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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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DATE OF REPORT: DECEMBER 27, 1996
INTERSTATE HOTELS COMPANY
FOSTER PLAZA 10
680 ANDERSEN DRIVE
PITTSBURGH, PENNSYLVANIA 15220
(412) 937-0600
PENNSYLVANIA 1-11731 25-1788101
(State of incorporation) (SEC File No.) (IRS Employer
Identification No.)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On December 27, 1996, Interstate Hotels Company (the "Company") acquired
substantially all of the equity interests in two full-service luxury resorts
located in Key West, Florida: the 311-room Marriott's Casa Marina Resort and
the 149-room Marriott's Reach Resort. The Company acquired a 1% general
partnership interest and 97.6% limited partnership interest in the Casa Marina
Resort for a total, including estimated capital expenditures for anticipated
renovations and closing costs, of approximately $62.8 million.
Contemporaneously, the Company acquired a 1% general partnership interest and
96.1% limited partnership interest in the Reach Resort for a total, including
estimated capital expenditures for anticipated renovations and closing costs,
of $31.5 million. Prior to the acquisition by the Company, Milton Fine,
Chairman of the Board and the largest beneficial owner of the Company's Common
Stock, David Fine, Milton Fine's son and a member of the Company's Board of
Directors, W. Thomas Parrington, Jr., the Company's President and Chief
Executive Officer, and J. William Richardson, Robert L. Froman and Marvin I.
Droz, all executive officers of the Company, together beneficially owned a 49%
limited partnership interest, and Milton Fine beneficially owned the 1% general
partnership interest in the entity that owned the Reach Resort. Messrs.
Parrington, Richardson, Froman and Droz together owned a 3.28% equity interest
in that entity, which they acquired in 1993. Giving effect to the acquisition,
Milton Fine beneficially owns a 1.44% limited partnership interest in that
entity.
The Company used cash on hand, together with $31.0 million of new
borrowings from Credit Lyonnais, New York branch, and assumed $15.8 million of
debt to fund the acquisitions. Except for Milton Fine and David Fine and Messrs.
Parrington, Richardson, Froman and Droz, the sellers in both transactions were
entities and individuals not affiliated with the Company.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
Exhibit No. Description
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2.1 Contribution Agreement, dated as of December 19, 1996, among
Casa Marina Ltd., Casa Marina Realty Corporation, Interstone
Partners I, L.P. and Casa Marina Realty Partnership, L.P.
2.2 Contribution Agreement and Agreement to Assign Partnership
Interests and Enter into First Amended and Restated Limited
Partnership Agreement, dated as of December 19, 1996, among
IHC Reach Corporation, Reach Resort Investment Corporation,
Interstone Partners I, L.P. and The Key West Reach Limited
Partnership
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
INTERSTATE HOTELS COMPANY
Date: January 13, 1997
By: /s/ J. William Richardson
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J. William Richardson
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
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INDEX TO EXHIBITS
Exhibit No. Description
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2.1 Contribution Agreement, dated as of December 19, 1996, among
Casa Marina Ltd., Casa Marina Realty Corporation, Interstone
Partners I, L.P. and Casa Marina Realty Partnership, L.P.
2.2 Contribution Agreement and Agreement to Assign Partnership
Interests and Enter into First Amended and Restated Limited
Partnership Agreement, dated as of December 19, 1996, among
IHC Reach Corporation, Reach Resort Investment Corporation,
Interstone Partners I, L.P. and The Key West Reach Limited
Partnership
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Exhibit 2.1
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT, dated as of December 19, 1996 (this
"Agreement"), is made by and among CASA MARINA LTD., a Florida limited
partnership ("CM Partnership"), CASA MARINA REALTY CORPORATION, a Delaware
corporation ("IHL Inc."), INTERSTONE PARTNERS I, L.P., a Delaware limited
partnership ("Interstone"), and CASA MARINA REALTY PARTNERSHIP, L.P., a
Delaware limited partnership ("Partnership").
W I T N E S S E T H :
WHEREAS, CM Partnership is the owner of a leasehold estate in certain land
and is the fee simple owner of the hotel and other improvements located
thereon, commonly known as the Casa Marina Hotel, in Key West, Florida and of
certain other assets constituting the Property (as hereinafter defined), which
Property is subject to the Mortgage (as hereinafter defined);
WHEREAS, CM Partnership desires to contribute to Partnership, subject to
the Mortgage, all of its right, title and interest in and to the Property, in
exchange for an interest in Partnership;
WHEREAS, Interstone and IHL Inc. each wishes to contribute certain cash to
Partnership in exchange for an interest in Partnership; and
WHEREAS, Partnership wishes to receive the aforesaid contributions of
property and cash, in exchange for the issuance of interests in Partnership;
NOW, THEREFORE, CM Partnership, IHL Inc., Interstone, and Partnership
hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 The following terms shall have the meanings respectively assigned to
them:
"Accepted Service Contracts" shall have the meaning set forth in
Section 8.2(u).
"Affiliate" has the meaning ascribed to such term in Rule 405 of
the Securities Act of 1933, as amended.
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"Applicable Law" means, with respect to any Person, any federal,
state or local statute, law, code, ordinance, rule, administrative
interpretation, regulation, order, writ, injunction, directive, judgment,
decree or other requirement of any Governmental Authority (including any
Environmental Law) applicable to such Person or any of its properties, assets,
officers, directors, employees, consultants or agents (in connection with such
officer's, director's, employee's, consultant's or agent's activities on behalf
of such Person).
"Business Day" means those days of the week which are not
Saturday, Sunday or a federal legal or bank holiday.
"Claims" mean claims, causes of action, choses in action, rights
of recovery and rights of set-off of whatever kind or description against any
Person arising out of or relating to the Property, except to the extent
directly arising out of the Excluded Liabilities.
"Closing" shall have the meaning set forth in Section 5.1.1.
"Closing Date" means the date for Closing provided for in
Section 5.1.2.
"Code" means the Internal Revenue Code of 1986, as amended, and
the regulations promulgated thereunder.
"Current Tax Year" means the fiscal year used by Monroe County,
Florida for the assessment and collection of real estate taxes, during which
the Closing occurs.
"Development Documents" shall have the meaning set forth in
Section 8.3(b).
"Development Rights" means any and all rights and privileges to
further develop the Property, the Land or any portion thereof.
"Effective Date" means December 1, 1996.
"Environmental Laws" means all Applicable Laws relating to the
control of any pollutant or the protection of human health, safety or the
environment including, without limitation, (i) all requirements pertaining to
reporting, licensing, permitting, controlling, investigating or remediating
emissions, discharges, releases or threatened releases of Hazardous Substances,
chemical substances, pollutants, contaminants or toxic substances, materials or
wastes, whether solid, liquid or gaseous in nature, into the air, surface
water, groundwater or land, or relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Substances, chemical substances, pollutants, contaminants or toxic
substances, materials or wastes, whether solid, liquid or gaseous in nature;
and (ii) all requirements pertaining to the protection of the health and safety
of employees or the public. Without limiting the generality of the foregoing,
"Environmental Laws" include: (a) the Resource Conservation and Recovery Act,
as amended, 42 U.S.C. Sections 6901 ET SEQ.; (b) the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 26 U.S.C.
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Sections 4611 and 42 U.S.C. Sections 9601 ET SEQ.; (c) the Superfund Amendment
and Reauthorization Act of 1984; (d) the Clean Air Act, 42 U.S.C. Sections 7401
ET SEQ.; (e) the Clean Water Act, 33 U.S.C. Sections 1251 ET SEQ.; (f) the Safe
Drinking Water Act, 42 U.S.C. Sections 300f ET SEQ.; (g) the Toxic Substances
Control Act, 15 U.S.C. Sections 2601 ET SEQ.; (h) the Federal Water Pollution
Control Act, as amended, 33 U.S.C. Section 1251 ET SEQ.; (i) the Hazardous
Materials Transportation Act, as amended, 49 U.S.C. Sections 1801 ET SEQ.,
(j) the Atomic Energy Act, as amended, 42 U.S.C. Sections 2011 ET SEQ.; (k) the
Federal Insecticide, Fungicide and Rodenticide Act, as amended, 7 U.S.C.
Sections 136 ET SEQ.; (l) the Federal Food, Drug and Cosmetic Act, as amended,
21 U.S.C. Sections 301 ET SEQ.; and (m) OSHA.
"Excluded Liabilities" shall have the meaning set forth in
Section 2.4 hereof.
"Franchise Agreements" means all those certain agreements with
Marriott Corporation relating to the franchise for the Hotel.
"GAAP" means generally accepted accounting principles.
"Governmental Authority" means any federal, territorial, state
or local governmental authority, quasi-governmental authority, instrumentality,
court, commission, tribunal or organization or any regulatory, administrative
or other agency, or any political or other subdivision, department or branch of
any of the foregoing having jurisdiction over the Property or CM Partnership.
"Ground Lease" means that certain Ground Lease dated November
13, 1987 made between Ground Lessor and CM Partnership.
"Ground Lessor" means Aetna Life Insurance Company, a
Connecticut corporation.
"Hazardous Substances" mean any chemical substance, object,
condition, material or waste that is or may be hazardous to human health,
safety or the environment, including, without limitation, any chemicals,
substances, materials and wastes: (i) the presence of which requires
investigation or remediation under any Applicable Law; or (ii) which are
defined as "hazardous wastes," "hazardous substances," "hazardous materials,"
"toxic substances," "air pollutants," "toxic pollutants," "extremely hazardous
waste" or "restricted hazardous waste" under any Environmental Laws; or (iii)
which are toxic, explosive, corrosive, flammable, infectious, radioactive,
carcinogenic, dangerous or mutagenic or otherwise hazardous and are regulated
by any Governmental Authority; or (iv) the presence of which causes a nuisance
to adjacent properties or poses a hazard to the health or safety of Persons; or
(v) the presence of which on adjacent properties constitutes a trespass by CM
Partnership; or (vi) without limitation, which contain radioactive materials,
pesticides, pollutants, contaminants, chemicals, lead, ureaformaldehyde,
flammable explosives, radon, gasoline, diesel fuel or other petroleum
hydrocarbons, polychlorinated biphenols (PCBs) or asbestos.
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"Hotel" means that certain 314 room hotel located on the Land
including all the improvements, buildings, structures and fixtures now or on
the Closing Date located on the Land, and all alterations and installations in
and to such improvements, buildings, structures and fixtures which may now or
hereafter, by lease or operation of law, be or become the property of the Hotel
or the owner of such improvements, buildings, structures and fixtures.
"Hotel Assets" mean all of the items of tangible personal
property owned by CM Partnership and used in the operation, management, repair
and/or maintenance of the Hotel and/or other portions of the Property,
including, without limitation, all furniture, furnishings, fixtures,
appliances, equipment, machinery, inventory, supplies, permits, computers,
computer software, tapes, disks, spare parts, uniforms, and other personal
property located in or used in connection with the operation of the Hotel,
Operating Supplies, Permits, Intellectual Property Rights, Reservation Rights,
refunds and pre-paid expenses, food and beverage supplies, inventory, books and
records, goodwill, Claims, and all of the assets set forth and described on
EXHIBIT 1A attached hereto as "Balances Contributed to New Partnership," all of
which are being contributed to Partnership hereunder (provided, however, that
prior to the Closing, CM Partnership shall have the right to utilize materials
described on EXHIBIT 1A for purposes of maintenance and repairs to the Hotel
and/or other portions of the Property if, at Closing, CM Partnership provides
to IHL and Partnership an accounting of such use).
"IHL" means IHL Inc. and Interstone, jointly and severally.
"Intellectual Property Rights" means all property rights, title
and interest of CM Partnership in and to all tradenames, trademarks, trade
secrets, service marks, and other intellectual property rights of CM
Partnership, whether or not registered, and all rights of CM Partnership with
respect to the use of the names "Casa Marina" and "Marriott Casa Marina Resort"
(and all derivatives of such names), including, without limitation, the
Intellectual Property Rights described on EXHIBIT 11.1.15(a).
"Land" means all that certain tract or parcel of land situated
and lying in Key West, Florida and containing approximately 374,616 square feet
of land, more or less, which is more particularly described on EXHIBIT 1B
attached hereto.
"Leasehold Estate" means (a) that certain leasehold estate in
the Land under the Ground Lease, together with all and singular the tenements,
hereditaments, easements, rights-of-way, appurtenances, belonging or in anywise
appertaining to the same, (b) all rights and options of ground lessee under the
Ground Lease, including, without limitation, the option to purchase the fee
simple title to the Land; and (c) the Hotel.
"Liability" means, with respect to any Person, any liability or
obligation of such Person of any kind, character or description, whether
disclosed or undisclosed, known or unknown, absolute or contingent, accrued or
unaccrued, liquidated or unliquidated, secured or unsecured, joint or several,
due or to become due, vested or unvested, executory, determined,
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determinable or otherwise and whether or not the same is required to be accrued
on the financial statements of such Person.
"Lien" means, with respect to any asset, any mortgage, title
defect or objection, lien, pledge, charge, security interest, hypothecation,
restriction, encumbrance, adverse right or charge of any kind in respect of
such asset.
"Liquor License" mean the liquor license applicable to the
Hotel.
"Management Agreement" means that certain Management Agreement
dated as of November 19, 1987 made between CM Partnership and Manager.
"Manager" means Interstate Hotels Corporation #10.
"Mortgage" means that certain Mortgage and Security Agreement
dated November 18, 1987 in favor of Mortgagee, filed in Official Records Book
1033, page 709, of the Public Records of Monroe County.
"Mortgagee" means Aetna Life Insurance Company, a Connecticut
corporation.
"Operating Supplies" mean all paper goods, linens, maintenance
equipment and supplies, kitchen and restaurant equipment and supplies, office
supplies and all similar items used in the operation of the Hotel, including,
without limitation, the Operating Supplies more particularly described on
EXHIBIT 1C attached hereto.
"OSHA" means the Occupational Safety and Health Act of 1970, 29
U.S.C.A. Section 651, and all rules and regulations promulgated thereunder.
"Other CM Partnership Interests" means all of the right, title
and interest, if any, of CM Partnership in and to (i) the Development Rights,
(ii) any easements, rights of way, privileges, rights, appurtenances,
hereditaments, oil and mineral rights, grants of right, or other agreements
benefiting the Real Property including, without limitation, and (iii) any land
lying in the bed of any street, road, alley or avenue, public or private,
opened or proposed, in front of or adjoining the Real Property, any strips or
gores adjoining or relating to the property or any part thereof, any award made
or to be made in lieu thereof, and any unpaid award for damages to said Real
Property by reason of change of grade of any street.
"Permits" means all licenses, approvals, permits, entitlements
and authorizations of any Governmental Authority, including, without
limitation, all necessary certificates of occupancy for the Hotel.
"Permitted Exceptions" mean collectively: (i) the Mortgage, (ii)
those restrictions, covenants, agreements, easements, matters and things of
fact or of record affecting
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title to the Property set forth on EXHIBIT 1D hereof; and (iii) real estate
taxes for the Current Tax Year not due and payable as of the Closing Date.
"Person" means an individual, corporation, limited liability
company, partnership, association, trust, estate, Governmental Authority or
other entity or organization.
"Property" means, collectively, the Leasehold Estate, the Site
Improvements, the Other CM Partnership Interests and the Hotel Assets.
"Real Property" means, collectively, the Land, the Hotel, the
Site Improvements and the Other CM Partnership Interests.
"Reservation Rights" means all of CM Partnership's right, title
and interest in and to all guest and customer lists, reservations, bookings and
inquiries, licenses, marketing information, advertising data, telephone numbers
and concessions, if any, used in or arising out of the operation of the Hotel.
"Service Contracts" means those contracts relating to or
affecting the use or operation of the Property, such as service, maintenance,
labor, parking operator and similar agreements, which are set forth in EXHIBIT
1E attached hereto. To the extent IHL identifies and accepts in writing other
such agreements prior to Closing, those agreements shall also be deemed Service
Contracts for the purposes of this Agreement.
"Site Improvements" means all of the parking lots, driveways,
pavings, access cuts, parking lot striping, lighting, bumpers, drainage systems
and landscaping situate upon the Land, and all equipment and machinery owned by
CM Partnership (and listed on EXHIBIT 1F attached hereto) and used to operate
and/or maintain the Site Improvements (if any).
"Taxes" mean, with respect to CM Partnership, all federal,
state, local, foreign and other taxes, assessments or other government charges,
including, without limitation, income, estimated income, business, occupation,
franchise, property, sales, transfer, use, employment, commercial rent or
withholding taxes, including interest, penalties and additions in connection
therewith for which CM Partnership may be liable.
"Warranties" mean all warranties and guaranties issued by
manufacturers, contractors or sub-contractors with respect to the Property,
including, without limitation, all warranties and guaranties related to the
construction, fabrication or repair of the Hotel or any part thereof.
1.2 Certain other terms are defined elsewhere in this Agreement.
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ARTICLE II
CAPITAL CONTRIBUTIONS.
2.1 CONTRIBUTION OF INTERSTONE. Interstone shall, effective at
the Closing Date and in consideration of an interest in the Partnership as set
forth in Section 3.1, contribute to the Partnership Twenty-Eight Million
Thirteen Thousand Dollars ($28,013,000.00).
