EXHIBIT 10.10
PURCHASE, SALE AND EXCHANGE AGREEMENT
BY AND BETWEEN
HMH PROPERTIES, INC., as Seller,
and
HOSPITALITY PROPERTIES TRUST,
as Purchaser
___________________________
February 26, 1996
TABLE OF CONTENTS
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SECTION 1. DEFINITIONS.................................................. 1
1.1 Agreement...................................................... 1
1.2 Agreement to Lease............................................. 2
1.3 Allocable Purchase Price....................................... 2
1.4 Assets......................................................... 2
1.5 Business Day................................................... 2
1.6 Closing........................................................ 2
1.7 Closing Date................................................... 2
1.8 Contracts...................................................... 2
1.9 Defective Property............................................. 2
1.10 Deposit........................................................ 2
1.11 Documents...................................................... 2
1.12 Exchange Closing............................................... 2
1.13 Exchange Closing............................................... 3
1.14 Exchange Closing Date.......................................... 3
1.15 Exchange Contract.............................................. 3
1.16 Exchange Parcels............................................... 3
1.17 Exchange Properties............................................ 3
1.18 Exchange Property Credit....................................... 3
1.19 Exchange Value................................................. 3
1.20 Excluded Assets................................................ 3
1.21 Fee Properties................................................. 3
1.22 FF&E........................................................... 3
1.23 FF&E Reserve................................................... 3
1.24 Final Exchange Closing Date.................................... 4
1.25 Ground Lease Properties........................................ 4
1.26 Ground Leases.................................................. 4
1.27 Host........................................................... 4
1.28 Improvements................................................... 4
1.29 Intangible Property............................................ 4
1.30 Interest Rate.................................................. 4
1.31 Leases......................................................... 4
1.32 LIBOR Rate..................................................... 4
1.33 Management Agreement Amendments................................ 5
1.34 Management Agreements.......................................... 5
1.35 Manager........................................................ 5
1.36 Other Agreement................................................ 5
1.37 Permitted Encumbrances......................................... 5
1.38 Property....................................................... 6
1.39 Purchase Price................................................. 6
1.40 Purchaser...................................................... 6
1.41 Real Property.................................................. 6
1.42 Retained Funds................................................. 6
1.43 Review Period.................................................. 6
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1.44 Sale Properties................................................ 6
1.45 Seller......................................................... 6
1.46 Seller's Knowledge............................................. 6
1.47 Surveys........................................................ 7
1.48 Syracuse Ground Lease.......................................... 7
1.49 Tenant Leases.................................................. 7
1.50 Title Commitments.............................................. 7
1.51 Title Company.................................................. 7
SECTION 2. PURCHASE, SALE AND EXCHANGE; DILIGENCE....................... 7
2.1 Purchase, Sale and Exchange..................................... 7
2.2 Diligence Inspections........................................... 7
2.3 Defective Properties............................................ 8
2.4 Title Matters.................................................. 10
2.5 Survey Matters................................................. 11
SECTION 3. PURCHASE AND SALE........................................... 12
3.1 Closing........................................................ 12
3.2 Purchase Price................................................. 12
SECTION 4. CONDITIONS TO PURCHASER'S OBLIGATION TO CLOSE............... 13
4.1 Closing Documents.............................................. 13
4.2 Condition of Properties........................................ 14
4.3 Title Policies................................................. 15
4.4 Opinions of Counsel............................................ 15
4.5 FF&E Reserve................................................... 15
4.6 Appraisal...................................................... 16
4.7 Xxxx Xxxxx Xxxxxx.............................................. 16
4.8 Other Approvals................................................ 16
4.9 Other Agreement................................................ 16
SECTION 5. CONDITIONS TO SELLER'S OBLIGATION TO CLOSE.................. 16
5.1 Other Agreement................................................ 16
5.2 Purchase Price................................................. 16
5.3 Closing Documents.............................................. 16
5.4 Opinion of Counsel............................................. 17
5.5 Xxxx Xxxxx Xxxxxx.............................................. 17
5.6 Other Approvals................................................ 17
SECTION 6. REPRESENTATIONS AND WARRANTIES OF SELLER..................... 17
6.1 Status and Authority the Seller................................ 17
6.2 Action of the Seller........................................... 17
6.3 No Violations of Agreements.................................... 18
6.4 Litigation..................................................... 18
6.5 Existing Leases, Agreements, Etc............................... 18
6.6 Disclosure..................................................... 18
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6.7 Utilities, Etc................................................. 18
6.8 Compliance With Law............................................ 19
6.9 Taxes.......................................................... 19
6.10 Not A Foreign Person........................................... 19
6.11 Hazardous Substances........................................... 19
6.12 Insurance...................................................... 19
6.13 Operating Statements........................................... 20
6.14 Ground Leases.................................................. 20
6.15 Management Agreements.......................................... 20
6.16 FF&E Reserve................................................... 20
SECTION 7. REPRESENTATIONS AND WARRANTIES OF PURCHASER.................. 21
7.1 Status and Authority of the Purchaser.......................... 21
7.2 Action of the Purchaser........................................ 22
7.3 No Violations of Agreements.................................... 22
7.4 Litigation..................................................... 22
SECTION 8. COVENANTS OF THE SELLER..................................... 22
8.1 Compliance with Laws, Etc...................................... 22
8.2 Approval of Agreements......................................... 23
8.3 Compliance with Agreements..................................... 23
8.4 Estoppel Certificates.......................................... 23
8.5 Notice of Material Changes or Untrue
Representations........................................... 23
8.6 Operation of Properties........................................ 23
SECTION 9. APPORTIONMENTS.............................................. 23
9.1 Real Property Apportionments................................... 23
9.2 Closing Costs.................................................. 24
9.3 Xxxx Xxxxx Xxxxxx.............................................. 24
SECTION 10. DEFAULT.................................................... 24
10.1 Default by the Seller.......................................... 24
10.2 Default by the Purchaser....................................... 25
SECTION 11. MISCELLANEOUS.............................................. 25
11.1 Agreement to Indemnify......................................... 25
11.2 Brokerage Commissions.......................................... 26
11.3 Publicity...................................................... 27
11.4 Corporate Approvals............................................ 27
11.5 Notices........................................................ 28
11.6 Waivers, Etc................................................... 29
11.7 Assignment; Successors and Assigns............................. 29
11.8 Severability................................................... 29
11.9 Counterparts, Etc.............................................. 30
11.10 Governing Law.................................................. 30
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11.11 Performance on Business Days................................... 31
11.12 Attorneys' Fees................................................ 31
11.13 Section and Other Headings..................................... 31
11.14 Nonliability of Trustees....................................... 31
11.15 Nonliability of Officers....................................... 31
SECTION 12. EXCHANGE CONTRACT........................................... 31
12.1 Exchanges...................................................... 31
12.2 Exchange Property Credit....................................... 31
12.3 Designation of Exchange Parcels................................ 32
12.4 Exchange Contracts............................................. 32
12.5 Conveyance of Exchange Parcels................................. 34
12.6 Failure of Exchange Parcels to Close........................... 34
12.7 Assignment Upon Exhaustion of Credit........................... 34
12.8 Closing Period................................................. 34
12.9 Reductions to Exchange Property Credit......................... 34
12.10 Increases to Exchange Property Credit.......................... 35
12.11 Final Exchange Closing Date.................................... 35
12.12 Indemnification................................................ 35
12.13 Escrow Provision............................................... 35
Schedule A - Allocable Purchase Prices of Properties and
Designations
Schedule B-1-18 - Legal Descriptions
Schedule C - Form of Surveyor's Certificate
Schedule D - Management Agreements
Schedule E - Operating Statements
Schedule F - FF&E Reserve Amounts
PURCHASE, SALE AND EXCHANGE AGREEMENT
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THIS PURCHASE, SALE AND EXCHANGE AGREEMENT is made as of the 26th day of
February, 1996, by and between HMH PROPERTIES, INC., a Delaware corporation, as
seller (the "Seller") and HOSPITALITY PROPERTIES TRUST, a Maryland real estate
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investment trust, as purchaser (the "Purchaser").
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W I T N E S S E T H :
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WHEREAS, the Seller is the owner and holder of the Properties (this and
other capitalized terms used and not otherwise defined herein having the
meanings ascribed to such terms in Section 1); and
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WHEREAS, the Purchaser wishes to acquire the Exchange Properties from the
Seller and the Seller is willing to convey the Exchange Properties to the
Purchaser in exchange for one or more other parcels of real property to be
designated by the Seller (collectively, the "Exchange Parcels"), subject to and
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upon the terms and conditions hereinafter set forth; and
WHEREAS, the Seller desires to effectuate tax deferred exchanges of the
Exchange Properties with other like-kind property pursuant to Section 1031 of
the Internal Revenue Code of 1986, as amended; and
WHEREAS, the Purchaser desires to purchase the Sale Properties, as more
fully set forth below; and
WHEREAS, the Seller is willing to sell the Sale Properties to the
Purchaser, subject to and upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the mutual receipt and legal
sufficiency of which are hereby acknowledged, the Seller and the Purchaser
hereby agree as follows:
SECTION 1. DEFINITIONS.
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Capitalized terms used in this Agreement shall have the meanings set
forth below or in the Section of this Agreement referred to below:
1.1 "Agreement" shall mean this Purchase, Sale and Exchange Agreement,
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together with Schedules A through F attached hereto, as it and they may be
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amended from time to time as herein provided.
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1.2 "Agreement to Lease" shall mean that certain Agreement to Lease,
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dated as of the date hereof, by and between HMH HPT Residence Inn, Inc. and the
Purchaser.
1.3 "Allocable Purchase Price" shall mean, with respect to any of the
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Properties, the amount set forth in Schedule A opposite the name of such
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Property.
1.4 "Assets" shall mean, with respect to any Property, collectively,
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all of the Real Property, the FF&E, the Contracts, the Documents, the
Improvements, the Intangible Property and the Tenant Leases now owned or
hereafter acquired by the Seller in connection with or relating to such Property
other than any Excluded Assets with respect to such Property.
1.5 "Business Day" shall mean any day other than a Saturday, Sunday or
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any other day on which banking institutions in The Commonwealth of Massachusetts
or the State of Maryland are authorized by law or executive action to close.
1.6 "Closing" shall have the meaning given such term in Section 3.1.
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1.7 "Closing Date" shall have the meaning given such term in Section
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3.1.
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1.8 "Contracts" shall mean, with respect to any Property, all hotel
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licensing agreements and other service contracts, equipment leases, booking
agreements and other arrangements or agreements to which the Seller is a party
affecting the ownership, repair, maintenance, management (including, without
limitation, the Management Agreements), leasing or operation of such Property,
to the extent the Seller's interest therein is assignable or transferable.
1.9 "Defective Property" shall have the meaning given such term in
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Section 2.3(a).
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1.10 "Deposit" shall mean an aggregate amount pursuant to this
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Agreement and the Other Agreement of Fifty Million Dollars ($50,000,000) paid by
the Purchaser to the Seller and to the sellers under the Other Agreement within
five (5) Business Days after the date of this Agreement.
