earlier termination of this Agreement, the Seller or the Seller’s agents shall:
(a) Insurance. Keep the Property insured against fire and other hazards in coverage,
amounts and deductibles not materially less than those in effect as of the date of this Agreement
and otherwise under such terms as the Seller deems advisable consistent with past practices.
(b) New Operating Agreements. Without the prior written consent of the Buyer, which
consent shall not be unreasonably withheld or delayed, not enter into any Operating Agreements or
Equipment Leases, or renew, amend or supplement any such contracts; provided that the Seller may
enter into or renew such contracts, or amend or supplement such contracts, without the Buyer’s
consent if such contract is entered into (or renewed, amended, or supplemented, as the case may be)
in the course of customary maintenance and repairs at the Property, or is necessary as a result of
an emergency at the Property and in either case is terminable on 30 days or less notice, without
penalty. If the Seller enters into or renews any such contracts, or amends or supplements any such
contracts, after the date of this Agreement, then the Seller shall promptly provide written notice
and a copy thereof to the Buyer and unless the same required the Buyer’s approval pursuant to this
paragraph and such approval was not obtained, the Buyer shall assume such contract at Closing and
the schedule of contracts attached to the Assignment of Contracts shall be so modified, and such
contract shall be deemed added to Schedule 3.2(a) attached hereto and Schedule
3.2(a) shall be deemed amended at the Closing to include such contracts. If a new contract, or
a renewal, amendment or supplement to an existing contract, requires the Buyer’s approval and the
Buyer does not object within seven days after receipt of a copy of such contract, then the Buyer
shall be deemed to have approved such contract. The Seller shall observe and perform all of its
material obligations under the material Operating Agreements and Equipment Leases excluding any
such agreements which may be terminated in the ordinary course of the operation of the Hotel or as
a result of a default by the other party.
(c) New Tenant Leases. Without the prior consent of the Buyer, not execute any new
lease, or renew, amend or supplement any existing lease (unless required by the terms thereof), for
space at the Property. If the Buyer’s approval was obtained on a new lease or the renewal,
amendment or supplement of an existing lease, the Buyer shall assume such lease at Closing and the
schedule of leases attached to the Assignment of Leases shall be so modified, and such lease shall
be deemed added to Schedule 3.2(c) attached hereto and Schedule 3.2(c) shall be
deemed amended at the Closing to include such leases. If the Buyer does not object within seven
days after receipt of a copy of a request for approval of a new lease, or to the renewal, amendment
or supplement of an existing lease (unless required by the terms thereof),
16
then the Buyer shall be deemed to have approved such new lease, renewal, amendment or
supplement, as the case may be.
(d) Franchise Agreement. Observe and perform all of its material obligations under the
Franchise Agreement. Without the prior consent of the Buyer, the Seller shall not amend, supplement
or terminate the Franchise Agreement.
(e) Assets. Shall not sell, exchange, assign, transfer, convey or otherwise dispose of
all or any of the Asset or any interest therein except for any FF&E, Inventories, Retail
Merchandise, Miscellaneous Personal Property or Property and Equipment that are sold, replaced or
consumed in the ordinary course of business and shall, to the extent within the Seller’s control
under the Management Agreement, maintain levels of Inventory and Property and Equipment in a manner
substantially consistent with the Seller’s customary operating practices and historical practice at
the Property.
(f) Operation. Shall, to the extent within the Seller’s control under the Management
Agreement, continue to operate and maintain the Hotel in substantially the same manner in which it
is being operated and maintained as of the date hereof, provided that, except for emergency
repairs, the Seller shall not perform any capital improvements at the Hotel including, without
limitation, any capital improvements or expenditures as may be contemplated by the existing capital
expenditure budget for the Hotel.
(g) Management Agreement. At or prior to the Closing, the Seller shall terminate
the Management Agreement effective as of or prior to the Closing Date.
SECTION 3.5. Amendment to Schedules. Notwithstanding anything to the contrary in
this Agreement, the Seller shall have the right to amend and supplement the schedules to this
Agreement from time to time prior to the Closing to reflect changes since the date of this
Agreement by providing a written copy of such amendment or supplement
to the Buyer; provided,
however, that any amendment or supplement to the schedules to this Agreement shall have no
effect for the purposes of determining whether subsection 5.2(a) has been satisfied if the matter
raised in such supplement has a material adverse effect on the Asset, but shall have effect only
for the purposes of limiting the defense and indemnification obligations of the Seller for the
inaccuracy or untruth of the representation or warranty qualified by such amendment or supplement.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BUYER
SECTION 4.1. Representations and Warranties of the Buyer. The Buyer hereby
represents and warrants to the Seller as follows:
(a) Formation: Existence. It is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of Delaware.
17
(b)
Power; Authority. It has all requisite power and authority to enter into
this Agreement, to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement, the purchase of the
Asset and the consummation of the transactions provided for herein have been duly authorized by all
necessary action on the part of the Buyer. This Agreement has been duly executed and delivered by
the Buyer and constitutes the legal, valid and binding obligation of the Buyer enforceable against
the Buyer in accordance with its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors’ rights and by general
principles of equity (whether applied in a proceeding at law or in equity).
(c) No Consents. No consent, license, approval, order, permit or
authorization of, or registration, filing or declaration with, any court, administrative agency or
commission or other Governmental Authority or instrumentality, domestic or foreign, is required to
be obtained or made in connection with the execution, delivery and performance of this Agreement or
any of the transactions required or contemplated hereby.
(d) No Conflicts. The execution, delivery and compliance with, and performance of the
terms and provisions of, this Agreement, and the purchase of the Asset, will not (i) conflict with
or result in any violation of its organizational documents, (ii) conflict with or result in any
violation of any provision of any bond, note or other instrument of indebtedness, contract,
indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which
it is a party in its individual capacity, or (iii) violate any existing term or provision of any
order, writ, judgment, injunction, decree, statute, law, rule or regulation applicable to it or its
assets or properties.
(e) Anti-Terrorism Laws.
(i) None of the Buyer or, to the Buyer’s Knowledge, its affiliates,
is in violation of the Executive Order or any Anti-Money Laundering and
Anti-Terrorism Law.
(ii) None of the Buyer or, to the Buyer’s Knowledge, its affiliates,
is acting, directly or indirectly, on behalf of terrorists, terrorist organizations
or narcotics traffickers, including those persons or entities that appear on the
Annex to the Executive Order, or are included on any relevant lists maintained by
the Office of Foreign Assets Control of U.S. Department of Treasury, U.S. Department
of State, or other U.S. government agencies, all as may be amended from time to
time.
(iii) None of the Buyer or, to the Buyer’s Knowledge, its affiliates
or, without inquiry, any of its brokers or other agents, in any capacity in
connection with the purchase of the Property (A) conducts any business or engages in
making or receiving any contribution of funds, goods or services to or for the
benefit of any person included in the lists set forth in the preceding paragraph;
(B) deals in, or otherwise engages in any transaction relating to, any property or
interests in property blocked pursuant to the Executive Order; or
18
(C) Engages in or conspires to engage in any transaction that evades or avoids,
or has the purpose of evading or avoiding, or attempts to violate, any of the
prohibitions set forth in any Anti-Money Laundering and Anti-Terrorism Laws.
(iv) The Buyer understands and acknowledges that the Seller may become subject
to further anti-money laundering regulations, and agrees to execute instruments,
provide information, or perform any other acts as may reasonably be requested by the
Seller, for the purpose of: (A ) carrying out due diligence as may be required by
applicable law to establish the Buyer’s identity and source of funds; (B) maintaining
records of such identities and sources of funds, or verifications or certifications
as to the same; and (C) taking any other actions as may be required to comply with
and remain in compliance with anti-money laundering regulations applicable to the
Buyer.
(v) Neither the Buyer, nor any person controlling or controlled by the Buyer, is
a country, territory, individual or entity named on a Government List, and the monies
used in connection with this Agreement and amounts committed with respect thereto,
were not and are not derived from any activities that contravene any applicable
anti-money laundering or anti -bribery laws and regulations (including funds being
derived from any person, entity, country or territory on a Government List or engaged
in any unlawful activity defined under Title 18 of the United States Code, Section
1956(c)(7)).
SECTION 4.2. Covenants of the Buyer Prior to Closing.
(a) Licenses and Permits.
(i) The Buyer shall use all commercially reasonable and good faith efforts to
obtain the transfer of all Licenses and Permits (to the extent transferable) or the
issuance of new licenses and permits. The Buyer, at its cost and expense, shall submit
all necessary applications and other materials to the appropriate Governmental
Authority and take such other actions to effect the transfer of Licenses and Permits or
issuance of new licenses and permits, as of the Closing, and the Seller shall use
commercially reasonable efforts (at no cost or expense to the Seller) to cooperate with
the Buyer to cause the Licenses and Permits to be transferred or new licenses and
permits to be issued to the Buyer. It shall not be a condition to the Closing hereunder
that the Buyer has obtained any transfer of Licenses or Permits or issuance of any new
licenses or permits.
(ii) The Seller agrees to reasonably cooperate with the Buyer in
connection with the transfer of the interest in the entity (the “Liquor
Holder”) currently holding the license for the sale and service of
alcoholic beverages at the Hotel to the Buyer or its designee without any
representations or warranties except as specifically set forth herein or in
the Memorandum of Sale in substantially the form of Exhibit H
attached hereto (the “Memorandum of Sale”).
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(iii) Promptly after the date hereof, the Buyer shall (and to the extent
required by law, the Seller shall cause Liquor Holder to) execute and file with the
Texas Alcoholic Beverage Commission and any other Governmental Authority that
maintains jurisdiction over liquor-related matters at the Hotel (the “Liquor
Authorities”) and publish any notices as may be required in connection with the
acquisition of the Liquor Holder by the Buyer or its designee as of the Closing.
Notwithstanding anything to the contrary contained herein, the Seller shall not
incur any material cost or expense or any liability in connection with the transfer
of the Liquor Holder to the Buyer and no representations or warranties shall be made
by the Seller or its affiliates as to such conveyance other than that 100% of the
issued and outstanding shares of Liquor Holder is held by MeriStar SPE Leasing LLC
(f/k/a MeriStar SPE Leasing Corp.) and that such interest will not be encumbered as
of the Closing. Without limitation on the foregoing, in no event shall the transfer
or assignment of the Liquor Holder be deemed or construed to be a condition to the
obligations of either the Seller or the Buyer hereunder.
(b) Operating Agreements and Equipment Leases. To the extent any Operating Agreement
or Equipment Lease requires the consent of the vendor party for the assignment of such agreements
from the Seller to the Buyer, the Buyer shall use commercially reasonable good faith efforts to
obtain such consent as of the Closing, provided, in any event the Buyer shall assume all
Operating Agreements and Equipment Leases as of the Closing even if such consent has not been
obtained.
SECTION 4.3. Employee Matters.
(a) Employees. The Buyer acknowledges that the Employees are currently employed by an
affiliate of the Buyer. At the Closing, the Buyer shall (or shall cause its manager to) offer
employment at the Hotel to all of the Employees in accordance with the terms of
subsection 4.3(b).
subsection 4.3(b).
(b) Continuity of Employees. The parties intend that there will be continuity of
employment with respect to all of the Employees. It is agreed that prior to, or in connection with,
the Closing, the Buyer shall take no action to cause the Seller or Manager to terminate the
employment of any Employee, and neither the Seller nor the Manager shall be under any obligation
to terminate any Employee prior to or on the Closing Date. It is further agreed that on or prior
to the Closing Date, the Buyer shall offer employment at the Hotel (or cause its manager to
continue employment of), commencing on the Closing Date to all Employees, including those on
vacation, leave of absence, disability or layoff, on the same terms and conditions (including,
without limitation, compensation, salary, employee benefits, job responsibility and descriptions,
location, seniority and deemed length of service) as those provided to such employees by Manager on
the day immediately preceding the Closing Date. Those Employees who accept the Buyer’s (or its
manager’s) offer of employment and commence (or continue) employment with the Buyer (or its
manager) on the Closing Date shall hereafter be referred to as “Transferred
Employees.”