2.2 CONTRIBUTION OF IHL INC. IHL Inc. shall, effective at the
Closing Date and in consideration of an interest in the Partnership as set
forth in Section 3.2, contribute to the Partnership Two Hundred Eighty-Seven
Thousand Dollars ($287,000.00).
2.3 CONTRIBUTION OF CM PARTNERSHIP. CM Partnership shall,
effective at the Closing Date and in consideration of an interest in the
Partnership as set forth in Section 3.3, transfer and contribute to the
Partnership all of CM Partnership's right, title and interest in and to the
Property subject only to the Permitted Exceptions. CM Partnership shall, at its
own expense, from time to time if requested by IHL or the Partnership, execute
and deliver such documents and instruments of transfer, conveyance and
assignment and take such further action as IHL or the Partnership may
reasonably require to complete more effectively the transfer and contribution
of the Property to the Partnership.
2.4 EXCLUDED ASSETS AND LIABILITIES. Notwithstanding any other
provision of this Agreement (i) CM Partnership shall not contribute or transfer
to the Partnership the assets listed on EXHIBIT 2.4(I), and (ii) CM Partnership
shall not transfer to the Partnership, and the Partnership shall not assume, or
otherwise be responsible for, any liabilities or obligations of CM Partnership,
whether actual or contingent, matured or unmatured, liquidated or unliquidated,
or known or unknown, whether arising out of occurrences prior to, at or after
the date hereof other than the liabilities set forth on EXHIBIT 2.4(II) (CM
Partnership's liabilities excluding the liabilities set forth on EXHIBIT
2.4(II), collectively, the "Excluded Liabilities"). The Excluded Liabilities
include, without limitation:
(a) Any and all liabilities in respect of injury to or death
of any person or damage to or destruction of any property, whether based on
negligence, breach of warranty, strict liability, enterprise liability or any
other legal or equitable theory for any occurrence on or prior to Closing.
(b) Any and all liabilities to or in respect of any former
employees of CM Partnership or any management agent of CM Partnership with
respect to the Hotel, including, without limitation, (i) any liability arising
under or with respect to any employment agreement, whether or not written,
between CM Partnership and any employee thereof, (ii) any liability under or
with respect to any employee benefit plan, program or arrangement, whether or
not written, at any time maintained, contributed to or required to be
contributed to by CM Partnership or under which CM Partnership may incur
liability or any liability with respect to CM Partnership's withdrawal or
partial withdrawal from or termination of any such plan, program, or
arrangement, and (iii) any claim of an unfair labor practice, or any claim
under any state unemployment compensation or worker's compensation law or
regulation or under any federal or state employment discrimination law or
regulation, that shall have been asserted on or
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prior to the Closing Date or to the extent the basis for any claim, liability,
damages or penalty shall have arisen on or prior to Closing Date.
(c) Any and all loans, obligations or other liabilities of CM
Partnership to or in respect of any current or former partner or joint venturer
of CM Partnership or any family member of any current or former partner or
joint venturer.
(d) Any and all liability or obligation of CM Partnership in
respect of any Tax except to the extent (if any) otherwise expressly agreed in
Section 4.1 of this Agreement.
(e) Any and all actions against CM Partnership or that
adversely affects the Property and that shall have been asserted on or prior to
the Closing Date or to the extent the basis of which shall have arisen on or
prior to the Closing Date, except to the extent (if any) otherwise expressly
agreed in Section 4.1 of this Agreement.
(f) Any and all liabilities or obligations of CM Partnership
resulting from entering into, performing its obligations pursuant to, or
consummating the transactions contemplated by, this Agreement (including,
without limitation, legal and other professional fees) except to the extent (if
any) otherwise expressly agreed in Section 4.1 of this Agreement.
(g) Any and all taxes or other liability or obligation of CM
Partnership in respect of fees or costs of recording or filing applicable
conveyancing instruments except to the except to the extent (if any) otherwise
expressly agreed in Section 4.1 of this Agreement.
(h) Any and all liabilities under any Service Contracts that
are not Accepted Service Contracts.
(i) That certain indebtedness or other obligation of CM
Partnership to Barry S. Cohen and Joel S. Meisel, in the aggregate amount of
approximately $1,500,000.
The provisions of this Section 2.4 shall survive delivery of
the deeds and Closing.
ARTICLE III
PARTNERSHIP INTERESTS
3.1 INTEREST OF INTERSTONE. In consideration of the cash
contribution described in Section 2.1, Interstone shall acquire, and the
Partnership shall issue to Interstone, at Closing, a 97.6063% limited
partnership interest in the Partnership.
3.2 INTEREST OF IHL INC. In consideration of the payment of the
cash contribution described in Section 2.2, IHL Inc. shall acquire, and the
Partnership shall issue to IHL Inc., at Closing, a 1% general partnership
interest in the Partnership.
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3.3 INTEREST OF CM PARTNERSHIP. In consideration of the transfer
and contribution of the Property described in Section 2.3, CM Partnership shall
acquire, and the Partnership shall issue to CM Partnership, at Closing, a
1.3937% limited partnership interest in the Partnership.
ARTICLE IV
BALANCE SHEET AND OTHER ITEMS
4.1 PRORATIONS.. The income and expenses arising from the
ownership or operation of the Property set forth hereinafter shall be allocated
between CM Partnership and Partnership, as of 12.01 a.m. (Eastern time) on the
Effective Date.
4.2 PAYMENT OF LIABILITIES, ETC. CM Partnership shall pay to
Partnership the sum of $2,247,102 (the "Expense Reimbursement") on account of
current liabilities retained by CM Partnership and reflected as such on EXHIBIT
1A. As agent for CM Partnership, Partnership shall convert the current assets
reflected on EXHIBIT 1A under the heading "Remaining Balance Sheet" to cash and
shall apply such cash and the Expense Reimbursement to payment of such current
liabilities. When all such current assets have been converted to cash and such
current liabilities have been paid, Partnership and CM Partnership shall make
any necessary compensating adjustments, one to the other, to the extent that
the actual current assets and liabilities are different from the current assets
and liabilities set forth on EXHIBIT 1A.
4.3 INTENTIONALLY DELETED.
4.4 TRANSFER OR STAMP TAXES Partnership shall pay the cost of
all state, county and municipal documentary transfer or stamp taxes and other
transfer fees and recording fees in connection with the recordation of the
deeds and documents described in Sections 8.2(a), (b), (c), (d), (e), (f), (g)
and (h) and 8.4(e).
4.5 ATTORNEYS' FEES. Partnership and CM Partnership shall each
pay their respective attorney's fees.
4.6 TITLE COMPANY CHARGES. Partnership shall pay all premiums
for title insurance policies obtained by Partnership with respect to the Real
Property, together with the fees of Title Company (as hereinafter defined) in
connection with Title Company's serving as an escrow agent hereunder.
4.7 OTHER FEES. Except as otherwise herein provided, any fee,
cost, charge or expense incurred by either party hereto or for which either
party hereto may be liable in connection with the negotiation, examination and
consummation of this Agreement, shall be paid by the party hereto incurring, or
liable for, such fee, cost, charge or expense.
The provisions of this Article 4 shall survive Closing.
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ARTICLE V
CLOSING; CLOSING DATE
5.1 CLOSING; TIME OF CLOSING.
5.1.1 The closing (the "Closing") shall take place at such
place as CM Partnership and IHL shall mutually agree, at 9:00 a.m. Eastern time
on the Closing Date.
5.1.2 The Closing Date shall be December 26, 1996. The
Closing Date shall be subject to extension as provided in Section 5.1.4 and
10.2.
5.1.3 Subject to the provisions of Section 5.1.4, the
parties agree that title to the Property will be contributed and transferred by
CM Partnership to the Partnership subject only to the Permitted Exceptions.
5.1.4 In the event that prior to the Closing Date IHL
becomes aware of and objects to additional title matters that are not Permitted
Exceptions ("Additional Title Matters"), then, upon written notice from IHL, CM
Partnership shall, without cost to IHL or Partnership, remove and cure the
Additional Title Matters on or prior to the Closing Date (which cure, at the
sole option of IHL, may be by means of affirmative insurance or endorsement
from the Title Company, in form and substance satisfactory to Partnership,
insuring over and providing that any liens, encumbrances, covenants, easements
or other matters which are not Permitted Exceptions shall not be collected out
of, or enforced against, the Leasehold Estate). If CM Partnership has not
caused the removal of the Additional Title Matters, IHL may elect either to (a)
terminate this Agreement by written notice to CM Partnership whereupon this
Agreement shall be null and void, none of the parties hereto having any further
obligation to the others, (b) extend the Closing Date by a period not exceeding
thirty (30) days in order to give CM Partnership the opportunity to cure the
Additional Title Matters, or (c) permit CM Partnership to contribute and
transfer of the Property subject to such Additional Title Matters (which shall
then be deemed to constitute Permitted Exceptions).
ARTICLE VI
INTENTIONALLY DELETED.
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ARTICLE VII
CONDITIONS PRECEDENT.
7.1 The obligation of IHL to close the transaction hereunder and
make the contributions provided for in Sections 2.1 and 2.2 is subject to
satisfaction of all the following conditions at or prior to Closing, any one or
more of which may be expressly waived in writing by IHL:
(a) CM Partnership shall have contributed and transferred the
Property to the Partnership pursuant to Section 2.3 in accordance with the
provisions of this Agreement.
(b) The deeds, agreements, documents and instruments
described in this Agreement to be executed and/or delivered by CM Partnership
shall have been executed and/or delivered as provided in this Agreement.
(c) The other deeds, agreements, documents and instruments to
be delivered by CM Partnership pursuant to Section 8.2 hereof, shall have been
delivered.
(d) The contingencies and conditions to IHL's obligation to
close set forth in this Agreement shall have been satisfied.
(e) All of the terms, covenants and conditions of this
Agreement to be complied with and performed by CM Partnership on or before the
Closing Date shall have been duly complied with and performed in all material
respects.
(f) The representations and warranties made by CM Partnership
under this Agreement shall be true and correct in all material aspects on and
as of the Closing Date with the same force and effect as though such
representations and warranties had been made on and as of the Closing Date.
(g) CM Partnership shall not have made a general assignment
for the benefit of its creditors, nor have admitted in writing its inability to
pay its debts as they become due, nor have filed a petition in bankruptcy or
been adjudicated a bankrupt or insolvent or have filed a petition seeking any
reorganization, arrangement, composition, readjustment liquidation, dissolution
or similar relief under any present or future statute, law or regulation, nor
have filed any answer admitting or failing to reasonably contest the material
allegations of a petition filed against it in any such proceeding or seek or
consent to or acquiesce in the appointment of any trustee, receiver or
liquidator of CM Partnership for any material part of CM Partnership's
property.
(h) Partnership shall have obtained a transfer of the Liquor
License to it from the appropriate Governmental Authority.
(i) Partnership shall have obtained or been granted the right
to use all Permits.
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<PAGE> 12
(j) All Accepted Service Contracts shall have been assigned
to Partnership.
(k) CM Partnership shall have delivered to IHL a UCC lien
search together with reasonable evidence of the release of all liens on any of
the Property (other than liens that are Permitted Exceptions), whether or not
indicated on such lien search.
(l) Any consents to the transfer of the Property required
under the Franchise Agreements shall have been obtained to IHL's reasonable
satisfaction.
(m) The Partnership shall have obtained a first loan in the
amount of $5,200,000 and a second loan in the amount of $25,800,000, on terms
and conditions acceptable to IHL.
(n) Title Company shall be ready, willing and able to issue
(at regular rates) a title policy, insuring marketable fee simple title to the
Real Property in Partnership, subject only to the Permitted Exceptions.
(o) The Florida Department of Environmental Protection (the
"DEP") shall have provided written confirmation, in form and substance
satisfactory to IHL, that all submerged land leases affecting the Property are
in good standing and that the DEP has no objection to the assignment of the
such leases to Partnership.
7.2 The obligation of CM Partnership to close the transaction
hereunder and make the contribution provided for in Section 2.3 is subject to
satisfaction of all the following conditions at or prior to Closing, any one or
more of which may be expressly waived in writing by CM Partnership:
(a) IHL shall have contributed the cash required to be
contributed pursuant to Sections 2.1 and 2.2 in accordance with the provisions
of this Agreement.
(b) The agreements, documents and instruments described in
this Agreement to be executed and/or delivered by IHL shall have been executed
and/or delivered as provided in this Agreement.
(c) The contingencies and conditions to CM Partnership's
obligation to close set forth in this Agreement shall have been satisfied.
(d) All of the terms, covenants and conditions of this
Agreement to be complied with and performed by the IHL on or before the Closing
Date shall have been duly complied with and performed in all material respects.
(e) Intentionally deleted.
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<PAGE> 13
(f) IHL Inc. shall not have made a general assignment for the
benefit of its creditors, nor have admitted in writing its inability to pay its
debts as they become due, nor have filed a petition in bankruptcy or been
adjudicated a bankrupt or insolvent or have filed a petition seeking any
reorganization, arrangement, composition, readjustment liquidation, dissolution
or similar relief under any present or future statute, law or regulation, nor
have filed any answer admitting or failing to reasonably contest the material
allegations of a petition filed against IHL Inc. in any such proceeding or seek
or consent to or acquiesce in the appointment of any trustee, receiver or
liquidator of IHL Inc. for any material part of IHL Inc.'s property.
(g) Interstone shall not have made a general assignment for
the benefit of its creditors, nor have admitted in writing its inability to pay
its debts as they become due, nor have filed a petition in bankruptcy or been
adjudicated a bankrupt or insolvent or have filed a petition seeking any
reorganization, arrangement, composition, readjustment liquidation, dissolution
or similar relief under any present or future statute, law or regulation, nor
have filed any answer admitting or failing to reasonably contest the material
allegations of a petition filed against Interstone in any such proceeding or
seek or consent to or acquiesce in the appointment of any trustee, receiver or
liquidator of Interstone for any material part of Interstone's property.
ARTICLE VIII
DOCUMENTS AT CLOSING.
8.1 For the convenience of the parties and to ensure that all of
the contributions and transfers required to be made hereunder are duly and
sufficiently made, Closing will be effectuated through a title company selected
by IHL (the "Title Company").
8.2 Subject to full compliance by IHL with all of IHL's
obligations to be kept, observed or performed by IHL under this Agreement, CM
Partnership shall deliver to the Title Company at Closing, the following
instruments, all of which shall be in form and substance as set forth in an
applicable Exhibit hereto or, if not so set forth, otherwise as may be
reasonably acceptable to the parties:
(a) Special warranty deed, substantially in the form attached
hereto as EXHIBIT 8.2(a), duly executed by CM Partnership and
notarized.
(b) Quitclaim deed, substantially in the form attached hereto
as EXHIBIT 8.2(b), duly executed by CM Partnership and
notarized.
(c) Assignment and Assumption of Lessee's Interest in Lease,
substantially in the form attached hereto as EXHIBIT 8.2(c),
duly executed by CM Partnership and notarized (the
"ASSIGNMENT AND ASSUMPTION OF LESSEE'S INTEREST IN GROUND
LEASE").
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<PAGE> 14
(d) Assignment and Assumption of Lessee's Interest in Lease,
substantially in the form attached hereto as EXHIBIT 8.2(d),
duly executed by CM Partnership and notarized (the
"ASSIGNMENT AND ASSUMPTION OF LESSEE'S INTEREST IN SUBMERGED
LAND LEASE").
(e) Special warranty deed, substantially in the form attached
hereto as EXHIBIT 8.2(e), duly executed by Ground Lessor and
notarized, conveying to Partnership the fee simple title to
the Real Property, free of Liens other than the Permitted
Exceptions in exchange for consideration of Thirteen Million
Five Hundred Sixty- Two Thousand Nine Hundred Forty-Eight
Dollars 25/100 ($13,562,948.25).
(f) Quitclaim deed, substantially in the form attached hereto
as EXHIBIT 8.2(f), duly executed by Ground Lessor and
notarized.
(g) Assignment and Assumption of Lessor's Interest in Lease,
substantially in the form attached hereto as EXHIBIT 8.2(g),
duly executed by Ground Lessor and notarized (the "ASSIGNMENT
AND ASSUMPTION OF LESSOR'S INTEREST IN GROUND LEASE").
(h) Assignment and Assumption of Lessee's Interest in Lease,
substantially in the form attached hereto as EXHIBIT 8.2(h),
duly executed by Ground Lessor and notarized (the "ASSIGNMENT
AND ASSUMPTION OF LESSOR'S INTEREST IN SUBMERGED LAND
LEASE").
(i) The original note dated December 18, 1987 from CM
Partnership to Mortgagee, marked "canceled."
(j) A Satisfaction or Release, in recordable form, of the
Mortgage, executed by Mortgagee and notarized.
(k) Intentionally deleted.
(l) Terminations of all UCC-1 financing statements in favor
of Ground Lessor with respect to CM Partnership in the
Official Records Book of the Public Records of Monroe County,
duly executed by the respective secured parties.
(m) An affidavit of CM Partnership setting forth that it is
not a "FOREIGN PERSON" for purpose of the Foreign Investment
in Real Property Transfer Act of 1986, as such term is
defined in Section 1445(b) (3) of the Code.
