Exhibit 10.9
CONTRIBUTION AGREEMENT
BY AND AMONG
CCGP SUGAR LAND CORPORATION,
a Delaware corporation,
and
CCLP SUGAR LAND CORPORATION,
a Delaware corporation,
collectively as the Contributor,
BARCELO CRESTLINE CORPORATION,
a Maryland corporation
AND
HIGHLAND HOSPITALITY, L.P.,
a Delaware limited partnership,
as the Acquirer
TABLE OF CONTENTS
Page
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ARTICLE I The Contribution................................................... 1
1.1 Contribution of Contributed Assets.................................... 1
1.2 Consideration......................................................... 2
1.3 Earn-Out Payment...................................................... 2
1.4 Post-Closing Escrow................................................... 3
1.5 Escrow of Units....................................................... 3
1.6 Redemption Rights for Units........................................... 4
1.7 Tax Consequences to Contributor....................................... 4
ARTICLE II Representations and Covenants..................................... 5
2.1 Representations by Acquirer........................................... 5
2.2 Representations by Contributor and BCC................................ 6
2.3 Satisfaction of Conditions........................................... 12
2.4 Contributor's and BCC's Indemnity.................................... 12
2.5 Acquirer's Indemnity................................................. 12
ARTICLE III Conditions Precedent to the Closing............................. 12
3.1 Conditions to Acquirer's Obligations................................. 12
3.2 Conditions to Contributor's Obligations.............................. 14
ARTICLE IV Closing and Closing Documents.................................... 14
4.1 Closing.............................................................. 14
4.2 Contributor's Deliveries............................................. 15
4.3 Acquirer's Deliveries................................................ 15
4.4 Fees and Expenses; Closing Costs..................................... 16
4.5 Default Remedies..................................................... 16
ARTICLE V Miscellaneous..................................................... 16
5.1 Notices.............................................................. 16
5.2 Entire Agreement; Modifications and Waivers; Cumulative Remedies..... 17
5.3 Exhibits............................................................. 17
5.4 Successors and Assigns............................................... 17
5.5 Article Headings..................................................... 17
5.6 Governing Law........................................................ 18
5.7 Counterparts......................................................... 18
5.8 Survival............................................................. 18
5.9 Further Acts......................................................... 18
5.10 Severability........................................................ 18
5.11 Attorneys' Fees..................................................... 18
5.12 Confidentiality..................................................... 18
EXHIBITS
A Assignment
B Partnership Agreement
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CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (this "Agreement") is made as of the 4th day of
September, 2003 by and among CCGP SUGAR LAND CORPORATION, a Delaware
corporation (the "General Partner"); CCLP SUGAR LAND CORPORATION, a Delaware
corporation (the "Barcelo Crestline Limited Partner") (the General Partner and
the Barcelo Crestline Limited Partner are sometimes hereinafter collectively
referred to as the "Contributor"); BARCELO CRESTLINE CORPORATION, a Maryland
corporation ("BCC"); and HIGHLAND HOSPITALITY, L.P., a Delaware limited
partnership (the "Acquirer").
RECITALS
A. Sugar Land Hotel Associates, L.P., a Delaware limited partnership (the
"Partnership") is the owner of a 300-room hotel and a leasehold interest in the
adjacent conference center and parking garage, known as the Marriott Sugar Land
Hotel and Conference Center located in the City of Sugar Land, Texas, all of
which is currently under construction (the "Project"). The Partnership was
formed pursuant to that certain Limited Partnership Agreement dated as of
February 28, 2002, as amended by a First Amendment to Limited Partnership
Agreement dated as of July 1, 2003 (as amended, the "Sugar Land Partnership
Agreement").
B. Sugar Land Hotel Developers, LLC, a Georgia limited liability company
(the "Stormont Limited Partner") is the record and beneficial owner of a 20%
limited partnership interest in the Partnership. The General Partner is the
general partner of the Partnership and the owner of a 1% general partnership
interest in the Partnership (the "GP Interest"). The Barcelo Crestline Limited
Partner is the owner of a 79% limited partnership interest in the Partnership
(the "LP Interest"). The GP Interest and the LP Interest are sometimes
hereinafter collectively referred to as the "Contributed Assets". BCC is the
sole shareholder of the General Partner and of the Barcelo Crestline Limited
Partner. The Contributor desires to contribute the Contributed Assets to the
Acquirer, and the Acquirer desires to acquire the Contributed Assets from the
Contributor, on the terms and conditions hereinafter set forth.
AGREEMENT
NOW, THEREFORE, for and in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
ARTICLE I
THE CONTRIBUTION
1.1 Contribution of Contributed Assets. The Contributor agrees to
contribute and transfer the Contributed Assets to the Acquirer, and the Acquirer
agrees to accept transfer of the Contributed Assets pursuant to the terms and
conditions set forth in this Agreement. Although the Project is encumbered by a
deed of trust securing a loan to the Partnership (the "Project Loan") from
Southwest Bank of Texas, NA (the "Project Lender"), the Contributed Assets shall
be transferred to the Acquirer free and clear of all liens, encumbrances,
security interests, prior assignments or conveyances, conditions, restrictions,
claims, and other matters affecting title thereto.
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1.2 Consideration. The total consideration (the "Consideration") for which
the Contributor agrees to contribute and assign the Contributed Assets to the
Acquirer, and which the Acquirer agrees to pay or deliver to the Contributor (or
the Contributor's designee for such payment and delivery), subject to the terms
of this Agreement, shall be the agreement to pay the "Earn-Out Payment" (as
defined below) and the issuance to the Contributor or its successor or designee
of a number of units of limited partnership interests in the Acquirer ("Units")
equal to (a) Four Hundred Thousand Dollars ($400,000), divided by (b) the price
(net of the underwriting discount) at which the common shares (the "Common
Shares") of Highland Hospitality Corporation, a Maryland corporation (the
"REIT"), are offered to (X) the public in the underwritten initial public
offering of the Common Shares, or (Y) Qualified Institutional Buyers in a
private placement of the Common Shares under Rule 144A of the Securities Act of
1933, as amended, either of which offering shall result in gross offering
proceeds of not less than Two Hundred Million Dollars ($200,000,000) (either of
which offering shall hereinafter be referred to as the "IPO") before any
discounts or fees paid to underwriters or placement agents. Subject to the
provisions of Section 1.5 below, the Contributor hereby directs the Acquirer to
issue and distribute on the Closing Date the Units not constituting Escrowed
Units (as defined below) directly to BCC, which executes this Agreement for the
purpose of acknowledging and agreeing to such distribution of the Units to BCC
and for the other purposes set forth herein. No fractional Units will be issued
as Consideration hereunder, but in lieu of issuing fractional Units, the value
thereof shall be paid in cash. The Contributor and BCC acknowledge that any
certificates evidencing the Units will bear appropriate legends indicating (i)
that the Units have not been registered under the Securities Act of 1933, as
amended ("Securities Act"), and (ii) that the Acquirer's Amended and Restated
Agreement of Limited Partnership (the "Acquirer's Partnership Agreement") will
restrict the transfer of the Units. Upon receipt of the Units, the Contributor
or its designee, (provided the designee is an accredited investor) shall become
a limited partner of the Acquirer and shall execute the Acquirer's Partnership
Agreement. Except as otherwise expressly set forth in this Agreement, the
Contributor and BCC acknowledge and agree that once Closing occurs, the
Contributor shall no longer be a partner in the Partnership, shall no longer be
entitled to receive any distributions from the Partnership, and shall have no
further right, title or interest in the Partnership. Additionally, within sixty
(60) days after the Closing Date, the Partnership's working capital as of the
Closing Date, if any, including all amounts in any escrow or reserve accounts as
of the Closing Date, shall be paid to the Acquirer.