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(c) Indemnity. The Seller shall pay all wages, payroll taxes and fringe benefits
(including accrued vacation pay to the extent actually earned) as well as social security,
unemployment compensation, health, life and disability insurance and pension fund contributions, if
any, of the Employees through the Closing Date, provided, that, the Seller shall have no liability
or obligation to pay for any sick pay or accrued but unearned vacation pay. The Seller shall
indemnify, defend and hold the Buyer harmless from and against any and all claims, actions, suits,
demands, proceedings, losses, expenses, damages, obligations and liabilities (including costs of
collection, attorney’s fees and other costs of defense) made by an Employee to the extent relating
to an event occurring prior to or an obligation relating to a period prior to the Closing Date,
provided that such indemnity shall not apply with respect to any losses incurred by the Buyer with
respect to the amount of employee expenses that have been prorated under subsection 10.1(m) or such
matters for which Manager would be liable to the Seller under the Management Agreement. The Buyer
shall indemnify, defend and hold the Seller harmless from and against any and all claims, actions,
suits, demands, proceedings, losses, expenses, damages, obligations and liabilities (including
costs of collection, attorney’s fees and other costs of defense) arising out of or otherwise in
respect of (i) the termination of any Employees in connection with the transactions contemplated by
this Agreement; (ii) failure of the Buyer (or its manager) to continue the employment of any
Transferred Employee on the same terms and conditions as said employee enjoys on the day
immediately preceding the Closing Date; (iii) a breach by the Buyer of the covenants set forth in
subsection 4.3(b); (iv) failure of the Buyer to comply with its obligations including, but not
limited to, any statutory obligations with respect to the Transferred Employees; (v) any claim made
by any Employee for severance pay; or (vi) any claim made by any Employee arising with respect to
acts or omissions at the Property which acts or omissions occurred on or after the Closing Date.
(d) WARN Act. The Buyer (or its manager) shall not, at any time prior to 90 days after
the Closing Date, effectuate a “plant closing” or “mass layoff,” as those terms are defined in the
WARN Act, affecting in whole or in part any site of employment, facility, operating unit or
Employee, without notifying the Seller in advance and without complying with the notice
requirements and other provisions of the WARN Act. In addition, the Buyer shall provide a full
defense to, and indemnify the Seller for any Losses which the Seller may incur in connection with
any suit or claim of violation brought against or affecting the Seller under the WARN Act for any
actions taken by the Buyer (or its manager or any of its and Manager’s affiliates) with regard to
the Hotel or any Employee affected by this Agreement subsequent to the Closing Date.
(e) Survival. The provisions of this Section 4.3 shall survive the Closing.
SECTION 4.4. Bookings. The Buyer shall honor all existing Bookings and all other
Bookings made in accordance with this Agreement for any period on or after the Closing Date. The
provisions of this Section 4.4 shall survive the Closing.
SECTION 4.5. Franchise Agreement.
(a) The parties acknowledge that the transfer of the franchise rights granted under the
Franchise Agreement to the Buyer is subject to the prior written consent of Franchisor under the
Franchise Agreement. Immediately following the date of this Agreement, (i) the Seller
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shall proceed promptly and in good faith to give the notices required under the Franchise Agreement
with respect to the transactions contemplated hereby and (ii) the Buyer shall proceed promptly and
in good faith to effect the consent of Franchisor to the transfer of such franchise rights to the
Buyer, which may require the transfer of the Franchise Agreement or execution of a new franchise
agreement with Franchisor. Accordingly, the Buyer shall promptly submit to Franchisor a complete
application to become a franchisee of Franchisor’s franchise system accompanied by payment of the
applicable application fee. As part of the application process, the Buyer shall provide any and all
information and documentation that Franchisor requires (including, without limitation, financial
statements, organizational documents, background information regarding the owners of the Buyer and
other documentation supporting its application). Without limiting the foregoing, the Buyer shall
use commercially reasonable efforts to obtain a new franchise agreement in place of the Franchise
Agreement, which may entail promptly responding to requests from Franchisor and otherwise promptly
complying with all obligations of a transferee under the Franchise Agreement. The Seller agrees to
reasonably cooperate, at no cost, in good faith with the Buyer and Franchisor in such process. The
Buyer shall agree with Franchisor to accept and be bound by any property improvement plan required
by Franchisor in connection with obtaining such consent (which may consist of the property
improvement plan currently incorporated into the Franchise Agreement), and to complete such
property improvement plan within the time periods set forth in such property improvement plan. In
connection with the transfer of the franchise rights, the Buyer shall be required to pay any and
all fees and charges associated therewith (including, without limitation, any transfer fee mandated
under the Franchise Agreement).
(b) If Franchisor has not agreed to terminate the Franchise Agreement and enter into a new
franchise agreement with the Buyer by the originally scheduled Closing Date, the Closing Date shall
be extended to a date that is the earlier of (i) ten Business Days after receipt of such consent
and (ii) November 2, 2006 (the “Outside Closing Date”). In the event Franchisor has not
delivered such new franchise agreement by the Outside Closing Date, the Buyer and the Seller shall
each have the option to terminate this Agreement by written notice to the other party (the
“Termination Option”). In the event the Termination Option is elected by either the Seller
or the Buyer, this Agreement shall terminate and provided the Buyer is not in default of any of its
obligations pursuant to subsection 4.5(a) or otherwise, the Xxxxxxx Money shall be refunded to the
Buyer and neither party shall have any further rights or obligations hereunder except for those
that expressly survive the termination of this Agreement.
SECTION 4.6. Manager Defaults. The Buyer acknowledges that an affiliate of the Buyer
is Manager and that the Buyer is knowledgeable about the Asset. Notwithstanding anything to the
contrary contained herein, (a) the Buyer agrees that the Seller shall have no liability under this
Agreement for a breach hereof, including without limitation, any breach under Sections 3.2 and 3.4,
to the extent such breach was caused by an act or omission of Manager (other than such acts taken
by Manager at the specific direction of the Seller) and any such act or omission shall not serve as
a basis for the Buyer failing to close on the purchase of the Assets in accordance with the terms
of this Agreement or any recourse against the Seller and (b) to the extent Manager has actual
knowledge of any inaccuracy or breach of any representation or warranty of the Seller contained in
this Agreement, such knowledge shall be imputed to the Buyer and the Buyer shall be precluded from
asserting a failure of the condition set forth in subsection 5.2(a) related thereto as it relates
to the representations and warranties made by the
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Seller in this Agreement as of the date hereof (but not as the same are re-made as of
the Closing pursuant to this Agreement). The provisions of this Section 4.6 shall survive
the Closing.
SECTION
4.7. Tax Clearance Certificates; Etc.
(a) The Seller shall promptly after the execution of this Agreement apply
for and thereafter use commercially reasonable efforts to obtain and deliver to the
Buyer and the Title Company on or prior to the Closing such municipal, state and
county tax clearance certificates demonstrating the payment of all tax liabilities
which, if unpaid, could impose successor liability on the Buyer
(“Tax Clearance
Certificates”). To the extent the Seller is unable to deliver such Tax Certificates
on or prior to the Closing, the Seller shall use commercially reasonable efforts to
obtain such certificates as soon as practicable following the Closing. The Seller
shall be liable for the payment of all amounts which may be required to be paid to
obtain all Tax Clearance Certificates. The Seller shall indemnify, defend and hold
the Buyer harmless from and against (x) any and all amounts which may be required to
be paid to obtain all Tax Clearance Certificates and (y) any claims or other
liabilities arising out of the Seller’s failure to obtain all such Tax Clearance
Certificates, each to the extent due with respect to the operation of the Hotel prior
to the Closing. Notwithstanding anything to the contrary contained herein, the Seller
shall have no liability to the Buyer or obligations hereunder as it relates to any
Tax Clearance Certificates with respect to unemployment taxes or mixed beverages
taxes. The provisions of this subsection 4.7(a) shall survive the Closing.
(b) The Seller shall use commercially reasonable efforts to obtain and
deliver to the Buyer and the Title Company on or prior to the Closing an estoppel
certificate from Brookhollow/Arlington Inc. or its successors or assign (the
“Brookhollow Estoppel”) with respect to that certain instrument entitled “Section 3
Brookhollow/Arlington Protective Covenants” dated June 2, 1981 and recorded in Volume
7130, Page 132 of the Deed Records of Tarrant County, Texas, as supplemented and
modified by that certain Restrictive Covenant recorded in Volume 7130, Page 147 of
the Deed Records of Tarrant County, Texas, and as modified and supplemented from time
to time.
(c) The Buyer acknowledges and agrees that the neither the delivery of the Tax
Clearance Certificates or the Brookhollow Estoppel by the Seller pursuant to this Section
4.7 or any matters disclosed therein shall be a condition precedent to the obligation
of the Buyer to purchase and pay for the Asset in accordance with the terms of this
Agreement. Notwithstanding the foregoing, to the extent such matters are raised as
exceptions to the Title Policy, the Seller shall deliver such affidavits or
indemnities as reasonably required by the Title Company to omit such matters from the
Title Policy.
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ARTICLE V
CONDITIONS PRECEDENT TO CLOSING
SECTION 5.1. Conditions Precedent to the Seller’s Obligations. The obligation
of the Seller to consummate the transfer of the Asset to the Buyer on the Closing Date is
subject to the satisfaction (or waiver by the Seller) as of the Closing of the following
conditions:
(a) Each of the representations and warranties made by the Buyer in
this Agreement shall be true and correct in all material respects when made and on
and as of the Closing Date as though such representations and warranties were made on
and as of the Closing Date, subject to any changes permitted pursuant to this
Agreement.
(b) The Buyer shall have performed or complied in all material respects
with each obligation and covenant required by this Agreement to be performed or
complied with by the Buyer on or before the Closing.
(c) No order or injunction of any court or administrative agency of
competent jurisdiction nor any statute, rule, regulation or executive order
promulgated by any Governmental Authority of competent jurisdiction shall be in
effect as of the Closing which restrains or prohibits the transfer of the Asset or
the consummation of any other transaction contemplated hereby.
(d) The Seller shall have received all of the documents required to
be delivered by the Buyer under subsection 6.1(a).
(e) The Seller shall have received the Purchase Price in accordance
with subsection 2.2(a) and all other amounts due to the Seller from the Buyer
hereunder.
(f) The Seller shall have received evidence that (i) Franchisor has consented to
the transfer of the franchise rights associated with the Franchise Agreement in
accordance with subsection 4.5(a), and (ii) the Seller and any affiliates thereof
have been released by Franchisor pursuant to such release as contemplated by the
Franchise Agreement.
(g) Manager shall have performed or complied in all material respects with each
obligation and covenant required by the Interstate Letter (as defined below) to be
performed or complied with by Manager.
SECTION 5.2. Conditions to the Buyer’s Obligations. The obligation of the
Buyer to purchase and pay for the Asset is subject to the satisfaction (or waiver by the
Buyer) as of the Closing of the following conditions:
(a) Each of the representations and warranties made by the Seller in this
Agreement shall be true and correct in all material respects when made and on and as of
the Closing Date as though such representations and warranties were made on and as of
Closing
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Date subject to (i) the Seller’s right to cure the same prior to the Closing as
expressly provided in this Agreement, (ii) any changes permitted pursuant to this
Agreement, and (iii) any changes relating to matters arising after the date hereof in
connection with the representations and warranties as set forth in subsections 3.2(e) and
3.2(g).
(b) The Seller shall have performed or complied in all material respects
with each obligation and covenant required by this Agreement to be performed or
complied with by the Seller on or before the Closing.
(c) No order or injunction of any court or administrative agency of
competent jurisdiction nor any statute, rule, regulation or executive order
promulgated by any Governmental Authority of competent jurisdiction shall be in
effect as of the Closing which restrains or prohibits the transfer of the Asset or
the consummation of any other transaction contemplated hereby.
(d) Title to the Property shall be delivered to the Buyer in the manner
required under Section 8.1.
(e) The Buyer shall have received all of the documents required to be delivered
by the Seller under Section 6.2, and all of the consents set forth on Schedule
3.1(c) shall have been obtained.
(f) Franchisor shall have issued a new franchise agreement to the Buyer
in accordance with Section 4.5(a).
(g) Affiliates of the Seller shall have performed or complied in all
material respects with each obligation and covenant required by the Interstate Letter
to be performed or complied with by such affiliates.
SECTION 5.3. Waiver of Conditions Precedent. The Closing shall constitute
conclusive evidence that the Seller and the Buyer have respectively waived any conditions
which are not satisfied as of the Closing.
ARTICLE VI
CLOSING DELIVERIES
SECTION 6.1. The Buyer Closing Deliveries.
The Buyer shall deliver the following documents at Closing:
(a) with respect to the Asset:
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(i) an assignment and assumption of the Seller’s interest in the
Tenant Leases (an “Assignment of Leases”) duly executed by the Buyer in
substantially the form of Exhibit A attached hereto; and
(ii) an assignment and assumption of the Operating Agreements,
Equipment Leases and Bookings (an “Assignment of Contracts”) duly
executed by the Buyer in substantially the form of Exhibit attached hereto.