(n) Florida forms DR219.
(o) Intentionally deleted.
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<PAGE> 15
(p) Affidavit of title signed by CM Partnership, subject to
the terms of this Agreement, and such affidavits and
indemnities as the Title Company shall reasonably require.
(q) Evidence of all necessary and proper consents of all
partners of CM Partnership consenting to and approving the
transfer and contribution of the Property to Partnership
(including, without limitation, the execution and delivery by
CM Partnership and the entities constituting CM Partnership
of the instruments and documents contemplated in this
Agreement), together with (i) copies of all relevant
partnership agreements, certificates, corporate certificates
and charters all certified as true and correct by a duly
authorized officer, and (ii) current good standing
certificates of all relevant corporations and (if available)
partnerships.
(r) A bill of contribution contributing and transferring all
of the Hotel Assets to Partnership, free and clear of all
Liens, substantially in the form of EXHIBIT 8.2(r) attached
hereto.
(s) An Assignment and Assumption of the Management Agreement
substantially in the form set forth in EXHIBIT 8.2(s)
attached hereto (the "Assignment and Assumption of Management
Agreement").
(t) An Assignment of Licenses and Warranties substantially in
the form set forth in EXHIBIT 8.2(t) attached hereto (the
"ASSIGNMENT OF LICENSES AND WARRANTIES").
(u) An Assignment and Acceptance substantially in the form
set forth in EXHIBIT 8.2(u) attached hereto (the "ASSIGNMENT
OF SERVICE CONTRACTS") of all Service Contracts that IHL has
notified CM Partnership in writing prior to the Closing Date
should be assigned to Partnership (collectively, "Accepted
Service Contracts"), whereby CM Partnership assigns to
Partnership, and Partnership expressly accepts as of the
Closing Date, all of CM Partnership's rights thereunder, and
all of CM Partnership's obligations thereunder attributable
to the period after Closing.
(v) Intentionally omitted.
(w) A completed Form 1099 B (if required) or such other
document (if any) as may be required by Section 6045 of the
Code.
(x) Letters to each of the parties to the Accepted Service
Contracts, in form approved by IHL.
(y) An Assignment, substantially in the form of EXHIBIT
8.2(y) attached hereto, of the Intellectual Property Rights
(the "ASSIGNMENT OF INTELLECTUAL PROPERTY RIGHTS") together
with any certificates executed by CM Partnership
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<PAGE> 16
which are required to be filed under federal, local or state
law to evidence such assignment.
(z) An Assignment and Assumption, substantially in the form
of EXHIBIT 8.2(z) attached hereto, of the Reservation Rights
(the "ASSIGNMENT AND ASSUMPTION OF RESERVATION RIGHTS").
(aa) An Assignment, in the form of EXHIBIT 8.2(aa) attached
hereto, of all of CM Partnership's right, title and interest
in and to the Development Documents and Development Rights
(the "ASSIGNMENT OF DEVELOPMENT DOCUMENTS AND DEVELOPMENT
RIGHTS").
(bb) An Assignment in the form of EXHIBIT 8.2(bb) (the
"ASSIGNMENT OF CONSTRUCTION CONTRACTS AND CLAIMS") of all of
CM Partnership's right, title and interest in and to all
architect's contracts, design contracts, general contractor's
agreement, engineer's contracts and any and all Claims CM
Partnership may have against third parties caused by,
relating to, arising out of, resulting from or in any way
connected with the construction, maintenance and/or design in
the Hotel.
(cc) Evidence of payment of Hotel Taxes to the appropriate
taxing authorities.
(dd) A settlement statement ("Settlement Statement").
(ee) Such additional documents as shall be reasonably
necessary to carry out the provisions of this Agreement.
(ff) First Right of Refusal, in the form attached hereto as
EXHIBIT 8.2(ff), duly executed by Joel S. Meisel and Barry S.
Cohen.
8.3 CM Partnership shall deliver to Partnership, at Closing, the
following items:
(a) Keys to all entrance doors to, and equipment and utility
rooms located in, the Hotel, which keys shall be properly
tagged for identification.
(b) Originals (or, if originals are not reasonably available
to CM Partnership, copies) of (1) all building plans and
specifications and as-built plans of the Hotel, and (2) all
site plans, subdivision plats, surveys, engineering and other
studies, plans, specifications, designs, applications and
submissions to Governmental Authorities and advices or
communications from such authorities and all other documents
relating to any possible or proposed further development (the
"DEVELOPMENT DOCUMENTS"), provided that such items are in CM
Partnership's possession or reasonably accessible to CM
Partnership.
(c) Copies of all documentation relating to the Mortgage,
together with the consent in writing of Mortgagee to the
transfer and contribution of the Property by
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<PAGE> 17
CM Partnership to Partnership, which consent shall, without
limitation, include a waiver of any obligation to make
monthly deposits for taxes and insurance premiums for so long
as the loan secured by the Mortgage is not in default and the
Property is owned by Partnership.
(d) Original or certified true copies of all Permits related
to the Property (including, without limitation, the
Development Rights).
(e) Originals and/or certified copies of all Accepted Service
Contracts.
(f) All information and data representing the Reservation
Rights in CM Partnership's possession.
8.4 Subject to full compliance by CM Partnership with all of CM
Partnership's obligations to be kept, observed or performed by CM Partnership
under this Agreement, Partnership shall execute and deliver to the Title
Company at Closing, the following instruments, all of which shall be in form
and substance as set forth in an applicable Exhibit hereto or, if not so set
forth, otherwise as may be reasonably acceptable to the parties:
(a) The Assignment and Assumption of Lessee's Interest in
Ground Lease.
(b) The Assignment and Assumption of Lessee's Interest in
Submerged Land Lease.
(c) the Assignment and Assumption of Lessor's Interest in
Ground Lease.
(d) The Assignment and Assumption of Lessor's Interest in
Submerged Land Lease.
(e) A Termination of Ground Lease, substantially in the form
attached hereto as Exhibit 8.4(e) (the "Termination of Ground
Lease").
(f) The Assignment and Assumption of Management Agreement.
(g) The Assignment of Licenses and Warranties.
(h) The Assignment of Service Contracts.
(i) The Assignment of Intellectual Property Rights.
(j) The Assignment and Assumption of Reservation Rights.
(k) The Assignment of Development Documents and Development
Rights.
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<PAGE> 18
(l) The Assignment of the Construction Contracts and Claims.
(m) The Settlement Statement.
(n) The Assignment and Assumption or License Agreement, in
the form attached as Exhibit 8.4(N).
8.5 Subject to full compliance by CM Partnership with all of CM
Partnership's obligations to be kept, observed or performed by CM Partnership
under this Agreement:
(a) Interstone shall deliver to the Title Company the cash
required to be contributed by Interstone pursuant to Section 2.1 hereof.
(b) IHL Inc. shall deliver to the Title Company the cash
required to be contributed by IHL Inc. pursuant to Section 2.2 hereof.
In addition, IHL shall execute (if applicable) and deliver to
the Title Company at Closing, the following instruments, all of which shall be
in form and substance as set forth in an applicable Exhibit hereto or, if not
so set forth, otherwise as may be reasonably acceptable to the parties:
(c) All necessary and proper consents of IHL Inc. and
Interstone consenting to and approving the within transactions.
(d) A written opinion letter of IHL's counsel, Steptoe &
Johnson (which may rely on opinions of other counsel reasonably acceptable to
CM Partnership), dated as of the Closing Date, substantially in the form
attached hereto as EXHIBIT 8.5(d).
8.6 Upon receipt of all of the documents, cash and other items
described in this Article VIII, Title Company shall promptly search the title
to the Real Property, and if (a) there shall then be no Liens recorded against
the Real Property other than the Permitted Exceptions, and (b) Title Company
shall be ready, willing and able to issue (at regular rates) a title policy,
insuring marketable fee simple title to the Real Property in Partnership,
subject only to the Permitted Exceptions, then Title Company shall promptly
record or file, as appropriate, the deeds and documents described in Sections
8.2(a), (b), (c), (d), (e), (f), (g), (h), (j), (k) and (l) and 8.4(e), among
the land records of Monroe County, Florida.
8.7. Upon recordation of the documents described in Section 8.6,
Title Company shall disburse payments in the manner and in the amounts provided
for in the Settlement Statement signed by the parties, which payments shall
include, without limitation, (w) the payment of Thirteen Million Five Hundred
Sixty-Two Thousand Nine Hundred Forty-Eight Dollars 25/100 ($13,562,948.25) to
the Ground Lessor on account of the consideration payable for the Fee Simple
Deed, and (x) the payment of Thirty-Seven Million Nine Hundred Thirty-Seven
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<PAGE> 19
Thousand Fifty-One Dollars 75/100 ($37,937,051.75) to the Mortgagee on account
of the principal and interest payable to Mortgagee as of the Effective Date,
together with interest on the Mortgage from the Effective Date through the
Closing Date in the amount of Two Hundred Sixty-Seven Thousand One Hundred
Forty Dollars 12/100 ($267,140.12) and a prepayment penalty in the amount of
One Million Five Hundred Thousand Dollars ($1,500,000.00). In the event of any
discrepancy between the amounts set forth in the Settlement Statement and in
this Section 8.7, the amounts set forth in the Settlement Statement shall
control.
ARTICLE IX
COVENANTS OF CM PARTNERSHIP.
9.1 CM Partnership covenants and agrees that, between the date
hereof and the Closing Date, CM Partnership shall, and shall direct the Manager
to continue (i) to operate the Hotel and perform repair and administrative
procedures consistent with its ordinary course practices, (ii) to carry on the
business of the Hotel in a good and diligent manner and use best efforts to
preserve the Hotel's business organization intact and preserve the good will of
the Hotel's guests, customers, suppliers and others having business relations
with it, (iii) to maintain the Hotel in its ordinary course operating condition
and repair and cause the continuation of the normal operations thereof, and
(iv) ordinary course practices with respect to the purchase and replacement of
supplies and the maintenance and repairs of the Hotel Assets. Without limiting
the generality of the foregoing, CM Partnership shall, and shall direct the
Manager to (at CM Partnership's expense where applicable):
(a) not sell, assign, lease, license, transfer or otherwise
dispose of, or mortgage, pledge or encumber (other than with Permitted
Exceptions), any Property except for sales of food, beverage and other supplies
in the ordinary course of business;
(b) not incur any Liability or Liabilities in connection with
the Property, except a Liability or Liabilities (1) incurred in the ordinary
course of business or (2) expressly permitted by the terms of this Agreement;
(c) pay all accounts payable and other expenses of CM
Partnership in the ordinary course of business;
(d) not modify, cancel, extend, renew or otherwise change in
any manner any of the terms, covenants or conditions of any of the Service
Contracts, nor waive or release any rights or remedies under any of the Service
Contracts, nor enter into any other agreements (including, without limitation,
cleaning, maintenance employment, management, supply, union and similar
contracts) affecting the Property, without the prior written consent of IHL
(which consent shall not be unreasonably withheld, delayed or conditioned),
unless same is
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<PAGE> 20
terminable without penalty or liability to Partnership on not more than thirty
(30) days' notice (any such action or act or agreement, an "AGREEMENT
MODIFICATION"). Immediately upon the occurrence of any Agreement Modification,
CM Partnership shall deliver to IHL a complete, certified copy thereof;
(e) provide or cause to be provided all such services in
connection with the operation, management or maintenance of the Hotel that are
now required to be provided or, if not so required, that have customarily been
provided in accordance with CM Partnership's ordinary course practices;
(f) operate, maintain and keep the Property (and all parts
thereof), including mechanical equipment of every kind used in the operation
thereof, in substantially the same condition as it is in as of the End of
Inspection Period (reasonable wear and tear and casualty excepted);
(g) continue to maintain the existing insurance on the
Property which are in the amounts and with the coverages as shown on EXHIBIT
11.1.14;
(h) not make or permit to be made any alterations to the
Property (or any part thereof) unless required by a Governmental Authority, or
remove any of the personalty included in this sale therefrom unless the
personalty so removed is simultaneously replaced with new personal property of
at least equal quality and utility. If any alterations are required by a
Governmental Authority as aforesaid, CM Partnership shall (i) promptly deliver
to IHL a copy of the notice requiring such alterations to be made, (ii)
promptly perform, or direct Manager promptly to perform, such alterations in a
good and workmanlike manner, (iii) not permit any mechanic's, materialmen's or
laborer's liens to be filed against any portion of the Real Property in
connection with such alterations.
(i) not release or compromise any of the Warranties;
(j) comply with any and all written notices issued and
delivered to CM Partnership prior to the date of Closing with respect to: (i)
violations of Applicable Laws from Governmental Authorities; (ii) any
outstanding work orders; and (iii) and requirements of the holder of the
Mortgage and/or the insurance company presently insuring the Property (or parts
thereof) against casualty loss. The immediately proceeding sentence
notwithstanding, between the Effective Date of this Agreement and the Closing
Date CM Partnership shall not be required to incur costs and expenses in excess
of $350,000 in order to comply with its obligations under this Section 9.1(j).
In the event that, in order to comply with its obligation under this Section
9.1(j), CM Partnership would be required to expend in excess of $350,000 then,
promptly upon becoming aware of such fact, CM Partnership shall give written
notice thereof to IHL (the "COMPLIANCE NOTICE"), specifying in detail, (x) the
work required and the reason same is required, and (xi) the cost of the work,
and CM Partnership shall, at the request of IHL, provide to IHL evidence
reasonably acceptable to IHL substantiating the information set forth in the
Compliance Notice. Not later than ten (10) Business Days after receipt of the
Compliance Notice and such substantiating information as IHL reasonably may
request, IHL shall give notice
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<PAGE> 21
to CM Partnership electing either (a) to cancel this Agreement in which event,
effective from the date of IHL's notice, the parties shall have no further
rights or obligations under this Agreement, except those specifically set forth
in this Agreement to survive the cancellation or termination of this Agreement,
or (b) to proceed to Closing, in which event (x) the Property shall be
transferred to Partnership subject to the condition specified in the Compliance
Notice which gave rise to the need for the work specified in such notice, and
CM Partnership shall have no liability or obligation for such specified
condition or for such specified work, and (y) the aggregate contributions to be
made by IHL to the Partnership pursuant to Sections 2.1. and 2.2 shall be
reduced by the cost of the work, as reasonably determined by IHL.
Notwithstanding the provisions of this Section 9.1(j), CM Partnership, at its
sole expense, shall be entitled to challenge any violation provided that (1) CM
Partnership shall have a good faith basis for the challenge, (2) neither
Partnership nor IHL shall not be liable for any criminal prosecution in
connection with the violation, (3) CM Partnership shall indemnify, defend and
hold Partnership and IHL harmless from and against any loss, cost, damage or
expense arising out of such challenge, and (4) such challenge shall not
materially adversely affect the use or occupancy of the Property, access to any
part of the Property, the provision of any Hotel services or the right or
ability to make alterations in or to the Property. CM Partnership shall notify
IHL of the commencement of any such challenge and, upon request, of the status
thereof;
(k) make available to IHL for inspection by IHL and its
agents, accountants and attorneys during normal business hours at the Property
or the office of CM Partnership all documents, books, records and other matters
relating to the Property, including, without limitation, the Ground Lease, all
documents evidencing or otherwise relating to the Intellectual Property Rights
or the Reservation Rights, the Development Documents, the Permits, the
Warranties, the documents evidencing the Services Contracts, the Liquor
License, all plans and specifications, soil and engineering reports,
environmental audits, surveys, title work, operating and financial information,
insurance policies, maintenance and repair records and similar information in
CM Partnership's possession or control, and all correspondence and other
communications in CM Partnership's files concerning the foregoing, and allow
IHL to make copies thereof at IHL's cost and expense;
(l) consent to IHL or its agents meeting with the manager and
other personnel of the Hotel, during normal business hours at the Property and
discussing the conditions and operation of the Property with such Persons;
(m) except in the ordinary course of business, not waive,
cancel or take any other action impairing any of its rights relating to the
Property;
(n) keep IHL informed, and provide IHL promptly with copies
of, all notices and communications concerning any of the Development Documents,
the Development Rights, and/or the possible future development of the Real
Property;
(o) intentionally deleted;
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<PAGE> 22
(p) maintain all of the Permits in full force and effect, and
obtain all applicable Permits, consents and approvals and give all notices and
make all filings with any third parties as may be necessary to authorize,
approve or permit the contribution and transfer of the Property to Partnership.