1.11 "Documents" shall mean, with respect to any Property, all books,
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records and files relating to the leasing, maintenance, management or operation
of such Property belonging to the Seller.
1.12 "Exchange Closing" shall have the meaning given such term in
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Section 12.1.
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1.13 "Exchange Closing" shall mean the consummation of the
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transactions contemplated by and Exchange Contract.
1.14 "Exchange Closing Date" shall mean the date on which any Exchange
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Closing shall occur.
1.15 "Exchange Contract" shall have the meaning given such term in
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Section 12.4.
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1.16 "Exchange Parcels" shall have the meaning given such term in the
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preambles to this Agreement.
1.17 "Exchange Properties" shall mean the Properties designated as
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"Exchange Properties" in Schedule A.
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1.18 "Exchange Property Credit" shall have the meaning given such term
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in Section 12.2.
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1.19 "Exchange Value" shall mean, with respect to any Exchange
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Property, the Allocable Purchase Price of such Property.
1.20 "Excluded Assets" shall mean, with respect to any Property, (i)
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except as otherwise provided in the Leases or the Management Agreements, any
right, title or interest in the name or signage containing the name "Marriott,"
"Residence Inn" and other marks used by the Seller, Host, the Manager or any of
their subsidiaries or affiliates, (ii) all property owned by the Seller, Host,
the Manager or any of their subsidiaries or affiliates, not normally located at
such Property and used, but not exclusively, in connection with the operation of
such Property and (iii) any other property which is the property of the Manager
or an affiliate or subsidiary of the Manager, including, without limitation, the
Proprietary Marks, Proprietary Signage and Software (as such terms are defined
in the Management Agreements) and all computer equipment proprietary to the
Manager or any affiliate or subsidiary of the Manager.
1.21 "Fee Properties" shall mean all of the properties identified on
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Schedule A other than the Ground Lease Properties.
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1.22 "FF&E" shall mean, with respect to any Property, all appliances,
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machinery, devices, fixtures, appurtenances, equipment, furniture, furnishings
and articles of tangible personal property of every kind and nature whatsoever
owned by the Seller and located in or at, or used in connection with the
ownership, operation or maintenance of such Property.
1.23 "FF&E Reserve" shall have the meaning given such term in the
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Management Agreements.
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1.24 "Final Exchange Closing Date" shall mean, with respect to any
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Exchange Closing, the first Business Day following the Exchange Closing Date;
provided, however, that in no event shall the Final Exchange Closing Date occur
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later than one hundred eighty (180) days after the Closing Date unless the
parties agree otherwise; provided, further, however, that, in the event that the
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Seller does not designate any Exchange Parcel on or before the day which is
forty-five (45) days after the Closing Date, the Final Exchange Closing Date
shall be the fifth Business Day following the expiration of such forty-five (45)
day period unless the parties otherwise agree.
1.25 "Ground Lease Properties" shall mean the Property identified as a
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ground lease property on Schedule A.
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1.26 "Ground Leases" shall mean the Syracuse Ground Lease.
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1.27 "Host" shall mean Host Marriott Corporation, a Delaware
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corporation.
1.28 "Improvements" shall mean, with respect to any Property, all
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buildings, fixtures, walls, fences, landscaping and other structures and
improvements situated on, affixed or appurtenant to the Real Property with
respect to such Property.
1.29 "Intangible Property" shall mean, with respect to any Property,
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all transferable or assignable permits, certificates of occupancy, operating
permits, sign permits, development rights and approvals, certificates, licenses,
warranties and guarantees, rights to deposits, trade names, service marks, the
Contracts, telephone exchange numbers identified with such Property held by the
Seller, and all other transferable intangible property, miscellaneous rights,
benefits and privileges of any kind or character with respect to such Property
held by the Seller other than the Excluded Assets.
1.30 "Interest Rate" shall mean a per annum rate of interest equal to
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the LIBOR Rate on the Closing Date plus one hundred fifty (150) basis points.
1.31 "Leases" shall mean, collectively, the leases to be entered into
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between the Purchaser, as landlord, and HMH HPT Residence Inn, Inc. an affiliate
of the Seller, as tenant, with respect to the Properties pursuant to the
Agreement to Lease.
1.32 "LIBOR Rate" shall mean the per annum rate of interest reported in
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The Wall Street Journal as the London Interbank Offered Rate for United States
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dollars for a six (6) month term in the amount of the Deposit or, if such rate
shall cease to be published, the per annum rate of interest of the 14-day moving
average closing trading price of 180-day Treasury Bills.
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1.33 "Management Agreement Amendments" shall mean, collectively, an
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amendment to each of the Management Agreements to be entered into on or prior to
the Closing Date (i) confirming the Manager's consent to the purchase and sale
contemplated hereunder, (ii) extending the initial terms of the Management
Agreements to December 31, 2020, (iii) providing renewal options to the Manager
of two (2) consecutive fifteen (15) year terms, (iv) providing that, as long as
the Properties are owned by the Purchaser and managed by the Manager (x) all
renewals of the Management Agreements may only be exercised with respect to all
of such Properties or none of such Properties; (y) all calculations of the FF&E
Reserve, expenditures from the FF&E Reserve and Base and Incentive Management
Fees (as defined in the Management Agreements) shall be done on a consolidated
basis for all such Properties; and (z) in the event any of the Leases are
terminated for any reason, the Purchaser shall have the right to designate
another person as "Owner" under the Management Agreements subject to the terms
and conditions of the Management Agreements, (v) requiring the Manager to obtain
and provide to the Purchaser such financial information and other data as may be
required by securities registration and reporting laws, regulations and rules of
the Securities and Exchange Commission, including, but not limited to, providing
an allocated breakdown of operating costs of the Properties, permitting the
Purchaser to publish such information and/or to incorporate by reference in the
Purchaser's public filing the public information filed by Marriott
International, Inc., and generally requiring the Manager and Marriott
International, Inc. to cooperate with the Purchaser in complying requirements of
the Securities and Exchange Commission, and (vi) amending the financing
restrictions in the Management Agreements to permit secured financing on all of
the Properties in an amount up to sixty percent (60%) of the consolidated
Priority Basis (as defined in the Management Agreement) of the Properties.
1.34 "Management Agreements" shall mean the management agreements
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between the Seller and the Manager, with respect to the Properties, which
Management Agreements are more particularly described in Schedule D.
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1.35 "Manager" shall mean Residence Inn by Marriott, Inc., a Delaware
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corporation.
1.36 "Other Agreement" shall mean the Purchase-Sale and Option
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Agreement, dated as of February 3, 1995, by and among HMH Courtyard Properties,
Inc. and HMH Properties, as sellers, and the Purchaser, as purchaser, as amended
from time to time.
1.37 "Permitted Encumbrances" shall mean, with respect to any Property,
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(a) liens for taxes, assessments and governmental charges with respect to such
Property not yet due and payable or
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due and payable but not yet delinquent; (b) applicable zoning regulations and
ordinances provided the same do not prohibit or impair in any material respect
use of such Property as a Residence Inn hotel as currently operated and
constructed; (c) such other nonmonetary encumbrances as do not, in the
Purchaser's reasonable opinion, impair marketability and do not materially
interfere with the use of such Property as a fully functioning Residence Inn
hotel as currently operated and constructed; (d) the Ground Leases; (e) UCC
Financing Statements which would be permitted pursuant to the terms of Section
21.9 of the Leases; and (f) such other nonmonetary encumbrances with respect to
such Property which are not objected to by the Purchaser in accordance with
Sections 2.4 and 2.5.
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1.38 "Property" shall mean all of the Assets relating to the properties
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identified on Schedule A, the legal descriptions of which are set forth in
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Schedules B1-18.
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1.39 "Purchase Price" shall have the meaning given such term in Section
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3.2.
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1.40 "Purchaser" shall have the meaning given such term in the
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preambles to this Agreement.
1.41 "Real Property" shall mean, with respect to any Property which is
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a Fee Property, the real property described in the applicable Schedule B-1
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through 18, and, with respect to any Property which is a Ground Lease Property,
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the leasehold estate created by the applicable Ground Lease, together with all
easements, rights of way, privileges, licenses and appurtenances which the
Seller may now own or hereafter acquire with respect thereto.
1.42 "Retained Funds" shall mean an amount equal to ten percent (10%)
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of the Acquisition Purchase Price.
1.43 "Review Period" shall mean the period commencing on the date of
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this Agreement and expiring forty-five (45) days thereafter or, if sooner, on
the Closing Date.
1.44 "Sale Properties" shall mean the Properties designated "Sale
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Properties" in Schedule A.
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1.45 "Seller" shall have the meaning given such term in the preambles
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to this Agreement.
1.46 "Seller's Knowledge" shall mean the actual knowledge of Xxxxx X.
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Xxxxxxxxx, Xxxxxx Xxxxxxx, Xxxxxx X. Xxxxx, Xxxxxx X. Block and Xxxxx Xxxxxxxxxx
after inquiry to Xxxx Xxxxxx, Xxxx Xxxxxx having been directed to consult with
the general manager of the Property and the Manager's litigation department, if
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appropriate, and any other appropriate representatives of the Manager.
1.47 "Surveys" shall have the meaning given such term in Section 2.5.
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1.48 "Syracuse Ground Lease" shall mean the Land Lease, dated as of
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February 15, 1989, between MBF Development Co., as landlord, and Marriott
Corporation, as tenant, as the same has been amended.
1.49 "Tenant Leases" shall mean, with respect to any Property, all
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leases, rental agreements or other agreements (including all amendments or
modifications thereto) which entitle any person to have rights with respect to
the use or occupancy of any portion of such Property.
1.50 "Title Commitments" shall have the meaning given such term in
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Section 2.4.
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1.51 "Title Company" shall mean such title insurance company as shall
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have been reasonably approved by the Purchaser and the Seller.
SECTION 2. PURCHASE, SALE AND EXCHANGE; DILIGENCE.
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2.1 Purchase, Sale and Exchange. In consideration of the mutual
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covenants herein contained, the Purchaser hereby agrees to purchase from the
Seller and the Seller hereby agree to sell to the Purchaser, all of the Seller's
right, title and interest in and to the Properties for the Purchase Price or, in
the case of the Exchange Properties, in exchange for one or more Exchange
Parcels, subject to and in accordance with the terms and conditions of this
Agreement.
2.2 Diligence Inspections. For the Review Period, the Seller shall
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permit the Purchaser and its representatives to inspect the Properties and the
Improvements (including, without limitation, all roofs, electric, mechanical and
structural elements, and HVAC systems therein), to perform due diligence, soil
analysis and environmental investigations, to examine the books of account and
records of the Seller and the Manager with respect to the Properties (other than
the Excluded Assets), including, without limitation, all leases and agreements
affecting the Properties, and make copies thereof, at such reasonable times as
the Purchaser or its representatives may request by notice to the Seller and the
Manager (which notice may be oral). To the extent that, in connection with such
investigations, the Purchaser, its agents, representatives or contractors,
damages or disturbs any of the Real Property or the
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Improvements located thereon, the Purchaser shall return the same to
substantially the same condition which existed immediately prior to such damage
or disturbance. The Purchaser shall indemnify, defend and hold harmless the
Seller from and against any and all expense, loss or damage which the Seller may
incur as a result of any act or omission of the Purchaser or its
representatives, agents or contractors in connection with such examinations and
inspections, other than any expense, loss or damage arising from any act or
omission of the Seller or the Manager. The foregoing indemnification agreement
shall survive the termination of this Agreement and the Closing.