(b) with respect to the transactions contemplated hereunder:
(i) a duly executed and sworn officer’s certificate from the Buyer
(or the general partner or managing member of the Buyer, where appropriate)
certifying that the Buyer has taken all necessary action to authorize the
execution of all documents being delivered hereunder and the consummation of
all of the transactions contemplated hereby and that such authorization has
not been revoked, modified or amended;
(ii) an executed and acknowledged incumbency certificate from
the Buyer (or the general partner or managing member of the Buyer, where
appropriate) certifying the authority of the officers of the Buyer (or the
general partner or managing member of the Buyer, where appropriate) to execute
this Agreement and the other documents delivered by the Buyer to the Seller at
the Closing;
(iii) all transfer tax returns which are required by law and the
regulations issued pursuant thereto in connection with the payment of all
state or local real property transfer taxes that are payable or arise as a
result of the consummation of the transactions contemplated by this Agreement,
in each case, as prepared and approved by the Seller and the Buyer and duly
executed by the Buyer;
(iv) the Memorandum of Sale duly executed by the Buyer or its
designee; and
(v) a closing statement prepared and approved by the Seller and
the Buyer, consistent with the terms of this Agreement.
SECTION 6.2. The Seller Closing Deliveries.
The Seller shall deliver the following documents at Closing:
(a) with respect to the Asset:
(i) a
special warranty deed (a “Deed”) in substantially the form of
Exhibit C attached hereto and in recordable form in Texas, duly
executed and acknowledged by the Seller;
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(ii) a
xxxx of sale (a “Xxxx of Sale”) duly executed by the Seller in substantially
the form of Exhibit D attached hereto, transferring the FF&E, Property and Equipment,
Inventories, Retail Merchandise, Books and Records, Miscellaneous Personal Property and
Accounts Receivable to the Buyer;
(iii) the Assignment of Leases duly executed by the Seller, together with a copies, and if
available, originals of the Tenant Leases referred to in such assignment;
(iv) the Assignment of Contracts duly executed by the Seller, together with copies, and if
available, originals of all contracts and agreements assigned thereby;
(v) a general assignment of the Licenses and Permits and Intangible Property (the
“Assignment of Intangibles”) duly executed by the Seller in substantially the form
of Exhibit E attached hereto;
(vi) all keys and keycards in the Seller’s possession and security and access codes to the
Property;
(vii) an affidavit that the Seller is not a “foreign person” within the meaning of the
Foreign Investment in Real Property Tax Act of 1980, as amended, in substantially the form
of Exhibit F attached hereto (the “FIRPTA”);
(viii) a closing statement prepared and approved by the Seller and the Buyer,
consistent with the terms of this Agreement;
(ix) all Books and Records and receipts in the Seller’s possession relating to the
ownership, operating and management of the Hotel;
(x) the
title affidavits and documents referred to in Section 8.4; and
(xi) evidence reasonably acceptable to the Title Company, to the extent required, of the
termination of the Management Agreement.
(b) with respect to the transactions contemplated hereunder:
(i) a duly executed and sworn officer’s certificate from the general partner of the Seller
certifying that the Seller has taken all necessary action to authorize the execution of
all documents being delivered hereunder and the consummation of all of the transactions
contemplated hereby and that such authorization has not been revoked, modified or amended;
(ii) an executed and acknowledged incumbency certificate from the general partner of the
Seller certifying the authority of the officers of the general partner of the Seller to
execute this Agreement and the other documents delivered by the Seller to the Buyer at the
Closing;
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(iii) the Memorandum of Sale duly executed by MeriStar SPE Leasing LLC;
and
(iv) all transfer tax returns which are required by law and the regulations
issued pursuant thereto that are required as a result of the consummation of
the transactions contemplated by this Agreement, in each case, as prepared
and approved by the Seller and the Buyer and duly executed by the Seller.
ARTICLE VII
INSPECTIONS; RELEASE
SECTION 7.1. Right of Inspection. Prior to the Closing, the Buyer and its agents
shall have the right, upon reasonable prior written notice to the Seller (which shall in any event
be at least 24 hours in advance) and at the Buyer’s sole cost, risk and expense, to inspect the
Property during business hours, provided that any such inspection shall not unreasonably impede the
normal day-to-day business operation of the Property, and provided further that the Seller shall be
entitled to accompany the Buyer and its agents on such inspection. Notwithstanding the foregoing,
the Buyer shall not have the right to do any invasive testing of the Property without the prior
written consent of the Seller which may be granted or denied in the Seller’s sole and absolute
discretion. The Seller shall be entitled to accompany the Buyer and its agents on any such
permitted interviews and testing. The Buyer’s right of inspection of the Property shall be subject
to the rights of the tenants and Hotel guests and the rights of Manager under the Management
Agreement. Prior to any such inspection, the Buyer shall deliver to the Seller certificates
reasonably satisfactory to the Seller evidencing that the Buyer’s consultants and agents carry and
maintain such general liability insurance policies with such companies and in such scope and
amounts as are acceptable to the Seller in its reasonable discretion, in all cases naming the
Seller as an additional insured and loss payee thereunder. The Buyer hereby indemnifies and agrees
to defend and hold the Seller harmless from and against all loss, cost (including, without
limitation, reasonable attorneys’ fees), claim or damage arising out of, resulting from relating to
or in connection with or from any such inspection by the Buyer or its agents, except to the extent
such claim or damage was caused solely by the Seller or the Seller’s agents. The provisions of this
Section 7.1 shall survive the Closing and any termination of this Agreement. Notwithstanding the
foregoing rights to inspect, the Buyer acknowledges that there is no “due diligence period” or “due
diligence termination right” in this Agreement and the Buyer does not have the right to terminate
this Agreement based on the results of such inspections other than pursuant to an express
termination right set forth in this Agreement.
SECTION
7.2. Examination; No Contingencies.
(a) Before entering into this Agreement, the Buyer has made such examination of the Asset and
all other matters affecting or relating to the transactions contemplated hereunder as the Buyer
has deemed necessary. In entering into this Agreement, the
28
Buyer has not been induced by and has not relied upon any written or oral representations,
warranties or statements, whether express or implied, made by the Seller or any partner of the
Seller, or any affiliate, agent, employee, or other representative of any of the foregoing or by
any broker or any other person representing or purporting to represent the Seller with respect to
the Asset, the Condition of the Asset or any other matter affecting or relating to the transactions
contemplated hereby, other than those expressly set forth in this Agreement or in the Closing
Documents. The Buyer’s obligations under this Agreement shall not be subject to any contingencies,
diligence or conditions except as expressly set forth in this Agreement or in the Closing
Documents. The Buyer acknowledges and agrees that, except as expressly set forth herein or in the
Closing Documents, the Seller makes no representations or warranties whatsoever, whether express or
implied or arising by operation of law, with respect to the Asset or the Condition of the Asset.
THE BUYER AGREES THAT THE ASSET WILL BE SOLD AND CONVEYED TO (AND ACCEPTED BY) THE BUYER AT THE
CLOSING IN THE THEN EXISTING CONDITION OF THE ASSET, AS IS, WHERE IS, WITH ALL FAULTS, AND WITHOUT
ANY WRITTEN OR VERBAL REPRESENTATIONS OR WARRANTIES WHATSOEVER, WHETHER EXPRESS OR IMPLIED OR
ARISING BY OPERATION OF LAW, OTHER THAN AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN THE CLOSING
DOCUMENTS. Without limiting the generality of the foregoing, except as set forth in this Agreement
or in the Closing Documents, the transactions contemplated by this Agreement are without statutory,
express or implied warranty, representation, agreement, statement or expression of opinion of or
with respect to the Condition of the Asset or any aspect thereof, including, without limitation,
(i) any and all statutory, express or implied representations or warranties related to the
suitability for habitation, merchantability, or fitness for a particular purpose, (ii) any
statutory, express or implied representations or warranties created by any affirmation of fact or
promise, by any description of the Asset or by operation of law and (iii) all other statutory,
express or implied representations or warranties by the Seller whatsoever. The Buyer acknowledges
that the Buyer has knowledge and expertise in financial and business matters that enable the Buyer
to evaluate the merits and risks of the transactions contemplated by this Agreement.
(b) For purposes of this Agreement, the term “Condition of the Asset” means the
following matters:
(i) Physical Condition of the Property. The quality, nature and
adequacy of the physical condition of the Property, including, without
limitation, the quality of the design, labor and materials used to construct
the improvements included in the Property; the condition of structural
elements, foundations, roofs, glass, mechanical, plumbing, electrical, HVAC,
sewage, and utility components and systems; the capacity or availability of
sewer, water, or other utilities; the geology, flora, fauna, soils,
subsurface conditions, groundwater, landscaping, and irrigation of or with
respect to the Property, the location of the Property in or near any special
taxing district, flood hazard zone, wetlands area, protected habitat,
geological fault or subsidence zone, hazardous waste disposal or clean-up
site, or other special area, the existence, location, or condition of
ingress, egress, access, and parking; the condition of the personal property
and any fixtures; and the presence of any asbestos or other Hazardous
Materials, dangerous, or toxic substance, material or waste in, on, under or
about the Property and the
29
improvements located thereon. “Hazardous Materials” means (A) those substances included
within the definitions of any one or more of the terms “hazardous substances,” “toxic pollutants”,
“hazardous materials”, “toxic substances”, and “hazardous waste” in the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. § 9601 et seq. (as amended), the Hazardous
Materials Transportation Act, as amended, 49 U.S.C. Sections 1801 et seq., the Resource
Conservation and Recovery Act of 1976 as amended, 42 U.S.C. Section 6901 et seq., Section 311 of
the Clean Water Act, 15 U.S.C. § 2601 et seq., 33 U.S.C. § 1251 et seq., 42 U.S.C. 7401 et seq. and
the regulations and publications issued under any such laws, (B) petroleum, radon gas, lead based
paint, asbestos or asbestos containing material and polychlorinated biphenyls and (C) mold or water
conditions which may exist at the Property or other matters governed by any applicable federal,
state or local law or statue.
(ii) Adequacy of the Asset. The economic feasibility, cash flow and expenses of
the Asset, and habitability, merchantability, fitness, suitability and adequacy of the
Property for any particular use or purpose.
(iii) Legal Compliance of the Asset. The compliance or non-compliance of the
Seller or the operation of the Property or any part thereof in accordance with, and the
contents of, (A) all codes, laws, ordinances, regulations, agreements, licenses, permits,
approvals and applications of or with any governmental authorities asserting jurisdiction
over the Property, including, without limitation, those relating to zoning, building,
public works, parking, fire and police access, handicap access, life safety, subdivision
and subdivision sales, and Hazardous Materials, dangerous, and toxic substances,
materials, conditions or waste, including, without limitation, the presence of Hazardous
Materials in, on, under or about the Property that would cause state or federal agencies
to order a clean up of the Property under any applicable legal requirements and (B) all
agreements, covenants, conditions, restrictions (public or private), condominium plans,
development agreements, site plans, building permits, building rules, and other
instruments and documents governing or affecting the use, management, and operation of the
Property.
(iv) Matters Disclosed in the Schedules and the Asset File. Those matters referred
to in this Agreement and the documents listed on the Schedules attached hereto and the
matters disclosed in the Asset File.
(v) Insurance. The availability, cost, terms and coverage of liability, hazard,
comprehensive and any other insurance of or with respect to the Property.
(vi) Condition of Title. The condition of title to the Property, including,
without limitation, vesting, legal description, matters affecting title, title defects,
liens, encumbrances, boundaries, encroachments, mineral rights, options, easements, and
access; violations of restrictive covenants, zoning ordinances, setback lines, or
development agreements; the availability, cost, and
30
coverage of title insurance; leases, rental agreements, occupancy agreements,
rights of parties in possession of, using, or occupying the Property; and standby
fees, taxes, bonds and assessments.