(q) notify IHL in writing of the commencement of any
proceeding or action by or against CM Partnership relating, in any way, to the
Property or any part thereof, or of CM Partnership becoming aware of any
threat, claim, action, suit, inquiry, proceeding, notice of violation, demand
letter, subpoena, government audit or disallowance that could reasonably be
expected to result in a proceeding or action, such notification to be provided
to IHL promptly after such commencement or of CM Partnership becoming aware as
aforesaid;
(r) notify IHL in writing of the occurrence of any breach by
CM Partnership of any representation, warranty, covenant or agreement contained
in this Agreement, promptly CM Partnership become aware of any such breach;
(s) not make any change in the accounting methods for the
Property or any portion thereof, or in the manner of keeping books and records;
(t) not, without the prior written consent of IHL (which
consent shall not be unreasonably withheld, delayed or conditioned):
(i) exercise any rights, options or privileges, or make
any decisions or elections under the Development Documents;
(ii) release or waive any rights, or waive any obligations
of others under the Development Documents;
(iii) make any submissions to any Governmental Authority
with respect to the Property, its use, operation, construction or development,
or make any other commitments which will bind the Property, its use, operation,
construction or development after the Closing;
(iv) make or commit to make any capital expenditure, or
group of related capital expenditures relating to the Property;
(v) withdraw, settle or otherwise compromise any protest
or reduction proceeding affecting real estate taxes assessed against the
Leasehold Estate, or any part thereof for the Current Tax Year; or
(w) collect receivables or other income in the ordinary
course of business and not in advance of their regularly scheduled due date.
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<PAGE> 23
Any reference herein or elsewhere in this Agreement to the
knowledge or awareness of CM Partnership shall mean the actual knowledge of,
and such knowledge which, with reasonable inquiry (excluding inquiry of Manager
or its employees) and the exercise of due diligence would have been known by,
Joel Meisel and/or SteveWilson. In no event shall the knowledge of any agent of
CM Partnership, including, without limitation, the Manager and its employees,
be attributed to CM Partnership.
ARTICLE X
CONDEMNATION AND DESTRUCTION.
10.1. If, prior to the Closing Date, all or any portion of the
Property or any means of ingress thereto or egress therefrom is taken by
eminent domain (or is the subject of a pending or threatened taking which has
not been consummated), or if any Development Rights shall be prejudiced or
impaired because of such taking or pending or contemplated taking, then CM
Partnership shall notify IHL of such fact and IHL shall have the option to
terminate this Agreement upon notice to CM Partnership given not later than
twenty (20) days after receipt of CM Partnership's notice. If IHL terminates
this Agreement as aforesaid, none of the parties shall have any further rights
or obligations hereunder, except such rights or obligations specified in this
Agreement to survive the termination of this Agreement. If IHL does not
exercise this option to terminate this Agreement, CM Partnership shall
contribute and transfer to all awards for the taking by eminent domain in
addition to the transfer and contribution of the Property provided for in
Section 2.3.
10.2 If a material part of the Property or any material part of
any means of ingress thereto or egress therefrom is damaged, destroyed by fire
or other casualty ("MATERIAL" herein deemed to be any destruction greater than
"IMMATERIAL" as defined below), CM Partnership shall notify IHL of such fact
and IHL shall have the option to terminate this Agreement upon notice to CM
Partnership given not later than twenty (20) days after receipt of CM
Partnership's notice. If IHL terminates this Agreement as aforesaid, none of
the parties shall have any further rights or obligations hereunder, except such
rights or obligations specified in this Agreement to survive the termination of
this Agreement. If IHL does not exercise this option to terminate this
Agreement, CM Partnership shall contribute and transfer to Partnership all
insurance proceeds. In the event there is damage to or destruction of an
immaterial part of the Property or an immaterial part of a means of ingress or
egress by fire or other casualty, the damage shall be repaired by CM
Partnership and the Closing Date shall be adjourned at CM Partnership's request
for one or more specified periods, not exceeding ninety (90) days in the
aggregate, in order to permit CM Partnership to make such repairs, it being
agreed that if such repairs are not completed within said ninety (90) day
period, IHL may elect to (i) terminate this Agreement, on the same terms as if
the Property had suffered material damage, or (ii) postpone the Closing Date
for one or more further periods, not exceeding ninety (90) days in the
aggregate, until such repairs are completed, or (iii) close under this
Agreement notwithstanding that such repairs have not been completed, in which
event CM Partnership's obligation to make such repairs shall
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<PAGE> 24
survive the Closing hereunder. An "IMMATERIAL" part of the Property or
immaterial part of the means of ingress or egress or personal property shall be
deemed to have been damaged or destroyed if the cost of repair or replacement
shall be Three Hundred Fifty Thousand ($350,000.00) Dollars or less and is
covered by CM Partnership's casualty insurance (without reference to any
deductible thereunder).
ARTICLE XI
REPRESENTATIONS AND WARRANTIES OF CM PARTNERSHIP
11.1. REPRESENTATIONS AND WARRANTIES OF CM PARTNERSHIP. CM
Partnership hereby represents and warrants to Partnership and IHL, as of the
date hereof, and as of Closing, the following:
11.1.1 CM Partnership has good and marketable title to, and,
subject only to the Ground Lease, the entire right, title and interest in, the
Property, free and clear of all Liens except the Permitted Exceptions.
11.1.2 Intentionally deleted.
11.1.3 No action or proceeding against CM Partnership is
presently pending in any court, or to the knowledge of CM Partnership,
threatened.
11.1.4 No party has any right to purchase the Property (or any
part thereof or interest therein), or any right of first refusal to purchase
the Property or any part thereof or interest therein, except that the Ground
Lease contains an option for the ground lessee to purchase the fee simple title
to the Land.
11.1.5 To the knowledge of CM Partnership, (i) the copies of the
real property tax bills for the Leasehold Estate for the current tax year which
have been furnished by CM Partnership to IHL are true and correct copies of all
of the tax bills for the Leasehold Estate, and (ii) except as set forth on
EXHIBIT 11.1.5, there are no real property taxes payable by Ground Lessor with
respect to the Land.
11.1.6 To the knowledge of CM Partnership, except as set forth
in EXHIBIT 11.1.6, there exists no requirement, understanding or agreement that
any public improvements, or contributions for public purposes, be made or
provided by or on behalf of the owner of the Property in connection with the
construction, development, use or occupancy of the Property except for the
obligation of the owner of the Real Property to pay ordinary and prevailing
real estate taxes.
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11.1.7 To the knowledge of CM Partnership, the use,
construction, maintenance, operation and occupancy of the Property is in
compliance in all material respects with all Applicable Laws.
11.1.8 To the knowledge of CM Partnership, all electric, sewer,
water, telephone and other utilities currently used in the operation or
occupancy of the Property are available to the Property, at the perimeter of
the Land; and there is no restriction or limitation on the right of the owner
of the Property to hook up to or to use any sewer utility, other than the
obligation to pay ordinary and prevailing hook-up and usage charges. CM
Partnership has not received written notice of, and CM Partnership has no
knowledge of, any threatened or actual reduction or curtailment of any utility
service supplied to the Property.
11.1.9 Attached hereto as EXHIBIT 11.1.9 are true and correct
copies of all Permits issued in connection with the Property, all of which are
in good standing, and the fees and charges for all of which have been paid in
full by CM Partnership, and all of which, if transferable, shall be transferred
to Partnership at Closing without payment.
11.1.10 There are no Service Contracts affecting the Property,
except as shown and identified on EXHIBIT 11.1.10; true, correct and complete
copies of the Service Contracts have been furnished by CM Partnership to IHL.
11.1.11 CM Partnership has no employees.
11.1.12 To the knowledge of CM Partnership, the use being made
of the Property at present is in conformity with the certificates of occupancy
issued for the Property and all required Permits for the ownership, use and
operation of the Property (including, without limitation, final and
unconditional certificates of occupancy for the Hotel) have been issued, are in
full force and effect and are transferable (and shall be transferred) with the
Property to Partnership; CM Partnership has not received any written notice and
has no knowledge of, any threatened or actual cancellation or suspension of any
certificate of occupancy or other Permit for any portion of the Hotel; CM
Partnership has not received any notice, and has no knowledge that, except as
set forth on EXHIBIT 11.1.12, the Property and the current use thereof violate
any applicable deed restrictions or other covenants, restrictions or
agreements, or any building, fire, zoning and other ordinances and regulations
applicable thereto, or any site plan approvals, zoning or subdivision
regulations or urban redevelopment plans; to the knowledge of CM Partnership,
no Permits from any Governmental Authority have been withdrawn and there are no
orders or requirements of any Governmental Authority that have not been
complied with by CM Partnership; to the knowledge of CM Partnership, CM
Partnership has complied with all of the requirements of all such Permits,
approvals and consents concerning the Property and the current use or
improvement thereof.
11.1.13 CM Partnership has no knowledge of any federal, state,
county or municipal plans to change the highway or road system in the immediate
vicinity of the Property or to restrict or change access from any such highway
or road to the Property or of any pending
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or threatened condemnation of the Land or the Property or any part thereof or
of any plans for improvements which might result in a special assessment
against the Property.
11.1.14 To the knowledge of CM Partnership, EXHIBIT 11.1.14 is
an accurate schedule of all insurance policies now affecting the Property; and
the only insurance policies carried on the Property are those set forth on said
schedule. For each Insurance Policy, EXHIBIT 11.1.14 indicates the type of
coverage, the name of the insureds, the insurer, the premium, the expiration
date, the period to which it relates, the deductibles and loss retention
amounts and the amounts of coverage.
11.1.15 INTELLECTUAL PROPERTY RIGHTS. To the knowledge of CM
Partnership, EXHIBIT 11.1.15(a) contains detailed information (including where
applicable the federal registration number and the date of registration or
application for registration and the name in which registration was applied
for) concerning (x) all of CM Partnership's registrations of trademarks and of
other marks, trade names or other trade rights, and all pending applications
for any such registrations and all of CM Partnership's patents and copyrights
and all pending applications therefor, (y) all computer software used by CM
Partnership in the conduct of its business ("Computer Software"), and (z) all
other trademarks and other marks, trade names and other trade rights and all
other trade secrets, designs, plans, specifications, and other intellectual
property rights of any kind of CM Partnership, whether or not registered,
including, without limitation, all rights of CM Partnership to use the names
"Casa Marina" and "Marriott Casa Marina Resort (and all derivatives of such
names) and any intellectual property rights that any third party owns and that
CM Partnership uses or proposes to use in its business, and specifies whether
such use is or will be pursuant to license, sublicense, agreement or
permission. CM Partnership owns (or, as set forth on EXHIBIT 11.1.15(a)
possesses adequate and enforceable licenses or other rights to use) all
Intellectual Property Rights now used or proposed to be used in its business
and has taken all necessary and desirable action to protect the Intellectual
Property Rights of CM Partnership. No person has a right to receive a royalty
or similar payment in respect of any Intellectual Property Rights pursuant to
any contractual arrangements entered into by CM Partnership or otherwise. CM
Partnership has no licenses granted by or to it and no other agreements to
which it is a party, relating in whole or in part to any of the Intellectual
Property Rights. Except as set forth on EXHIBIT 11.1.15(a) CM Partnership's use
of the Intellectual Property Rights is not interfering with, infringing upon or
otherwise violating the rights of any third party in or to such Intellectual
Property Rights, and no proceedings have been instituted against or notices
received by CM Partnership alleging that CM Partnership's use or proposed use
of any Intellectual Property Rights infringes upon or otherwise violates any
rights of a third party in or to such Intellectual Property Rights. CM
Partnership's confidential information has never been misappropriated from
others. CM Partnership has supplied IHL with correct and complete copies of all
Intellectual Property Rights owned or used by CM Partnership and described in
EXHIBIT 11.1.15(a).
11.1.16 To the knowledge of CM Partnership, except for minor,
immaterial quantities of such materials as are usually and customarily used in
and found in hotels (i .e., cleaning materials), no Hazardous Substances exist
on, in or under the Property or on, in or under any properties immediately
adjoining the Property, and the Property is not in violation of any
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<PAGE> 27
Environmental Laws or any federal, state or local law, ordinance or regulation
relating to industrial hygiene.
11.1.17 To the knowledge of CM Partnership, there are no
underground storage tanks on the Property, other than not more than two water
cisterns.
11.1.18 To the knowledge of CM Partnership, no spillage or
discharge of any Hazardous Substances has occurred nor has there been
introduced to, on or under the Property (or any part thereof) any Hazardous
Substances or to, on or under any properties immediately adjoining the Property
or any part thereof.
11.1.19 To the knowledge of CM Partnership, the assessed
valuation and real estate taxes set forth in EXHIBIT 11.1.19 hereto are the
assessed valuation of the Leasehold Estate, and the taxes paid or payable with
respect thereto for the Current Tax Year. Except as otherwise set forth in
EXHIBIT 11.1.19 there are no tax increases, additional assessments or
reassessments, assessments payable in annual or other installments, or tax
abatements or exemptions affecting the Leasehold Estate, and all taxes required
to be paid to any and all taxing authorities have been paid and will be paid,
if due and payable, up to Closing.
11.1.20 CM Partnership has not retained any person to file
notices of protest against, or to commence actions to review, real property tax
assessments against the Property.
11.1.21 To the knowledge of CM Partnership, the Hotel and other
portions of the Property (including, without limitation, all floors, ceiling,
roofs, beams, electrical, mechanical, plumbing, HVAC, elevators and other
building systems, and structural elements thereof), are in good repair and
condition, and good operating condition (in the case of building systems) and
there are no latent or patent defects to the Property, Hotel or any part of
either thereof.
11.1.22 CM Partnership is a limited partnership duly formed and
validly existing under the laws of the State of Florida, and has the power to
own its own properties and to carry on its business as now being conducted.
11.1.23 CM Partnership has the full right, power and capacity to
enter into this Agreement and to carry out the transactions contemplated hereby
and no consent or authorization of any person is required as a condition
precedent to the consummation of this Agreement or the transactions
contemplated herein, and the Person who executed this Agreement on behalf of
Partnership is a duly constituted general partner of CM Partnership.
11.1.24 The execution and delivery of this Agreement, the
consummation of the transactions herein contemplated and the compliance with
the terms hereof will not conflict with or result in a breach of any agreement
to which CM Partnership or any its partners or principals is a party or by
which any of them are bound, or any lease, indenture, mortgage, loan agreement
or instrument to which CM Partnership, or any of its partners or principals, is
a
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<PAGE> 28
party or by which the Property, CM Partnership, or any of its partners or
principals, is bound or, any Applicable Law.
11.1.25 Except as specifically set forth on EXHIBIT 11.1.25, CM
Partnership has not received notice of, and CM Partnership has no knowledge of,
any pending or threatened action, litigation, investigation, condemnation or
other proceeding (by any private person or entity or by any Governmental
Authority) against or relating to the Property, or against CM Partnership (or
any of CM Partnership's partners or principals), which would or could (i)
result in a judgment or other lien being filed against the Property, (ii)
otherwise affect the Property, its construction, use or occupancy, (iii) affect
the right or ability of CM Partnership (or any of CM Partnership's partners or
principals) to perform their obligations under this Agreement, or (iv) relate
to or affect the business of CM Partnership, including, without limitation, the
operation and management of the Hotel. Any action pending or threatened is
covered by insurance of a reputable and solvent insurance company and
applicable insurance policies are in full force and effect and CM Partnership
has not received any notice or threat of cancellation, limitation or
non-coverage.
11.1.26 CM Partnership is not a foreign person as that term is
used and defined in Sections 1445 and 7701 of the Code.
11.1.27 To the knowledge of CM Partnership, no services,
material or work have been supplied by CM Partnership's contractors,
subcontractors or materialmen with respect to the Property (or any part
thereof) for which payment has not been made in full. If, subsequent to
Closing, any mechanic's or other lien, charge or order for the payment of money
shall be filed against the Property (or any part thereof) or against
Partnership or Partnership's assigns, based upon any act or omission, or
alleged act or omission before or after Closing, of CM Partnership or its agent
or any contractor, subcontractor or materialman connected with the construction
and completion by CM Partnership of improvements at the Property, or repairs
made to the Property by or on behalf of CM Partnership (whether or not such
lien, charge or order shall be valid or enforceable as such), within ten (10)
days after notice to CM Partnership of the filing thereof, CM Partnership shall
take such action, by bonding, deposit, payment or otherwise, as will remove or
satisfy such lien of record against the Property. The provisions of this
Section 11.1.27 shall survive Closing.
11.1.28 To the knowledge of CM Partnership, for a period of five
(5) years prior to the Effective Date the Land did not constitute "agricultural
land" as defined in 7 U.S.C. 3501 ET SEQ.
11.1.29 To the knowledge of CM Partnership, (i) the Property
includes all assets necessary for the conduct of the Hotel in the ordinary
course consistent with past practice, and (ii) the Hotel Assets are free from
defects, have been maintained in accordance with good industry practice, and
are in good operating condition and repair (except for ordinary wear and tear).
Upon the consummation of the transaction contemplated hereby, Partnership will
acquire good title to all of the Hotel Assets free and clear of all Liens,
encumbrances or claims other than the Permitted Exceptions.