2.3 Defective Properties. (a) In the event that (i) the Purchaser
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reasonably determines that a Property has structural, environmental, legal or
other operational defects or conditions such that (x) expenditures equal to or
greater than seven and one-half percent (7.5%) of the Allocable Purchase Price
of such Property are required in order to bring such Property into a
satisfactory condition in accordance with prevailing Marriott standards for like
hotels or (y) the calculation with respect to such Property of Operating Profit
(as defined in the Management Agreements) less ground rent varies by fifteen
percent (15%) or more of that set forth in the Operating Statements described in
Section 6.13 and other financial data provided by the Seller to the Purchaser
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prior to the date hereof (any such Property being hereinafter referred to as a
"Defective Property"), and (ii) the Purchaser gives written notice thereof to
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the Seller no later than the expiration of the Review Period (time being of the
essence with respect to the giving of such notice), identifying the Defective
Property or Properties and the specific defects with respect thereto, the
Seller, shall, subject to paragraph (c) below, be required to permit the
Purchaser to acquire all of the Properties other than such Defective Property or
Properties. Prior to the Closing, the Seller shall enforce all rights available
against third parties, including, without limitation, the Manager, and shall
cause any and all defects or conditions so identified by the Purchaser to be
corrected, it being expressly understood and agreed that nothing contained
herein shall be construed to relieve any such parties from any obligations with
respect to such matters.
(b) If, prior to the Closing, (i) any Property, as applicable, suffers a
casualty or condemnation which would cause such Property or Properties to become
a Defective Property, (ii) such Property is not, prior to the Closing, restored
to a condition substantially the same as the condition thereof immediately prior
to such casualty or condemnation, and (iii) the Purchaser provides written
notice of same to the Seller no later than the Closing Date, time being of the
essence, the Seller shall, subject to paragraph (c) below, be required to permit
the Purchaser to acquire all of the Properties other than such
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Defective Property or Properties. Promptly upon learning of the same, the
Seller covenants and agrees to provide the Purchaser with prompt written notice
of any casualty or condemnation affecting any Property.
(c) If the Purchaser timely identifies any Defective Property and the
Purchaser and the Seller shall, acting reasonably and in good faith be unable or
unwilling to agree that (x) the Seller shall, at its sole cost, remedy the
applicable defect prior to the applicable Closing, (y) the Purchaser shall,
notwithstanding such defect, acquire the Defective Property subject to a
reduction in the Allocable Purchase Price of the Defective Property sufficient
to compensate the Purchaser for such defect, or (z) on the substitution of
another property owned by the Seller for such Defective Property, this Agreement
shall terminate with respect to such Defective Property and the Purchase Price
shall be reduced by the Allocable Purchase Price of such Defective Property.
Notwithstanding the foregoing, if more than an aggregate of three (3) Properties
are identified as Defective Properties or rejected by the Purchaser pursuant to
Section 2.4 or 2.5, either party may terminate this Agreement and the
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transactions contemplated hereby, in which case the Deposit shall be returned to
the Purchaser, together with interest thereon as provided in Section 10.1 and no
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party shall have any further obligations hereunder; provided, however, that in
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the event the Seller shall be the terminating party, the Purchaser shall have
the right, exercisable by notice given within ten (10) Business Days after the
Seller's notice to terminate, to proceed to closing on one or more such
Defective Properties (or Properties rejected pursuant to Section 2.4 or 2.5)
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such that the total amount of Properties deleted by the Purchaser pursuant to
this Section 2.3, Section 2.4 and Section 2.5 shall not be greater than three
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(3). In the event the Purchaser shall elect to proceed to closing as aforesaid,
(x) any notice of termination given by the Seller shall be null and void and of
no further force or effect and (y) in the event that any Property shall have
been affected by a casualty or taking, the Seller shall pay over and assign to
the Purchaser the entire amount of any insurance proceeds or award paid or
payable with respect thereto less any amounts previously expended by the Seller
in connection with repair or restoration, provided that any such repair or
restoration shall have been approved by the Purchaser (which approval shall not
be unreasonably withheld or delayed).
(d) In the event that the Purchaser reasonably determines that the
calculation, with respect to the Properties in the aggregate, of Operating
Profit (as defined in the Management Agreements) less ground rent varies by
seven and one-half percent (7.5%) or more from that set forth in the Operating
Statements described in Section 6.13 and other financial data provided by the
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Seller to the Purchaser, the Purchaser shall have the right
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to terminate this Agreement and the transactions contemplated hereby, in which
case the Deposit shall be returned to the Purchaser, together with interest
thereon as provided in Section 10.1 and no party shall have any further
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obligations hereunder.
2.4 Title Matters. Prior to the date of this Agreement, the Seller has
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ordered from the Title Company and directed the Title Company promptly to
deliver to the Purchaser and the Seller a preliminary title commitment, having
an effective date after the date of this Agreement, for an ALTA extended owner's
policy of title insurance with respect to each of the Properties, together with
complete and legible copies of all instruments and documents referred to as
exceptions to title (collectively, the "Title Commitments"). At the Seller's
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election, they may also obtain a leasehold policy of title insurance for the
tenant under the Leases.
Within ten (10) Business Days after receipt of the Title Commitments (the
Purchaser agreeing, however, to respond as promptly as reasonably possible), the
Purchaser shall give the Seller notice of any title exceptions (other than
Permitted Encumbrances) which adversely affect such Property in any material
respect and as to which the Purchaser reasonably objects. If, for any reason,
the Seller is unable to take such actions as may be required to cause such
exceptions to be removed from the Title Commitments, the Seller shall give the
Purchaser notice thereof; it being understood and agreed that the failure of the
Seller to give such notice within ten (10) Business Days after the Purchaser's
notice of objection shall be deemed an election by the Seller to remedy such
matters. If the Seller shall be unable to remove any title defects to which the
Purchaser has reasonably objected, the Purchaser may elect (i) to terminate this
Agreement with respect to the affected Property, in which event, the Purchase
Price shall be reduced by the Allocable Purchase Price of the affected
Properties and this Agreement shall be of no further force and effect with
respect to the affected Properties or (ii) to consummate the transactions
contemplated hereby, notwithstanding such title defect, without any abatement or
reduction in the Purchase Price on account thereof. The Purchaser shall make
any such election by written notice to the Seller given on or prior to the fifth
Business Day after the Seller's notice of its inability to cure such defect.
Failure of the Purchaser to give such notice shall be deemed an election by the
Purchaser to proceed in accordance with clause (ii) above. If the Purchaser
shall elect to terminate this Agreement with respect to an aggregate of more
than three (3) of the Properties pursuant to this Section 2.4, Section 2.3 and
----------- -----------
Section 2.5, either the Purchaser or the Seller may elect to proceed in
-----------
accordance with Section 2.3(c).
--------------
-11-
2.5 Survey Matters. Prior to the date of this Agreement, the Seller has
--------------
arranged for the preparation of an ALTA survey with respect to each of the
Properties (the "Surveys"), by a licensed surveyor in the jurisdiction in which
-------
each such Property is located, which (i) contains an accurate legal description
of the applicable Property, (ii) shows the exact location, dimension and
description (including applicable recording information) of all utilities,
easements, encroachments and other physical matters affecting such Property, the
number of striped parking spaces located thereon and all applicable building
set-back lines, (iii) states whether the applicable Property is located within
a 100-year flood plain and (iv) includes a certification in the form set forth
in Schedule C, addressed to the Purchaser, the Title Company and any other
----------
persons requested by the Purchaser or designated by the Seller.
Within ten (10) Business Days after receipt of the Surveys (the Purchaser
agreeing, however, to respond as promptly as reasonably possible), the Purchaser
shall give the Seller notice of any matters shown thereon (other than Permitted
Encumbrances) which adversely affect any such Property in any material respect
and as to which the Purchaser reasonably objects. If, for any reason, the
Seller is unable to take such actions as may be required to remedy the
objectionable matters, the Seller shall give the Purchaser prompt notice
thereof; it being understood and agreed that the failure of the Seller to give
such notice within ten (10) Business Days after the Purchaser's notice of
objection shall be deemed an election by the Seller to remedy such matters. If
the Seller shall be unable to remove any survey defect to which the Purchaser
has reasonably objected, the Purchaser may elect (i) to terminate this Agreement
with respect to the affected Property, in which event, the Purchase Price shall
be reduced by the Allocable Purchase Price of the affected Properties and this
Agreement shall terminate and be of no further force or effect with respect to
the affected Properties or (ii) to consummate the transactions contemplated
hereby, notwithstanding such defect, without any abatement or reduction in the
Purchase Price on account thereof. The Purchaser shall make any such election
by written notice to the Seller given on or prior to the fifth Business Day
after the Seller's notice of its inability to cure such defect and time shall be
of the essence with respect to the giving of such notice. Failure of the
Purchaser to give such notice shall be deemed an election by the Purchaser to
proceed in accordance with clause (ii) above. If the Purchaser shall elect to
terminate this Agreement with respect to an aggregate of more than three (3) of
the Properties pursuant to this Section 2.5, Section 2.3 and Section 2.4, either
----------- ----------- -----------
the Purchaser or the Seller may elect to proceed in accordance with Section
-------
2.3(c).
------
-12-
SECTION 3. PURCHASE AND SALE.
--------- -----------------
3.1 Closing. The purchase and sale of the Properties shall be
-------
consummated at a closing (the "Closing") to be held at the offices of Xxxxxxxx &
-------
Worcester, Xxx Xxxx Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx, or at such other
location as the Seller and the Purchaser may agree, at 10:00 a.m. local time, on
a date (the "Closing Date") which is the later to occur of (i) March 22, 1996,
------------
and (ii) the date as of which all conditions precedent to the Closing herein set
forth have either been satisfied or waived by the party in whose favor such
conditions run; provided, however, that the Purchaser shall have the right, by
-------- -------
written notice to the Seller, to adjourn the Closing Date for up to forty-five
(45) days. In the event that the Closing shall not have occurred on or before
December 31, 1996, provided that no action for specific performance shall have
been commenced by the Purchaser to enforce this Agreement, any party shall have
the right, by the giving of written notice, to terminate this Agreement and, in
such event, the Deposit, together with interest thereon, shall be refunded to
the Purchaser in accordance with Section 11.1.
------------
3.2 Purchase Price. (a) At the Closing, the Purchaser shall pay to
--------------
the Seller, for the Properties, a purchase price (the "Purchase Price") in the
--------------
amount of One Hundred Seventy Two Million Two Hundred Thousand Dollars
($172,200,000), subject to the following adjustments:
(i) Except to the extent that the Purchaser has received a credit
therefor under the Other Agreement, there shall be deducted
from the Purchase Price the sum of interest accrued at the
Interest Rate on the Deposit from the date received to, but
not including, the Closing Date;
(ii) There shall be deducted from the Purchase Price the Allocable
Purchase Price of any Property as to which this Agreement
shall have been terminated pursuant to Sections 2.3, 2.4 or
--------------------
2.5;
---
(iii) There shall be added to or deducted from the Purchase Price
such amounts as may be required pursuant to Section 9; and
---------
(iv) There shall be added to the Purchase Price an amount equal to
Five Million Hundred Thousand Dollars ($5,500,000), which
amount represents the purchase price of the FF&E Reserve.