SECTION 7.3. RELEASE. THE BUYER HEREBY AGREES THAT THE SELLER, AND EACH OF THEIR
PARTNERS, MEMBERS, TRUSTEES, DIRECTORS, OFFICERS, EMPLOYEES, REPRESENTATIVES, PROPERTY MANAGERS,
ASSET MANAGERS, AGENTS, ATTORNEYS, AFFILIATES AND RELATED ENTITIES, HEIRS, SUCCESSORS, AND ASSIGNS
(COLLECTIVELY, THE “RELEASEES”) SHALL BE, AND ARE HEREBY, FULLY AND FOREVER RELEASED AND
DISCHARGED FROM ANY AND ALL LIABILITIES, LOSSES, CLAIMS (INCLUDING THIRD PARTY CLAIMS), DEMANDS,
DAMAGES (OF ANY NATURE WHATSOEVER), CAUSES OF ACTION, COSTS, PENALTIES, FINES, JUDGMENTS,
REASONABLE ATTORNEYS’ FEES, CONSULTANTS’ FEES AND COSTS AND EXPERTS’ FEES (COLLECTIVELY, THE
“CLAIMS”) WITH RESPECT TO ANY AND ALL CLAIMS, WHETHER DIRECT OR INDIRECT, KNOWN OR UNKNOWN,
FORESEEN OR UNFORESEEN, THAT MAY ARISE ON ACCOUNT OF OR IN ANY WAY BE CONNECTED WITH THE ASSET OR
THE PROPERTY INCLUDING, WITHOUT LIMITATION, THE PHYSICAL, ENVIRONMENTAL AND STRUCTURAL CONDITION OF
THE PROPERTY OR ANY LAW OR REGULATION APPLICABLE THERETO, INCLUDING, WITHOUT LIMITATION, ANY CLAIM
OR MATTER (REGARDLESS OF WHEN IT FIRST APPEARED) RELATING TO OR ARISING FROM (A) THE PRESENCE OF
ANY ENVIRONMENTAL PROBLEMS, OR THE USE, PRESENCE, STORAGE, RELEASE, DISCHARGE, OR MIGRATION OF
HAZARDOUS MATERIALS ON, IN, UNDER OR AROUND THE PROPERTY REGARDLESS OF WHEN SUCH HAZARDOUS
MATERIALS WERE FIRST INTRODUCED IN, ON OR ABOUT THE PROPERTY, (B) ANY PATENT OR LATENT DEFECTS OR
DEFICIENCIES WITH RESPECT TO THE PROPERTY, (C) ANY AND ALL MATTERS RELATED TO THE PROPERTY OR ANY
PORTION THEREOF, INCLUDING WITHOUT LIMITATION, THE CONDITION AND/OR OPERATION OF THE PROPERTY AND
EACH PART THEREOF, AND (D) THE PRESENCE, RELEASE AND/OR REMEDIATION OF ASBESTOS AND ASBESTOS
CONTAINING MATERIALS IN, ON OR ABOUT THE PROPERTY
REGARDLESS OF WHEN SUCH ASBESTOS AND ASBESTOS CONTAINING MATERIALS WERE FIRST INTRODUCED IN, ON OR
ABOUT THE PROPERTY; PROVIDED, HOWEVER, THAT IN NO EVENT SHALL RELEASEES BE RELEASED FROM (X) ANY
CLAIMS ARISING PURSUANT TO THE PROVISIONS OF THIS AGREEMENT OR THE SELLER’S OBLIGATIONS, IF ANY,
UNDER THE CLOSING DOCUMENTS OR (Y) ANY CLAIMS ARISING FROM ANY FRAUDULENT ACTS COMMITTED BY THE
SELLER TO THE BUYER IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. THE BUYER
FURTHER AGREES THAT THE WAIVERS AND RELEASES HEREIN HAVE BEEN NEGOTIATED AND AGREED UPON IN LIGHT
OF THAT REALIZATION AND THAT THE BUYER NEVERTHELESS HEREBY INTENDS TO RELEASE, DISCHARGE AND ACQUIT
THE SELLER FROM ANY SUCH UNKNOWN CLAIMS, DEBTS, AND CONTROVERSIES WHICH MIGHT IN ANY WAY BE
INCLUDED AS A MATERIAL PORTION OF THE CONSIDERATION GIVEN TO THE SELLER BY THE BUYER IN
EX CHANGE FOR THE SELLER’S PERFORMANCE HEREUNDER. THE SELLER HAS GIVEN THE BUYER MATERIAL
CONCESSIONS REGARDING THIS TRANSACTION IN EXCHANGE FOR
31
THE BUYER AGREEING TO THE PROVISIONS OF THIS SECTION 7.3. THE SELLER AND THE BUYER HAVE EACH
INITIALED THIS SECTION 7.3 TO FURTHER INDICATE THEIR AWARENESS AND ACCEPTANCE OF EACH AND EVERY
PROVISION HEREOF. THE PROVISIONS OF THIS SECTION 7.3 SHALL SURVIVE THE CLOSING AND SHALL NOT BE
DEEMED MERGED INTO ANY INSTRUMENT OR CONVEYANCE DELIVERED AT THE CLOSING.
SELLER’S INITIALS: | BUYER’S INITIALS: | |||||||
ARTICLE VIII
TITLE AND PERMITTED EXCEPTIONS
SECTION 8.1. Title Insurance and Survey.
The Property shall be sold and is to be conveyed, and the Buyer agrees to purchase the
Property, subject only to the Permitted Exceptions.
SECTION 8.2. Title Commitment; Survey.
The Buyer has received and reviewed a copy of the Title Commitment and the Existing Survey.
SECTION 8.3. Delivery of Title.
(a) At or prior the Closing, the Seller shall obtain releases of (i) all mortgages and/or deed
of trust liens and other financing items encumbering the Asset (“Financing Liens”), (ii) tax liens
(other than liens for taxes not yet due and payable) encumbering the Property (“Tax Liens”) and
(iii) any liens encumbering the Property affirmatively placed on the Property by the Seller on or
after August 8, 2006 (“Post Effective Date Seller Encumbrance”). Other than as set forth in this
Agreement (including without limitation the first sentence of this subsection 8.3(a), and
subsection 8.3(c)), the Seller shall not be required to take or bring any action or proceeding or
any other steps to remove any title exception or to expend any moneys therefor, nor shall the Buyer
have any right of action
against the Seller, at law or in equity, for the Seller’s inability to convey title subject
only to the Permitted Exceptions.
(b) Subject to the Seller’s obligations under subsecti ons 8.3(a) and 8.3(c), in the event
that the Seller is unable to convey title subject only to the Permitted Exceptions, and the Buyer
has not, prior to the Closing Date, given notice to the Seller that the Buyer is willing to waive
objection to each title exception which is not a Permitted Exception, the Seller shall have the
right, in the Seller’s sole and absolute discretion, to (i) take such action as the Seller shall
deem advisable to attempt to discharge each such title exception which is not a Permitted Exception
or (ii) terminate this Agreement. In the event that the Seller shall elect to attempt to
32
discharge such title exceptions which are not
Permitted Exceptions, the Seller shall proceed to
attempt to discharge such title exceptions diligently and in good faith and for so long as it is so
attempting to discharge such title objections shall be entitled to one or more adjournments of the
Closing Date for a period not to exceed 60 days in the aggregate. If, for any reason whatsoever,
the Seller has not discharged such title exceptions which are not Permitted Exceptions prior to the
expiration of the last of such adjournments, and if the Buyer is not willing to waive objection to
such title exceptions, this Agreement shall be terminated as of the expiration of the last of such
adjournments. In the event of a termination of this Agreement pursuant to this subsection 8.3(b),
the Xxxxxxx Money shall be refunded to the Buyer and neither party shall have any further rights or
obligations hereunder except for those that expressly survive the termination of this Agreement.
Nothing in this clause (b) shall require the Seller, despite any election by the Seller to attempt
to discharge any title exceptions, to take or bring any action or proceeding or any other steps to
remove any title exception or to expend any moneys therefor, other than with respect to the Post
Effective Date Seller Encumbrance, the Post Effective Date Monetary Encumbrance, Financing Liens
and Tax Liens.
(c) Notwithstanding the foregoing, at the Closing, in addition to releasing all Financing
Liens, Tax Liens and Post Effective Date Seller Encumbrances which the Buyer does not waive its
objection to pursuant to Section 8.3(b), the Seller shall obtain a release of any lien encumbering
the Property on or after August 8, 2006 which may be removed by the payment of a sum of money (a
“Post Effective Date Monetary Encumbrances”); provided that Seller shall not be obligated to spend
more than $250,000 in the aggregate to remove any Post-Effective Date Monetary Encumbrances.
SECTION
8.4. Cooperation. In connection with obtaining the Title Policy, the Buyer and the
Seller, as applicable, and to the extent requested by the Title Company, will deliver to the Title
Company (a) evidence sufficient to establish (i) the legal existence of the Buyer and the Seller
and (ii) the authority of the respective signatories of the Seller and the Buyer to bind the
Seller and the Buyer, as the case may be, (b) certificates of good standing of the Seller in
Delaware and Texas; and (c) an affidavit of the Seller in the form attached hereto as
Exhibit G.
ARTICLE IX
TRANSACTION COSTS; RISK OF LOSS
SECTION 9.1. Transaction Costs.
(a) The Buyer and the Seller agree to comply with all real estate transfer tax laws applicable
to the sale of the Asset. The Seller agrees to pay for the “basic” title insurance premium for a
standard form TLTA T-1 Owner’s Policy of Title Insurance issued by Title Company in the State of
Texas with coverage in the amount of the Purchase Price. In addition to their respective
apportionment obligations hereunder, (i) the Seller and the Buyer shall each be responsible for
the payment of the costs of their respective legal counsel, advisors and other
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professionals employed thereby in connection with the sale of the Asset, and (ii) the Buyer shall
be responsible for all costs and expenses associated with (A) the Buyer’s due diligence, (B) the
amount by which the title insurance premium for the Owner’s Policy and all endorsements (including
limiting the survey exception to shortages in area) exceeds the basic title insurance premium for a
standard form TLTA T-1 Owner’s Policy of Title Insurance with coverage in the amount of the
Purchase Price, (C) the policy premiums in respect of any mortgage title insurance obtained by the
Buyer, (D) all costs for any new survey and search costs with respect to the Property and updates
related thereto, (E) payment, at the Closing, of the recording charges and fees (other than deed
recordation taxes) for the documents necessary to transfer the Asset, (F) obtaining any financing
the Buyer may elect to obtain (including any fees, financing costs, transfer taxes, mortgage and
recordation taxes and intangible taxes in connection therewith) and (G) all other costs which are
the responsibility under applicable law for the Buyer to pay (including, without limitation, all
sales and use taxes due as a result of the sale of the Asset). The fees, if any, of the Escrow
Agent shall be equally divided between the Seller and the Buyer.
(b) Each party to this Agreement shall indemnify the other parties and their respective
successors and assigns from and against any and all loss, damage, cost, charge, liability or
expense (including court costs and reasonable attorneys’ fees) which such other party may sustain
or incur as a result of the failure of either party to timely pay any of the aforementioned taxes,
fees or other charges for which it has assumed responsibility under this Section. The provisions of
this Article IX shall survive the Closing or the termination of this Agreement.
SECTION 9.2. Risk of Loss.
(a) If, on or before the Closing Date, (i) the Property or any portion thereof shall be
damaged or destroyed by fire or other casualty or (ii) any Governmental
Authority or other entity having condemnation authority shall take the property or any portion
thereof or institute an eminent domain proceeding by delivering written notice thereof to the
Seller and the same is not dismissed prior to the Closing, then the Seller shall promptly notify
the Buyer and at Closing, the Seller will credit against the Purchase Price payable by the Buyer at
the Closing an amount equal to the net proceeds (other than on account of business or rental
interruption relating to the period prior to Closing), if any, received by the Seller on or prior
to the Closing as a result of such casualty or condemnation, plus the amount of any deductible,
less any amounts spent to restore the Property. If as of the Closing Date, the Seller has not
received all or any portion of such insurance or condemnation proceeds, then the parties shall
nevertheless consummate on the Closing Date the conveyance of the Asset (without any credit for
such as yet unpaid insurance or condemnation proceeds except for a credit for any deductible under
such insurance) and the Seller will at Closing assign to the Buyer all rights of the Seller, if
any, to the insurance or condemnation proceeds (other than on account of business or rental
interruption relating to the period prior to Closing but including all business or rental
interruption relating to the period on or after Closing) and to all other rights or claims arising
out of or in connection with such casualty or condemnation and the Buyer may notify all appropriate
insurance companies of its interest in the insurance proceeds.