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<PAGE> 29
11.1.30. Except for the Mortgage, the Service Contracts listed
on EXHIBIT 11.1.10, and those contracts listed on EXHIBIT 11.1.30 attached
hereto and except for Service Contracts made in the ordinary and usual course
of its business since the date hereof consistent with past practice or in
connection with this Agreement, CM Partnership is not a party to, or bound by,
any contract of any kind to be performed after the Closing Date pursuant to
which it is obligated to expend more than $50,0000 in the aggregate in any
twelve-month period and that is not subject to cancellation on not more than 30
days' notice by CM Partnership without penalty or increased cost. EXHIBIT
11.1.30 lists the following contracts, agreements and other written
arrangements to which CM Partnership is a party:
(a) any written arrangements (or group of related written
arrangements) for the lease of personal property providing for lease payments
in excess of $50,000 per annum;
(b) any written arrangement (or group of related written
arrangements) for the purchase materials, supplies, inventory, products or
other property or, including, without limitation, any customer or vendor
contracts;
(c) any written arrangement (or group of related written
arrangements) under which it has created, incurred, assumed or guaranteed (or
may create, incur, assume or guarantee) indebtedness (including capitalized
lease obligations) involving more than $50,000 in principal amount or under
which it has imposed (or may impose) a security interest or lien on any of its
assets, tangible or intangible;
(d) any written arrangement (or group of related written
arrangements) concerning confidentiality or non-competition arrangements;
(e) any written arrangement with any of its partners,
officers or employees or any member of any such Person's immediate family (1)
providing for the furnishing of material services by, (2) providing for the
rental of material real or personal property from, or (3) otherwise requiring
material payments to (other than for services as officers or employees of CM
Partnership), any such Person or any corporation, partnership, trust or other
entity in which any such Person has a substantial interest as a shareholder,
officer, director, trustee or partner;
(f) any other written arrangement (or group of related
written arrangements) under which the consequences of a default or termination
could have a material adverse effect on CM Partnership's business or finances;
(g) any other written arrangement (or group of related
written arrangements) either involving aggregate payments of more than $50,000
or not entered into in the ordinary course of business consistent with past
practice;
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<PAGE> 30
(h) any oral contract, agreement or other arrangement with
respect to any of the matters referred to in the foregoing clauses (a) through
(g) and any proposal (oral or written) to enter into any contract, agreements
or other arrangement with respect to any of the matters referred to in the
foregoing clauses (a) through (g).
CM Partnership has delivered to Partnership a correct and
complete copy of each written arrangement listed in EXHIBIT 11.1.30, and has
included as part of EXHIBIT 11.1.30 a brief summary of any such oral contracts,
agreements or other arrangements and any proposals (oral or written) to enter
into any such contracts, agreements or other arrangements. With respect to each
written arrangement listed, (A) the written arrangement is legal, valid,
binding, enforceable and in full force and effect, (B) the written arrangement
will continue to be legal, valid, binding, enforceable and in full force and
effect on identical terms following Closing, (C) no party is in breach or
default, and no event has occurred which with notice or lapse of time could
constitute a breach or default or permit termination, modification or
acceleration, under the written arrangement and (D) no party has repudiated any
term of the written arrangement.
11.1.31 The financial statements of the operation of the
Property covering fiscal (calendar) year 1995, including the statements of
income and expenses are complete, true and accurate in all material respects,
were prepared in accordance with GAAP consistently applied throughout the
periods indicated, are in accordance with the books and records of CM
Partnership and fairly present the financial position, cash flow, equity and
results of operations of CM Partnership. The financial statements of the
operation of the Property, including the statements of income and expenses,
covering the period January 1 to December 31 of fiscal year 1995, attached
hereto as part of EXHIBIT 11.1.31, were complete, true and accurate in all
material respects as of the date of such financial statements.
11.1.32 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set
forth on EXHIBIT 11.1.32, since the date of financial statements referred to in
Section 11.1.31, there has not been any:
(a) adverse change in the assets, liabilities, business,
condition (financial or otherwise), operations, results of operations or
prospects of CM Partnership;
(b) intentionally deleted;
(c) sale, lease, assignment or transfer of any of the assets,
tangible or intangible, of CM Partnership except for sales of food, beverage
and other supplies in the ordinary course of business;
(d) cancellation, compromise, waiver or release of any rights
or claim (or series of related rights or claims) either (i) involving an
Affiliate of CM Partnership, (ii) involving more than $25,000 in the aggregate,
or (iii) outside the ordinary course of business consistent with past practice;
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<PAGE> 31
(e) amendment, cancellation or termination of any contract,
license or other instrument (i) involving an Affiliate of CM Partnership, (ii)
involving payments in excess of $50,000 in the aggregate, or (iii) that are
otherwise material to CM Partnership;
(f) capital expenditure or the execution of any lease,
contract, license, sublease or sublicense (or series of related contracts,
leases, subleases, licenses and sublicenses) or any incurring of liability
therefor (i) involving an Affiliate of CM Partnership, (ii) involving payments
in excess of $50,000 per annum in the aggregate, or (iii) outside the ordinary
course of business consistent with past practice;
(g) delay or failure to repay when due any material
obligation of CM Partnership;
(h) failure to operate the Hotel in the ordinary course
consistent with past practice so as to use reasonable efforts to preserve the
Hotel business intact, to keep available to Partnership the services of Hotel's
personnel, and to preserve for Partnership the goodwill of CM Partnership's
guests, customers, suppliers and others having business relations with it;
(i) change in accounting methods or practices by
CM Partnership;
(j) revaluation by CM Partnership of any of the assets of CM
Partnership, including, without limitation, writing off notes or accounts
receivable;
(k) damage, destruction or loss (whether or not covered by
insurance) that has a material adverse effect or that may reasonably be
expected to have a material adverse effect on the business or finances of CM
Partnership;
(l) mortgage, pledge or other encumbrance of any of the
assets of CM Partnership;
(m) distribution or redemption, purchase, or other
acquisition of any CM Partnership's partnership interests, any bonus, fee or
other payment, or any other transfer of assets to or on behalf of any partner
of CM Partnership or any Affiliate of CM Partnership, including, but not
limited to, any payment of principal of or interest on any debt owed to any
such partner or affiliate;
(n) indebtedness incurred by CM Partnership or borrowed money
or any commitment to borrow money entered into by CM Partnership, or any loans
or guarantees made or agreed to be made by CM Partnership;
(o) liabilities involving $50,000 or more or otherwise
material to the business of CM Partnership except in the ordinary course of
business and consistent with past practice, or any increase or change in any
assumptions underlying or methods of calculating any bad debt, contingency or
other reserves;
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<PAGE> 32
(p) payment, discharge or satisfaction of any liabilities
other than the payment, discharge or satisfaction in the ordinary course of
business and consistent with past practice of liabilities reflected or reserved
against on the financial statements (other than debt principal or interest
repayment) or incurred in the ordinary course of business and consistent with
past practice since the last date of the financial statements (other than debt
principal or interest repayment);
(q) acceleration, termination, modification, cancellation or
threatened termination or cancellation of any contract to which CM Partnership
is a party or by which CM Partnership is bound;
(r) capital investment in, any loan to, or any acquisition of
the securities or assets of any other person (i) involving an Affiliate of CM
Partnership, (ii) involving more than $25,000 in the aggregate, or (iii)
outside the ordinary course of business consistent with past practice;
(s) grant of any license or sublicense of any rights under or
with respect to any Intellectual Property Rights;
(t) charitable or other capital contribution made or pledged
by CM Partnership;
(u) agreement (either oral or written) by CM Partnership to
do any of the foregoing; or
(v) other event or condition of any character that in any one
case, or in the aggregate, has had a material adverse effect on the business or
finances of CM Partnership or any event or condition known to CM Partnership
which it is reasonable to expect will, in any one case or in the aggregate,
have such a material adverse effect in the future.
11.1.33 The prepaid items recorded on the balance sheets
included in the financial statements of CM Partnership constitute a full and
complete presentation of each and every prepaid item which CM Partnership is
entitled to list, in accordance with generally accepted accounting principles.
11.1.34 To the knowledge of CM Partnership, it has no
liabilities or obligations (absolute, accrued, contingent or otherwise) except
(i) liabilities that are reflected and reserved against on the December 31,
1995 audited financial statements of CM Partnership, that have not been paid or
discharged since the date of the financial statements, and (ii) liabilities
incurred since the date of the financial statements in the ordinary course of
business consistent with past practice and in accordance with this Agreement
(none of which relates to any breach of contract, breach of warranty, tort,
infringement or violation of law or arose out of any complaint, action, suit or
proceeding and none of which individually or in the aggregate could have a
material adverse effect on the business of finances of CM Partnership).
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11.1.35 The values at which the inventories are shown on the
1995 financial statements of CM Partnership have been determined in accordance
with the normal valuation policy of CM Partnership, consistently applied, and
in accordance with GAAP. The inventories (and items of inventory acquired
subsequent to the date of the financial statements) consist only of items of
quality and quantity commercially usable and salable in the ordinary course of
business, except for any items of obsolete material or material below standard
quality, all of which have been written down to realizable market value, or for
which adequate reserves have been provided on the financial statements of CM
Partnership and the current quantities of all inventories are reasonable in the
current circumstances of the business of CM Partnership.
11.1.36 Neither CM Partnership nor the Mortgagee is in breach,
default or violation of any of the monetary or non-monetary provisions of the
Mortgage, and no event has occurred which with notice or the passing of time or
both could constitute a breach, default or violation thereunder; the consent of
the Mortgagee to the transfer and contribution of the Property is valid and
binding; and the Mortgage has not been amended, modified or supplemented except
as set forth on EXHIBIT 11.1.36.
11.1.37 Intentionally deleted.
11.1.38 CM Partnership and, to the knowledge of CM Partnership,
the conduct of the Hotel business of CM Partnership, are in compliance with all
Applicable Laws. CM Partnership has not received any written notice to the
effect that, or otherwise been advised that, it is not in compliance with any
Applicable Laws, and CM Partnership has no reason to anticipate that any
currently existing circumstances are likely to result in violations of any
Applicable Laws, which could in any one case or in the aggregate, have a
material adverse effect on the business or finances of CM Partnership. To the
knowledge of CM Partnership, it has all Permits, each of which is currently
valid and in full force and effect, necessary to carry on the business of CM
Partnership, which Permits are set forth on EXHIBIT 11.1.38. Without limiting
the generality of the preceding representation and warranty, CM Partnership has
not, (i) made or agreed to make any contribution, payment or gift to any
government official, employee, or agent where either the contribution, payment
or gift or the purpose thereof was illegal under any Applicable Laws , (ii)
established or maintained any unrecorded fund or asset for any purpose or made
any false entries on the books and records of CM Partnership for any reason, or
(iii) made or agreed to make any contribution, or reimbursed any political gift
or contribution made by any other person, to any candidate for federal, state,
local or foreign public office. In addition, CM Partnership (a) has complied
with all Applicable Laws relating to employee and civil rights and relating to
employment opportunities, (b) filed in a timely manner all reports and
documents it was required to file (and the information contained therein was
correct and complete in all respects) under all Applicable Laws, (c) has
possession of all records and documents it was required to retain under all
Applicable Laws. To the knowledge of CM Partnership, the Property is in
compliance with the requirements of the Americans with Disabilities Act.
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<PAGE> 34
11.1.39 TAX MATTERS.
(a) CM Partnership has filed with the appropriate taxing or
other Governmental Authorities all returns (including, without limitation,
information returns and other information) required to be filed through the
date hereof. The information filed is complete and accurate in all respects. CM
Partnership has delivered to Partnership complete and accurate copies of CM
Partnership's federal, state and local tax returns for the years 1992-1995 or
such lesser number of years as CM Partnership shall have been in existence. As
of the date hereof, CM Partnership has not filed any federal, state or local
tax returns for the year 1996.
(b) All Taxes of CM Partnership, in respect of periods
beginning before the date hereof, have been paid, or an adequate reserve (in
conformity with GAAP) has been established therefor, and CM Partnership has no
liability for Taxes in excess of the amounts so paid or reserves so
established. All Taxes that CM Partnership has been required to collect or
withhold have been duly collected or withheld and, to the extent required when
due, have been or will be duly paid to the proper taxing authority.
(c) No deficiencies for Taxes of CM Partnership have been
claimed, proposed or assessed by any taxing or other Governmental Authority.
There are no pending or, to the best of CM Partnership's knowledge, threatened
audits, investigations or claims for or relating to any liability in respect of
taxes of CM Partnership, and there are no matters under discussion with any
Governmental Authorities with respect to taxes of CM Partnership.
(d) With respect to any and all audits of federal, state and
local returns for Taxes, the assessed amount, and all penalties and interest
thereon, have been paid in full. CM Partnership has not been notified that any
taxing authority intends to audit a return for any other period. No extension
of a statute of limitations relating to Taxes is in effect with respect to CM
Partnership.
11.1.40 CM Partnership has delivered to IHL true and complete
copies of all federal, state and local returns filed by CM Partnership covering
any year or portion of a year during which CM Partnership owned all or any part
of the Property.
11.1.41 Intentionally deleted.
11.1.42 Intentionally deleted.
11.1.43 EXHIBIT 11.1.43 contains a true and correct list of the
names of each bank, savings and loan, or other financial institution in which
CM Partnership has an account, including cash contribution accounts, or safe
deposit boxes, and the names of all persons authorized to draw thereon or to
access thereto.
11.1.44 No representations or warranties by CM Partnership in
this Agreement, nor any document, exhibit, statement, certificate or schedule
furnished or to be furnished to IHL or Partnership pursuant hereto, or in
connection with the transactions contemplated hereby, contains or will contain
any untrue statement of a material fact, or omits or
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<PAGE> 35
will omit to state any material fact necessary to make the statements or facts
contained therein not misleading.
11.2 The representations, warranties and covenants set forth in
Section 11.1 shall survive the Closing for a period of two (2) years, and upon
the expiration of such two (2) year period all such representations, warranties
and covenants (and any and all claims and causes of action resulting from or on
account of any breach thereof for which Partnership or IHL has not theretofore
served upon CM Partnership written notice of claim) shall terminate and may not
be asserted. Nothing herein shall limit the duration of (i) any indemnity or
other agreement specified in this Agreement to survive the Closing (other than
indemnity agreements relating to representations or warranties which have
expired two (2) years after the Closing), and (ii) any representations,
warranties, indemnities, covenants or agreements set forth in the instruments
or documents delivered at Closing.
11.3 Notwithstanding anything contained in this Agreement to the
contrary, CM Partnership's failure to disclose any matter herein of which it
has knowledge shall not be a breach of this Agreement if and to the extent that
Manager has actual knowledge of such matter as of the date that IHL executes
this Agreement. This limitation shall not apply to actual knowledge acquired by
Manager after such date or to Manager's constructive knowledge at any time.
11.4 All documents and other items to be delivered by CM
Partnership pursuant to Section 8.3 or this Article XI shall be deemed
delivered if such documents or item is within the possession or control of
Manager and CM Partnership has authorized Manager in writing to deliver same.
ARTICLE XII
BROKER.
12.1 CM Partnership and IHL each hereby represents to each other
that it has not dealt with, or otherwise disclosed this Agreement or the
subject matter hereof to, any real estate broker, agent, or salesman
(collectively, a "Broker"), so as to create any legal right or claim in any
Broker for a real estate commission or compensation with respect to the
negotiation and/or consummation of this Agreement or the contribution and
transfer of the Property by CM Partnership to Partnership. CM Partnership
hereby agrees to indemnify, defend and hold harmless Partnership and IHL from
any and all claims (and all expenses incurred in defending any such claims or
in enforcing this indemnity, including attorneys' fees and court costs) made by
Broker for a real estate commission or similar fee resulting out of or in any
way connected with any claimed agency or other relationship with CM
Partnerships and relating to the transactions contemplated hereby. IHL hereby
agrees to indemnify, defend and hold harmless Partnership and CM Partnership
from any and all claims (and all expenses incurred in defending any such claims
or in enforcing this indemnity, including attorneys' fees and court costs) made
by Broker for a real estate commission or similar fee resulting out of or in
any way connected with any claimed agency or other relationship with IHL and
relating to the transactions
-35 -
<PAGE> 36
contemplated hereby. The provisions of this Article 12 shall survive the
Closing or the termination of this Agreement.
ARTICLE XIII
DEFAULT AND REMEDIES.
13.1 If CM Partnership shall tender all documents, instruments,
items and contributions required by this Agreement and otherwise is in full
compliance with its obligations hereunder, and if (a) IHL shall fail or refuse
to make the contributions of cash required to be made pursuant to Sections 2.1
and 2.2, or (b) IHL otherwise is in default hereunder so that CM Partnership
has the right to refuse to close under this Agreement, then following receipt
by IHL of five (5) Business Days prior written notice from CM Partnership
stating that IHL is in default hereunder, unless IHL shall have cured such
default during the five (5) Business Day period, CM Partnership shall have all
remedies, at law or in equity, available to it.
13.2 If IHL shall make the contributions required to be made
pursuant to Sections 2.1 and 2.2 hereof and otherwise is in full compliance
with its obligations hereunder, and if (a) CM Partnership shall fail or refuse
to close as required by the terms of this Agreement, or (b) CM Partnership
otherwise is in default hereunder so that IHL has the right to refuse to close,
in either case so as to entitle IHL to a remedy in respect of this Agreement,
then, following receipt by CM Partnership of five (5) Business Days prior
written notice from IHL stating that CM Partnership is in default hereunder,
unless CM Partnership shall have cured such default during the five (5)
Business Day Period, IHL shall have all remedies, at law or in equity,
available to it.
13.3 Subject to Section 11.3, in the event that any of the
representations or warranties of CM Partnership set forth in this Agreement are
not true and correct as of the Closing, then IHL shall have all remedies, at
law or in equity, available to it.
ARTICLE XIV
INDEMNIFICATION.