-13-
(b) The Purchase Price shall be payable as follows:
(i) The Deposit shall be paid by the Purchaser as herein provided
by wire transfer of immediately available funds to an account
or accounts to be designated by the Seller;
(ii) Except as otherwise provided in Article 12, at the Closing, the
----------
balance of the Purchase Price less the Retained Funds shall be
payable by wire transfer of immediately available funds on the
Closing Date to an account or accounts to be designated by the
Seller prior to the Closing; and
(iii) The Retained Funds shall be payable by wire transfer of
immediately available funds on a pro rata basis upon the
expiration or sooner termination of any of the Leases of the
Properties (other than any termination arising from the
occurrence of any Default or Event of Default (as defined
therein)) by the tenant under the Leases, to an account or
accounts to be designated by the Seller prior to such date.
SECTION 4. CONDITIONS TO PURCHASER'S OBLIGATION TO CLOSE.
--------- ---------------------------------------------
The obligation of the Purchaser to acquire the Properties on the Closing
Date shall be subject to the satisfaction of the following conditions precedent
on and as of the Closing Date:
4.1 Closing Documents. The Seller shall have delivered to the
-----------------
Purchaser:
(a) A good and sufficient warranty deed with covenants against grantor's
acts, or its local equivalent, with respect to all of the Properties which are
Fee Properties, in proper statutory form for recording, duly executed and
acknowledged by the Seller, conveying good and marketable title to the
applicable Fee Properties, free from all liens and encumbrances other than the
Permitted Encumbrances;
(b) With respect to all of the Properties which are Ground Lease
Properties, an assignment and assumption agreement, in form and substance
reasonably satisfactory to the Seller and the Purchaser, duly executed and
acknowledged by the Seller, with respect to all of the Seller's right, title and
interest in, to and under the Ground Leases together with the written consent of
each of the lessors under the applicable Ground Leases if such consent is
required pursuant to the terms of such Ground Leases;
-14-
(c) An estoppel certificate, in form and substance reasonably
satisfactory to the Purchaser, from each of the lessors under the applicable
Ground Leases, confirming, to such lessor's knowledge, that each such Ground
Lease is in full force and effect, the amount of the rents and other sums
payable thereunder, that no default or event which with the giving of notice
and/or lapse of time could constitute a default has occurred and is continuing
thereunder, and regarding such other matters as the Purchaser may reasonably
require;
(d) A xxxx of sale and assignment agreement, in form and substance
reasonably satisfactory to the Seller and the Purchaser, duly executed and
acknowledged by the Seller, with respect to all of the Seller's right, title and
interest in, to and under the FF&E, the Contracts, the Documents, the Intangible
Property and the Tenant Leases with respect to the Properties;
(e) A certificate of a duly authorized officer of the Seller confirming
the continued truth and accuracy of the representations and warranties of the
Seller in this Agreement;
(f) To the extent the same are in the Seller's possession, originally,
fully executed copies of agreements pertaining to the Properties;
(g) Duly executed copies of the Leases and all of the Incidental
Documents (as such term is defined in the Leases);
(h) An estoppel certificate, in form and substance reasonably
satisfactory to the Purchaser and the Seller, regarding such matters with
respect to the Management Agreements, as the Purchaser may reasonably require;
(i) Duly executed copies of the Management Agreement Amendments;
(j) Certified copies of all charter documents, applicable corporate
resolutions and certificates of incumbency with respect to the Seller, the
tenant under the Leases and the Manager; and
(k) Such other conveyance documents, certificates, deeds, affidavits and
other instruments as the Purchaser, the Seller, the tenant under the Leases or
the Title Company may reasonably require.
4.2 Condition of Properties. (a) All of the Properties and all
-----------------------
Improvements located thereon shall, except as otherwise provided in Section 2.3,
-----------
be in substantially the same physical condition as on the date of this
Agreement, ordinary wear and tear excepted;
-15-
(b) No material default or event which with the giving of notice and/or
lapse of time could constitute a material default shall have occurred and be
continuing under any of the Ground Leases, the Management Agreements or any
other material agreement benefiting or affecting the Properties in any respect;
(c) No action shall be pending or threatened for the condemnation or
taking by power of eminent domain of all or any material portion of the
Properties; and
(d) All material licenses, permits and other authorizations necessary
for the current use, occupancy and operation of the Properties.
4.3 Title Policies. The Title Company shall be prepared, subject only
--------------
to payment of the applicable premium and delivery of all conveyance documents in
recordable form, to issue title insurance policies to the Purchaser, in form and
substance satisfactory to the Purchaser in accordance with Section 2.4, together
-----------
with such affirmative coverages as the Purchaser may reasonably require and
shall have been determined by the Title Company as available prior to the
expiration of the Review Period.
4.4 Opinions of Counsel. (a) The Purchaser shall have received a
-------------------
written opinion from Xxxxxx X. Xxxxx, assistant general counsel to Host and as
counsel to the Seller, in form and substance reasonably satisfactory to the
Purchaser, regarding the organization and authority of Host, the Seller and the
tenant under the Leases, the enforceability of this Agreement, the Leases and
the Incidental Documents (as defined in the Leases) and such other matters with
respect to the transactions contemplated by this Agreement as the Purchaser may
reasonably require.
(b) The Purchaser shall have received a written opinion from counsel to
Marriott International, Inc., in form and substance reasonably satisfactory to
the Purchaser, regarding the organization and authority of the Manager and the
enforceability of the Management Agreements as amended by the Management
Agreement Amendments.
(c) The Purchaser shall have received a written opinion from local
counsel to the Purchaser, in form and substance reasonably satisfactory to the
Purchaser, regarding the compliance of the Properties with respect to zoning,
licensing and such other matters as the Purchaser may reasonably require.
4.5 FF&E Reserve. The Seller shall transfer to the Purchaser the FF&E
------------
Reserve, including interest accrued thereon,
-16-
which the Purchaser shall hold and apply in accordance with the Management
Agreements.
4.6 Appraisal. As of the Closing Date, the Purchaser shall have
---------
received and approved an original appraisal report, dated within sixty (60) days
prior to the Closing Date, addressed to the Purchaser, prepared by a qualified
real estate appraiser reasonably satisfactory to the Purchaser and indicating an
aggregate fair market value for the Properties of not less than the Purchase
Price (and an allocation among such properties consistent with the Allocable
Purchase Prices), such appraisals to be otherwise in form and substance
reasonably acceptable to the Purchaser.
4.7 Xxxx Xxxxx Xxxxxx. The Seller and the Purchaser shall have
-----------------
complied with all applicable provisions of the Xxxx Xxxxx Xxxxxx Antitrust
Improvements Act of 1976, as amended.
4.8 Other Approvals. The Seller and the Purchaser shall have received,
---------------
in form and substance reasonably satisfactory to the Seller and the Purchaser,
all required approvals and waivers, as may be necessary or appropriate to
consummate the transactions contemplated by this Agreement.
4.9 Other Agreement. The closing with respect to the Group D
---------------
Properties (as defined therein) shall simultaneously occur under the Other
Agreement.
SECTION 5. CONDITIONS TO SELLER'S OBLIGATION TO CLOSE.
--------- ------------------------------------------
The obligation of the Seller to convey the Properties on the Closing Date
to the Purchaser is subject to the satisfaction of the following conditions
precedent on and as of the Closing Date:
5.1 Other Agreement. The closing of the Group D Properties (as defined
---------------
therein) shall simultaneously occur under the Other Agreement.
5.2 Purchase Price. The Purchaser shall deliver to the Seller the
--------------
balance of the Purchase Price (less the amount of the Retained Funds), payable
hereunder, adjusted as herein provided.
5.3 Closing Documents. The Purchaser shall have delivered to the
-----------------
Seller:
(a) Duly executed and acknowledged counterparts of the documents
described in Section 4.1, where applicable and the Management Agreement
-----------
Amendments;
-17-
(b) A certificate of a duly authorized officer of the Purchaser
confirming the continued truth and accuracy of the representations and
warranties of the Purchaser in this Agreement; and
(c) Certified copies of all charter documents, applicable resolutions and
certificates of incumbency with respect to the Purchaser.
5.4 Opinion of Counsel. The Seller shall have received a written
------------------
opinion from Xxxxxxxx & Worcester, counsel to the Purchaser, in form and
substance reasonably satisfactory to the Seller, regarding the organization and
authority of the Purchaser, the enforceability of this Agreement and such other
matters with respect to the transactions contemplated by this Agreement as the
Seller may reasonably require.
5.5 Xxxx Xxxxx Xxxxxx. The Seller and the Purchaser shall have
-----------------
complied with all applicable provisions of the Xxxx Xxxxx Xxxxxx Antitrust
Improvements Act of 1976, as amended.
5.6 Other Approvals. The Seller and the Purchaser shall have received,
---------------
in form and substance reasonably satisfactory to the Seller and the Purchaser,
all required approvals and waivers, as may be necessary or appropriate to
consummate the transactions contemplated by this Agreement.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF SELLER.
--------- ----------------------------------------
To induce the Purchaser to enter into this Agreement, the Seller
represent and warrant to the Purchaser as follows:
6.1 Status and Authority of the Seller. The Seller is a corporation
----------------------------------
duly organized, validly existing and in corporate good standing under the laws
of its state of incorporation, and has all requisite power and authority under
the laws of such state and its respective charter documents to enter into and
perform its obligations under this Agreement and to consummate the transactions
contemplated hereby. The Seller has duly qualified to transact business in each
jurisdiction in which the nature of the business conducted by it requires such
qualification.
6.2 Action of the Seller. The Seller has taken all necessary action to
--------------------
authorize the execution, delivery and performance of this Agreement, and upon
the execution and delivery of any document to be delivered by the Seller on or
prior to the Closing Date, such document shall constitute the valid and binding
obligation and agreement of the Seller, enforceable against the Seller in
accordance with its terms,
-18-
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws of general application affecting the
rights and remedies of creditors.
6.3 No Violations of Agreements. Neither the execution, delivery or
---------------------------
performance of this Agreement by the Seller, nor compliance with the terms and
provisions hereof, will result in any breach of the terms, conditions or
provisions of, or conflict with or constitute a default under, or result in the
creation of any lien, charge or encumbrance upon any Property pursuant to the
terms of any indenture, mortgage, deed of trust, note, evidence of indebtedness
or any other agreement or instrument by which the Seller is bound.
6.4 Litigation. The Seller has received no written notice of and, to
----------
the Seller's Knowledge, no action or proceeding is pending or threatened and no
investigation looking toward such an action or proceeding has begun, which (a)
questions the validity of this Agreement or any action taken or to be taken
pursuant hereto, (b) will result in any material adverse change in the business,
operation, affairs or condition of any of the Properties, (c) result in or
subject the Properties to a material liability, or (d) involves condemnation or
eminent domain proceedings against any part of the Properties.