(b) Notwithstanding the provisions of subsection 9.2(a), if, on or before the Closing Date,
the Property or any portion thereof shall be (i) damaged or destroyed by a Material
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Casualty or (ii) taken as a result of a Material Condemnation, the Buyer shall have the right,
exercised by notice to the Seller no more than ten Business Days after the Buyer has received
notice of such Material Casualty or Material Condemnation, to terminate this Agreement, in which
event the Xxxxxxx Money shall be refunded to the Buyer and neither party shall have any further
rights or obligations hereunder other than those which expressly survive the termination of this
Agreement. If the Buyer fails to timely terminate this Agreement in accordance with this subsection
9.2(b), the provisions of subsection 9.2(a) shall apply. As used in this subsection 9.2(b), a
“Material Casualty” shall mean any damage to the Property or any portion thereof by fire or other
casualty that, in the Seller’s reasonable judgment, may be expected to cost in excess of $2,000,000
to repair. As used in this subsection 9.2(b), a “Material
Condemnation ” shall mean a taking of the
Property or any material portion thereof as a result of a condemnation or eminent domain proceeding
or the institution of such proceeding pursuant to a written notice thereof to the Seller that,
permanently impairs the use and value of th e Property, and which can not be restored to
substantially the same use and value as before the taking.
(c) Subject to the provisions of this Section 9.2, the risk of loss or damage to the Property
shall remain with the Seller until delivery of the Deed.
ARTICLE X
ADJUSTMENTS
SECTION 10.1. Adjustments. Except as otherwise specifically provided in subsection 10.1(m),
the Seller shall be responsible for and shall pay (or credit the Buyer for) all liabilities,
including, without limitation, all real property, personal property and sales and use taxes, which
accrue with respect to the Asset with respect to all periods prior to the Closing and the Buyer
shall be responsible for and shall pay all liabilities, including without limitation all real
property, personal property and sales and use taxes, which accrue with respect to the Asset with
respect to all periods from and after the Closing. Unless otherwise provided below, the following
are to be adjusted and prorated between the Seller and the Buyer as of 11:59 P.M. on the day
preceding the Closing (the “Cut-Off Time”), based upon a 365 day year, and the net amount thereof
under Section 10.1 shall be added to (if such net amount is in the Seller’s favor) or deducted from
(if such net amount is in the Buyer’s favor) the Purchase Price payable at Closing:
(a) Taxes and Assessments. All real estate and personal property taxes and assessments
(including, without limitation, special assessments and improvement assessments) levied against the
Asset shall be prorated as of the Cut-Off Time between the Buyer and the Seller. If the amount of
any such taxes is not ascertainable on the Closing Date, the proration for such taxes shall be
estimated based on the most recent available xxxx; provided , however , that after the Closing, the
Seller and the Buyer shall reprorate the taxes and pay any deficiency in the original proration to
the other party promptly upon receipt of the actual xxxx for the relevant taxable period. In the
event that the Asset or any part thereof shall be or shall have been affected by an assessment or
assessments which are payable in installments, the Seller shall, at the
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Closing, be responsible for any installments due prior to the Closing and the Buyer shall be
responsible for any installments due on or after the Closing, provided that such assessments shall
in any event be prorated between the Buyer and the Seller as of the Cut-Off Time. The reproration
obligation under this subsection 10.1 (a) shall survive the Closing.
(b) Water and Sewer Charges, Utilities. All utility services shall be prorated as of
the Cut-Off Time between the Buyer and the Seller. To the extent possible, readings shall be
obtained for all utilities as of the Cut-Off Time. If not possible, the cost of such utilities
shall be prorated between the Seller and the Buyer by estimating such cost on the basis of the
most recent xxxx for such service; provided, however, that after the Closing, the Seller and the
Buyer shall reprorate the amount for such utilities and pay any deficiency in the original
proration to the other party promptly upon receipt of the actual xxxx for the relevant billing
period. The Seller shall receive a credit for all deposits transferred to the Buyer or which
remain on deposit for the benefit of the Buyer with respect to such utility contracts, otherwise
such deposits shall be refunded to the Seller. The reproration obligation in this subsection
10.1(b) shall survive the Closing.
(c) Operating Agreements and Equipment Leases. Charges and payments (including the
reimbursement of expenses) under all Operating Agreements and Equipment Leases.
(d) Miscellaneous Revenues. Revenues, if any, arising out of telephone booths,
vending machines, parking, or other income-producing agreements, on an if, as and when collected
basis.
(e) Inventory. The Seller shall receive a credit for all Inventory and Retail
Merchandise in unopened cases as of the Closing in an amount equal to the Seller’s actual cost
(including sales and/or use tax) for such items.
(f) Tenant Leases. Any rents and other amounts prepaid, accrued or due and payable
under the Tenant Leases shall be prorated as of the Cut-Off Time between the Buyer and the Seller.
The Buyer shall receive a credit for all cash security deposits held by the Seller under the
Tenant Leases and the Buyer thereafter shall be obligated to refund or apply such deposits in
accordance with the terms of such Tenant Leases.
(g) Licenses and Permits. All amounts prepaid, accrued or due and payable under any
Permits (other than utilities which are separately prorated under subsection 10.1(b)) transferred
to the Buyer shall be prorated as of the Cut-Off Time between the Seller and the Buyer. The Seller
shall receive a credit for all deposits made by the Seller under the Licenses and Permits which
are transferred to the Buyer or which remain on deposit for the benefit of the Buyer.
(h) Deposits for Bookings. The Buyer shall receive a credit for all prepaid
deposits for Bookings scheduled for accommodations or events on or after the Closing Date, except
to the extent such deposits are transferred to the Buyer and for all other amounts prepaid by
guests or other customers for accommodations or events on or after the Closing Date.
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(i) Restaurants and Bars, Etc. The Seller shall close out the transactions in
the restaurants and bars in the Hotel as of the Cut-Off Time and all revenues with respect thereto
and with respect to other services to guests of the Hotel, including without limitation, health
club revenues, room service revenues and banquet revenues, if any, shall be prorated between the
Seller and the Buyer as of the Cut-Off Time.
(j) Vending Machines. The Seller shall remove all monies from all vending
machines, laundry machines, pay telephones and other coin-operated equipment as of the Cut-Off Time
and shall retain all monies collected therefrom as of the Cut-Off Time, and the Buyer shall be
entitled to any monies collected therefrom after the Cut-Off Time.
(k) Trade Payables. Except to the extent an adjustment or proration is made
under another subsection of this Section 10.1, (i) the Seller shall pay in full prior to the
Closing all amounts payable to vendors or other suppliers of goods or services to the Hotel (the
“Trade Payables”) which are due and payable as of the Closing Date for which goods or services have
been delivered to the Hotel prior to Closing, and (ii) the Buyer shall receive a credit for the
amount of such Trade Payables which have accrued, but are not yet due and payable as of the Closing
Date, and the Buyer shall pay all such Trade Payables accrued as of the Closing Date when such
Trade Payables become due and payable up to the amount of such credit; provided, however, the
Seller and the Buyer shall reprorate the amount of credit for any Trade Payables and pay any
deficiency in the original proration to the other party promptly upon receipt of the actual xxxx
for such goods or services. The Seller shall receive a credit for all advance payments or deposits
made with respect to FF&E, Retail Merchandise, Property and Equipment and Inventories ordered, but
not delivered to the Hotel prior to the Closing Date, and the Buyer shall pay the amounts which
become due and payable for such FF&E, Retail Merchandise, Property and Equipment and Inventories
which were ordered but not delivered prior to Closing. The reproration obligation in this
subsection 10.1(k) shall survive the Closing.
(1) Cash. The Seller shall receive a credit for all cash on hand at the Hotel
and all cash on deposit in any house bank at the Hotel as of the Closing and all such cash on hand
and cash on deposit in any house bank at the Hotel shall be transferred to and belong to the Buyer
from and after the Closing. The Seller shall retain all amounts in any operating accounts of the
Hotel in any bank, and there shall be no credit or adjustment hereunder with respect to such cash;
provided, however, the Seller shall receive a credit for any reserve fund or account
established pursuant to the terms of the Management Agreement which the Seller transfers to the
Buyer at Closing, if any.
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pay whether having accrued prior to, on or after the Cut-Off Time. The Buyer shall be
responsible for all severance payments for Transferred Employees arising on or after the Closing
and for all Employees not offered employment by the Buyer (or its manager) as of the Closing, or
who do not accept employment by the Buyer (or its manager) on the same terms as those provided to
such employees by Manager on the day immediately preceding the Closing Date.
(n) The Buyer and the Seller each acknowledge that certain taxes and assessments accrue
and are payable to the various local governments by any business entity operating a hotel and its
related facilities. Included in those taxes and assessments may be business and occupation taxes,
retail sales taxes, gross receipts taxes, and other special lodging or hotel taxes and assessments.
For purposes of this Agreement, all of such taxes and assessments (expressly excluding (x) taxes
and assessments covered in Section 10.1(a) of this Agreement, which shall be governed by the
provisions of Section 10.1 (a), and (y) corporate franchise taxes, and federal, state and local
income taxes) shall be allocated between the Seller and the Buyer such that those attributable to
the period prior to the Cut-Off Time shall be allocable to the Seller and those attributable to the
period after the Cut-Off Time shall be allocable to the Buyer (with the attribution of such taxes
and assessments hereunder to be done in a manner consistent with the attribution under this
Agreement of the applicable revenues on which such taxes and assessments may be based). The Seller
shall be obligated to pay all such taxes and assessments which accrue with respect to the period
prior to the Cut-Off Time, and the Buyer shall be obligated to pay all such taxes and assessments
which accrue with respect to the period after the Cut-Off Time.
(p) The provisions of Section 10.1 and the obligations of the Seller and the Buyer
hereunder shall survive the Closing.
SECTION
10.2. Re-Adjustment.
(a) If any items to be adjusted pursuant to this Article X are not determinable at the
Closing, the adjustment shall be made subsequent to the Closing when the charge is determined. The
Buyer shall deliver to the Seller no later than 120 days following the Closing Date a schedule of
prorations setting forth the Buyer’s determination of all adjustments to the prorations made at
Closing that it believes are necessary to complete the prorations as set forth in this Article X.
Any errors or omissions in computing adjustments or readjustments at the Closing or thereafter
shall be promptly corrected or made, provided that the party seeking to correct such error or
omission or to make such readjustment shall have notified the other party of such error or
omission or readjustment on or prior to the date that is 180 days following the Closing.
(b) The provisions of Section 10.2 and the obligations of the Seller and the Buyer hereunder
shall survive the Closing.
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SECTION 10.3. Accounts Receivable.
(a) Guest Ledger. All revenues received or to be received from transient guests on
account of room rents for the period prior to and including the Cut-Off Time shall belong to the
Seller. At Closing, the Seller shall receive a credit in an amount equal to: (i) all amounts
unpaid as of the Cut-Off Time charged to the Guest Ledger for all room nights up to (but not
including) the night during which the Cut-Off Time occurs, and (ii) one-half of all amounts unpaid
as of the Cut-Off Time charged to the Guest Ledger for the room night which includes the Cut-Off
Time and the Guest Ledger and all amounts charged thereto and unpaid as of the Cut-Off Time shall
become the property of the Buyer. For the period beginning on the day immediately following the
Cut-Off Time, such revenues collected from the Guest Ledger shall belong to the Buyer. In the
event that an amount less than the total amount due from a guest is collected and guest continued
in occupancy after the Cut-Off Time, such amount shall be applied first to any amount owing by
such person to the Seller and thereafter to such person’s amounts accruing to the Buyer.
(b) Accounts Receivable (Other than Guest Ledger).
(i) On the Closing Date, the Seller shall assign to the Buyer all Accounts
Receivable that are 90 days or less past due as of the Closing (the
“Assigned Accounts Receivable”), the Buyer shall pay to the Seller
an amount equal to 100% of all Accounts Receivable that are 90 days or less
past due as of the Closing Date and shall not credit to the Seller any
amounts for Accounts Receivable more than 90 days past due as of the Closing
Date. The Buyer shall have the sole right to collect and retain all such
Assigned Accounts Receivable. If any Assigned Accounts Receivable are paid
to the Seller after the Closing, the Seller shall pay to the Buyer the
amounts received by the Seller within 10 days after receipt of such amounts
without any commission or deduction for the Seller.
(ii) After the Closing, the Seller shall retain the right to collect all
Accounts Receivable other than the Guest Ledger which is addressed in
subsection 10.3(a), and the Assigned Accounts Receivable, which is addressed
in subsection 10.3(b)(i) (such retained Accounts Receivable, the
“Retained Accounts Receivable”). The Seller shall not receive a
credit for the Retained Accounts Receivable. The Seller shall have the sole
right to collect the Retained Accounts Receivable. If any Retained Accounts
Receivable are paid to the Buyer after the Closing, the Buyer shall pay to
the Seller the amounts received by the Buyer within 10 days after receipt of
such amounts without any commission or deduction for the Buyer.