14.1 CM Partnership shall, and hereby does, indemnify, defend
and hold harmless Partnership and IHL from and against:
(a) Any and all claims or demands made by third parties and
arising out of any and all acts or omissions of CM Partnership relating to the
Property or any other rights, properties or interests to be contributed and
transferred by CM Partnership hereunder and any and all liabilities and
obligations of CM Partnership to third parties including, without limitation,
any and all liabilities or obligations of CM Partnership in respect of which
claims are asserted against Partnership or the Property (or any part thereof)
by third parties by reason of CM
- 36 -
<PAGE> 37
Partnership's (or CM Partnership's agents', employees' or contractors') acts or
omissions with respect to the Property (or any part thereof), or any other
rights, properties or interests to be contributed and transferred by CM
Partnership hereunder, the Service Contracts, the Mortgage or other agreements
relating to the Property, by reason of events which occurred or causes of
action which accrued prior to the Closing specifically excluding any and all
claims or causes of action caused by IHL or Partnership and claims and causes
of action for which Partnership has expressly assumed liability pursuant to
this Agreement.
(b) Any and all claims or demands made by third parties and
arising out of the Excluded Liabilities.
(c) Any material misrepresentation, breach of warranty, or
nonfulfillment of any representation, warranty, covenant or agreement on the
part of CM Partnership under this Agreement, or from any misrepresentation in,
or omission of a material nature from, any certificate of other instrument
furnished or to be furnished by or for CM Partnership to Partnership under this
Agreement.
(d) Any losses, expenses or costs incurred by or suffered by
Partnership as a result of (i) any discharge of Hazardous Substances, or any
other introduction of Hazardous Substances on, under or about the Real
Property, or any property adjoining the Real Property, during CM Partnership's
ownership of the Property; or (ii) any wrongful act of CM Partnership during CM
Partnership's ownership of the Property.
(e) All claims, actions, suits, proceedings, demands,
assessments, judgments, costs and expenses (including reasonable attorneys'
fees) incident to any of the foregoing.
14.2 CM Partnership's obligations under Section 14.1 shall be
subject to and conditioned upon the performance and satisfaction of all of the
following provisions and conditions:
(a) Within fifteen (15) days (and within ten (10) days in the
event of service of judicial process or other court pleadings or documents)
after Partnership has received written notice of a claim for which CM
Partnership may be responsible under Section 14.1, Partnership shall deliver a
complete copy of such notice to CM Partnership, but the failure to notify CM
Partnership of a particular claim within that period of time shall not defeat
or terminate the rights of the Partnership under Section 14.1 with respect to
that claim, unless such failure or delay of notice prejudiced or adversely
affected CM Partnership in some material respect.
(b) If, by the first to occur of (1) the thirtieth day after
CM Partnership has received written notice of a claim for indemnification and
defense under this Section 14.2, and (2) the date prior to the date on which
will occur the entry of a judgment against Partnership with respect to that
claim, CM Partnership notifies the Partnership that CM Partnership will defend
such claims, then CM Partnership shall have the sole right to defend such claim
and to select and retain counsel to defend such claim at CM Partnership's
expense, and CM Partnership shall have complete control over all decisions
relating to the defense, contest, conduct and settlement of
- 37 -
<PAGE> 38
such claim, but if within such time CM Partnership fails to notify Partnership
that it will defend such claim, then Partnership may retain a single joint
counsel reasonably satisfactory to CM Partnership to defend, contest and settle
such claim, the reasonable fees, costs and expenses of which will be paid by CM
Partnership, and, in addition, even if CM Partnership does timely notify the
Partnership and engage counsel and defend such claim, Partnership may, at its
sole cost and expense, also retain separate legal counsel to advise Partnership
with respect to any such claim. CM Partnership shall, at reasonable intervals,
advise the Partnership of the status of such claim and CM Partnership's actions
pertaining thereto.
(c) CM Partnership shall not settle any claim without the
prior written consent of Partnership and IHL, which consent may be withheld in
the sole discretion of Partnership or IHL.
(d) Upon CM Partnership's written request, Partnership shall
cooperate with CM Partnership in the contest of such claim, provided that CM
Partnership shall reimburse Partnership for any and all out-of-pocket costs and
expenses (not including fees or expenses of the Partnership's separate legal
counsel or any other outside consultants or advisers) reasonably incurred by
Partnership in connection therewith.
14.3 Partnership shall, and hereby does, indemnify, defend and
hold harmless CM Partnership from and against any and all claims or demands
made by third parties arising out of any and all acts or omissions of
Partnership relating to the Property or any other rights, properties or
interests assumed by Partnership hereunder and any and all liabilities and
obligations of Partnership to third parties including, without limitation, any
and all liabilities or obligations of Partnership in respect of which claims
are asserted against CM Partnership or the Property (or any part thereof) by
third parties by reason of Partnership's (or Partnership's agents', employees'
or contractors') acts or wrongful omissions with respect to the Property (or
any part thereof ), the Accepted Service Contracts or other agreements relating
to the Property assumed by Partnership, by reason of events which occurred or
causes of action which accrued from or after the Closing, specifically
excluding all claims or causes of action caused by CM Partnership, its agents,
employees or contractors.
14.4 Partnership's obligations under Section 14.3 shall be
subject to and conditioned upon the performance and satisfaction of all of the
following provisions and conditions:
(a) Within fifteen (15) days (and within ten (10) days in the
event of service of judicial process or other court pleadings or documents)
after CM Partnership has received written notice of a claim for which
Partnership may be responsible under Section 14.3, CM Partnership shall deliver
complete copies of such notice to Partnership and IHL, but the failure to
notify Partnership and IHL of a particular claim within that period of time
shall not defeat or terminate the rights of CM Partnership under Section 14.3
with respect to that claim, unless such failure or delay of notice prejudiced
or adversely affected Partnership or IHL in some material respect.
- 38 -
<PAGE> 39
(b) If, by the first to occur of (1) the thirtieth day after
Partnership and IHL have received written notice of a claim for indemnification
and defense under this Section 14.4, and (2) the date prior to the date on
which will occur the entry of a judgment against CM Partnership with respect to
that claim, Partnership notifies CM Partnership that Partnership will defend
such claims, then Partnership shall have the sole right to defend such claim
and to select and retain counsel to defend such claim at Partnership's expense,
and Partnership shall have complete control over all decisions relating to the
defense, contest, conduct and settlement of such claim, but if within such time
Partnership fails to notify CM Partnership that it will defend such claim, then
CM Partnership may retain a single joint counsel reasonably satisfactory to
Partnership to defend, contest and settle such claim, the reasonable fees,
costs and expenses of which will be paid by Partnership, and, in addition, even
if Partnership does timely notify CM Partnership and engage counsel and defend
such claim, CM Partnership may, at its sole cost and expense, also retain
separate legal counsel to advise CM Partnership with respect to any such claim.
Partnership shall, at reasonable intervals, advise CM Partnership of the status
of such claim and Partnership's actions pertaining thereto.
(c) Partnership shall have the right, in its sole discretion
and without CM Partnership's consent, to settle any claim for such amount (if
any) and on such basis as Partnership shall determine in its sole discretion as
long as such settlement does not obligate CM Partnership (or any of its
partners or principals) to pay any amount or perform any obligation or be
subjected to any liability, but if the proposed settlement of such claim would
obligate CM Partnership (or any of its partners or principals) to pay any
amount or perform any obligations or be subjected to any liability, then such
settlement shall be subject to CM Partnership's prior written consent, which
consent may be withheld in CM Partnership's sole discretion.
(d) Upon Partnership's written request, CM Partnership shall
cooperate with Partnership in the contest of such claim, provided that
Partnership shall reimburse CM Partnership for any out-of-pocket costs and
expenses (not including fees or expenses of CM Partnership's separate legal
counsel or any other outside consultants or advisers) reasonably incurred by CM
Partnership in connection therewith.
14.5 The provisions of this Article 14 shall survive the Closing
for a period of two (2) years, and upon the expiration of such two (2) year
period all such indemnities (and any and all claims and causes of action
resulting from such indemnities or on account thereof for which written notice
of claim has not then been given to the other party) shall terminate.
ARTICLE XV
MISCELLANEOUS.
15.1 NOTICES. Notices required or permitted to be given
hereunder shall be in writing and shall be delivered by (i) hand, (ii)
overnight courier, (iii) telefacsimile (provided the transmitting machine
produces an acknowledgment of delivery), or (iv) certified mail, return receipt
requested, postage prepaid, and addressed to each party at its address as set
forth below.
- 39 -
<PAGE> 40
Any such notice, request, or other communication shall be considered given or
delivered, as the case may be, on the date of hand or facsimile delivery, one
(1) Business Day after mailing by a generally recognized overnight courier
(requesting proof of delivery), or three (3) Business Days after the date of
deposit in the United States mail as provided above. By giving at least ten (10)
days' prior written notice thereof, any party hereto may from time to time and
at any time change its mailing address.
If to IHL: Interstate Hotels
Foster Plaza Ten
680 Andersen Drive
Pittsburgh, Pennsylvania 15220-8126
Telefacsimile No.: (412) 937-3116
Attention: J. William Richardson
With a copy to: Marvin I. Droz, Esq.
Vice President/General Counsel
Interstate Hotels
Legal Department
Foster Plaza Ten
680 Andersen Drive
Pittsburgh, Pennsylvania 15220-8126
Telefacsimile No.: (412) 937-3116
With a copy to: Steptoe & Johnson LLP
1330 Connecticut Avenue, N.W.
Washington, D.C. 20036
Attn.: Blake D. Rubin, Esq.
Telefacsimile No.: (202) 429-3902
If to Partnership Casa Marina Realty Partnership, L.P.
c/o Interstate Hotels
Foster Plaza Ten
680 Andersen Drive
Pittsburgh, Pennsylvania 15220-8126
Telefacsimile No.: (412) 937-3116
Attention: J. William Richardson
With a copy to: Marvin I. Droz, Esq.
Vice President/General Counsel
Interstate Hotels
- 40 -
<PAGE> 41
Legal Department
Foster Plaza Ten
680 Andersen Drive
Pittsburgh, Pennsylvania 15220-8126
Telefacsimile No.: (412) 937-3116
With a copy to: Steptoe & Johnson LLP
1330 Connecticut Avenue, N.W.
Washington, D.C. 20036
Attn.: Blake D. Rubin, Esq.
Telefacsimile No.: (202) 429-3902
If to CM Partnership: Martin J. Saturn
Meisel & Cohen Properties
6000 Executive Boulevard
Rockville, MD 20850
Telefacsimile No.: (301) 881-0546
With a copy to: Arnold & Porter
555 12th Street, N.W.
Washington, D.C. 20004
Attn.: S. Lee Narrow, Esq.
Telefacsimile No.: (202) 942-5999
15.2 ASSIGNMENT. The obligations of IHL Inc. or Interstone
hereunder may be assigned to any Affiliate provided that the assignee shall
assume all of the obligations of IHL Inc. or Interstone, as the case may be,
under this Agreement. Upon such assignment, the assignor shall be relieved of
all further obligations under this Agreement. The obligations of CM Partnership
may not be assigned.
15.3 ENTIRE AGREEMENT; MODIFICATION. This Agreement supersedes
all prior discussions and agreements between CM Partnership and IHL with
respect to the Property and contains the sole and entire understanding between
CM Partnership and IHL with respect to the subject matter hereof. All promises,
inducements, offers, solicitations, agreements, commitments, representations
and warranties heretofore made between such parties are merged into this
Agreement. This Agreement shall not be modified or amended in any respect
except by a written instrument executed by or on behalf of each of the parties
to this Agreement.
15.4 EXHIBITS. Each and every Exhibit referred to or otherwise
mentioned in this Agreement is attached to this Agreement and is and shall be
construed to be made a part of this Agreement by such reference or other
mention at each point at which such reference or other mention occurs, in the
same manner and with the same effect as if each Exhibit were set forth in full
and at length every time it is referred to or otherwise mentioned.
- 41 -
<PAGE> 42
15.5 CAPTIONS. All captions, headings, Article and Section
numbers and letters and other reference numbers or letters are solely for the
purpose of facilitating reference to this Agreement and shall not supplement,
limit, or otherwise vary in any respect the text of this Agreement.
15.6 CONSTRUCTION. All references to Articles or Sections shall
be deemed to refer to the appropriate Articles or Sections of this Agreement.
Unless otherwise specified in this Agreement, the terms "herein," "hereof,
"hereunder," and other terms of like or similar import, shall be deemed to
refer to this Agreement as a whole, and not to any particular Article, Section,
Subsection or clause hereof. Whenever required by the context, any gender used
in this Agreement shall include any other gender, the singular shall include
the plural and the plural shall include the singular.
15.7 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same instrument.
15.8 WAIVER. Any condition or right of termination, cancellation
or rescission granted by this Agreement to either party may be waived by such
party, but no such waiver may be relied upon or asserted by the other party
unless such waiver has been made in writing by the waiving party, except as
specifically provided herein.
15.9 RIGHTS CUMULATIVE. Except as expressly limited by the terms
of this Agreement, all rights, powers, and privileges conferred hereunder shall
be cumulative and not restrictive of those given by law.
15.10 SUCCESSORS AND ASSIGNS. Subject to the restrictions on
assignment contained in Section 15.2, this Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors and assigns.
15.11 DATE OF PERFORMANCE. If the time period by which any
right, option, or election provided under this Agreement must be exercised or
by which any acts or payments required hereunder must be performed or paid, or
by which the Closing must be held, expires on a day other than a Business Day,
then such time period shall be automatically extended to the close of business
on the next regularly scheduled Business Day.
15.12 GOVERNING LAW. This Agreement shall be governed by the
internal laws (and not the conflict of laws rules) of the State of Florida. In
any action or proceeding concerning this Agreement, or any agreement or
instrument delivered pursuant to this Agreement, or the transactions delivered
pursuant to this Agreement, or the transactions contemplated by this Agreement,
(a) all parties (and the general partners of such parties, and the partners of
such general partners) to this Agreement or such other agreement or instrument
hereby consent (i) to the jurisdiction of the State of Florida over all such
parties and their general partners, and the partners of such general partners
and (ii) that venue for all actions and proceedings shall be in the State of
Florida.
- 42 -
<PAGE> 43
15.13 THIRD PARTY BENEFICIARIES. Nothing in this Agreement is
intended or shall be construed to confer upon or to give to any person, firm or
corporation other than the parties hereto, their successors and assigns any
right, remedy, or claim under or by reason of this Agreement. All terms and
conditions in this Agreement shall be for the sole and exclusive benefit of the
parties hereto, their successors and assigns.
15.14 FURTHER ASSURANCES. Partnership, CM Partnership and IHL
each agree to execute promptly on demand without additional consideration
therefor, but without cost thereto, and deliver to the other such further
documents or instruments as may be reasonable and necessary in furtherance of
the performance of the terms, covenants and conditions of this Agreement. This
Section 15.14 shall survive the Closing.
15.15 PARTIAL INVALIDITY. If any term or provision of this
Agreement or the application thereof to any person or circumstances shall, to
any extent, be invalid or unenforceable, the remainder of this Agreement, or
the application of such term or provision to persons or circumstances other
than those as to which it is held invalid or unenforceable, shall not be
affected thereby, and each term and provision of this Agreement shall be valid
and be enforced to the fullest extent permitted by law.
15.16 INCOME TAXES. Each of CM Partnership and IHL has conducted
its own "due diligence" investigations and analyses with respect to the
Property for U.S. Federal, state and local income tax purposes. Each of
Partnership and IHL agrees that the other party has not made and does not make
any representation or warranty concerning the treatment or character of any
item of income, gain, loss, deduction or credit for U.S. Federal, state or
local income tax purposes that arises from or in respect of the Property from
and after the Closing.
15.17 ATTORNEYS' FEES. Each party shall pay directly any and all
fees, costs and expenses of its attorneys incurred on its behalf pertaining to
the negotiation and preparation of this Agreement and the closing of the
contributions and transfers contemplated by this Agreement. If any party hereto
brings an action or suit against any other party arising out of this Agreement,
the prevailing party in such action or suit shall be entitled to recover from
the other party all reasonable costs and expenses (including, but not limited
to, all court costs and reasonable attorneys' fees and expenses) of such action
or suit.
15.18 PUBLICITY. Neither party shall issue any press release or
make any public statement regarding the transactions contemplated hereby,
without the prior approval of the other party; provided, however, that nothing
herein shall be deemed to prohibit any party from making any disclosure which
its counsel deems necessary in order to fulfill such party's disclosure
obligations imposed by law.
15.19 BULK SALES. It may not be necessary or practicable to
comply or attempt to comply with the procedures of the "Bulk Sales Act" or
similar law of the State of Florida or of any other state which may be asserted
to be applicable to the transactions contemplated hereby. Accordingly to induce
IHL not to require compliance with such laws, CM Partnership and the partners
and Affiliates of CM Partnership hereby agree that the indemnity provisions of
Article
- 43 -
<PAGE> 44
14 shall apply to any damages of Partnership or IHL arising out of or
resulting from the failure to comply with any such laws or any similar law or
which may be asserted to be applicable.