6.5 Existing Leases, Agreements, Etc. To the Seller's Knowledge, other
---------------------------------
than the Management Agreements, the Ground Leases and any other agreements
provided to the Purchaser on or before March 1, 1996, there are no other
material agreements affecting the Properties which will be binding on the
Purchaser subsequent to the Closing Date.
6.6 Disclosure. To the Seller's Knowledge, there is no fact or
----------
condition which materially and adversely affects the business or condition of
the Properties which has not been set forth in this Agreement, or in the other
documents, certificates or statements furnished to the Purchaser in connection
with the transactions contemplated hereby.
6.7 Utilities, Etc. To the Seller's Knowledge, all utilities and
---------------
services necessary for the use and operation of the Properties (including,
without limitation, road access, gas, water, electricity and telephone) are
available thereto, are of sufficient capacity to meet adequately all needs and
requirements necessary for the use and operation of such Properties and for
their respective intended purposes. To the Seller's Knowledge, no fact,
condition or proceeding exists which would result in the termination or
impairment of the furnishing of such utilities to the Properties.
-19-
6.8 Compliance With Law. To the Seller's Knowledge, (i) the Properties
-------------------
and the use and operation thereof do not violate any material federal, state,
municipal and other governmental statutes, ordinances, by-laws, rules,
regulations or any other legal requirements, including, without limitation,
those relating to construction, occupancy, zoning, adequacy of parking,
environmental protection, occupational health and safety and fire safety
applicable thereto; and (ii) there are presently in effect all material
licenses, permits and other authorizations necessary for the current use,
occupancy and operation thereof. The Seller has not received written notice of
any threatened request, application, proceeding, plan, study or effort which
would materially adversely affect the present use or zoning of any of the
Properties or which would modify or realign any adjacent street or highway.
6.9 Taxes. To the Seller's Knowledge, other than the amounts disclosed
-----
by tax bills, no taxes or special assessments of any kind (special, bond or
otherwise) are or have been levied with respect to any of the Properties, or any
portion thereof, which are outstanding or unpaid, other than amounts not yet due
and payable or, if due and payable, not yet delinquent, and, to the Seller's
Knowledge, none will be levied prior to the Closing Date.
6.10 Not A Foreign Person. The Seller is a not "foreign person" within
--------------------
the meaning of Section 1445 of the United States Revenue Code of 1986, as
amended, and the regulations promulgated thereunder.
6.11 Hazardous Substances. Except as disclosed to the Purchaser or as
--------------------
described in any environmental report delivered to the Purchaser, to the
Seller's Knowledge, none of the Seller nor any tenant or other occupant or user
of any of the Properties, or any portion thereof, has stored or disposed of (or
engaged in the business of storing or disposing of) or has released or caused
the release of any hazardous waste, contaminants, oil, radioactive or other
material on any of the Properties, or any portion thereof, the removal of which
is required or the maintenance of which is prohibited or penalized by any
applicable Federal, state or local statutes, laws, ordinances, rules or
regulations, and, to the Seller's Knowledge, except as disclosed to the
Purchaser or as described in any environmental report delivered to the
Purchaser, the Properties are free from any such hazardous waste, contaminants,
oil, radioactive and other materials, except any such materials maintained in
accordance with applicable law.
6.12 Insurance. The Seller has received no written notice from any
---------
insurance carrier of defects or inadequacies in the Properties which, if
uncorrected, would result in a termination
-20-
of insurance coverage or an increase in the premiums charged therefor.
6.13 Operating Statements. Attached hereto as Schedule E are the most
-------------------- ----------
current operating statements for the Properties. To the Seller's Knowledge,
such operating statements fairly represent the operating history for the
Properties for the periods covered thereby, contain no material misstatement and
do not omit any statement or fact necessary to make the information contained
therein not materially misleading (the Purchaser acknowledging that such
operating statements relate solely to historical performance and in no way
represent a projection of future performance and the Seller makes no
representations as to the future performance of any Property).
6.14 Ground Leases. The copies of the Ground Leases heretofore
-------------
delivered by the Seller to the Purchaser are true, correct and complete copies
thereof; the Ground Leases have not been amended except as evidenced by
amendments similarly delivered and constitute the entire agreement between the
Seller and the applicable other parties. To the Seller's Knowledge, the Ground
Leases are in full force and effect and no default or event which with the
giving of notice and/or lapse of time could constitute a default thereunder has
occurred with respect to the Seller or, to the Seller's Knowledge, the
applicable ground lessor.
6.15 Management Agreements. The copies of the Management Agreements
---------------------
heretofore delivered by the Seller to the Purchaser are true, correct and
complete copies thereof; the Management Agreements have not been amended except
as evidenced by amendments similarly delivered or as required by this Agreement
and constitute the entire agreement between the Seller and the Manager. To the
Seller's Knowledge, the Management Agreements are in full force and effect and
no default or event which with the giving of notice and/or lapse of time could
constitute a default thereunder has occurred with respect to the Seller or, to
the Seller's Knowledge, the Manager.
6.16 FF&E Reserve. To the Seller's Knowledge, the FF&E Reserve for
------------
each Property is, as of the date hereof, in the amount set forth on Schedule F.
----------
To the Seller's Knowledge, the FF&E Reserve for each Property has been
maintained in accordance with the Management Agreement for such Property.
The representations and warranties made in this Agreement by the Seller
shall be continuing and shall be deemed remade by the Seller as of the Closing
Date with the same force and effect as if made on, and as of, such date;
provided, however, that, the Seller shall have the right, from time to time
-------- -------
prior to the Closing Date, to modify the representations and warranties as a
-21-
result of changes in condition of the Properties by notice to the Purchaser and,
in such event, the Purchaser shall have the rights provided in Section 2.3. All
-----------
representations and warranties made in this Agreement by the Seller with respect
to the Properties shall survive the Closing for a period of one year.
Except as otherwise expressly provided in this Agreement or any documents
to be delivered to the Purchaser at the Closing, the Seller disclaims the making
of any representations or warranties, express or implied, regarding the
Properties or matters affecting the Properties, whether made by the Seller, on
the Seller's behalf or otherwise, including, without limitation, the physical
condition of the Properties, title to or the boundaries of the Real Property,
pest control matters, soil conditions, the presence, existence or absence of
hazardous wastes, toxic substances or other environmental matters, compliance
with building, health, safety, land use and zoning laws, regulations and orders,
structural and other engineering characteristics, traffic patterns, market data,
economic conditions or projections, and any other information pertaining to the
Properties or the market and physical environments in which they are located.
The Purchaser acknowledges (i) that the Purchaser has entered into this
Agreement with the intention of making and relying upon its own investigation or
that of third parties with respect to the physical, environmental, economic and
legal condition of each Property and (ii) that the Purchaser is not relying upon
any statements, representations or warranties of any kind, other than those
specifically set forth in this Agreement or in any document to be delivered to
the Purchaser at the Closing made (or purported to be made) by the Seller or
anyone acting or claiming to act on the Seller's behalf. The Purchaser further
acknowledges that it has not received from or on behalf of the Seller any
accounting, tax, legal, architectural, engineering, property management or other
advice with respect to this transaction and is relying solely upon the advice of
third party accounting, tax, legal, architectural, engineering, property
management and other advisors. Subject to the provisions of this Agreement, the
Purchaser shall purchase the Properties in their "as is" condition on the
Closing Date.
SECTION 7. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
--------- -------------------------------------------
To induce the Seller to enter in this Agreement, the Purchaser represents
and warrants to the Seller as follows:
7.1 Status and Authority of the Purchaser. The Purchaser is a Maryland
-------------------------------------
real estate investment trust duly organized, validly existing under the laws of
the State of Maryland, and has all requisite power and authority under the laws
of such state and under its charter documents to enter into and perform its
-22-
obligations under this Agreement and to consummate the transactions contemplated
hereby. The Purchaser has duly qualified and is in good standing as a trust or
unincorporated business association in each jurisdiction in which the nature of
the business conducted by it requires such qualification.
7.2 Action of the Purchaser. The Purchaser has taken all necessary
-----------------------
action to authorize the execution, delivery and performance of this Agreement,
and upon the execution and delivery of any document to be delivered by the
Purchaser on or prior to the Closing Date such document shall constitute the
valid and binding obligation and agreement of the Purchaser, enforceable against
the Purchaser in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws of
general application affecting the rights and remedies of creditors.
7.3 No Violations of Agreements. Neither the execution, delivery or
---------------------------
performance of this Agreement by the Purchaser, nor compliance with the terms
and provisions hereof, will result in any breach of the terms, conditions or
provisions of, or conflict with or constitute a default under, or result in the
creation of any lien, charge or encumbrance upon any property or assets of the
Purchaser pursuant to the terms of any indenture, mortgage, deed of trust, note,
evidence of indebtedness or any other agreement or instrument by which the
Purchaser is bound.
7.4 Litigation. No investigation, action or proceeding is pending and,
----------
to the Purchaser's actual knowledge, no action or proceeding is threatened and
no investigation looking toward such an action or proceeding has begun, which
questions the validity of this Agreement or any action taken or to be taken
pursuant hereto.
The representations and warranties made in this Agreement by the
Purchaser shall be continuing and shall be deemed remade by the Purchaser as of
the Closing Date with the same force and effect as if made on, and as of, such
date. All representations and warranties made in this Agreement by the
Purchaser shall survive the Closing for a period of one year.
SECTION 8. COVENANTS OF THE SELLER.
--------- -----------------------
The Seller hereby covenants with the Purchaser between the date of this
Agreement and the Closing Date as follows:
8.1 Compliance with Laws, Etc. To comply, and direct the Manager to
--------------------------
comply, in all material respects, with (i) all laws, regulations and other
requirements from time to time applicable of every governmental body having
jurisdiction of the Properties
-23-
or the use or occupancy of the Improvements located thereon and (ii) all terms,
covenants and conditions of all of the Management Agreements, the Ground Leases,
instruments of record and other agreements affecting Properties.
8.2 Approval of Agreements. Except as otherwise authorized by this
----------------------
Agreement, not to enter into, modify, amend or terminate the Management
Agreements, the Ground Leases or any other agreement with respect to the
Properties which would encumber or be binding upon such Properties from and
after the Closing Date without in each instance obtaining the prior written
consent of the Purchaser.
8.3 Compliance with Agreements. To comply, and direct the Manager to
--------------------------
comply, with each and every material term, covenant and condition contained in
the Management Agreements, the Ground Leases and any other document or agreement
affecting the Properties.
8.4 Estoppel Certificates. To request, and use reasonable efforts to
---------------------
obtain, from the Manager and the landlords under the Ground Leases,
certifications, in form and substance reasonably satisfactory to the Purchaser,
regarding the status of the Management Agreements and the Ground Leases, as the
case may be.