(iii) The Accounts Receivable addressed in this subsection 10.3(b) shall not
include the Guest Ledger, which is addressed in subsection 10.3(a).
(iv) The parties’ obligations under this subsection 10.3(b) shall
survive the Closing.
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(c) The provisions of Section 10.3 and the obligations of the Seller and the Buyer
hereunder shall survive the Closing.
SECTION 10.4. Interstate Letter Agreement. The Seller and the
Buyeracknowledge that contemporaneously with the execution of this Agreement,
Manager and certain affiliates of the Seller are executing a letter agreement (the
“Interstate Agreement”). The Interstate Agreement provides, in part, that in
exchange for a full release of certain amounts due to Manager, such affiliates of
the Seller shall make a payment to Manager at the Closing in such amount as set
forth on Schedule 10.4 based on the Closing Date (the
“Interstate Payment”).
The Seller and the Buyer acknowledge that in lieu of a making the Interstate Payment
directly to Manager, the Buyer shall receive a credit to the Purchase Price at the
Closing in an amount equal to the Interstate Payment.
ARTICLE XI
INDEMNIFICATION
SECTION 11.1. Indemnification by the Seller. From and after the Closing and subject
to Sections 11.3 and 11.4, the Seller shall indemnify and hold the Buyer, its affiliates, members
and partners, and the partners, shareholders, officers, directors, employees, representatives and
agents of each of the foregoing (collectively, “Buyer-Related
Entities”) harmless from and against
any and all costs, fees, expenses, damages, deficiencies, interest and penalties (including,
without limitation, reasonable attorneys’ fees and disbursements) suffered or incurred by any such
indemnified party in connection with any and all losses, liabilities, claims, damages and expenses
(“Losses”), arising out of, or in any way relating to (a) any breach of any representation or
warranty of the Seller contained in this Agreement or in any Closing Document and (b) any breach of
any covenant of the Seller which survives the Closing contained in this Agreement or in any Closing
Document, including, without limitation, any amounts due and owing to the Buyer following the
Closing pursuant to Article X. Notwithstanding anything to the contrary contained herein, the
Seller shall have no liability or obligation to indemnify and hold the Buyer Related Entities
harmless from any Losses to the extent such Losses results from or is related to any acts or
omissions of Manager which would otherwise result in an indemnification obligation of Manager in
favor of the Seller pursuant to the terms of the Management Agreement or constitute a default by
Manager under the Management Agreement.
SECTION 11.2. Indemnification by the Buyer. From and after the Closing and subject
to Sections 11.3 and 11.4, the Buyer shall indemnify and hold the Seller, its affiliates, members
and partners, and the partners, shareholders, officers, directors, employees, representatives and
agents of each of the foregoing (collectively,
“Seller-Related Entities”) harmless from any and all
Losses arising out of, or in any way relating to, (a) any breach of any representation or warranty
by the Buyer contained in this Agreement or in any Closing Document including, without limitation,
any amounts due and owing to the Seller pursuant to Article X and (b) any breach of any covenant of
the Buyer which survives the Closing contained
40
in this Agreement or in any Closing Document including, without limitation, any amounts due
and owing to the Seller following the Closing pursuant to Article X.
SECTION 11.3. Limitations on Indemnification. Notwithstanding the foregoing
provisions of Section 11.1, (a) the Seller shall not be required to indemnify the Buyer or any
Buyer-Related Entities under subsection 11.1 (a) unless the aggregate of all amounts for which an
indemnity would otherwise be payable by the Seller under subsection 11.1 (a) exceeds the Basket
Limitation and, in such event, the Seller shall be responsible only for such amount in excess of
the Basket Limitation, (b) in no event shall the liability of the Seller with respect to the
indemnification provided for in subsection 11.1 (a) exceed in the aggregate the Cap Limitation, and
(c) if prior to the Closing, the Buyer or Manager obtains or has actual knowledge of any inaccuracy
or breach of any representation, warranty or pre-closing covenant of the Seller contained in this
Agreement (a “Buyer Waived Breach”) and nonetheless proceeds with and consummates the Closing, then
the Buyer and any Buyer-Related Entities shall be deemed to have waived and forever renounced any
right to assert a claim for indemnification under this Article XI for, or any other claim or cause
of action under this Agreement at law or in equity on account of any such Buyer Waived Breach.
SECTION 11.4. Survival. The (a) representations and warranties contained in this
Agreement and the Closing Documents (other than the Deed or FIRPTA) shall survive for a period of
six months after the Closing and (b) the covenants contained in the Agreement and the Closing
Documents (other than the Deed or FIRPTA) shall survive for a period of one year after the Closing
(the period beginning on the date hereof and ending on such applicable date in clause (a) or (b)
being herein called the “Survival Period”) unless otherwise provided for in this Agreement. Each
party shall have the right to bring an action against the other for the breach of the
representations and warranties, covenants, obligations, provisions and liabilities hereunder or
under the Closing Documents (other than the Deed or FIRPTA), but only on the following conditions:
the party bringing the action for breach (i) gives a reasonably detailed written notice of such
breach to the other party within 91 days after the expiration of the applicable Survival Period,
and (ii) files an action for such breach on or before the first day following the second
anniversary of the Closing Date, after which time all representations and warranties, covenants,
obligations and liabilities (and any cause of action resulting from a breach thereof not then in
litigation) herein or the Closing Documents (other than the Deed or FIRPTA) shall terminate. The
provisions of this Section 11.4 shall not be applicable to the Deed or FIRPTA, which shall survive
the Closing without limitation.
SECTION 11.5. Indemnification as Sole Remedy. If the Closing has occurred, the sole
and exclusive remedy (other than the right to seek specific performance of a covenant to be
performed by the Seller or the Buyer after the Closing) available to a party in the event of a
breach by the other party to this Agreement of any representation, warranty, covenant or other
provision of this Agreement which survives the Closing shall be the indemnifications provided for
under this Article XI or elsewhere in this Agreement, which indemnifications shall survive the
Closing as provided in Article XI.
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ARTICLE XII
DEFAULT AND TERMINATION
SECTION 12.1. The Seller’s Termination.
(a) This Agreement may be terminated by the Seller prior to the Closing if (i) any of the
conditions precedent to the Seller’s obligations set forth in Section 5.1 or elsewhere in this
Agreement have not been satisfied or waived by the Seller on or prior to the Closing Date or (ii)
there is a material breach or default by the Buyer in the performance of any of its obligations
under this Agreement.
(b) In the event this Agreement is terminated by the Seller pursuant to subsection 12.1(a),
this Agreement shall be null and void and of no further force or effect and neither party shall
have any rights or obligations against or to the other except (i) for those provisions hereof which
by their terms expressly survive the termination of this Agreement and (ii) as set forth in
subsection 12.1(c). Notwithstanding the foregoing, if this Agreement is terminated by the Seller
prior to the Close for a failure of (i) the condition precedent set forth in subsection 5.1(f) and
provided the Buyer is not in default of its obligation as set forth in Section 4.5 or (ii) the
condition set forth in subsection 5.1(c) and provided any matters arising under such subsection
5.1(c) is not based upon any act or omission by the Buyer or any of its affiliates, the Escrow
Agent shall disburse the Xxxxxxx Money to the Buyer as the Buyer’s sole and exclusive remedy, and
upon such disbursement the Seller and the Buyer shall have no further obligations under this
Agreement, except those which expressly survive such termination.
(c) In the event the Seller terminates this Agreement as a result of a breach or default by
the Buyer in any of its obligations under this Agreement, the Escrow Agent shall immediately
disburse the Xxxxxxx Money to the Seller, and upon such disbursement the Seller and the Buyer shall
have no further obligations under this Agreement, except those which expressly survive such
termination. The Buyer and the Seller hereby acknowledge and agree that it would be impractical
and/or extremely difficult to fix or establish the actual damage sustained by the Seller as a
result of such default by the Buyer, and agree that the Xxxxxxx Money is a reasonable approximation
thereof. Accordingly, in the event that the Buyer breaches this Agreement by defaulting in the
completion of the purchase of the Asset, the Xxxxxxx Money shall constitute and be deemed to be the
agreed and liquidated damages of the Seller, and shall be paid by the Escrow Agent to the Seller as
the Seller’s sole and exclusive remedy hereunder;
provided, however, the foregoing shall
not limit the Buyer’s obligation to pay to the Seller all reasonable attorneys’ fees and costs of
the Seller to enforce the provisions of this Section 12.1 or limit the Buyer’s indemnification
obligations owed to the Seller pursuant to this Agreement which survive a termination of this
Agreement. The payment of the Xxxxxxx Money as liquidated damages is not intended to be a
forfeiture or penalty, but is intended to constitute liquidated damages to the Seller.
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SECTION 12.2. The Buyer’s Termination.
(a) This Agreement may be terminated by the Buyer prior to the Closing if (i) any of the
conditions precedent to the Buyer’s obligations set forth in Section 5.2 or specifically set forth
elsewhere in this Agreement have not been satisfied or waived by the Buyer on or prior to the
Closing Date or (ii) there is a material breach or default by the Seller in the performance of its
obligations under this Agreement.
(b) In the event this Agreement is terminated by the Buyer pursuant to subsection 12.1(a), the
Escrow Agent shall disburse the Xxxxxxx Money to the Buyer as the Buyer’s sole and exclusive
remedy, and upon such disbursement the Seller and the Buyer shall have no further obligations under
this Agreement, except those which expressly survive such termination.
(c) If there is a material breach or default by the Seller in the performance of its
obligations under this Agreement, the Buyer, at its option and as its sole and exclusive remedy,
may either (i) terminate this Agreement, direct the Escrow Agent to deliver the Xxxxxxx Money to
the Buyer and retain the Xxxxxxx Money, at which time this Agreement shall be terminated and of no
further force and effect except for the provisions which explicitly survive such termination, or
(ii) specifically enforce the terms and conditions of this Agreement provided such action seeking
specific performance is initiated within 90 days of the Closing Date. The Buyer and the Seller
hereby acknowledge and agree that it would be impractical and/or extremely difficult to fix or
establish the actual damage sustained by the Buyer as a result of such default by the Seller, and
agree that the remedy set forth in clause (i) above is a reasonable approximation thereof.
Accordingly, in the event that the Seller breaches this Agreement by defaulting in the completion
of the sale, and the Buyer elects not to exercise the remedy set forth in clause (ii) above but
instead elects the remedy set forth in clause (i) above, the delivery of the Xxxxxxx Money to the
Buyer shall be the Buyer’s sole and exclusive remedy. The Buyer agrees to, and does hereby, waive
all other remedies against the Seller which the Buyer might otherwise have at law or in equity by
reason of such default by the Seller.
ARTICLE XIII
TAX CERTIORARI PROCEEDINGS
SECTION 13.1. Prosecution and Settlement of Proceedings. If any tax reduction
proceedings in respect of the Property, relating to any fiscal years ending prior to the fiscal
year in which the Closing occurs are pending at the time of the Closing, the Seller reserves and
shall have the right to continue to prosecute and/or settle the same. If any tax reduction
proceedings in respect of the Property, relating to the fiscal year in which the Closing occurs,
are pending at the time of Closing, then the Seller reserves and shall have the right to continue
to prosecute and/or settle the same; provided, however, that the Seller shall not settle
any such proceeding without the Buyer’s prior written consent, which consent shall not be
unreasonably
43
withheld or delayed. The Buyer shall reasonably cooperate with the Seller in connection with
the prosecution of any such tax reduction proceedings.
SECTION 13.2. Application of Refunds or Savings. Any refunds or savings in the
payment of taxes resulting from such tax reduction proceedings applicable to taxes payable during
the period prior to the date of the Closing shall belong to and be the property of the Seller, and
any refunds or savings in the payment of taxes applicable to taxes payable from and after the date
of the Closing shall belong to and be the property of the Buyer. All attorneys’ fees and other
expenses incurred in obtaining such refunds or savings shall be apportioned between the Seller and
the Buyer in proportion to the gross amount of such refunds or savings payable to the Seller and
the Buyer, respectively (without regard to any amounts reimbursable to tenants); provided, however,
that neither the Seller nor the Buyer shall have any liability for any such fees or expenses in
excess of the refund or savings paid to such party unless such party initiated such proceeding.
SECTION 13.3. Survival. The provisions of this Article XIII shall survive the
Closing.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1. Use of Blackstone Name and Address. The Buyer hereby acknowledges and
agrees that neither the Buyer nor any affiliate, successor, assignee or designee of the Buyer shall
be entitled to use the name “Blackstone”, “MeriStar” or “Equistar” in connection with the
operation, ownership and use of the Property. The provisions of this Section 14.1 shall survive
the Closing and any termination of this Agreement.