1.3 Earn-Out Payment. As part of the Consideration, the Acquirer shall
cause the REIT to pay to the Contributor (or its designee), within sixty (60)
days after the "Calculation Date" (as defined below), an amount equal to the
Earn-Out Payment (as calculated below); provided, however, that the amount of
the Earn-Out Payment shall not exceed $1,800,000. If during the period beginning
on the date on which the Project is open for business and available for use by
paying overnight guests and ending on the date which is thirty-six (36) full
calendar months after the last day of the month in which such opening date
occurs (the "Calculation Date") the cumulative "Operating Profit" for the
Project (as that term is defined in that certain Management Agreement to be
entered into as of Closing (the "Management Agreement") between the TRS
Affiliate (as defined below) and Crestline Hotels & Resorts, Inc.) is more than
$9,500,000, then the Earn-Out Payment shall be equal to fifty percent (50%) of
the difference between (a) the actual amount of the cumulative Operating Profit
(as of the Calculation Date) for such 3-year period, and (b) $9,500,000. In the
event the cumulative Operating Profit for such 3-year period is $9,500,000 or
less, then no Earn-Out Payment shall be payable. If the Contributor is entitled
to the Earn-Out Payment pursuant to this Section 1.3, then the Contributor (or
its designee) shall receive the Earn-Out Payment in the form of Units, provided
the Contributor (or
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its designee) continues to be an "accredited investor" as described herein. The
number of Units delivered to the Contributor (or its designee) shall be equal to
the calculated amount of the Earn-Out Payment divided by the average closing
price per Common Share of the REIT for the twenty (20) trading days immediately
preceding the Calculation Date.
1.4 Post-Closing Escrow. As used herein, the term "Costs Savings" shall
mean the documented and approved (by the Acquirer and Contributor in their good
faith reasonable judgment) amounts by which the total actual "Development
Expenses" incurred as of Closing in connection with the Project is less than the
total "Development Budget" for work completed as of Closing (as those terms are
defined in that certain Hotel Development Agreement dated February 28, 2002, as
amended by a First Amendment to Hotel Development Agreement dated as of July 1,
2003 (the "Hotel Development Agreement"), between Stormont Hospitality Group,
LLC (the "Developer") and the Partnership). In the event that the Acquirer
elects to pay off the Project Loan prior to Project Close-Out (as defined
below), then the Acquirer agrees to fund into an escrow account (the "Escrow")
an amount equal to the difference between (a) $27,750,000, and (b) the actual
principal amount of the Project Loan which is paid off at Closing. The Escrow
shall be held by Acquirer until Project Close-Out occurs. The Developer shall be
entitled to request and receive from the Escrow monthly disbursements of funds
in accordance with the draw procedures set forth in the Hotel Development
Agreement to pay actual Development Expenses incurred which are shown on the
Development Budget but which were not paid or payable prior to Closing. If the
Escrow is established as provided above, then upon the occurrence of Project
Close-Out, if Costs Savings exist, any amounts remaining in the Escrow shall be
distributed as follows within five (5) business days after Project Close-Out:
(i) 80% shall be distributed in cash in the following order: first to the
Acquirer up to the amount of any "Operating Losses" (as defined below) that have
been incurred (such amount being referred to herein as the "Operating Loss
Off-Set Amount"), and the remaining portion, if any, to the Contributor (or its
designee), and (ii) 20% to the Stormont Limited Partner. If the amount
distributed to the Contributor (or its designee) from the Escrow is insufficient
to pay the Contributor (or its designee) 80% of the Cost Savings (less the
Operating Loss Off-Set Amount), then the Acquirer shall pay such insufficient
amount to the Contributor (or its designee) in cash within five (5) business
days after Project Close-Out occurs. The Acquirer acknowledges that BCC or its
affiliate has posted with the Project Lender a $1,000,000 certificate of deposit
(the "CD"), which is being held by the Project Lender as collateral for the
Project Loan. The Acquirer, the Contributor and BCC hereby agree to use
commercially reasonable efforts to have the then-current balance of the CD
released by the Project Lender to BCC (or its designee) at Closing. In the event
the Project Lender draws on any portion of the CD prior to Closing to cover
Operating Losses (as defined below), then the remaining balance of the CD being
held by the Project Lender will be released to BCC at Closing. The difference,
if any, between $1,000,000 and the amount of the CD that is actually released to
BCC by the Project Lender is hereinafter referred to as the "CD Make-Up Amount".
The Acquirer shall pay to BCC the CD Make-Up Amount within five (5) business
days after Project Close-Out (as defined below). The term "Operating Losses"
shall mean the amount by which the operating expenses (including the payment of
any debt service on the Project Loan) for the Project exceed the gross revenues
generated by the Project during the period of time from the date the Project is
open to the public for paying overnight guests through the Closing Date.
1.5 Escrow of Units. At Closing, the Acquirer shall hold back and keep in
escrow twenty-five percent (25%) of the Units (the "Escrowed Units") that
otherwise would be delivered to the Contributor (or its designee) at Closing as
part of the Consideration. By separate
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contribution agreement, the Stormont Limited Partner will also escrow
twenty-five percent (25%) of the Units to which it will be entitled under such
separate contribution agreement. The Escrowed Units shall be held by the
Acquirer until such time as all of the following have occurred (collectively,
the "Project Close-Out"): (a) "Completion" as defined in the Hotel Development
Agreement has occurred, (b) all "Punchlist Items" (as defined in the Hotel
Development Agreement) are fully completed, (c) any and all disputes with the
Developer, the contractor and any other parties relating to the construction and
development of the Project which are reasonably anticipated to be settled for
$25,000 or more have been settled and final payments have been made to the
Developer and the contractor (including any retainage amounts), and (d) all
other Development Expenses have been paid. Any distributions under the
Acquirer's Partnership Agreement which are paid by the Acquirer on the Escrowed
Units while they are in escrow shall be paid to the Contributor (or its
designee). On the date on which all conditions for Project Close-Out have been
satisfied, except for the payment of the costs and expenses which constitute a
"Capped Overrun" (as defined in the First Amendment to the Sugar Land
Partnership Agreement), if such Capped Overrun exists, the Contributor and BCC,
jointly and severally, agree to pay the Contributor's percentage portion of such
Capped Overrun to the Partnership pursuant to the provisions of the Sugar Land
Partnership Agreement as if the Contributor were still a partner thereof. If the
Contributor and BCC fail to pay such portion of the Capped Overrun within twenty
(20) days after the date on which Project Close-Out would have occurred but for
the payment of the amount of the Capped Overrun, then the Acquirer shall have
the right to take out of escrow and retain the number of Escrowed Units having a
value (as of the date the Escrowed Units are taken out of escrow) equal to the
amount of the Capped Overrun which the Contributor and BCC failed to pay, in
which event the Acquirer will pay to the party entitled thereto the amount of
the Capped Overrun which the Contributor and BCC failed to pay. The balance of
the Escrowed Units shall be released from escrow and delivered to the
Contributor (or its designee) within five (5) business days thereafter. If the
Contributor or BCC pays such portion of the Capped Overrun within such 20-day
period, then the Acquirer shall release the Escrowed Units from Escrow and
deliver them to the Contributor (or its designee) within five (5) business days
after the Acquirer's receipt of such payment.