8.5 Notice of Material Changes or Untrue Representations. Upon learning
----------------------------------------------------
of any material change in any condition with respect to any of the Properties or
of any event or circumstance which makes any representation or warranty of the
Seller to the Purchaser under this Agreement untrue or misleading, promptly to
notify the Purchaser thereof (the Purchaser agreeing, on learning of any such
fact or condition, promptly to notify the Seller thereof).
8.6 Operation of Properties. To direct the Manager (and exercise all
-----------------------
rights of the Seller with respect thereto pursuant to the Management Agreement)
to continue to operate each of the Properties as a Residence Inn hotel in a good
and businesslike fashion consistent with their past practices and to cause each
of the Properties to be maintained in good working order and condition in a
manner consistent with their past practice.
SECTION 9. APPORTIONMENTS.
--------- --------------
9.1 Real Property Apportionments. Representatives of the Purchaser and
----------------------------
the Seller shall perform any and all of the adjustments and apportionments which
are appropriate and usual for a transaction of this nature, taking into account
the applicable provisions of the Leases and the Management Agreements. The
adjustments hereunder shall be calculated or
-24-
paid in an amount based upon a fair and reasonable estimated accounting
performed and agreed to by representatives of the Seller and the Purchaser at
the Closing. Subsequent final adjustments and payments shall be made in cash or
other immediately available funds as soon as practicable after the Closing Date
and in any event within ninety (90) days after such Closing Date, based upon an
agreed accounting performed by representatives of the Seller and the Purchaser.
In the event the parties have not agreed with respect to the adjustments
required to be made pursuant to this Section 9.1 within such ninety-day period,
-----------
upon application by either party, a certified public accountant reasonably
acceptable to the Purchaser and the Seller shall determine any such adjustments
which have not theretofore been agreed to between the Seller and the Purchaser.
The charges of such accountant shall be borne fifty percent (50%) by the Seller
and fifty percent (50%) by the Purchaser.
9.2 Closing Costs. The Seller and the Purchaser shall share equally
-------------
all costs and expenses associated with the transaction contemplated hereby
(other than any costs incurred by either party pursuant to Section 10) except
----------
that (x) all costs and expenses incurred in connection with any purchase money
financing obtained by the Purchaser, including, without limitation, all costs
and expenses relating to a lender's title insurance policy, surveys and all
mortgage recording taxes and filing fees, shall be paid by the Purchaser and (y)
each party shall pay its own attorneys' and accountants' fees and costs in
connection with this transaction.
9.3 Xxxx Xxxxx Xxxxxx. The Seller and the Purchaser shall share
-----------------
equally any filing fees and other costs incurred in connection with compliance
with the requirements of the Xxxx Xxxxx Xxxxxx Antitrust Improvements Act of
1976, as amended.
The obligations of the parties under this Section 9 shall survive the
---------
Closing.
SECTION 10. DEFAULT.
---------- -------
10.1 Default by the Seller. If the Seller shall have made any
---------------------
representation or warranty herein which shall be untrue or misleading in any
material respect, or if the Seller shall fail to perform any of the material
covenants and agreements contained herein to be performed by them and such
failure continues for a period of ten (10) days after notice thereof from the
Purchaser or if the Other Agreement shall be terminated for any reason other
than default by the Purchaser, the Purchaser may terminate this Agreement and/or
the Purchaser may pursue any and all remedies available to it at law or in
equity, including, but not limited to, a suit for specific performance or other
equitable
-25-
relief. In addition to, and not in limitation of, the foregoing, the Purchaser
may require the Seller to return the Deposit, together with interest accrued
thereon at the Interest Rate from the date such amounts were paid to the Seller
to, but not including, the date of refund.
10.2 Default by the Purchaser. If the Purchaser shall have made any
------------------------
representation or warranty herein which shall be untrue or misleading in any
material respect, or if the Purchaser shall fail to perform any of the covenants
and agreements contained herein to be performed by it and such failure shall
continue for a period of ten (10) days after notice thereof from the Seller or
if the Other Agreement shall be terminated for any reason other than default by
the Seller thereunder, the Seller may terminate this Agreement. The damages
that the Seller would sustain as a result of any such termination would be
substantial but would be impracticable and excessively costly and difficult to
establish or ascertain and the parties hereto have therefore agreed that, in
such event, the Seller shall, as their sole remedy at law and in equity, retain
an aggregate amount pursuant to this Agreement and the Other Agreement of Two
Million Dollars ($2,000,000), as liquidated damages, whereupon the Seller shall
refund to the Purchaser the balance of the Deposit, together with interest
accrued on such balance at the Interest Rate from the date such amounts were
paid to the Seller to, but not including, the date of refund.
SECTION 11. MISCELLANEOUS.
---------- -------------
11.1 Agreement to Indemnify. (a) Subject to any express provisions of
----------------------
this Agreement to the contrary, (i) the Seller shall indemnify and hold harmless
the Purchaser from and against any and all obligations, claims, losses, damages,
liabilities, and expenses (including, without limitation, reasonable attorneys'
and accountants' fees and disbursements) arising out of (x) events, contractual
obligations, acts or omissions of the Seller that occurred in connection with
the ownership or operation of any Property prior to the Closing or (y) any
damage to property of others or injury to or death of any person or any claims
for any debts or obligations occurring on or about or in connection with any
Property or any portion thereof at any time or times prior to the Closing, and
(ii) the Purchaser shall indemnify and hold harmless the Seller from and against
any and all obligations, claims, losses, damages, liabilities and expenses
(including, without limitation, reasonable attorneys' and accountants' fees and
disbursements) arising out of (x) events, contractual obligations, acts or
omissions of Purchaser that occur in connection with the ownership or operation
of any Property after the Closing, or (y) any damage to property of others or
injury to or death of any person or any claims for any
-26-
debts or obligations occurring on or about any Property or any portion thereof
at any time or times after the Closing.
(b) Whenever it is provided in this Agreement that an obligation of the
Seller will be assumed by the Purchaser after the Closing, the Purchaser shall
be deemed to have also agreed to indemnify and hold harmless the Seller and its
respective successors and assigns from and against all claims, losses, damages,
liabilities, costs, and expenses (including, without limitation, reasonable
attorneys' and accountants' fees and expenses) arising from any failure of the
Purchaser to perform the obligation so assumed after the Closing.
(c) Whenever either party shall learn through the filing of a claim or
the commencement of a proceeding or otherwise of the existence of any liability
for which the other party is or may be responsible under this Agreement, the
party learning of such liability shall notify the other party promptly and
furnish such copies of documents (and make originals thereof available) and such
other information as such party may have that may be used or useful in the
defense of such claims and shall afford said other party full opportunity to
defend the same in the name of such party and shall generally cooperate with
said other party in the defense of any such claim.
(d) The provisions of this Section 11.1 shall survive the Closing and the
------------
termination of this Agreement.
11.2 Brokerage Commissions. Each of the parties hereto represents to
---------------------
the other parties that it dealt with no broker, finder or like agent in
connection with this Agreement or the transactions contemplated hereby, and that
it reasonably believes that there is no basis for any other person or entity to
claim a commission or other compensation for bringing about this Agreement or
the transactions contemplated hereby. The Seller shall indemnify and hold
harmless the Purchaser and its respective legal representatives, heirs,
successors and assigns from and against any loss, liability or expense,
including, reasonable attorneys' fees, arising out of any claim or claims for
commissions or other compensation for bringing about this Agreement or the
transactions contemplated hereby made by any broker, finder or like agent, if
such claim or claims are based in whole or in part on dealings with the Seller.
The Purchaser shall indemnify and hold harmless the Seller and its legal
representatives, heirs, successors and assigns from and against any loss,
liability or expense, including, reasonable attorneys' fees, arising out of any
claim or claims for commissions or other compensation for bringing about this
Agreement or the transactions contemplated hereby made by any broker, finder or
like agent, if such claim or claims are based in whole or in part on dealings
with the Purchaser. Nothing contained in this
-27-
section shall be deemed to create any rights in any third party. The provisions
of this Section 11.2 shall survive the Closing and any termination of this
------------
Agreement.
11.3 Publicity. The parties agree that no party shall, with respect to
---------
this Agreement and the transactions contemplated hereby, contact or conduct
negotiations with public officials, make any public pronouncements, issue press
releases or otherwise furnish information regarding this Agreement or the
transactions contemplated to any third party without the consent of the other
parties, which consent shall not be unreasonably withheld. No party, or its
employees shall trade in the securities of any parent or affiliate of the Seller
or of the Purchaser until a public announcement of the transactions contemplated
by this Agreement has been made. No party shall record this Agreement or any
notice thereof.
11.4 Corporate Approvals. (a) In the event, notwithstanding diligent
-------------------
and good faith efforts, the Seller shall be unable to obtain the approval of the
Boards of Directors of the Seller to the transactions contemplated by this
Agreement, this Agreement may be terminated by the Seller by the giving of
written notice thereof to the Purchaser within five (5) Business Days after the
date of this Agreement; it being expressly understood and agreed that time shall
be of the essence with respect to the giving of such notice. If the Seller
shall give such notice to the Purchaser within the time period hereinabove
provided, this Agreement shall terminate and be of no further force or effect
and the Seller shall refund the Deposit to the Purchaser, together with interest
thereon, in accordance with Section 10.1. If the Seller shall fail to give such
------------
notice within the time period and in the manner hereinabove provided, the Seller
shall have no further right to terminate this Agreement pursuant to this
section.
(b) In the event, notwithstanding diligent and good faith efforts, the
Purchaser shall be unable to obtain the approval of the Board of Directors of
the Purchaser to the transactions contemplated by this Agreement, this Agreement
may be terminated by the Purchaser by the giving of written notice thereof to
the Seller within five (5) Business Days after the date of this Agreement; it
being expressly understood and agreed that time shall be of the essence with
respect to the giving of such notice. If the Purchaser shall give such notice
to the Seller within the time period hereinabove provided, this Agreement shall
terminate and be of no further force or effect and the Seller shall refund the
Deposit to the Purchaser, together with interest thereon, in accordance with
Section 10.1. If the Purchaser shall fail to give such notice within the time
------------
period and in the manner hereinabove provided, the Purchaser shall have no
further right to terminate this Agreement pursuant to this section.
-28-
11.5 Notices. (a) Any and all notices, demands, consents, approvals,
-------
offers, elections and other communications required or permitted under this
Agreement shall be deemed adequately given if in writing and the same shall be
delivered either in hand, by telecopier with written acknowledgment of receipt,
or by mail or Federal Express or similar expedited commercial carrier, addressed
to the recipient of the notice, postpaid and registered or certified with return
receipt requested (if by mail), or with all freight charges prepaid (if by
Federal Express or similar carrier).
(b) All notices required or permitted to be sent hereunder shall be
deemed to have been given for all purposes of this Agreement upon the date of
acknowledged receipt, in the case of a notice by telecopier, and, in all other
cases, upon the date of receipt or refusal, except that whenever under this
Agreement a notice is either received on a day which is not a Business Day or is
required to be delivered on or before a specific day which is not a Business
Day, the day of receipt or required delivery shall automatically be extended to
the next Business Day.