SECTION 14.2. Exculpation of the Seller. Notwithstanding anything to the contrary
contained herein, the Seller’s shareholders, limited partners, members, the partners or members of
such partners, the shareholders of such partners, members, and the trustees, officers, directors,
employees, agents and security holders of the Seller and the partners or members of the Seller
assume no personal liability for any obligations entered into in connection with or relating to
this Agreement on behalf of the Seller and their respective individual assets shall not be subject
to any claims of any person relating to such obligations. The foregoing shall govern any direct and
indirect obligations of the Seller under this Agreement. The provisions of this Section 14.2 shall
survive the Closing and any termination of this Agreement.
SECTION 14.3. Brokers.
(a) The Seller represents and warrants to the Buyer that it has dealt with no broker,
finder or similar person with respect to this Agreement or the transactions contemplated hereby.
The Seller agrees to indemnify, protect, defend and hold the Buyer harmless from and against all
claims, losses, damages, liabilities, costs, expenses (including reasonable attorneys’
44
fees and disbursements) and charges resulting from the Seller’s breach of the foregoing
representation in this subsection (a). The provisions of this subsection 14.3(a) shall survive the
Closing and any termination of this Agreement.
(b) The Buyer represents and warrants to the Seller that it has dealt with no broker,
finder or similar person with respect to this Agreement or the transactions contemplated hereby.
The Buyer agrees to indemnify, protect, defend and hold the Seller harmless from and against all
claims, losses, damages, liabilities, costs, expenses (including reasonable attorneys’ fees and
disbursements) and charges resulting from the Buyer’s breach of the foregoing representations in
this subsection (b). The provisions of this subsection 14.3(b) shall survive the Closing and any
termination of this Agreement.
SECTION
14.4. Confidentiality; Press Release: IRS Reporting Requirements.
(a) The Buyer and the Seller, and each of their respective affiliates shall hold as
confidential all information disclosed in connection with the transaction contemplated hereby and
concerning each other, the Asset, this Agreement and the transactions contemplated hereby and shall
not release any such information to third parties without the prior written consent of the other
parties hereto, except (i) any information which was previously or is hereafter publicly disclosed
or was available on a non-confidential basis prior to its disclosure (other than in violation of
this Agreement or other confidentiality agreements to which affiliates of the Buyer are parties),
(ii) to their partners, advisers, underwriters, analysts, employees, affiliates, officers,
directors, consultants, lenders, accountants, legal counsel, title companies or other advisors of
any of the foregoing, provided that they are advised as to the confidential nature of such
information and are instructed to maintain such confidentiality and (iii) to comply with any law,
rule or regulation (including without limitation those of the United States Securities and Exchange
Commission) or the requirements of any securities exchange on which such party or its parent
company is listed. The foregoing shall constitute a modification of any prior confidentiality
agreement that may have been entered into by the parties. The provisions of this Section shall
survive the termination of this Agreement for a period of one year.
(b) The Seller or the Buyer may issue a press release with respect to this Agreement and the
transactions contemplated hereby, provided that the content of any such press release shall be
subject to the prior written consent of the other party hereto, not to be unreasonably withheld,
conditioned or delayed.
(c) For the purpose of complying with any information reporting requirements or other rules
and regulations of the IRS that are or may become applicable as a result of or in connection with
the transaction contemplated by this Agreement, including, but not limited to, any requirements set
forth in proposed Income Tax Regulation Section 1.6045-4 and any final or successor version thereof
(collectively, the “IRS Reporting Requirements”), the Seller and the Buyer hereby designate and
appoint the Escrow Agent to act as the “Reporting Person” (as that term is defined in the
IRS Reporting Requirements) to be responsible for complying with any IRS Reporting Requirements.
The Escrow Agent hereby acknowledges and accepts such designation and appointment and agrees to
fully comply with any IRS Reporting Requirements that are or may become applicable as a result of
or in connection with the transaction contemplated by this Agreement. Without limiting the
responsibility and obligations of the
45
Escrow Agent as the Reporting Person, the Seller and the Buyer hereby agree to comply with any
provisions of the IRS Reporting Requirements that are not identified therein as the responsibility
of the Reporting Person, including, but not limited to, the requirement that the Seller and the
Buyer each retain an original counterpart of this Agreement for at least four years following the
calendar year of the Closing.
SECTION 14.5. Escrow Provisions.
(a) The Escrow Agent shall hold the Xxxxxxx Money in escrow in an interest-bearing bank
account at a federally insured banking institution (the
“Escrow Account”).
(b) The Escrow Agent shall hold the Xxxxxxx Money in escrow in the Escrow Account until the
Closing or sooner termination of this Agreement and shall hold or apply such proceeds in accordance
with the terms of this subsection (b). The Seller and the Buyer understand that no interest is
earned on the Xxxxxxx Money during the time it takes to transfer into and out of the Escrow
Account. At the Closing, the Xxxxxxx Money shall be paid by the Escrow Agent to, or at the
direction of, the Seller. If for any reason the Closing does not occur and either party makes a
written demand upon the Escrow Agent for payment of such amount, the Escrow Agent shall, within 24
hours give written notice to the other party of such demand. If the Escrow Agent does not receive a
written objection within five Business Days after the giving of such notice, the Escrow Agent is
hereby authorized to make such payment. If the Escrow Agent does receive such written objection
within such five Business Day period or if for any other reason the Escrow Agent in good faith
shall elect not to make such payment, the Escrow Agent shall continue to hold such amount until
otherwise directed by joint written instructions from the parties to this Agreement or a final
judgment of a court of competent jurisdiction. However, the Escrow Agent shall have the right at
any time to deposit the Xxxxxxx Money with the clerk of the court of New York County. The Escrow
Agent shall give written notice of such deposit to the Seller and the Buyer. Upon such deposit the
Escrow Agent shall be relieved and discharged of all further obligations and responsibilities
hereunder.
(c) The parties acknowledge that the Escrow Agent is acting solely as a stakeholder at their
request and for their convenience, that the Escrow Agent shall not be deemed to be the agent of
either of the parties, and the Escrow Agent shall not be liable to either of the parties for any
act or omission on its part, other than for its gross negligence or willful misconduct. The Seller
and the Buyer shall jointly and severally indemnify and hold the Escrow Agent harmless from and
against all costs, claims and expenses, including attorneys’ fees and disbursements, incurred in
connection with the performance of the Escrow Agent’s duties hereunder.
(d) The Escrow Agent has acknowledged its agreement to these provisions by signing this
Agreement in the place indicated following the signatures of the Seller and the Buyer.
SECTION
14.6. Successors and Assigns; No Third-Party Beneficiaries. The
stipulations, terms, covenants and agreements contained in this Agreement shall inure to the
benefit of, and shall be binding upon, the parties hereto and their respective permitted successors
and assigns (including any successor entity after a public offering of stock, merger,
46
consolidation, purchase or other similar transaction involving a party hereto) and nothing herein
expressed or implied shall give or be construed to give to any person or entity, other than the
parties hereto and such assigns, any legal or equitable rights hereunder.
SECTION 14.7. Assignment. This Agreement may not be assigned by the Buyer without
the prior written consent of the Seller. The Buyer may designate an affiliate to which the Asset
will be assigned at the Closing, provided that the Buyer provides the Seller written notice of such
designation at least five days prior to the Closing and the Buyer will continue to remain primarily
liable under this Agreement notwithstanding any such designation. Notwithstanding anything to the
contrary contained herein, the Buyer may assign its rights and obligations under this Agreement to
an affiliate of the Buyer provided that the Buyer provides the Seller with a fully executed
assignment of contract at least five days prior to the Closing and the Buyer will continue to
remain primarily liable under this Agreement notwithstanding any such assignment.
SECTION 14.8. Further Assurances.
(a) From time to time, as and when requested by any party hereto, the other party shall
execute and deliver, or cause to be executed and delivered, all such documents and instruments and
shall take, or cause to be taken, all such further or other actions as such other party may
reasonably deem necessary or desirable to consummate the transactions contemplated by this
Agreement.
(b) The Seller shall after the Closing and if requested by the Buyer, based on the Buyer’s
obligations under regulatory requirements, reasonably cooperate with the Buyer in the Buyer’s
preparation of audited financial statements of the Property for the calendar year in which the
Closing occurs and the three preceding calendar years, by providing such information as may be in
the possession of the Seller as shall be required to enable an accounting firm of the Buyer’s
choosing to prepare such audited financial statements, the cost of which shall be borne by the
Buyer. Any information provided by the Seller to the Buyer pursuant to this subsection 14.8(b)
shall be without any representations or warranties. The Buyer agrees to reimburse the Seller for
the Seller’s actual and reasonable costs in connection with the Seller’s cooperation pursuant to
this subsection 14.8(b).
(c) The provisions of this Section 14.8 shall survive the Closing.
SECTION 14.9. Notices. All notices, demands or requests made pursuant to, under or
by virtue of this Agreement must be in writing and shall be (a) personally delivered, (b) delivered
by express mail, Federal Express or other comparable overnight courier service, (c) telecopied,
with telephone or written confirmation within one Business Day, or (d) mailed to the party to which
the notice, demand or request is being made by certified or registered mail, postage prepaid,
return receipt requested, as follows:
To the Seller:
c/o
Blackstone Real Estate Acquisitions V L.L.C.
47
Attention: _____________________
Facsimile: _____________________
Telephone: _____________________
Facsimile: _____________________
Telephone: _____________________
with copies thereof to:
Xxxxxxx Xxxxxxx & Xxxxxxxx LLP
______________________________
______________________________
Attention: _____________________
Facsimile: _____________________
Telephone: _____________________
______________________________
______________________________
Attention: _____________________
Facsimile: _____________________
Telephone: _____________________
To the Buyer:
Interstate Hotel & Resorts, Inc.
______________________________
______________________________
Attention: _____________________
Facsimile: _____________________
Telephone: _____________________
______________________________
______________________________
Attention: _____________________
Facsimile: _____________________
Telephone: _____________________
with copies thereof to:
XxXxxxx, Diamond & Ash
______________________________
______________________________
Attention: _____________________
Facsimile: _____________________
Telephone: _____________________
______________________________
______________________________
Attention: _____________________
Facsimile: _____________________
Telephone: _____________________
To the Escrow Agent/Title Company:
First American Title Insurance Company
______________________________
______________________________
Attention: _____________________
Facsimile: _____________________
Telephone: _____________________
______________________________
______________________________
Attention: _____________________
Facsimile: _____________________
Telephone: _____________________
All notices (i) shall be deemed to have been given on the date that the same shall have been
delivered in accordance with the provisions of this Section and (ii) may be given either by a party
or by such party’s attorneys. Any party may, from time to time, specify as its address for purposes
of this Agreement any other address upon the giving of 10 days’ prior notice thereof to the other
parties.
48
SECTION 14.10. Entire Agreement. This Agreement, along with the Exhibits and
Schedules hereto contains all of the terms agreed upon between the parties hereto with respect to
the subject matter hereof, and all understandings and agreements heretofore had or made among the
parties hereto are merged in this Agreement which alone fully and completely expresses the
agreement of the parties hereto.
SECTION 14.11. Amendments. This Agreement may not be amended, modified, supplemented
or terminated, nor may any of the obligations of the Seller or the Buyer hereunder be waived,
except by written agreement executed by the party or parties to be charged.
SECTION 14.12. No Waiver. No waiver by either party of any failure or refusal by the
other party to comply with its obligations hereunder shall be deemed a waiver of any other or
subsequent failure or refusal to so comply.
SECTION 14.13. Governing Law. This Agreement shall be governed by, interpreted
under, and construed and enforced in accordance with, the laws of the State of Texas.
SECTION 14.14. Intentionally Omitted.
SECTION 14.15. Severability. If any term or provision of this Agreement or the
application thereof to any person or circumstances shall, to any extent, be invalid or
unenforceable, the remainder of this Agreement or the application of such term or provision to
persons or circumstances other than those as to which it is held invalid or unenforceable shall not
be affected thereby, and each term and provision of this Agreement shall be valid and enforceable
to the fullest extent permitted by law.
SECTION 14.16. Section Headings. The headings of the various Sections of this
Agreement have been inserted only for purposes of convenience, are not part of this Agreement and
shall not be deemed in any manner to modify, explain, expand or restrict any of the provisions of
this Agreement.
SECTION 14.17. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and it shall not be necessary in making
proof of this Agreement to produce or account for more than one such counterpart.