1.6 Redemption Rights for Units. Each Unit shall be redeemable at the
option of the holder, in accordance with, but subject to the restrictions
contained in, the Acquirer's Partnership Agreement; provided, however, that such
redemption option may not be exercised prior to the first anniversary of the
Closing Date.
1.7 Tax Consequences to Contributor. Notwithstanding anything to the
contrary contained in this Agreement, including without limitation the use of
words and phrases such as "sell," "sale," purchase," and "pay," the parties
hereto acknowledge and agree that it is their intent that the transaction
contemplated hereby shall be treated for federal income tax purposes pursuant to
Section 721 of the Internal Revenue Code of 1986, as amended (the "Code"), as
the contribution of the Contributed Assets by the Contributor to the Acquirer,
in exchange for the Units, any amounts received by the Contributor pursuant to
Sections 1.2, 1.3, 1.4, 1.5 and any payments made by the Acquirer on behalf of
the Contributor or BCC pursuant to Section 4.4, and not as a transaction in
which the Contributor is acting other than in its capacity as a prospective
partner in the Acquirer.
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ARTICLE II
REPRESENTATIONS AND COVENANTS
2.1 Representations by Acquirer. The Acquirer hereby represents and
warrants unto the Contributor that the following statements are true, correct,
and complete as of the date of this Agreement and will be true, correct, and
complete as of the Closing Date:
(a) Organization and Power. The Acquirer is duly organized, validly
existing, and in good standing under the laws of the State of Delaware, and has
full right, power, and authority to enter into this Agreement and to assume and
perform all of its obligations under this Agreement; and, the execution and
delivery of this Agreement and the performance by the Acquirer of its
obligations hereunder have been duly authorized by all requisite action of the
Acquirer and require no further action or approval of the Acquirer's partners or
of any other individuals or entities in order to constitute this Agreement as a
binding and enforceable obligation of the Acquirer.
(b) Noncontravention. Neither the entry into nor the performance of,
or compliance with, this Agreement by the Acquirer has resulted, or will result,
in any violation of, or default under, or result in the acceleration of, any
obligation under any existing certificate of limited partnership, partnership
agreement, mortgage, indenture, lien agreement, note, contract, permit,
judgment, decree, order, restrictive covenant, statute, rule, or regulation
applicable to the Acquirer.
(c) Litigation. There is no action, suit, or proceeding, pending or
known to be threatened, against or affecting the Acquirer in any court or before
any arbitrator or before any federal, state, municipal, or other governmental
department, commission, board, bureau, agency or instrumentality which (i) in
any manner raises any question affecting the validity or enforceability of this
Agreement, (ii) could materially and adversely affect the business, financial
position, or results of operations of the Acquirer, (iii) could materially and
adversely affect the ability of the Acquirer to perform its obligations
hereunder, or under any document to be delivered pursuant hereto.
(d) Units Validly Issued. The Units, when issued, will have been duly
and validly authorized and issued, free of any preemptive or similar rights, and
will be fully paid and nonassessable, without any obligation to restore capital
except as required by the Delaware Revised Uniform Limited Partnership Act (the
"Limited Partnership Act"). The Contributor (or its designee) shall be admitted
as a limited partner of the Acquirer as of the Closing Date and shall be
entitled to all of the rights and protections of a limited partner under the
Limited Partnership Act and the provisions of the Acquirer's Partnership
Agreement, with the same rights, preferences, and privileges as all other
limited partners on a pari passu basis. For purposes of allocating items of
income, gain, loss and deduction with respect to the Project and/or the
Contributed Assets in the manner required by Section 704(c) of the Code, the
Acquirer shall employ, and shall cause any entity controlled by the Acquirer
which holds title to the Project or the Contributed Assets to employ, the
"traditional method" (without curative allocations) as set forth in Treasury
Regulation section 1.704-3(b)(1).
(e) Consents. Except as may otherwise be set forth in Section 3.1
hereof, each consent, approval, authorization, order, license, certificate,
permit, registration, designation,
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or filing by or with any governmental agency or body necessary for the
execution, delivery, and performance of this Agreement or the transactions
contemplated hereby by the Acquirer has been obtained or will be obtained on or
before the Closing Date.
(f) Brokerage Commission. The Acquirer has not engaged the services of
any real estate agent, broker, finder or any other person or entity for any
brokerage or finder's fee, commission or other amount with respect to the
transactions described herein on account of any action by the Acquirer. The
Acquirer hereby agrees to indemnify and hold the Contributor and BCC and their
respective employees, directors, members, partners, affiliates and agents
harmless against any claims, liabilities, damages or expenses arising out of a
breach of the foregoing. This indemnification shall survive Closing or any
termination of this Agreement.
2.2 Representations by Contributor and BCC. The Contributor and BCC hereby
make the following representations and warranties, each and every one of which
is true, correct, and complete as of the date of this Agreement (unless they
expressly provide for a future date), and will be true, correct, and complete as
of the Closing Date:
(a) Organization and Power. Each of the entities comprising the
Contributor is a corporation, duly incorporated, validly existing, and in good
standing under the laws of the State of Delaware. The Contributor has full
right, power, and authority to enter into this Agreement and to assume and
perform all of its obligations under this Agreement; and the execution and
delivery of this Agreement and the performance by the Contributor of its
obligations hereunder have been duly authorized by all requisite action of
Contributor and require no further action or approval of Contributor's officers,
directors or shareholders or of any other individuals or entities (other than
the Stormont Limited Partner pursuant to the Sugar Land Partnership Agreement,
which consent has been obtained under a separate contribution agreement between
the Acquirer and the Stormont Limited Partner) in order to constitute this
Agreement as a binding and enforceable obligation of the Contributor.
(b) Noncontravention. Neither the entry into nor the performance of,
or compliance with, this Agreement by the Contributor or BCC has resulted, or
will result, in any violation of, or default under, or result in the
acceleration of, any obligation under any limited liability company agreement,
regulations, mortgage indenture, lien agreement, note, contract, permit,
judgment, decree, order, restrictive covenant, statute, rule, or regulation
applicable to Contributor, BCC or to the Contributed Assets.
(c) Litigation. There is no action, suit, or proceeding, pending or
known to be threatened, against or affecting the Contributor, the Partnership or
the Project in any court or before any arbitrator or before any federal, state,
municipal, or other governmental department, commission, board, bureau, agency
or instrumentality which (A) in any manner raises any question affecting the
validity or enforceability of this Agreement, (B) could materially and adversely
affect the business, financial position, or results of operations of the
Contributor, the Partnership or the Project, (C) could materially and adversely
affect the ability of the Contributor to perform its obligations hereunder, or
under any document to be delivered pursuant hereto, (D) could create a lien on
the Contributed Assets, the Partnership, the Project, any part thereof, or any
interest therein, or (E) could materially and adversely affect the Contributed
Assets, the Partnership, the Project, any part thereof, or any interest therein.
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(d) Good Title. (A) The Contributor is the sole owner of the
Contributed Assets, (B) the Contributor has good title to the Contributed
Assets, (C) other than the pledge of the Contributed Assets to Regent Sugar
Land, L.P. (the "Regent Pledge") as collateral for the Mezzanine Loan (as
hereinafter defined), which Mezzanine Loan shall be paid in full and the Regent
Pledge released at Closing, the Contributed Assets are free and clear of all
liens, encumbrances, pledges, conditions, restrictions, claims and security
interests and any other matters affecting title thereto, and (D) the Contributor
has not granted any other person or entity an option to purchase or a right of
first refusal upon the Contributed Assets nor are there any agreements or
understandings between Contributor and any other person or entity with respect
to the disposition of the Contributed Assets.