15.20 BOOKS AND RECORD. Each party agrees that it will cooperate
with and make available to the other party, during normal business hours, all
books and records, information and personnel (without substantial disruption of
employment) retained and remaining in existence after the Closing Date that are
necessary or useful in connection with any tax inquiry, audit, investigation or
dispute, any litigation or investigation or any other matter requiring any such
books and records, information or employees for any reasonable business
purpose. The party requesting any such books and records, information or
employees shall bear all of the out-of-pocket costs and expenses (including
without limitation, attorneys' fees, but excluding reimbursement for salaries
and employee benefits) reasonably incurred in connection with providing such
books and records, information or employees.
15.21 SAFE DEPOSIT BOXES AND BAGGAGE. CM Partnership hereby
agrees to indemnify and hold Partnership harmless and to defend and protect
Partnership from and against any and all losses, damages, expenses or
liabilities of any kind or nature resulting from, arising out of, or relating
to or in any way connected to safe deposit boxes and unclaimed baggage prior to
Closing.
IN WITNESS WHEREOF, this Agreement was executed as of the day
and year first above written.
CASA MARINA LTD., a Florida limited
partnership
By /s/ JOEL S. MEISEL
-----------------------------
Joel S. Meisel
General Partner
By /s/ BARRY S. COHEN
-----------------------------
Barry S. Cohen
General Partner
CASA MARINA REALTY CORPORATION,
a Delaware corporation
By: /s/ TIMOTHY Q. HUDAK
---------------------------
Name: Timothy Q. Hudak
---------------------------
Title: Asst. Secretary
---------------------------
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<PAGE> 45
INTERSTONE PARTNERS I, L.P., a Delaware
limited partnership
By: IHC/Interstone Corporation,
General Partner
By: /s/ TIMOTHY Q. HUDAK
-----------------------------
Name: Timothy Q.Hudak
-----------------------------
Title: Asst. Secretary
-----------------------------
By: IHC Member Corporation,
General Partner
By: /s/ TIMOTHY Q. HUDAK
-----------------------------
Name: Timothy Q. Hudak
-----------------------------
Title: Asst. Secretary
-----------------------------
CASA MARINA REALTY PARTNERSHIP, L.P.
a Delaware limitedpartnership
By: Casa Marina Realty Corporation,
a Delaware corporation
By: /s/ TIMOTHY Q. HUDAK
-----------------------------
Name: Timothy Q.Hudak
-----------------------------
Title: Asst. Secretary
-----------------------------
S-2
<PAGE> 46
Schedules to Contribution Agreement
<TABLE>
<S> <C>
1A Tangible assets
1B Legal description of land
1C Operating supplies
1D Permitted exceptions
1E Service contracts
1F Equipment for site improvements
2.4(i) Excluded assets
2.4(ii) Excluded liabilities
8.2(a) Special warranty deed
8.2(b) Quitclaim deed
8.2(c) Assignment and Assumption of Lessee's Interest in Ground Lease
8.2(d) Assignment and Assumption of Lessee's Interest in Submerged Land Lease
8.2(e) Special warranty deed
8.2(f) Quitclaim deed
8.2(g) Assignment and Assumption of Lessor's Interest in Ground Lease
8.2(h) Assignment and Assumption of Lessor's Interest in Submerged Land Lease
8.2(r) Bill of contribution
8.2(s) Termination of Management Agreement
8.2(t) Assignment of Licenses and Warranties
8.2(u) Assignment of Service Contracts
8.2(y) Assignment of Intellectual Property Rights
8.2(z) Assignment and Assumption of Reservation Rights
8.2(aa) Assignment of Development Documents and Development Rights
8.2(bb) Assignment of Construction Contracts and Claims
8.2(ff) Right of First Refusal
8.4(n) Assignment and Assumption of License Agreement
8.5(d) Opinion of Steptoe & Johnson
11.1.5 Real property taxes payable
11.1.6 Obligations for public improvements and contributions
11.1.9 Licenses and Permits
11.1.10 Service contracts
11.1.12 Violations of zoning provisions or certificate of occupancy
11.1.14 Insurance policies
11.1.15(a) Trademark registrations, patents, copyrights
11.1.19 Assessed value of real estate taxes
11.1.25 Pending litigation
11.1.30 Contracts requiring payments in excess of $50,000
11.1.31 Financial Statements
11.1.32 Changes in financial statements
11.1.36 Breaches and violations of mortgage
11.1.38 Permits necessary to conduct business
11.1.43 Financial institutions
</TABLE>
- ---------------
The Company agrees to furnish supplementally a copy of the above omitted
schedules to the Securities and Exchange Commission upon request.
<PAGE> 1
Exhibit 2.2
CONTRIBUTION AGREEMENT AND AGREEMENT TO ASSIGN
PARTNERSHIP INTERESTS AND ENTER
INTO FIRST AMENDED AND RESTATED LIMITED
PARTNERSHIP AGREEMENT
THIS CONTRIBUTION AGREEMENT AND AGREEMENT TO ASSIGN PARTNERSHIP INTERESTS
AND ENTER INTO FIRST AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT, dated
as of December 19, 1996 (this "Agreement"), is made by and among IHC REACH
CORPORATION, a Delaware corporation ("IHC Reach"), REACH RESORT INVESTMENT
CORPORATION, a Maryland corporation ("RRIC"), INTERSTONE PARTNERS I, L.P., a
Delaware limited partnership ("Interstone"), THE KEY WEST REACH LIMITED
PARTNERSHIP, a Delaware limited partnership ("Reach Partnership"), and each of
the persons and entities listed on EXHIBIT 1A attached hereto (collectively,
the "Limited Partners").
W I T N E S S E T H :
WHEREAS, Reach Partnership is the fee simple owner of the land, hotel and
other improvements, commonly known as the Reach Hotel, in Key West, Florida and
of certain other assets constituting the Property (as hereinafter defined);
WHEREAS, IHC Reach and RRIC respectively own one percent (1%) general
partnership interests in Reach Partnership;
WHEREAS, IHC Associates (hereinafter defined) and the Fine Trust
(hereinafter defined) have respectively agreed to assign to Interstone all of
their limited partnership interests in Reach Partnership, on the terms and
conditions herein set forth;
WHEREAS, Interstone and IHC Reach have respectively agreed to contribute
certain moneys to Reach Partnership, on the terms and conditions herein set
forth;
WHEREAS, the Fine Partners (as hereinafter defined) and the Meisel
Partners (as hereinafter defined) have agreed to admit Interstone to Reach
Partnership as a limited partner;
WHEREAS, Interstone, the Fine Partners and the Meisel Partners have each
agreed to enter in a First Amended and Restated Limited Partnership Agreement
for Reach Partnership;
<PAGE> 2
NOW, THEREFORE, in consideration of the mutual agreements herein contained
and for other good and valuable consideration, the receipt and sufficiency
whereof are hereby acknowledged, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 The following terms shall have the meanings respectively assigned to
them:
"Affiliate" has the meaning ascribed to such term in Rule 405 of the
Securities Act of 1933, as amended.
"Applicable Law" means, with respect to any Person, any federal,
state or local statute, law, code, ordinance, rule, administrative
interpretation, regulation, order, writ, injunction, directive, judgment,
decree or other requirement of any Governmental Authority (including any
Environmental Law) applicable to such Person or any of its properties, assets,
officers, directors, employees, consultants or agents (in connection with such
officer's, director's, employee's, consultant's or agent's activities on behalf
of such Person).
"Business Day" means those days of the week which are not Saturday,
Sunday or a federal legal or bank holiday.
"Claims" mean claims, causes of action, choses in action, rights of
recovery and rights of set-off of whatever kind or description against any
Person arising out of or relating to the Property.
"Closing" shall have the meaning set forth in Section 5.1.1 hereof.
"Closing Date" means the Closing Date specified in Section 5.1.2
hereof.
"Code" means the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder.
"Current Tax Year" means the fiscal year used by Monroe County,
Florida for the assessment and collection of real estate taxes, during which
the Closing occurs.
"Development Documents" shall mean (1) all building plans and
specifications and as-built plans of the Hotel, and (2) all site plans,
subdivision plats, surveys, engineering and other studies, plans,
specifications, designs, applications and submissions to Governmental
Authorities and advices or communications from such authorities and all other
documents relating to any possible or proposed further development.
"Development Rights" shall mean any and all rights and privileges to
further develop the Real Property or any portion thereof.
- 2 -
<PAGE> 3
"Effective Date" means December 1, 1996.
"Environmental Laws" means all Applicable Laws relating to the
control of any pollutant or the protection of human health, safety or the
environment including, without limitation, (i) all requirements pertaining to
reporting, licensing, permitting, controlling, investigating or remediating
emissions, discharges, releases or threatened releases of Hazardous Substances,
chemical substances, pollutants, contaminants or toxic substances, materials or
wastes, whether solid, liquid or gaseous in nature, into the air, surface
water, groundwater or land, or relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Substances, chemical substances, pollutants, contaminants or toxic
substances, materials or wastes, whether solid, liquid or gaseous in nature;
and (ii) all requirements pertaining to the protection of the health and safety
of employees or the public. Without limiting the generality of the foregoing,
"Environmental Laws" include: (a) the Resource Conservation and Recovery Act,
as amended, 42 U.S.C. Sections 6901 et seq.; (b) the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 26 U.S.C.
Sections 4611 and 42 U.S.C. Sections 9601 et seq.; (c) the Superfund Amendment
and Reauthorization Act of 1984; (d) the Clean Air Act, 42 U.S.C. Sections 7401
et seq.; (e) the Clean Water Act, 33 U.S.C. Sections 1251 et seq.; (f) the Safe
Drinking Water Act, 42 U.S.C. Sections 300f et seq.; (g) the Toxic Substances
Control Act, 15 U.S.C. Sections 2601 et seq.; (h) the Federal Water Pollution
Control Act, as amended, 33 U.S.C. Section 1251 et seq.; (i) the Hazardous
Materials Transportation Act, as amended, 49 U.S.C. Sections 1801 et seq., (j)
the Atomic Energy Act, as amended, 42 U.S.C. Sections 2011 et seq.; (k) the
Federal Insecticide, Fungicide and Rodenticide Act, as amended, 7 U.S.C.
Sections 136 et seq.; (l) the Federal Food, Drug and Cosmetic Act, as amended,
21 U.S.C. Sections 301 et seq.; and (m) OSHA.
"Fine Partners" means: IHC Reach Corporation; IHC Associates; Fine
Trust; and Milton Fine, collectively and severally.
"Fine Trust" means David J. Fine, trustee, under an Irrevocable Trust
dated December 15, 1989.
"Fine Trust Consideration" means Three Million Five Hundred Fifty-One
Thousand Seven Hundred Eighty-Seven Dollars 20/100 ($3,551,787.20), or such
lesser amount as Interstone shall reasonably determine to be the market value
of the Fine Trust's limited partnership interest in Reach Partnership, based on
the independent fairness opinion obtained by Interstone or its Affiliate at or
prior to Closing.
"GAAP" means generally accepted accounting principles.
"Governmental Authority" means any federal, territorial, state or
local governmental authority, quasi-governmental authority, instrumentality,
court, commission, tribunal or organization or any regulatory, administrative
or other agency, or any political or other subdivision, department or branch of
any of the foregoing having jurisdiction over the Property or Reach
Partnership.
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"Hazardous Substances" mean any chemical substance, object,
condition, material or waste that is or may be hazardous to human health,
safety or the environment, including, without limitation, any chemicals,
substances, materials and wastes: (i) the presence of which requires
investigation or remediation under any Applicable Law; or (ii) which are
defined as "hazardous wastes," "hazardous substances," "hazardous materials,"
"toxic substances," "air pollutants," "toxic pollutants," "extremely hazardous
waste" or "restricted hazardous waste" under any Environmental Laws; or (iii)
which are toxic, explosive, corrosive, flammable, infectious, radioactive,
carcinogenic, dangerous or mutagenic or otherwise hazardous and is regulated by
any Governmental Authority; or (iv) the presence of which causes a nuisance to
adjacent properties or poses a hazard to the health or safety of Persons; or
(v) the presence of which on adjacent properties constitutes a trespass by
Reach Partnership; or (vi) without limitation, which contains radioactive
materials, pesticides, pollutants, contaminants, chemicals, lead,
ureaformaldehyde, flammable explosives, radon, gasoline, diesel fuel or other
petroleum hydrocarbons, polychlorinated biphenols (PCBs) or asbestos.
"Hotel" means that certain 149 room hotel located on the Land
including all the improvements, buildings, structures and fixtures now or on
the Closing Date located on the Land, and all alterations and installations in
and to such improvements, buildings, structures and fixtures which may now or
hereafter, by lease or operation of law, be or become the property of the Hotel
or the owner of such improvements, buildings, structures and fixtures.
"Hotel Assets" mean all of the items of tangible personal property
owned by Reach Partnership and used in the operation, management, repair and/or
maintenance of the Hotel and/or other portions of the Property, including,
without limitation, all furniture, furnishings, fixtures, appliances,
equipment, machinery, inventory, supplies, permits, computers, computer
software, tapes, disks, spare parts, uniforms, and other personal property
located in or used in connection with the operation of the Hotel, Operating
Supplies, Permits, Intellectual Property Rights, Reservation Rights, refunds
and pre-paid expenses, food and beverage supplies, inventory, books and
records, goodwill, Claims, and all of the assets set forth and described on
EXHIBIT 1B attached hereto.
"Interstate" means Interstate Hotels Corporation, a Pennsylvania
corporation.
"IHC" means Interstone and IHC Reach, collectively.
"IHC Associates" means IHC Associates Limited Partnership, a Delaware
limited partnership.
"IHC Associates Consideration" means Four Hundred Sixty-Six Thousand
Five Hundred Thirty Dollars 80/100 ($466,530.80), or such lesser amount as
Interstone shall reasonably determine to be the market value of the IHC
Associates' limited partnership interest in Reach Partnership, based on the
independent fairness opinion obtained by Interstone or its Affiliate at or
prior to Closing.
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"Intellectual Property Rights" means all property rights, title and
interest of Reach Partnership, the Fine Partners and/or the Meisel Partners in
and to all tradenames, trademarks, trade secrets, service marks, and other
intellectual property rights of Reach Partnership, whether or not registered,
and all rights of Reach Partnership, the Fine Partners and/or the Meisel
Partners with respect to the use of the name "Reach Hotel" (and all derivatives
thereof), including, without limitation, the Intellectual Property Rights
described on EXHIBIT 11.1.15(A).
"Land" means all that certain tract or parcel of land situated and
lying in Key West, Florida, which is more particularly described on EXHIBIT 1C
attached hereto.
"Liability" means, with respect to any Person, any liability or
obligation of such Person of any kind, character or description, whether
disclosed or undisclosed, known or unknown, absolute or contingent, accrued or
unaccrued, liquidated or unliquidated, secured or unsecured, joint or several,
due or to become due, vested or unvested, executory, determined, determinable
or otherwise and whether or not the same is required to be accrued on the
financial statements of such Person.
"Lien" means, with respect to any asset, any mortgage, title defect
or objection, lien, pledge, charge, security interest, hypothecation,
restriction, encumbrance, adverse right or charge of any kind in respect of
such asset.
"Liquor License" mean the liquor license applicable to the Hotel.
"Manager" means Interstate Hotels Corporation.
"Meisel Partners" means RRIC, the Meisel Family Hotel Trust, a
Maryland trust, Martin J. Saturn and Marlene Patton.
"Mortgage" means that certain Mortgage and Security Agreement dated
October 12, 1995 in favor of Mortgagee and any other documents evidencing or
securing the loan from Mortgagee to Reach Partnership.
"Mortgagee" means Massachusetts Mutual Life Insurance Company.
"Operating Supplies" mean all paper goods, linens, maintenance
equipment and supplies, kitchen and restaurant equipment and supplies, office
supplies and all similar items used in the operation of the Hotel, including,
without limitation, the Operating Supplies more particularly described on
EXHIBIT 1D attached hereto.
"OSHA" means the Occupational Safety and Health Act of 1970, 29
U.S.C.A. ss. 651, and all rules and regulations promulgated thereunder.
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"Other Reach Partnership Interests" means all of the right, title and
interest, if any, of Reach Partnership in and to the following:
Any easements, rights of way, privileges, rights, appurtenances,
hereditaments, oil and mineral rights, grants of right, or other
agreements benefiting the Real Property including, without
limitation, the Development Rights, and
Any land lying in the bed of any street, road, alley or avenue,
public or private, opened or proposed, in front of or adjoining the
Real Property, any strips or gores adjoining or relating to the
property or any part thereof, any award made or to be made in lieu
thereof, and any unpaid award for damages to said Real Property by
reason of change of grade of any street.
"Permits" means all licenses, approvals, permits, entitlements and
authorizations of any Governmental Authority, including, without limitation,
all necessary certificates of occupancy for the Hotel.
"Permitted Exceptions" mean collectively: (i) the Mortgage, (ii)
those restrictions, covenants, agreements, easements, matters and things of
fact or of record affecting title to the Property set forth on EXHIBIT 1E
hereof; and (iii) real estate taxes for the Current Tax Year not due and
payable as of the Closing Date.
"Person" means an individual, corporation, limited liability company,
partnership, association, trust, estate, Governmental Authority or other entity
or organization.