SECTION 14.18. Acceptance of Deed. The acceptance of the Deed by the Buyer shall
be deemed full compliance by the Seller of all of the Seller’s obligations under this Agreement
except for those obligations of the Seller which are specifically stated to survive the Closing.
SECTION 14.19. Construction. The parties acknowledge that the parties and their
counsel have reviewed and revised this Agreement and that the normal rule of construction to the
effect that any ambiguities are to be resolved against the drafting party shall not be employed in
the interpretation of this Agreement or any exhibits or amendments hereto.
SECTION 14.20. Recordation. Neither this Agreement nor any memorandum or notice of
this Agreement may be recorded by any party hereto without the prior written consent of the other
party hereto. The provisions of this Section shall survive the Closing or any
49
termination of this Agreement. The Buyer also agrees not to file any lis pendens or other
instrument against the Asset in connection herewith in bad faith. In furtherance of the foregoing,
the Buyer (i) acknowledges that the filing of a lis pendens in bad faith against or encumbering the
Asset or the recording of any memorandum or notice of this Agreement could cause significant
monetary and other damages to the Seller, and (ii) hereby indemnifies the Seller from and against
any and all liabilities, damages, losses, costs or expenses (including without limitation attorneys
fees and expenses) arising out of a breach of this Section 14.20. The provisions of this Section
14.20 shall survive the Closing or any termination of this Agreement.
SECTION 14.21. Waiver of Jury Trial. The Seller and the Buyer hereby waive trial by
jury in any action, proceeding or counterclaim brought by any party against another party on any
matter arising out of or in any way connected with this Agreement. The provisions of this Section
14.21 shall survive the Closing and any termination of this Agreement.
SECTION 14.22. Time is of the Essence. The Seller and the Buyer agree that time is
of the essence with respect to the obligations of the Buyer and the Seller under this Agreement.
SECTION
14.23. Bulk Sale; Occasional Sale. The Seller and the Buyer specifically
waive compliance with the Uniform Commercial Code of the State of Texas with respect to bulk
transfers, with any similar provision under any applicable law of the County of Tarrant and City of
Arlington. The Buyer and the Seller acknowledge that the Seller is selling the entire operating
assets of a business pursuant to this Agreement, which is intended to qualify as an occasional sale
as defined in the Tax Code Section 151.304.
50
SELLER: | ||||||||||||||
EQUISTAR ARLINGTON PARTNERS, L.P., a Delaware limited partnership | ||||||||||||||
By: | MERISTAR SPE LLC, a Delaware limited partnership, its general partner | |||||||||||||
By: | /s/ Xxxxxx Xxxxxx |
|||||||||||||
Name: | Xxxxxx Xxxxxx | |||||||||||||
Title: | Vice President and Assistant Secretary | |||||||||||||
BUYER: | ||||||||||||||
INTERSTATE ARLINGTON, LP, a Delaware limited liability company | ||||||||||||||
By: | Interstate Arlington GP, LLC, a Delaware limited liability company, its general partner | |||||||||||||
By: | Interstate Operating Company, LP, a Delaware limited partnership, its managing member | |||||||||||||
By: | Interstate Hotels
& Resorts, Inc., a Delaware corporation, its general partner |
|||||||||||||
By: | /s/ Xxxxxxxxxxx X. Xxxxxxx | |||||||||||||
Name: | Xxxxxxxxxxx X. Xxxxxxx | |||||||||||||
Title: | Executive Vice President and General Counsel |
September 11, 2006
Alcor Holdings LLC
c/o Blackstone Real Estate Acquisitions V L.L.C.
000 Xxxx Xxxxxx — 32nd Floor
New York, New York 11045
Attention: Xxxxxxx X. Xxxxxx
000 Xxxx Xxxxxx — 32nd Floor
New York, New York 11045
Attention: Xxxxxxx X. Xxxxxx
Re: | The Management Agreements, dated as of January 1, 2001 (as amended, supplemented and/or modified from time to time, the “Management Agreements”), by and among MeriStar Hotel Lessee LLC, a Delaware limited liability company (f/k/a MeriStar Hotel Lessee Corp.), MeriStar SPE Leasing LLC, a Delaware limited liability company (f/k/a MeriStar SPE Leasing Corp.), MeriStar SPE California LLC, a Delaware limited liability company (f/k/a MeriStar SPE California Corp.), MeriStar SPE Colorado LLC, a Delaware limited liability company (f/k/a MeriStar SPE Colorado Corp.), MeriStar SPE North Carolina LLC, a Delaware limited liability company (f/k/a MeriStar SPE North Carolina LLC Corp.), MeriStar SPE Wisconsin LLC, a Delaware limited liability company (f/k/a MeriStar SPE Wisconsin Corp.) (collectively, “Owners”) and Interstate Management Company, L.L.C., a Delaware limited liability company (f/k/a Meristar Management Company, L.L.C.) (“Operator”) |
Dear Xx. Xxxxxx:
This letter (this “Letter”) memorializes our agreement relating to certain termination fees
currently payable by Owners to Operator under those certain Management Agreements for the
properties set forth on Schedule A attached hereto that have been terminated by the
applicable Owner prior to the date hereof (the “Terminated Contracts”) and certain termination fees
that may be payable by Owners to Operator following the termination of those certain existing
Management Agreements for the properties set forth on Schedule B attached hereto (the
“Future Terminated Contracts”). Owners and Operator agree as follows:
1. | As of the date hereof, the aggregate amount of Termination Fees owed by Owners under the Terminated Contracts equals $13,899,760 (the “Current Aggregate Termination Fee”). Schedule C attached hereto sets forth the Termination Fee payment schedule relating to the Terminated Contracts. | ||
2. | Simultaneously with the execution of this Letter, Equistar Arlington Partners, L.P., an affiliate of Owners (“Arlington Owner”), and Interstate Arlington L.P., an affiliate of Operator (“Arlington Buyer”) are entering into that certain Agreement of Purchase and Sale dated as of the date hereof (the “Arlington Agreement”) relating to the property located at 0000 X. Xxxxx Xxxxxxxxx, Xxxxxxxxx, Xxxxx and commonly known as the “Hilton Arlington” (the “Arlington Hotel”). |
2
3. | Owners and Operator hereby agree that in lieu of Owners making the Current Aggregate Termination Fee in accordance with the terms of the applicable Management Agreements and the Master Fee Agreement dated as of January 1, 2001 (as amended, supplemented and/or modified from time to time, the “Master Fee Agreement”) between Owners and Operator and as otherwise described on Schedule C attached hereto, Owners shall, in full satisfaction of all such amounts, pay to Operator upon the closing under the Arlington Agreement (the “Arlington Closing”) a lump sum payment in the amount of $12,271,601, provided, if the applicable Termination Fee payment in October 2006 has been made by Owners prior to the Arlington Closing relating to the Terminated Contracts, such payment amount shall equal $11,667,069, and provided, further, if the applicable Termination Fee payment in October 2006 and November 2006 has been made by Owners prior to the Arlington Closing relating to the Terminated Contracts, such payment amount shall equal $11,215,989 (such applicable payment being referred to as the “Final Termination Fee”). | ||
4. | On August 23, 2006, Owners issued a notice of their intent to terminate the Management Agreements for the properties set forth on Schedule B attached hereto on September 30, 2006 (the “Anticipated Terminated Contracts”). Upon such termination, certain Termination Fees may be payable in accordance with the terms of the applicable Management Agreements and the Master Fee Agreement currently estimated to equal $2,540,349 (the “Anticipated Aggregate Termination Fee”). Schedule D attached hereto sets forth the Anticipated Aggregate Termination Fee payment schedule relating to the Anticipated Terminated Contracts. Owners and Operator hereby agree that in lieu of Owners making the Anticipated Aggregate Termination Fee in accordance with the terms of the applicable Management Agreements and the Master Fee Agreement and as otherwise described on Schedule D attached hereto, Owners shall, in full satisfaction of all such amounts, pay to Operator upon the Arlington Closing (in addition to such amounts as contemplated in paragraph 3 above) a lump sum payment in the amount of $2,086,693, provided, if the applicable Termination Fee payment in October 2006 has been made by Owners prior to the Arlington Closing relating to the Anticipated Terminated Contracts, such payment amount shall equal $2,051,159, and provided, further, if the applicable Termination Fee payment in October 2006 and November 2006 has been made by Owners prior to the Arlington Closing relating to the Anticipated Terminated Contracts, such payment amount shall equal $2,015,328 (such applicable payment being referred to as the “Additional Final Termination Fee”). | ||
5. | Owners and Operator agree that the Anticipated Aggregate Termination Fee and the Additional Final Termination Fee are preliminary amounts based on the parties best faith estimate. Owners and Operator shall cooperate in good faith to agree upon a final amount relating to the Anticipated Aggregate Termination Fee and the Additional Final Termination Fee upon the availability of the information necessary to determine such final amounts. To the extent the Additional Final |
3
Termination Fee is (i) in excess of the amount as finally determined by the parties to be payable under paragraph 4 above, Operator shall promptly refund to Owners any such excess amount or (ii) less than the amount as finally determined by the parties to be payable under paragraph 4 above, Owners shall promptly pay to Operator such deficiency. | |||
6. | The obligation of the parties hereto is subject to the closing of the purchase and sale of the Arlington Hotel pursuant to the Arlington Agreement. In the event the Arlington Agreement is terminated pursuant to its terms, this Letter shall be null and void and the parties hereto shall have no further rights or obligations under this Letter. | ||
7. | Operator and Owners agree that in lieu of a direct payment by Owners to Operator of the applicable Final Termination Fee and the Additional Final Termination Fee, Arlington Buyer shall receive a credit to the purchase price under the Arlington Agreement upon the Arlington Closing equal to such amounts. | ||
8. | The Final Termination Fee and the Additional Final Termination Fee upon such credit shall be in full satisfaction of any and all termination fees or other similar amounts owed by Owners or any affiliates thereof under the Terminated Contracts and the Anticipated Terminated Contracts; provided, however, that payment of the Final Termination Fee and the Additional Final Termination Fee shall not be in satisfaction of amounts, if any, that may due and payable under the Terminated Contracts and the Anticipated Terminated Contracts other than such termination or similar fees. |
Each party hereby acknowledges that it has participated equally in the drafting of this Letter
with assistance of counsel, and therefore that no court construing this Letter should construe it
more stringently against one party than the other.
All rights, benefits and remedies provided to the parties by this Letter, or any instruments
or documents executed pursuant to this Letter, are cumulative and shall not be exclusive of any
other of the rights, remedies and benefits allowed by law or equity to the parties.
This Letter shall be governed by, and construed under, the laws of the State of New York
without regard to conflicts of principles thereof.
If any provision of this Letter is held to be illegal, invalid or unenforceable under present
or future laws in effect from time to time, such provision shall be fully severable; this Letter
shall be construed and enforced as if the illegal, invalid or unenforceable provision had never
comprised a part hereof; and the remaining provisions hereof shall remain in full force and effect
and shall not be affected by the illegal, invalid or unenforceable provision or by its severance
herefrom.
This Letter may be executed in identical counterparts, each of which shall be
4
deemed an original for all purposes and all of which shall constitute, collectively, one
Letter. This Letter may be executed by facsimile signature, which signature shall be deemed an
original for all purposes.
Each of the parties hereto represents and warrants that it is duly authorized to execute and
deliver this Letter in accordance with its organizational and governing documents, including, as
applicable, its corporate charter, corporate bylaws, limited liability company agreement or
articles of organization and/or partnership agreement and that this Letter is binding upon such
party in accordance with its terms.
This Letter shall be binding upon and inure to the benefit of the parties hereto, and their
respective successors and permitted assigns.
5
All
capitalized terms used in this Letter and not otherwise defined herein shall have the
respective meanings given to such terms in the Management Agreements.
Sincerely,
INTERSTATE MANAGEMENT COMPANY, LLC | ||||
By:
|
/s/ Xxxxxxxxxxx X. Xxxxxxx
|
|||
Title: EVP and General Counsel | ||||
ACKNOWLEDGED AND AGREED: | ||||
OWNERS: | ||||
MERISTAR HOTEL LESSEE, LLC | ||||
MERISTAR SPE LEASING LLC | ||||
MERISTAR SPE CALIFORNIA LLC | ||||
MERISTAR SPE COLORADO LLC | ||||
MERISTAR SPE NORTH CAROLINA LLC | ||||
MERISTAR SPE WISCONSIN LLC | ||||
By:
|
/s/ Xxxxxx Xxxxxx
|
|||
Title: Vice President and Assistant Secretary |