(e) No Consents. Except as may otherwise be set forth in Section 3.1
hereof, each consent, approval, authorization, order, license, certificate,
permit, registration, designation, or filing by or with any governmental agency
or body necessary for the execution, delivery, and performance of this Agreement
or the transactions contemplated hereby by the Contributor has been obtained or
will be obtained on or before the Closing Date.
(f) Operation of Contributed Assets. Between the date hereof and the
Closing Date, the Contributor will and will cause the Partnership to (A) operate
its business only in the usual, regular, and ordinary manner consistent with
such entity's prior practice and (B) maintain its books of account and records
in the usual, regular, and ordinary manner, in accordance with sound accounting
principles applied on a basis consistent with the basis used in keeping its
books in prior years. From the date hereof until the Closing Date, the
Contributor shall not and shall cause the Partnership not to, take any action or
fail to take any action the result of which would (1) have a material adverse
effect on the Contributed Assets, the Project, the Partnership or the Acquirer's
ability to continue the operation thereof after the Closing Date in
substantially the same manner as presently conducted or (2) would cause any of
the representations and warranties contained in this Section 2.2 to be untrue as
of the Closing Date.
(g) Sugar Land Partnership Agreement. The Sugar Land Partnership
Agreement is in force and effect as of the date hereof, and has not been further
modified or amended. No event of default or event that with notice or the
passage of time, or both, would constitute an event of default has occurred
under the Sugar Land Partnership Agreement. The Contributor has performed all of
its obligations under the Sugar Land Partnership Agreement.
(h) Securities Law Matters. (A) In acquiring the Units and engaging in
this transaction, neither the Contributor nor BCC is relying upon any
representations made to it by the Acquirer, or any of its partners, officers,
employees, or agents that are not contained herein. The Contributor and BCC are
aware of the risks involved in investing in the Units and in the Common Shares
issuable upon redemption of such Units. The Contributor and BCC have had an
opportunity to ask questions of, and to receive answers from, the Acquirer and
the REIT or a person or persons authorized to act on their behalf, concerning
the terms and conditions of this investment and the financial condition,
affairs, and business of the Acquirer and the REIT. The Contributor and BCC
confirm that all documents, records, and information pertaining to its
investment in the Acquirer that have been requested by it, including a complete
copy of the form of the Acquirer's Partnership Agreement, have been made
available or delivered to it prior to the date hereof. The Contributor and BCC
represent and warrant that each has reviewed and approved the form of the
Acquirer's Partnership Agreement attached hereto as Exhibit B.
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(B) The Contributor and BCC understand that neither the Units nor
the Common Shares issuable upon redemption of the Units have been registered
under the Securities Act or any state securities acts and are instead being
offered and sold in reliance on an exemption from such registration
requirements. The Units issuable the Contributor (or its designee) are being
acquired solely for its own account, for investment, and are not being acquired
with a view to, or for resale in connection with, any distribution, subdivision,
or fractionalization thereof, in violation of such laws, and neither BCC nor the
Contributor has any present intention to enter into any contract, undertaking,
agreement, or arrangement with respect to any such resale; provided, however,
that, at or following Closing, the Contributor may distribute the Units to those
of its members or successors that (1) have represented and warranted to the
Acquirer in writing that, as of the time of such distribution, such member is an
accredited investor as that term is defined in Rule 501 of Regulation D under
the Securities Act of 1933, as amended, and (2) have executed the Partnership
Agreement as limited partners. The Contributor and BCC understand that any
certificates evidencing the Units will contain appropriate legends reflecting
the requirement that the Units not be resold without registration under such
laws or the availability of an exemption from such registration and that the
Partnership Agreement will restrict transfer of the Units.
(i) Accredited Investors. The Barcelo Crestline Limited Partner and
BCC are each an accredited investor as that term is defined in Rule 501 of
Regulation D under the Securities Act of 1933, as amended.
(j) Tax Matters. (A) The Contributor has filed within the time periods
(including any extensions of such time periods filed by the Contributor) and in
the manner prescribed by law all federal, state, and local tax returns and
reports, including but not limited to income, gross receipts, intangible, real
property, excise, withholding, franchise, sales, use, employment, personal
property, and other tax returns and reports, required to be filed by the
Contributor under the laws of the United States and of each state or other
jurisdiction in which the Contributor conducts business activities requiring the
filing of tax returns or reports. All tax returns and reports filed by the
Contributor are true and correct in all material respects. The Contributor has
paid in full all taxes of whatever kind or nature to be paid by the Contributor
for the periods covered by such returns (unless an extension of such periods has
been properly filed for such returns). The Contributor has no tax deficiency or
claim outstanding, assessed, threatened, or proposed against it. The charges,
accruals, and reserves for unpaid taxes on the books and records of the
Contributor as of the Closing Date are sufficient in all respects for the
payment of all unpaid federal, state, and local taxes of the Contributor accrued
for or applicable to all periods ended on or before the Closing Date. There are
no tax liens, whether imposed by the United States, any state, local, or other
taxing authority, outstanding against the Contributor or any of its assets. The
federal, state, and local tax returns of the Contributor have not been audited,
nor has the Contributor received any notice of any federal, state, or local
audit.
(B) The Contributor and BCC represent and warrants that they have
obtained from their own counsel advice regarding the transaction contemplated by
this Agreement, including, without limitation, the tax consequences of (i) the
transfer of the Contributed Assets to the Acquirer and the receipt of Units as
consideration therefor and (ii) the Contributor's (or its designee's) admission
as a limited partner of the Acquirer. The Contributor and BCC further represent
and warrant that they have not relied on the Acquirer or the Acquirer's
representatives or counsel for such tax advice.
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(k) Bankruptcy with respect to Contributor. No Act of Bankruptcy has
occurred with respect to the Contributor or BCC. As used herein, "Act of
Bankruptcy" shall mean if a party hereto or any member or manager thereof shall
(A) apply for or consent to the appointment of, or the taking of possession by,
a receiver, custodian, trustee or liquidator of itself or of all or a
substantial part of its property, (B) admit in writing its inability to pay its
debts as they become due, (C) make a general assignment for the benefit of its
creditors, (D) file a voluntary petition or commence a voluntary case or
proceeding under the Federal Bankruptcy Code (as now or hereafter in effect),
(E) be adjudicated bankrupt or insolvent, (F) file a petition seeking to take
advantage of any other law relating to bankruptcy, insolvency, reorganization,
receivership, dissolution, winding-up or composition or adjustment of debts, (G)
fail to controvert in a timely and appropriate manner, or acquiesce in writing
to, any petition filed against it in an involuntary case or proceeding under the
Federal Bankruptcy Code (as now or hereafter in effect), or (H) take any entity
action for the purpose of effecting any of the foregoing.
(l) Brokerage Commission. The Contributor has not engaged the services
of, any real estate agent, broker, finder or any other person or entity for any
brokerage or finder's fee, commission or other amount with respect to the
transactions described herein on account of any action by the Contributor. The
Contributor hereby agrees to indemnify and hold the Acquirer and its employees,
directors, members, partners, affiliates and agents harmless against any claims,
liabilities, damages or expenses arising out of a breach of the foregoing. This
indemnification shall survive Closing or any termination of this Agreement.
(m) Project Representations and Warranties. To the best of the
Contributor's knowledge, each of the following statements with respect to the
Project is true, correct and complete as of the date of this Agreement (unless
they expressly provide for a future date), and will be true, correct and
complete as of the Closing Date:
(A) Title to Project. The Partnership owns good and marketable
fee simple and leasehold title of record to the applicable portion of the
Project, free and clear of any claim, lien, charge, security interest, mortgage,
deed of trust, encumbrance, purchase rights or other rights of any nature
whatsoever of any third party, other than the deed of trust securing the Project
Loan, the lien for real estate taxes and assessments not yet due or payable, and
such recorded easements and restrictions which do not materially adversely
affect the marketability of title to the Project or the use of the Project for
its intended use.