(c) All such notices shall be addressed,
if to the Seller to:
Host Marriott Corporation
00000 Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: Xx. Xxxxx X. Xxxxxxxxx
Treasury Department 902
[Telecopier No. (000) 000-0000]
with a copy to:
Host Marriott Corporation
00000 Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxx, Esq.
Law Department 923
[Telecopier No. (000) 000-0000 or 3558]
If to the Purchaser, to:
Hospitality Properties Trust
000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xx. Xxxx X. Xxxxxx
[Telecopier No. (000) 000-0000]
-29-
with a copy to:
Xxxxxxxx & Worcester
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxxxxx X. Xxxxx, Esq.
[Telecopier No. (000) 000-0000]
(d) By notice given as herein provided, the parties hereto and their
respective successor and assigns shall have the right from time to time and at
any time during the term of this Agreement to change their respective addresses
effective upon receipt by the other parties of such notice and each shall have
the right to specify as its address any other address within the United States
of America.
11.6 Waivers, Etc. Any waiver of any term or condition of this
-------------
Agreement, or of the breach of any covenant, representation or warranty
contained herein, in any one instance, shall not operate as or be deemed to be
or construed as a further or continuing waiver of any other breach of such term,
condition, covenant, representation or warranty or any other term, condition,
covenant, representation or warranty, nor shall any failure at any time or times
to enforce or require performance of any provision hereof operate as a waiver of
or affect in any manner such party's right at a later time to enforce or require
performance of such provision or any other provision hereof. This Agreement may
not be amended, nor shall any waiver, change, modification, consent or discharge
be effected, except by an instrument in writing executed by or on behalf of the
party against whom enforcement of any amendment, waiver, change, modification,
consent or discharge is sought.
11.7 Assignment; Successors and Assigns. This Agreement and all rights
----------------------------------
and obligations hereunder shall not be assignable by any party without the
written consent of the other parties, except that the Purchaser may assign this
Agreement to any entity wholly owned, directly or indirectly, by HPT; provided,
--------
however, that, in the event this Agreement shall be assigned to any entity
-------
wholly owned, directly or indirectly, by HPT, HPT shall remain liable for the
obligation of the "Purchaser" hereunder. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective legal
representatives, successors and permitted assigns. This Agreement is not
intended and shall not be construed to create any rights in or to be enforceable
in any part by any other persons.
11.8 Severability. If any provision of this Agreement shall be held or
------------
deemed to be, or shall in fact be, invalid, inoperative or unenforceable as
applied to any particular case in any jurisdiction or jurisdictions, or in all
jurisdictions or in
-30-
all cases, because of the conflict of any provision with any constitution or
statute or rule of public policy or for any other reason, such circumstance
shall not have the effect of rendering the provision or provisions in question
invalid, inoperative or unenforceable in any other jurisdiction or in any other
case or circumstance or of rendering any other provision or provisions herein
contained invalid, inoperative or unenforceable to the extent that such other
provisions are not themselves actually in conflict with such constitution,
statute or rule of public policy, but this Agreement shall be reformed and
construed in any such jurisdiction or case as if such invalid, inoperative or
unenforceable provision had never been contained herein and such provision
reformed so that it would be valid, operative and enforceable to the maximum
extent permitted in such jurisdiction or in such case.
11.9 Counterparts, Etc. This Agreement may be executed in two or more
------------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement
constitutes the entire agreement of the parties hereto with respect to the
subject matter hereof and shall supersede and take the place of any other
instruments purporting to be an agreement of the parties hereto relating to the
subject matter hereof. This Agreement may not be amended or modified in any
respect other than by the written agreement of all of the parties hereto.
11.10 Governing Law. This Agreement shall be interpreted, construed,
-------------
applied and enforced in accordance with the laws of the State of Maryland
applicable to contracts between residents of Maryland which are to be performed
entirely within Maryland, regardless of (i) where this Agreement is executed or
delivered; or (ii) where any payment or other performance required by this
Agreement is made or required to be made; or (iii) where any breach of any
provision of this Agreement occurs, or any cause of action otherwise accrues; or
(iv) where any action or other proceeding is instituted or pending; or (v) the
nationality, citizenship, domicile, principal place of business, or jurisdiction
of organization or domestication of any party; or (vi) whether the laws of the
forum jurisdiction otherwise would apply the laws of a jurisdiction other than
the State of Maryland; or (vii) any combination of the foregoing.
To the maximum extent permitted by applicable law, any action to enforce,
arising out of, or relating in any way to, any of the provisions of this
Agreement may be brought and prosecuted in such court or courts located in the
State of Maryland as is provided by law; and the parties consent to the
jurisdiction of said court or courts located in the State of Maryland and to
service of process by registered mail, return receipt requested, or by any other
manner provided by law.
-31-
11.11 Performance on Business Days. In the event the date on which
----------------------------
performance or payment of any obligation of a party required hereunder is other
than a Business Day, the time for payment or performance shall automatically be
extended to the first Business Day following such date.
11.12 Attorneys' Fees. If any lawsuit or arbitration or other legal
---------------
proceeding arises in connection with the interpretation or enforcement of this
Agreement, the prevailing party therein shall be entitled to receive from the
other party the prevailing party's costs and expenses, including reasonable
attorneys' fees incurred in connection therewith, in preparation therefor and on
appeal therefrom, which amounts shall be included in any judgment therein.
11.13 Section and Other Headings. The headings contained in this
--------------------------
Agreement are for reference purposes only and shall not in any way affect the
meaning or interpretation of this Agreement.
11.14 Nonliability of Trustees. THE DECLARATION OF TRUST
------------------------
ESTABLISHING THE PURCHASER, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS
THERETO (THE "DECLARATION"), IS DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS
-----------
AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT THE NAME "HOSPITALITY
PROPERTIES TRUST" REFERS TO THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS
TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER,
SHAREHOLDER, EMPLOYEE OR AGENT OF THE PURCHASER SHALL BE HELD TO ANY PERSONAL
LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, THE
PURCHASER. ALL PERSONS DEALING WITH THE PURCHASER, IN ANY WAY, SHALL LOOK ONLY
TO THE ASSETS OF THE PURCHASER FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF
ANY OBLIGATION.
11.15 Nonliability of Officers. NO TRUSTEE, OFFICER, SHAREHOLDER,
------------------------
EMPLOYEE OR AGENT OF THE SELLER SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY
OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, THE SELLER. ALL PERSONS
DEALING WITH THE SELLER, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF THE SELLER
FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.
SECTION 12. EXCHANGE CONTRACT MATTERS.
---------- -------------------------
12.1 Exchanges. The Seller desires to effectuate and the Purchaser
---------
agrees to cooperate in effectuating three (3) separate tax deferred exchanges of
Exchange Properties for the Exchange Parcels on the terms and conditions set
forth in this Agreement.
12.2 Exchange Property Credit. In connection with the consummation of
------------------------
any Exchange Closing, the Purchaser shall direct
-32-
that all or any portion of the Allocable Purchase Price of the applicable
Exchange Property equal to the Exchange Value be applied to the acquisition of
the applicable Exchange Parcel or held in escrow by the Title Company for such
purpose pursuant to Section 12.13 (each such designated amount, an "Exchange
------------- --------
Property Credit"). The Purchaser shall be obligated (subject to the terms
---------------
hereof) to expend cash in an amount not to exceed the Exchange Property Credit
to acquire and convey to the Seller pursuant to Exchange Contracts such Exchange
Parcels as the Seller may designate. Any Exchange Property Credit shall, from
time to time, be reduced by any payments made in connection with the acquisition
of the applicable Exchange Parcels. The Title Company shall disburse, at the
direction of the Purchaser and the Seller, the unapplied portion of any
applicable Exchange Property Credit as may from time to time be required to pay
amounts then due under the applicable Exchange Contract. Notwithstanding the
foregoing, if the Seller notifies the Purchaser in writing at least five (5)
days prior to the Closing Date or Exchange Closing Date that it has elected not
to designate any Exchange Parcels, the Exchange Value shall be paid to the
Seller on such Exchange Closing Date as herein described.
12.3 Designation of Exchange Parcels.
-------------------------------
(a) The Seller may from time to time after the date of this Agreement
but, in any event, no later than forty-five (45) days after the Closing Date,
designate one or more parcels of real property as Exchange Parcels, which
Exchange Parcels the Purchaser shall acquire and transfer to the Seller, in
exchange for the Exchange Properties, upon the terms and subject to the
conditions of this Agreement. The Seller shall be unconditionally obligated to
accept any Exchange Parcel acquired by the Purchaser pursuant to the terms of
this Agreement.
(b) In the event that the Seller does not designate any Exchange Parcels
on or before the day within forty-five (45) days after the Closing Date, or if
the Exchange Property Credit has not been reduced to zero on or before the Final
Exchange Closing Date, the provisions of Section 12.11 shall apply.
-------------
12.4 Exchange Contracts.
------------------
(a) At the request of the Seller and subject to all of the applicable
terms and conditions of this Agreement, the Purchaser shall, upon 5 days' prior
notice from the Seller, execute and deliver a purchase and sale agreement or an
assignment and assumption agreement of the Seller's interest under any purchase
and sale agreement, in either case, for the acquisition of one or more Exchange
Parcels (any such purchase and sale agreement or assignment thereof, an
"Exchange Contract"), it being expressly understood and agreed, however, that
--------- --------
the Purchaser's obligation
-33-
to execute or accept assignment of any Exchange Contract shall be subject to the
conditions that:
(i) Pursuant to the terms of such Exchange Contract, the closing
thereunder shall be scheduled to occur within one hundred
eighty (180) days after the Closing Date;
(ii) The aggregate amount of payments required to be made under or
in connection with such Exchange Contract, as reasonably
estimated by the Purchaser, shall not exceed the unapplied
portion of the applicable Exchange Property Credit, unless the
Seller shall provide the Purchaser with such assurances
regarding the payment of such amounts by the Seller as the
Purchaser shall require;
(iii) The Purchaser shall have no rights or obligations under such
Exchange Contract, monetary or nonmonetary, including, without
limitation, the performance of any due diligence or the giving
of any notices, other than the payment of amounts less than or
equal to the unapplied portion of the applicable Exchange
Property Credit;
(iv) Such Exchange Contract shall permit the Purchaser to designate
the Seller as the Purchaser's designee or nominee to receive
title to the Exchange Parcel to be conveyed thereunder (the
Seller agreeing to accept such title); and
(v) The Purchaser shall be under no duty or obligation to find or
assist the Seller in finding or selecting Exchange Parcels
suitable for exchange or negotiating its purchase and the
Purchaser shall have no responsibility for the failure of the
purchase of any Exchange Parcel to be closed or settled by the
Exchange Closing Date other than by reason of the Purchaser's
willful failure to perform its obligations under this
Agreement.
(b) It is further expressly understood and agreed that anything herein
to the contrary notwithstanding, the Purchaser shall have no obligation to
participate in any exchange contemplated by this Agreement if such exchange
would or reasonably could (as determined by the Purchaser's legal counsel)
result in (i) the recognition of any gain by the Purchaser, (ii) a tax basis in
any Property lower than the tax basis therein that the Purchaser would have had
such Property been sold to the Purchaser for an amount equal to the Allocable
Purchase Price (subject to adjustment as provided in this Agreement) as
-34-
contemplated by this Agreement other than the provisions in Section 12, or (iii)
----------
any other federal or state income tax consequences different from those that
would have resulted had such Property been sold to the Purchaser for an amount
equal to the Allocable Purchase Price (subject to adjustment as provided in this
Agreement) as contemplated by this Agreement other than the provisions in
Section 12.