(B) No Agreements to Sell. The Partnership has made no agreement
with, and will not enter into any agreement with, and has no obligation
(absolute or contingent) to, any other person or firm to sell, transfer or in
any way encumber the Project or to not sell the Project, or to enter into any
agreement with respect to a sale, transfer or encumbrance of or put or call
right with respect to the Project.
(C) Lease. A true, correct and complete copy of the Conference
Center and Parking Lease Agreement dated February 28, 2002 (the "Parking Lease")
has been delivered to the Acquirer and its agents and underwriters. The Parking
Lease is valid, binding and enforceable and presently in full force and effect.
Neither the Partnership nor the lessor under the Parking Lease is in default
thereunder, and no event has occurred which, but for the passage of time or the
giving of notice, or both, would constitute a default under the Parking Lease.
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(D) Franchise Documents. True, correct and complete copies of the
"Franchise Documents" (as defined in the Sugar Land Partnership Agreement) have
been delivered or made available to the Acquirer and its agents and
underwriters. The Franchise Documents are valid, binding and enforceable and
presently in full force and effect. Neither the Partnership nor the other
parties to the Franchise Documents is in default under the Franchise Documents,
and no event has occurred which, but for the passage of time or the giving of
notice, or both, would constitute a default under the Franchise Documents.
(E) Liabilities; Indebtedness. Except for the Project Loan and
the Mezzanine Loan, the Partnership has not incurred any indebtedness related to
the Project except in each instance for trade payables and other customary and
ordinary expenses in the ordinary course of business that have been disclosed to
the Acquirer.
(F) Insurance. The Partnership currently maintains or causes to
be maintained all of the public liability, casualty and other insurance coverage
with respect to the Project that is required under the terms of the "Senior Loan
Documents" and the "Management Agreement" (as those terms are defined in the
Sugar Land Partnership Agreement). All such insurance coverage shall be
maintained in full force and effect through the Closing and all premiums due and
payable thereunder have been, and shall be, fully paid through Closing.
(G) Personal Property. All equipment, fixtures and personal
property located at or on the Project shall remain and not be removed prior to
the Closing, except for equipment that becomes obsolete or unusable, which may
be disposed of or replaced in the ordinary course of business.
(H) Environmental Conditions. Except as set forth in the
environmental reports and materials previously delivered to the Acquirer
(collectively, "Environmental Reports"), neither the Contributor nor the
Partnership has received any written notice of the presence or release of any
substance that is regulated under any Environmental Laws as a pollutant,
contaminant or toxic, radioactive or otherwise hazardous substance, including
petroleum, its derivatives or by-products and other hydrocarbons (collectively
and individually, "Hazardous Substances") that would cause the Project or the
Partnership to be in violation of any applicable Environmental Laws and that
remains uncured, nor has the Contributor or the Partnership received written
notice that the Project is not in compliance with applicable Environmental Laws.
Except as otherwise disclosed in the Environmental Reports, (i) there are no
Hazardous Substances located at, on or under the Project and (ii) no Hazardous
Substances have leaked, escaped or been discharged, emitted or otherwise
released from the Project onto any adjoining properties. For the purposes of
this Section, "Environmental Laws" means any and all federal, state and local
statutes, laws, regulations and rules in effect on the date hereof relating to
the protection of the environment or to the use, transportation and disposal of
Hazardous Substances.
(I) Compliance With Laws. The Partnership possesses and/or on or
prior to Closing will possess such certificates, authorities or permits issued
by the appropriate state or federal agencies or bodies necessary to conduct the
business to be conducted by it, and the Partnership has not received any written
notice of proceedings that have been or may be commenced relating to the
revocation or modification or any such certificate, authority or permit which,
singly or in the aggregate, if the subject of an unfavorable decision, ruling,
or finding, would materially and adversely affect the condition, financial or
otherwise, or the
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earnings, business affairs or business prospects of the Project. The Partnership
has not received any written or other notice of any violation of any applicable
zoning, building or safety code, rule, regulation or ordinance, or of any
employment, environmental, wetlands or other regulatory law, order, regulation
or other requirement, including without limitation the Americans With
Disabilities Act ("ADA") or any restrictive covenants or other easements,
encumbrances or agreements, relating to the Project, which remains uncured and
would materially and adversely affect the condition, financial or otherwise, or
the earnings, business affairs or business prospects of the Project. The Project
is being constructed in material compliance with all applicable laws,
ordinances, rules and regulations, and all material approvals regarding zoning,
land use, subdivision, environmental and building and construction laws,
ordinances, rules and regulations will be obtained by Closing, and such
approvals will not be invalidated by the consummation of the transactions
contemplated by this Agreement (other than those licenses and permits, including
without limitation, liquor licenses, for which new licenses and permits must be
obtained by law as a result of the change in the ownership of the Contributed
Assets contemplated by this Agreement).
(J) Condemnation and Moratoria. There are (i) no pending or
threatened condemnation or eminent domain proceedings, or negotiations for
purchase in lieu of condemnation, which affect or would affect any portion of
the Project; (ii) no pending or threatened moratoria on utility or public water
or sewer hook-ups or the issuance of permits, licenses or other inspections or
approvals necessary in connection with the construction or reconstruction of
improvements which affect or would affect any portion of the Project; and (iii)
no pending or threatened proceeding to change adversely the existing zoning
classification as to any portion of the Project. No portion of the Project is a
designated historic property or located within a designated historic area or
district, and there are no graveyards or burial grounds located within any of
the Project.
(K) Condition of Improvements. There is no material defect in the
condition of the Project in its current stage of construction, including the
improvements thereon, the roof, foundation, load-bearing walls or other
structural elements thereof, and the mechanical, electrical, plumbing and,
safety systems therein, to the extent that such items exist or have been
installed as of the date of this Agreement. No material damage to the Project in
its current stage of construction has occurred from casualty or other cause, nor
is there any soil condition of any nature that will not support all of the
improvements being constructed thereon without the need for unusual or new
subsurface excavations, fill, footings, caissons or other installations.
(L) Taxes. (i) All taxes (including real estate taxes due and
owing with respect to the Project) have been paid and all tax or information
returns required to be filed on or before the date hereof by or on behalf of the
Partnership have been filed and all such tax or information returns required to
be filed hereafter will be filed on or before the date due in accordance with
all applicable laws prior to the incurrence of any penalties or interest thereon
and all taxes shown to be due on any returns have been paid or will be paid when
due; and (ii) there is no action, suit or proceeding pending against or
threatened with respect to the Partnership or the Project in respect of any tax,
nor is any claim for additional tax asserted by any taxing authority. Neither
the Partnership nor any of its federal, state and local income or franchise tax
returns are the subject of any audit or examination by any taxing authority.
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2.3 Satisfaction of Conditions. The Acquirer hereby covenants that the
Acquirer shall: (I) use commercially reasonable efforts and diligence in order
to satisfy all of the conditions set forth in subsections 3.1(d), (e), (g) and
(i), and subsections 3.2(a), (b), (c), (d) and (e) hereof, and (II) cooperate
and assist in the Contributor's efforts to satisfy the conditions set forth in
subsection 3.1(c) hereof; and the Contributor shall not have any obligation to
consummate the Closing hereunder unless and until all such conditions have been
satisfied or waived by the Contributor in writing. The Contributor hereby
covenants that the Contributor shall: (A) use commercially reasonable efforts
and diligence in order to satisfy all of the conditions set forth in subsections
3.1(a), (b) and (c) hereof, and (B) cooperate and assist in the Acquirer's
efforts to satisfy the conditions set forth in subsections 3.1(d), (g) and (i)
and subsections 3.2(c) and (d) hereof; and the Acquirer shall not have any
obligation to consummate the Closing hereunder unless and until such conditions
have been satisfied or waived by the Acquirer in writing.
2.4 Contributor's and BCC's Indemnity. The Contributor and BCC hereby
jointly and severally agree to indemnify and hold the Acquirer, the REIT, and
their respective employees, directors, members, partners, affiliates and agents
harmless of and from all liabilities, losses, damages, costs, and expenses
(including reasonable attorneys' fees) which the Acquirer or the REIT may suffer
or incur by reason of (a) any breach of the representations or warranties
contained in Section 2.2 of this Agreement, (b) any act or cause of action
occurring or accruing prior to the Closing Date and arising from the ownership
of the Contributed Assets prior to the Closing Date, and (c) the ownership or
operation of the Project and relating to the period prior to the Closing Date,
including, without limitation, actions or claims relating to damage to property
or injury to or death of any person occurring or arising during the period prior
to the Closing Date, or any claims for any debts or obligations occurring on or
about or in connection with the Project or any portion thereof or with respect
to the Project's operations at any time prior to the Closing Date (subject to
the reconciliation of the operating accounts of the Project).
2.5 Acquirer's Indemnity. The Acquirer agrees to indemnify and hold the
Contributor, BCC and their respective employees, directors, members, partners,
affiliates and agents harmless of and from all liabilities, losses, damages,
costs, and expenses (including reasonable attorneys' fees) which the Contributor
may suffer or incur by reason of (a) any breach of its representations or
warranties contained in Section 2.1 of this Agreement, (b) any act or cause of
action occurring or accruing on or after the Closing Date and arising from the
ownership of the Contributed Assets or the operation of the Project on or after
the Closing Date, and (c) the ownership or operation of the Project and relating
to the period on or after the Closing Date, including, without limitation,
actions or claims relating to damage to property or injury to or death of any
person occurring or arising during the period on or after the Closing Date, or
any claims for any debts or obligations occurring on or about or in connection
with the Project or any portion thereof or with respect to the Project's
operations at any time on or after the Closing Date.
ARTICLE III
CONDITIONS PRECEDENT TO THE CLOSING
3.1 Conditions to Acquirer's Obligations. In addition to any other
conditions set forth in this Agreement, the Acquirer's obligation to consummate
the Closing is subject to the timely
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satisfaction of each and every one of the conditions and requirements set forth
in this Section 3.1, all of which shall be conditions precedent to the
Acquirer's obligations under this Agreement.
(a) Contributor's and BCC's Obligations. The Contributor shall have
performed all obligations of the Contributor hereunder which are to be performed
prior to Closing, and shall have delivered or caused to be delivered to the
Acquirer, all of the documents and other information required of the Contributor
pursuant to Section 4.2. Additionally, BCC shall have either caused the CD to be
transferred to the Acquirer or liquidated the CD and paid the principal thereof
to the Acquirer, together with any deficiency amounts required by Section 1.2
hereof.
(b) Contributor's Representations and Warranties. The Contributor's
and BCC's representations and warranties set forth in Section 2.2 shall be true
and correct as if made again on the Closing Date.
(c) No Injunction. On the Closing Date, there shall be no effective
injunction, writ, preliminary restraining order or other order issued by a court
of competent jurisdiction restraining or prohibiting the consummation of the
transactions contemplated hereby.
(d) Third Party Consents. To the extent required by the "City
Documents" or the "Franchise Documents" (as those terms are defined in the Sugar
Land Partnership Agreement), or to the extent the Project Loan is not paid in
full at Closing, the Acquirer shall have obtained the consent of the Lender, the
City of Sugar Land, Texas, Xxxxxxxxx Properties Incorporated, the Sugar Land
Town Square Development Authority, and/or Marriott International, Inc. (the
"Franchisor") to (i) the Acquirer's acquisition of the Contributed Assets, (ii)
the lease or sublease of the Project from the Partnership to a wholly-controlled
affiliate of the Acquirer (the "TRS Affiliate"), and (iii) either assigning the
existing Franchise Documents to the TRS Affiliate or entering into a new
franchise agreement for the Project between the Franchisor and the TRS Affiliate
(the "New Franchise Agreement").
(e) Completion of IPO. The IPO shall have been completed.
(f) Completion and Certificate of Occupancy. "Completion" (as that
term is defined in the Hotel Development Agreement dated February 28, 2002)
shall have occurred, and a final certificate of occupancy (the "CO") shall have
been issued for the Project.
(g) Mezzanine Loan Payoff. The $3,500,000 mezzanine loan from Regent
Sugar Land, L.P. to the Partnership (the "Mezzanine Loan") shall be paid in full
concurrently with the Closing, and the Regent Pledge shall have been terminated
and released, together with any associated financing statements.
(h) Stormont Contribution Agreement Closing. Each of the conditions
precedent to the Acquirer's obligations to close under that certain Contribution
Agreement dated as of August 6, 2003 (the "Stormont Contribution Agreement")
between the Stormont Limited Partner and the Acquirer shall have been satisfied
or waived by the Acquirer, and the closing under the Stormont Contribution
Agreement shall have occurred or shall occur simultaneously with the Closing
hereunder.
(i) Franchise Documents. Either the existing Franchise Documents shall
have been assigned by the Partnership to the TRS Affiliate with all necessary
consents from the
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Franchisor, or the New Franchise Agreement shall have been executed by the
Franchisor and the TRS Affiliate.
3.2 Conditions to Contributor's Obligations. In addition to any other
conditions set forth in this Agreement, the Contributor's obligations to
consummate the Closing is subject to the timely satisfaction of each and every
one of the conditions and requirements set forth in this Section 3.2, all of
which shall be conditions precedent to the Contributor's obligations under this
Agreement.
(a) Acquirer's Obligations. The Acquirer shall have performed all
obligations of the Acquirer hereunder which are to be performed prior to
Closing, and shall have delivered or caused to be delivered to the Contributor,
all of the documents and other information required of the Acquirer pursuant to
Section 4.3.
(b) Acquirer's Representations and Warranties. The Acquirer's
representations and warranties set forth in Section 2.1 shall be true and
correct as if made again on the Closing Date.
(c) Mezzanine Loan Payoff. The Mezzanine Loan shall be paid in full
concurrently with the Closing and the Regent Pledge, together with any
associated financing statements, shall have been terminated and released.
(d) Project Loan. Either the Project Loan shall have been paid in full
or the Project Lender shall have released or terminated that certain Continuing
Guaranty from Crestline Capital Corporation in favor of the Project Lender dated
as of February 28, 2002, and that certain Replacement Guaranty from Regent
Atlanta, LLC in favor of the Project Lender dated as of March 28, 2003.
(e) Completion of IPO. The IPO shall have been completed.
(f) Stormont Contribution Agreement Closing. Each of the conditions
precedent to the Acquirer's obligations to close under the Stormont Contribution
Agreement shall have been satisfied or waived by the Acquirer, and the closing
under the Stormont Contribution Agreement shall have occurred or shall occur
simultaneously with the Closing hereunder.