----------
12.5 Conveyance of Exchange Parcels. At the time of any Exchange
------------------------------
Closing, title to the applicable Exchange Parcel shall be conveyed directly to
the Seller as the nominee and designee of the Purchaser and the Seller shall
accept such title as shall be conveyed thereunder; it being expressly understood
and agreed that the Purchaser makes no representations, warranties or covenants
with respect to such title, the satisfaction of any conditions precedent under
any Exchange Contract or any other matter in regard or pertaining thereto.
12.6 Failure of Exchange Parcels to Close. At any time upon the
------------------------------------
request of the Seller, the Purchaser shall assign any Exchange Contract to the
Seller (without representation or warranty other than that the Purchaser has not
created any liens or encumbrances thereon, such assignment to be made on the
date specified in the Seller's notice (but not less than 3 days after the giving
of such notice). The Purchaser shall have a unilateral right to assign any
Exchange Contracts to the Seller at any time after the date one hundred eighty-
one (181) days after the Closing Date.
12.7 Assignment Upon Exhaustion of Credit. At such time as the
------------------------------------
applicable Exchange Property Credit shall be reduced to zero, the Purchaser
shall assign (unless sooner assigned to the Seller as herein provided) the
Exchange Contract to the Seller (without representation or warranty other than
that the Purchaser has not created any liens or encumbrances thereon). Upon
assignment of an Exchange Contract to the Seller, the Purchaser shall have no
further obligations hereunder with respect to the applicable Exchange Parcels or
Exchange Contract.
12.8 Closing Period. Purchaser shall not be obligated to participate
--------------
in any Exchange Closing prior to the Closing Date or after the date which is one
hundred eighty (180) days after the Closing Date.
12.9 Reductions to Exchange Property Credit. The applicable Exchange
--------------------------------------
Value and the Purchase Price payable under this Agreement shall be reduced from
time to time by (a) the aggregate cash consideration paid by the Purchaser under
any Exchange Contract, (b) any costs and expenses incurred by or on behalf of
Purchaser in connection with any Exchange Parcel, (c) the amount of any claim or
indemnity owing to the Purchaser by or
-35-
at the direction of the Seller pursuant to this Agreement, (d) the amount of any
consideration paid by the Purchaser to the Seller pursuant to this Agreement and
(e) the costs and expenses incurred in good faith by or on behalf of the
Purchaser in connection with the proposed acquisition of an Exchange Parcel,
whether or not an Exchange Contract is executed in connection therewith and
whether or not the proposed transaction is consummated.
12.10 Increases to Exchange Property Credit. Regardless of the actual
-------------------------------------
interest earned thereon, there shall be credited to the Exchange Property Credit
an amount equal to the interest which would be earned on the amount of such
credit outstanding from time to time if it had been deposited with the Title
Company earning interest equivalent to the Federal Reserve Bank Discount Rate.
12.11 Final Exchange Closing Date. On a Final Exchange Closing Date,
---------------------------
the Title Company shall pay to the Seller an amount equal to the then remaining
balance of the Exchange Property Credit, if any, less any payments, if any, then
due and unpaid by the Seller to the Purchaser pursuant to this Agreement. Upon
such payment, and upon payment of any other sums then due by any party to
another party pursuant to this Agreement, such Exchange Contract shall be
finally closed and no party shall have any further rights or obligations
pursuant thereto, except as otherwise provided herein. Any excess balance in
the escrow account then held by Escrow Agent shall be returned to Purchaser.
12.12 Indemnification. The Seller acknowledges that the Purchaser is
---------------
agreeing to enter into each Exchange Contract and to acquire Exchange Parcels
solely as an accommodation to the Seller and that it is not intended that the
Purchaser will incur any costs or liabilities with respect to the Exchange
Parcels or any Exchange Contract in carrying out its obligations pursuant to
this Agreement. Accordingly, the Seller hereby agrees to indemnify, defend and
hold the Purchaser and its successors and assigns harmless from, against and in
respect of, and shall on demand reimburse the Purchaser and its successors and
assigns for, any and all loss, liability, damage or expense arising out of or in
any way connected with the exchanges contemplated by this Section 12, any
----------
Exchange Contract or the Exchange Parcels. The provisions of this Section 12.12
-------------
shall survive the Closing and the Exchange Closings.
12.13 Escrow Provision. The Title Company shall establish three (3)
----------------
separate interest-bearing escrow accounts, one for each Exchange Property. The
Exchange Property Credit shall be held by the Title Company, in trust, in
accordance with the following terms and conditions:
-36-
(a) The Title Company, shall not be liable to any party for holding the
Exchange Property Credit in escrow in accordance with the provisions of this
Section 12.13 in the event of any contested claims by either party relating to
-------------
any Exchange Contract.
(b) The Title Company shall deliver the Exchange Property Credit, and
any interest earned thereon, to the Purchaser or the Seller, as the case may be,
upon the following conditions:
(i) To the Purchaser, any amount remaining in the escrow account on
the Final Exchange Closing Date in excess of the remaining
Exchange Property Credit balance.
(ii) To the Seller, upon receipt of a written notice from the Seller
stating that the Seller is entitled under this Agreement to the
Exchange Property Credit and demanding payment of the same;
provided, however, that the Title Company will not honor such
-------- -------
demand until not less than ten (10) days after the date on
which the Title Company shall have given such notice to the
Purchaser of such demand, nor thereafter if, prior to or during
such ten (10) day period, the Title Company shall have received
written notice of objection from the Purchaser.
(iii) To the Purchaser, upon receipt of a written notice from the
Purchaser stating that the Purchaser is entitled under this
Agreement to the return of the Exchange Property Credit and
demanding return of the same; provided, however, that the Title
-------- -------
Company will not honor such demand until not less than ten (10)
days after the date on which the Title Company shall have given
notice to the Seller of such demand, nor thereafter if prior to
or during such ten (10) day period, the Title Company shall
have received written notice of objection from the Seller.
(c) Any notice to the Title Company shall be sufficient only if received
by the Title Company within the applicable time periods set forth herein. All
mailings and notices to and from the Title Company shall be sent as provided in
Section 11.5.
------------
(d) If the Title Company shall receive a written demand for the Exchange
Property Credit or written notice of objection to the return of the Exchange
Property Credit or if there is any disagreement or dispute shall arise between
or among any of the parties hereto and/or any other persons resulting in adverse
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claims and demands being made for the Exchange Property Credit, whether or not
litigation has been instituted, the Title Company shall continue to hold the
Exchange Property Credit subject to such adverse claims and the Title Company
shall not be or become liable in any way or to any person for its refusal to
comply with such claims or demand and (i) in the event of any joint direction
from the Seller and the Purchaser, the Title Company shall then disburse the
Exchange Property Credit in accordance with said direction, (ii) in the event
the Title Company shall receive a written notice advising that a litigation over
entitlement to the Exchange Property Credit has been commenced, the Title
Company may deposit the Exchange Property Credit with the clerk of the court in
which said litigation is pending or (iii) the Title Company may (but shall not
be required to) take such affirmative steps as it may, at its option, elect in
order to substitute another impartial party satisfactory to the Seller and the
Purchaser to hold the Exchange Property Credit subject to such adverse claims
including the commencement of an action for interpleader in a court of competent
jurisdiction, the cost thereof to be borne by whichever of the Seller and the
Purchaser is the losing party and, thereupon, the Title Company shall be
released of and from all liability hereunder. The Seller and the Purchaser
jointly and severally agree to reimburse the Title Company for any and all
expenses incurred in the discharge of its duties under this Article, including,
without limitation, attorneys' fees. Nothing herein, however, shall affect the
liability of a defaulting party to another party for reimbursement of any amount
paid to the Title Company under this Section 12.13(d).
----------------
(e) It is expressly understood that the Title Company acts hereunder as
an accommodation to the Seller and the Purchaser and as a depository only and is
not responsible or liable in any manner whatever for the sufficiency,
correctness, genuineness or validity of any instrument deposited with it, or for
the form or execution of such instruments or for the identity, authority or
right of any person executing or depositing the same, or for the terms and
conditions of any instrument pursuant to which the Title Company or the parties
may act.
(f) The Title Company shall not have any duties or responsibilities
except those set forth in this Section and shall not incur any liability in
acting upon any signature, notice, request, waiver, consent, receipt or other
paper or document believed by the Title Company to be genuine and the Title
Company may assume that any person purporting to give it any notice on behalf of
any party in accordance with the provisions hereof has been duly authorized to
do so.
(g) The Title Company may act or refrain from acting in respect of any
matter referred to herein in full reliance upon
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and by and with the advice of counsel which may be selected by it and shall be
fully protected in so acting or refraining from acting upon the advice of such
counsel.
(h) The Title Company shall not be responsible for any act or failure to
act on its part except in the case of its own willful default or gross
negligence. The Title Company shall be automatically released from all
responsibility and liability under this Agreement upon the Title Company's
delivery or deposit of the Exchange Property Credit in accordance with the
provisions of this Agreement.
(i) The Seller and the Purchaser agree that if either shall deliver to
the Title Company a written demand for the Exchange Property Credit, the party
making such demand shall, promptly after delivering such demand to the Title
Company, deliver a copy of such demand to the other party, together with a
statement of the facts and circumstances underlying the demand; provided,
however, that nothing in this part shall have any effect whatsoever upon the
Title Company's rights, duties and obligations under the preceding parts of this
Section 12.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as a sealed instrument as of the date first above written.
SELLER:
HMH PROPERTIES, INC.
By: /s/ X.X. Xxxxx
----------------------------------
Its: Vice President
----------------------------
PURCHASER:
HOSPITALITY PROPERTIES TRUST
By: /s/ Xxxx X. Xxxxxx
-------------------------------
Its: Treasurer
--------------------------
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The undersigned hereby acknowledges and agrees to be bound by the provisions
of Section 12.13.
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CHICAGO TITLE INSURANCE COMPANY
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------
Its: Resident Vice President
----------------------------
The undersigned hereby guarantees full performance of all of the
obligations of HMH Properties, Inc. under the foregoing Agreement.
HOST MARRIOTT CORPORATION
By: /s/ X.X. Xxxxx
-------------------------------
Its: Assistant Secretary
--------------------------
Schedule A
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Allocable Purchase Prices of Properties and Designations
--------------------------------------------------------
[See attached copy.]
Schedule B-1 through B-18
-------------------------
Legal Descriptions of Properties
--------------------------------
[See attached copies.]
Schedule C
----------
Form of Surveyor's Certificate
------------------------------
[See attached copy.]
Schedule D
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Management Agreements
---------------------
[See attached copy.]
Schedule E
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Operating Statements
--------------------
[See attached copy.]
Schedule F
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FF&E Reserve Amounts
--------------------
[See attached copy.]