ARTICLE IV
CLOSING AND CLOSING DOCUMENTS
4.1 Closing. The consummation and closing (the "Closing") of the
transactions contemplated under this Agreement shall take place at the offices
of the Acquirer in McLean, Virginia, or such other place as is mutually
agreeable to the parties, on the later to occur of the following unless
otherwise set by agreement of the parties (such date being referred to herein as
the "Closing Date"): (a) the date which is five (5) business days after the CO
is issued, or (b) the date of the closing of the IPO; provided, however, that
this Agreement shall terminate if Closing does not occur prior to March 31,
2004.
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4.2 Contributor's Deliveries. At the Closing, the Contributor and BCC, as
applicable, shall deliver the following to the Acquirer in addition to all other
items required to be delivered to the Acquirer by the Contributor or BCC:
(a) Assignment of Contributed Assets. The Contributor shall have
executed and delivered an Assignment, in substantially the form of Exhibit A
attached hereto, granting and conveying to the Acquirer good and indefeasible
title to the Contributed Assets, free and clear of all liens, encumbrances,
security interests, prior assignments, conditions, restrictions, claims, and
other matters affecting title thereto.
(b) Execution of Acquirer's Partnership Agreement. Signature pages of
the Acquirer's Partnership Agreement (which Acquirer's Partnership Agreement
shall be in substantially the form attached hereto as Exhibit B) duly executed
by the Contributor (or its designee), as limited partner.
(c) FIRPTA Certificate. An affidavit from the Contributor certifying
pursuant to Section 1445 of the Internal Revenue Code that the Contributor is
not a foreign corporation, foreign partnership, foreign trust, foreign estate or
foreign person (as those terms are defined in the Internal Revenue Code and the
Income Tax Regulations promulgated thereunder).
(d) Pledge Release. A fully executed termination and release of the
Regent Pledge, together with terminations and releases of all financing
statements associated therewith.
(e) Other Documents. Any other document or instrument reasonably
requested by the Acquirer or required hereby. Without limiting the generality of
the foregoing, to the extent that individuals associated with the Contributor or
BCC serve as officers or directors in the Sugar Land Hotel and Conference Center
Association, Inc, the Contributor shall cause such individuals to resign and
withdraw from such positions at Closing. The Contributor or BCC shall deliver to
the Acquirer at Closing any minute books or other books and records of such
Association that are in the possession or control of the Contributor or BCC.
4.3 Acquirer's Deliveries. At the Closing, the Acquirer shall deliver the
following:
(a) Certificates for Units. If certificates are issued, certificates
representing Units duly issued by the Acquirer in the name the Contributor (or
its designee) as of the Closing Date representing the Units to which the
Contributor is entitled pursuant to Section 1.2 of this Agreement.
(b) Executed Acquirer's Partnership Agreement. The fully executed
Acquirer's Partnership Agreement, with the original duly executed signature of
the REIT, as general partner, and original or photostatic copies of the
signatures of all limited partners.
(c) Other Documents. Any other document or instrument reasonably
requested by the Contributor or required hereby, including without limitation, a
copy of the fully executed Management Agreement.
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4.4 Fees and Expenses; Closing Costs. The Acquirer shall pay all fees,
expenses and closing costs relating to the transactions contemplated by this
Agreement; provided however, that the Contributor and BCC shall pay their own
attorneys' and consultants' fees and expenses.
4.5 Default Remedies. If the closing of the IPO occurs and all of the other
conditions precedent set forth in Section 3.1 hereof have been satisfied, but
the Acquirer fails to consummate the Closing contemplated hereunder with the
Contributor, the Contributor shall have the right, as the Contributor's sole and
exclusive remedy for such default, to seek specific performance of this
Agreement. If the Contributor defaults in performing any of the Contributor's
obligations under this Agreement, the Acquirer shall have all rights and
remedies available to it at law or in equity resulting from the Contributor's
default, including without limitation, the right to seek specific performance of
this Agreement and the Contributor's obligation to convey the Contributed Assets
to the Acquirer hereunder. The parties acknowledge and agree that the failure of
a condition precedent to occur, notwithstanding the good faith and commercially
reasonable efforts of the applicable party, shall not be a default hereunder.
ARTICLE V
MISCELLANEOUS
5.1 Notices. Any notice provided for by this Agreement and any other
notice, demand, or communication required hereunder shall be in writing and
either delivered in person (including by confirmed facsimile transmission) or
sent by hand delivered against receipt or sent by recognized overnight delivery
service or by certified or registered mail, postage prepaid, with return receipt
requested. All notices shall be addressed as follows:
Acquirer:
c/o Highland Hospitality Corporation
0000 Xxxxxxxxxx Xxxxx, Xxxxx 000
XxXxxx, XX 00000
Attention: General Counsel
Fax No.: (000) 000-0000
with a copy to:
c/o Highland Hospitality Corporation
0000 Xxxxxxxxxx Xxxxx, Xxxxx 000
XxXxxx, XX 00000
Attention: Chief Executive Officer
Fax No.: (000) 000-0000
Contributor or BCC:
x/x Xxxxxxx Xxxxxxxxx Xxxxxxxxxxx
0000 Xxxxxxxxxx Xxxxx, Xxxxx 000
XxXxxx, XX 00000
Attention: General Counsel
Fax No.: (000) 000-0000
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with a copy to:
x/x Xxxxxxx Xxxxxxxxx Xxxxxxxxxxx
0000 Xxxxxxxxxx Xxxxx, Xxxxx 000
XxXxxx, XX 00000
Attention: Chief Executive Officer
Fax No.: (000) 000-0000
Any address or name specified above may be changed by a notice given by the
addressee to the other party. Any notice, demand or other communication shall be
deemed given and effective as of the date of delivery in person or receipt set
forth on the return receipt. The inability to deliver because of changed address
of which no notice was given, or rejection or other refusal to accept any
notice, demand or other communication, shall be deemed to be receipt of the
notice, demand or other communication as of the date of such attempt to deliver
or rejection or refusal to accept.
5.2 Entire Agreement; Modifications and Waivers; Cumulative Remedies. This
Agreement supersedes any existing letter of intent between the parties,
constitutes the entire agreement among the parties hereto and may not be
modified or amended except by instrument in writing signed by the parties
hereto, and no provisions or conditions may be waived other than by a writing
signed by the party waiving such provisions or conditions. No delay or omission
in the exercise of any right or remedy accruing to the Contributor or the
Acquirer upon any breach under this Agreement shall impair such right or remedy
or be construed as a waiver of any such breach theretofore or thereafter
occurring. The waiver by the Contributor or the Acquirer of any breach of any
term, covenant, or condition herein stated shall not be deemed to be a waiver of
any other breach, or of a subsequent breach of the same or any other term,
covenant, or condition herein contained. All rights, powers, options, or
remedies afforded to Contributor or the Acquirer either hereunder or by law
shall be cumulative and not alternative, and the exercise of one right, power,
option, or remedy shall not bar other rights, powers, options, or remedies
allowed herein or by law, unless expressly provided to the contrary herein.
5.3 Exhibits. All exhibits referred to in this Agreement and attached
hereto are hereby incorporated in this Agreement by reference.
5.4 Successors and Assigns. Upon the request of the Acquirer, the General
Partner and the Barcelo Crestline Limited Partner agree to transfer at Closing
their respective interests (or portions thereof) in the Partnership to the
Acquirer and to one or more wholly-controlled affiliates of the Acquirer in
order to prevent the Partnership from technically dissolving under state
partnership law. Except as set forth above or elsewhere in this Agreement, this
Agreement may not be assigned by the Acquirer, BCC or the Contributor without
the prior approval of the other party hereto. This Agreement shall be binding
upon, and inure to the benefit of, the Contributor, BCC, the Acquirer, and their
respective legal representatives, successors, and permitted assigns.
5.5 Article Headings. Article headings and article and section numbers are
inserted herein only as a matter of convenience and in no way define, limit, or
prescribe the scope or intent of this Agreement or any part hereof and shall not
be considered in interpreting or construing this Agreement.
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5.6 Governing Law. This Agreement shall be construed and interpreted in
accordance with the laws of the Commonwealth of Virginia, without regard to
conflicts of laws principles.
5.7 Counterparts. This Agreement may be executed in any number of
counterparts and by any party hereto on a separate counterpart, each of which
when so executed and delivered shall be deemed an original and all of which
taken together shall constitute but one and the same instrument.
5.8 Survival. All representations and warranties contained in this
Agreement, and all covenants and agreements contained in the Agreement which
contemplate performance after the Closing Date (including, without limitation,
those covenants and agreements contained in Sections 1.2, 1.3, 1.4, 2.4 and 2.5
hereof) shall survive the Closing.
5.9 Further Acts. In addition to the acts, instruments and agreements
recited herein and contemplated to be performed, executed and delivered by the
Acquirer, BCC and the Contributor, the Acquirer, BCC and Contributor shall
perform, execute, and deliver or cause to be performed, executed, and delivered
at the Closing or after the Closing, any and all further acts, instruments, and
agreements and provide such further assurances as the other parties may
reasonably require to consummate the transaction contemplated hereunder.
5.10 Severability. In case any one or more of the provisions contained in
this Agreement shall for any reason be held to be invalid, illegal, or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provision hereof, and this Agreement shall be
construed as if such invalid, illegal, or unenforceable provision had never been
contained herein.
5.11 Attorneys' Fees. Should a party employ an attorney or attorneys to
enforce any of the provisions hereof or to protect its interest in any manner
arising under this Agreement, or to recover damages for breach of this
Agreement, any non-prevailing party in any action pursued in a court of
competent jurisdiction (the finality of which is not legally contested) shall
pay to the prevailing party all reasonable costs, damages, and expenses,
including reasonable attorneys' fees, expended or incurred in connection
therewith.
5.12 Confidentiality. The Contributor and BCC acknowledge that the matters
relating to the REIT, the IPO, this Agreement, and the other documents, terms,
conditions and information related thereto (collectively, the "Information") are
confidential in nature. Therefore, the Contributor and BCC covenant and agree to
keep the Information confidential and will not (except as required by applicable
law, regulation or legal process including applicable securities laws), without
the Acquirer's prior written consent, disclose any Information in any manner
whatsoever; provided, however, that the Information may be revealed only to the
Contributor's and BCC's key employees, legal counsel and financial advisors and
to the "Senior Lender," the "Mezzanine Lender," the "City," the "Authority" and
the "Franchisor" (as those terms are defined in the Sugar Land Partnership
Agreement), each of whom shall be informed of the confidential nature of the
Information and shall agree to act in accordance with the terms of this Section
5.12. In the event that the Contributor, BCC or its key employees, legal counsel
or financial advisors or the Senior Lender, the Mezzanine Lender, the City, the
Authority or the Franchisor (collectively, the "Information Group") are
requested pursuant to, or required by, applicable law (other than in connection
with the IPO), regulation or legal process to disclose
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any of the Information, the applicable member of the Information Group will
notify the Acquirer promptly so that it may seek a protective order or other
appropriate remedy or, in its sole discretion, waive compliance with the terms
of this Section 5.12. In the event that no such protective order or other remedy
is obtained, or that the Acquirer waives compliance with the terms of this
Section 5.12, the applicable member of the Information Group may furnish only
that portion of the Information which it is advised by counsel is legally
required and will exercise all reasonable efforts to obtain reliable assurance
that confidential treatment will be accorded the Information. The Contributor
and BCC acknowledge that remedies at law may be inadequate to protect the
Acquirer or the REIT against any actual or threatened breach of this Section
5.12, and, without prejudice to any other rights and remedies otherwise
available, the Contributor and BCC agree to the granting of injunctive relief in
favor of the REIT and/or the Acquirer without proof of actual damages.
Notwithstanding any other express or implied agreement to the contrary, the
parties agree and acknowledge that each of them and each of their employees,
representatives, and other agents may disclose to any and all persons, without
limitation of any kind, the tax treatment and tax structure of the transaction
and all materials of any kind (including opinions or other tax analyses) that
are provided to any of them relating to such tax treatment and tax structure,
except to the extent that confidentiality is reasonably necessary to comply with
U.S. federal or state securities laws. For purposes of this paragraph, the terms
"tax treatment" and "tax structure" have the meanings specified in Treasury
Regulation section 1.6011-4(c).
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
[SIGNATURES APPEAR ON FOLLOWING PAGES.]
-19-
IN WITNESS WHEREOF, this Agreement has been entered into effective as of
the 4th day of September, 2003.
CONTRIBUTOR:
CCGP SUGAR LAND CORPORATION, a
Delaware corporation
By: /s/ Xxxxxxxxx X. Xxxxxxxxx
----------------------------------------
Name: Xxxxxxxxx X. Xxxxxxxxx
Title: Vice President
CCLP SUGAR LAND CORPORATION, a
Delaware corporation
By: /s/ Xxxxxxxxx X. Xxxxxxxxx
----------------------------------------
Name: Xxxxxxxxx X. Xxxxxxxxx
Title: Vice President
ACQUIRER:
HIGHLAND HOSPITALITY, L.P. a Delaware
limited partnership
By: Highland Hospitality Corporation, its
General Partner
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: President and Chief Executive
Officer
BCC:
BARCELO CRESTLINE CORPORATION,
a Maryland corporation
By: /s/ Xxxxx X. Xxxxxxxxx
----------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: President and Chief Executive Officer
-20-
EXHIBIT A
Assignment
CCGP SUGAR LAND CORPORATION, a Delaware corporation (the "General
Partner"), and CCLP SUGAR LAND CORPORATION, a Delaware corporation (the "Barcelo
Crestline Limited Partner") (the General Partner and the Barcelo Crestline
Limited Partner are sometimes hereinafter collectively referred to as the
"Assignor"), for good and valuable consideration paid to the Assignor by
Highland Hospitality, L.P., a Delaware limited partnership ("Assignee"),
pursuant to the Contribution Agreement dated as of , 2003, by and
---------------
between Assignor, Barcelo Crestline Corporation and Assignee (the "Agreement")
and for other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, does hereby sell, assign, transfer, convey and deliver
(a) good and indefeasible title to the General Partner's GP Interest to
, its successors and assigns, and (b) good and indefeasible title
--------------
to the Barcelo Crestline Limited Partner's LP Interest to the Assignee, its
successors and assigns, in each case free and clear of all liens, encumbrances,
security interests, prior assignments, conditions, restrictions, claims, and
other matters affecting title thereto.
Capitalized terms used but not defined herein shall have the respective
meanings ascribed to them in the Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment to be
signed by a duly authorized officer this day of , 200 .
-- ----- --
CCGP SUGAR LAND CORPORATION, a
Delaware corporation
By:
----------------------------------------
Name: Xxxxxxxxx X. Xxxxxxxxx
Title: Vice President
CCLP SUGAR LAND CORPORATION, a
Delaware corporation
By:
----------------------------------------
Name: Xxxxxxxxx X. Xxxxxxxxx
Title: Vice President
EXHIBIT B
Acquirer's Partnership Agreement