"Property" means, collectively, the Real Property and the Hotel
Assets.
"Real Property" means, collectively, Land, the Hotel, the Site
Improvements and the Other Reach Partnership Interests.
"Reservation Rights" means all of Reach Partnership's right, title
and interest in and to all guest and customer lists, reservations, bookings and
inquiries, licenses, marketing information, advertising data, telephone numbers
and concessions, if any, used in or arising out of the operation of the Hotel.
"Revised Reach Partnership Agreement" shall have the meaning set
forth in Section 2.3 hereof.
"Service Contracts" means those contracts relating to or affecting
the use or operation of the Property, such as service, maintenance, labor,
parking operator and similar agreements, which are set forth in EXHIBIT 1F
attached hereto.
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<PAGE> 7
"Site Improvements" means all of the parking lots, driveways,
pavings, access cuts, parking lot striping, lighting, bumpers, drainage systems
and landscaping situate upon the Land, and all equipment and machinery owned by
Reach Partnership (and listed on EXHIBIT 1G attached hereto) and used to
operate and/or maintain the Site Improvements (if any).
"Taxes" mean, with respect to Reach Partnership, all federal, state,
local, foreign and other taxes, assessments or other government charges,
including, without limitation, income, estimated income, business, occupation,
franchise, property, sales, transfer, use, employment, commercial rent or
withholding taxes, including interest, penalties and additions in connection
therewith for which Reach Partnership may be liable.
"Warranties" mean all warranties and guaranties issued by
manufacturers, contractors or sub-contractors with respect to the Property,
including, without limitation, all warranties and guaranties related to the
construction, fabrication or repair of the Hotel or any part thereof.
1.2 Certain other terms are defined elsewhere in this Agreement.
ARTICLE II
PARTNERSHIP MATTERS
2.1 ASSIGNMENT OF FINE TRUST'S LIMITED PARTNERSHIP INTEREST. The Fine
Trust hereby agrees to assign to Interstone all of the Fine Trust's limited
partnership interest in Reach Partnership, as shown on EXHIBIT 1A, in exchange
for the Fine Trust Consideration.
2.2 ASSIGNMENT OF IHC ASSOCIATES' LIMITED PARTNERSHIP INTEREST. IHC
Associates hereby agrees to assign to Interstone all of IHC Associates' limited
partnership interest in Reach Partnership, as shown on EXHIBIT 1A, in exchange
for the IHC Associates Consideration.
2.3 FIRST AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF REACH
PARTNERSHIP. At Closing, Interstone and each of the Fine Partners and Meisel
Partners shall execute a First Amended and Restated Agreement of Limited
Partnership for Reach Partnership, in the form attached hereto as EXHIBIT 2.3
(the "Revised Reach Partnership Agreement"), providing, among other things, for
the admission of Interstone as a 96.1074% limited partner in Reach Partnership.
2.4 CONSENT. Notwithstanding anything to the contrary contained in the
Limited Agreement of Reach Partnership dated as of December 1, 1993 (the
"Original Partnership Agreement"), each of the Fine Partners and Meisel
Partners hereby agrees to execute a consent and waiver in the form attached
hereto as EXHIBIT 2.4 (the "Partnership Consent").
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ARTICLE III
CONTRIBUTIONS
3.1 CONTRIBUTION OF INTERSTONE. Interstone shall, effective at the Closing
Date, contribute to Reach Partnership Nine Million Nine Hundred Ninety-Six
Thousand Two Hundred Sixty-Eight Dollars ($9,996,268.00)
3.2 CONTRIBUTION OF IHC REACH. IHC Reach shall, effective at the Closing
Date, contribute to Reach Partnership Three Thousand Seven Hundred Thurty-Two
Dollars ($3,732.00)
ARTICLE IV
COSTS OF AGREEMENT
4.1 Except as herein expressly provided, each of the parties shall pay
their respective attorney's fees in connection with the transactions and other
matters contemplated by this Agreement.
4.2 Except as otherwise herein provided, any fee, cost, charge or expense
incurred by either party hereto or for which either party hereto may be liable
in connection with the negotiation, examination and consummation of this
Agreement, shall be paid by the party hereto incurring, or liable for, such
fee, cost, charge or expense.
The provisions of this Article 4 shall survive Closing.
ARTICLE V
CLOSING; CLOSING DATE
5.1 Closing; Time of Closing.
5.1.1 The closing (the "Closing") shall take place at such place as the
Fine Partners, the Meisel Partners and Interstone shall mutually agree, at 9:00
a.m. Eastern time on the Closing Date.
5.1.2 The Closing Date shall be December 26, 1996. The Closing Date shall
be subject to extension as provided in Section 10.2.
ARTICLE VI
INTENTIONALLY DELETED
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ARTICLE VII
CONDITIONS PRECEDENT.
7.1 The obligation of IHC to close the transaction hereunder and make the
contributions provided for in Sections 3.1 and 3.2 is subject to satisfaction
of all the following conditions at or prior to Closing, any one or more of
which may be expressly waived in writing by Interstone:
(a) Interstate shall have acquired all of the authorized and issued
stock in IHC Reach.
(b) All of the agreements, documents and instruments described in
this Agreement to be executed and/or delivered by the Reach Partnership, the
Fine Partners, the Meisel Partners or any of them shall have been executed
and/or delivered as provided in this Agreement.
(c) The other contingencies and conditions to Interstone's obligation
to close set forth in this Agreement shall have been satisfied.
(d) All of the terms, covenants and conditions of this Agreement to
be complied with and performed by Reach Partnership, the Fine Partners, the
Meisel Partners, or any of them on or before the Closing Date shall have been
duly complied with and performed in all material respects.
(e) The representations and warranties made by the Fine Partners, the
Meisel Partners, and each of them under this Agreement shall be true and
correct in all material aspects on and as of the Closing Date with the same
force and effect as though such representations and warranties had been made on
and as of the Closing Date.
(f) None of the Fine Partners or Meisel Partners shall have made a
general assignment for the benefit of its creditors, nor have admitted in
writing its inability to pay its debts as they become due, nor have filed a
petition in bankruptcy or been adjudicated a bankrupt or insolvent or have
filed a petition seeking any reorganization, arrangement, composition,
readjustment liquidation, dissolution or similar relief under any present or
future statute, law or regulation, nor have filed any answer admitting or
failing to reasonably contest the material allegations of a petition filed
against it in any such proceeding or seek or consent to or acquiesce in the
appointment of any trustee, receiver or liquidator of it for any material part
of its property.
(g) Reach Partnership, the Fine Partners and the Meisel Partners
shall have delivered to Interstone a UCC lien search for Reach Partnership and
each of the Fine Partners and the Meisel Partners showing no outstanding Liens
against or affecting the Property other than the Permitted Exceptions.
(h) The consent of Mortgagee to the following matters shall have been
obtained, in form and substance acceptable to Interstone: (i) the execution and
delivery of the
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<PAGE> 10
Revised Reach Partnership Agreement, (ii) the admission of Interstone as a
limited partner in Reach Partnership, (iii) the transfer of all the authorized
and issued stock in IHC Reach to Interstate, and (iv) if required, the
assignment by Fine Trust and IHC Associates to Interstone of all their
respective limited partnership interests in Reach Partnership.
(i) All other necessary consents to the assignment and contribution
of interests in Reach Partnership shall have been obtained to Interstone's
reasonable satisfaction.
7.2 The obligation of the Fine Partners and the Meisel Partners to execute
the Amended Reach Partnership Agreement is subject to satisfaction of all the
following conditions at or prior to Closing, any one or more of which may be
expressly waived in writing by the Fine Partners, the Meisel Partners:
(a) Interstone shall have executed the Revised Reach Partnership
Agreement.
(b) Interstone and IHC Reach shall have made the capital
contributions to Reach Partnership provided for in Sections 3.1 and 3.2 hereof.
(c) The other contingencies and conditions to the Fine Partners' and
the Meisel Partners' obligation to close set forth in this Agreement shall have
been satisfied.
(d) All of the terms, covenants and conditions of this Agreement to
be complied with and performed by Interstone on or before the Closing Date
shall have been duly complied with and performed in all material respects.
(e) Reach Partnership shall have agreed in writing to be bound by
that certain consultancy agreement made between Interstone and Joel S. Meisel,
in the form attached hereto as EXHIBIT 7.2(E).
(f) Interstone shall not have made a general assignment for the
benefit of its creditors, nor have admitted in writing its inability to pay its
debts as they become due, nor have filed a petition in bankruptcy or been
adjudicated a bankrupt or insolvent or have filed a petition seeking any
reorganization, arrangement, composition, readjustment liquidation, dissolution
or similar relief under any present or future statute, law or regulation, nor
have filed any answer admitting or failing to reasonably contest the material
allegations of a petition filed against Interstone in any such proceeding or
seek or consent to or acquiesce in the appointment of any trustee, receiver or
liquidator of Interstone for any material part of Interstone's property.
(g) IHC Reach shall not have made a general assignment for the
benefit of its creditors, nor have admitted in writing its inability to pay its
debts as they become due, nor have filed a petition in bankruptcy or been
adjudicated a bankrupt or insolvent or have filed a petition seeking any
reorganization, arrangement, composition, readjustment liquidation, dissolution
or similar relief under any present or future statute, law or regulation, nor
have filed any answer admitting or failing to reasonably contest the material
allegations of a petition filed against IHC
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<PAGE> 11
Reach in any such proceeding or seek or consent to or acquiesce in the
appointment of any trustee, receiver or liquidator of IHC Reach for any
material part of IHC Reach's property.
ARTICLE VIII
DOCUMENTS AT CLOSING.
8.1 Subject to full compliance by Interstone with all of Interstone's
obligations to be kept, observed or performed by Interstone under this
Agreement, the Fine Partners and/or the Meisel Partners shall deliver to
Interstone at Closing, the following documents and other items:
(a) The Revised Reach Partnership Agreement, duly executed by each of
the Fine Partners and Meisel Partners.
(b) Assignments of Limited Partnership Interest, in the form attached
hereto as EXHIBIT 8.1(B), executed by the Fine Trust and IHC Associates,
assigning all their respective limited partnership interests in Reach
Partnership to Interstone.
(c) Amended Certificate of Limited Partnership for Reach Partnership,
executed by RRIC.
(d) Copies of all documentation relating to the Mortgage, together
with the consent in writing of Mortgagee, in form and substance acceptable to
Interstone, to: (i) the execution and delivery of the Revised Reach Partnership
Agreement, (ii) the admission of Interstone as a limited partner in Reach
Partnership, (iii) the transfer of all the authorized and issued stock in IHC
Reach to Interstate, and (iv) if required, the assignment by Fine Trust and IHC
Associates to Interstone of all their respective limited partnership interests
in Reach Partnership.
(e) Evidence of all necessary and proper consents of each of the Fine
Partners and Meisel Partners consenting to the transactions and other matters
provided for herein, together with (i) copies of all relevant partnership
agreements, certificates, corporate certificates and charters all certified as
true and correct by a duly authorized officer, and (ii) current good standing
certificates of all relevant corporations and (if available) partnerships.
(f) The Partnership Consent executed by each of the Fine Partners and
Meisel Partners.
(g) A Right of First Refusal, in the form attached hereto as EXHIBIT
8.1(G), duly executed by Joel S. Meisel and Barry S. Cohen.
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(h) Such additional documents as shall be reasonably necessary to
carry out the provisions of this Agreement.
8.2 Subject to full compliance by each of the Fine Partners and Meisel
Partners with his or its respective obligations to be kept, observed or
performed by such partner under this Agreement, Interstone shall execute (if
applicable) and deliver, at Closing, the following documents and other items:
(a) The Revised Reach Partnership Agreement, duly executed by
Interstone.
(b) Amended Certificate of Limited Partnership for Reach Partnership,
executed by IRC Reach
(c) All necessary and proper consents of Interstone consenting to and
approving to the transactions and other matters provided for herein.
(d) A written opinion letter of Steptoe & Johnson (which may rely on
opinions of other counsel reasonably acceptable to the Meisel Partners), dated
as of the Closing Date, in the form attached hereto as EXHIBIT 8.2(D).
(e) Such additional documents as shall be reasonably necessary to
carry out the provisions of this Agreement.
8.3 Subject to full compliance by the Fine Partners and the Meisel
Partners with all of their respective obligations to be kept, observed or
performed under this Agreement, at Closing, Interstone and IHC Reach shall
contribute to Reach Partnership the cash required to be contributed pursuant to
Sections 3.1 and 3.2 hereof.
ARTICLE IX
COVENANTS
9.1 Each of the Fine Partners covenants and agrees that, between the date
hereof and the Closing Date, the Fine Partners shall, and shall direct the
Manager to, and each of the Meisel Partners covenants and agrees that, between
the date hereof and the Closing Date, the Meisel Partners shall, and shall
direct the Manager to, continue (i) to operate the Hotel and perform repair and
administrative procedures consistent with its ordinary course practices, (ii)
to carry on the business of the Hotel in a good and diligent manner and use
best efforts to preserve the Hotel's business organization intact and preserve
the good will of the Hotel's guests, customers, suppliers and others having
business relations with it, (iii) to maintain the Hotel in its ordinary course
operating condition and repair and cause the continuation of the normal
operations thereof, and (iv) ordinary course practices with respect to the
purchase and replacement of supplies and the maintenance and repairs of the
Hotel Assets. Without limiting the generality of
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the foregoing, IHC Reach shall, and shall direct the Manager, and RRIC shall,
and shall direct the Manager, at Reach Partnership's expense where applicable,
to:
(a) not sell, assign, lease, license, transfer or otherwise dispose
of, or mortgage, pledge or encumber (other than with Permitted Exceptions), any
Property except for sales of food, beverage and other supplies in the ordinary
course of business;
(b) not incur any Liability or Liabilities in connection with the
Property, except a Liability or Liabilities (1) incurred in the ordinary course
of business or (2) expressly permitted by the terms of this Agreement;
(c) pay all accounts payable and pursue collection of all accounts
receivable related to the Property in the ordinary course of business;
(d) not modify, cancel, extend, renew or otherwise change in any
manner any of the terms, covenants or conditions of any of the Service
Contracts, nor waive or release any rights or remedies under any of the Service
Contracts, nor enter into any other agreements (including, without limitation,
cleaning, maintenance employment, management, supply, union and similar
contracts) affecting the Property, without the prior written consent of
Interstone (which consent shall not be unreasonably withheld, delayed or
conditioned), unless same is terminable without penalty or liability to Reach
Partnership on not more than thirty (30) days' notice (any such action or act
or agreement, an "Agreement Modification"). Immediately upon the occurrence of
any Agreement Modification, Reach Partnership shall deliver to Interstone a
complete, certified copy thereof;
(e) provide or cause to be provided all such services in connection
with the operation, management or maintenance of the Hotel that are now
required to be provided or, if not so required, that have customarily been
provided in accordance with Reach Partnership's ordinary course practices;
(f) operate, maintain and keep the Property (and all parts thereof),
including mechanical equipment of every kind used in the operation thereof, in
substantially the same condition as it is in as of the End of Inspection Period
(reasonable wear and tear and casualty excepted);
(g) continue to maintain the existing insurance on the Property which
are in the amounts and with the coverages as shown on EXHIBIT 11.1.14;
(h) not make or permit to be made any alterations to the Property (or
any part thereof) unless required by a Governmental Authority, or remove any of
the personalty included in this sale therefrom unless the personalty so removed
is simultaneously replaced with new personal property of at least equal quality
and utility. If any alterations are required by a Governmental Authority as
aforesaid, Reach Partnership shall (i) promptly deliver to Interstone a copy of
the notice requiring such alterations to be made, (ii) promptly perform, or
direct Manager
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promptly to perform, such alterations in a good and workmanlike manner, (iii)
not permit any mechanic's, materialmen's or laborer's liens to be filed against
any portion of the Real Property in connection with such alterations;
(i) not release or compromise any of the Warranties;
(j) comply with any and all written notices issued and delivered to
Reach Partnership prior to the date of Closing with respect to: (i) violations
of Applicable Laws from Governmental Authorities; (ii) any outstanding work
orders; and (iii) and requirements of the holder of the Mortgage and/or the
insurance company presently insuring the Property (or parts thereof) against
casualty loss. The immediately proceeding sentence notwithstanding, if Reach
Partnership would, between the Effective Date of this Agreement and the Closing
Date, be required to incur costs and expenses in excess of $350,000 in order to
comply with any written notice(s), then, promptly upon becoming aware of such
fact, Reach Partnership shall give written notice thereof to Interstone (the
"Compliance Notice"), specifying in detail, (x) the work required and the
reason same is required, and (xi) the cost of the work, and the Reach
Partnership shall, at the request of Interstone, provide to Interstone evidence
reasonably acceptable to Interstone substantiating the information set forth in
the Compliance Notice. Not later than ten (10) Business Days after receipt of
the Compliance Notice and such substantiating information as Interstone
reasonably may request, Interstone shall give notice to the Fine Partners and
the Meisel Partners electing either (a) to cancel this Agreement in which
event, effective from the date of Interstone's notice, the parties shall have
no further rights or obligations under this Agreement, except those
specifically set forth in this Agreement to survive the cancellation or
termination of this Agreement, or (b) to proceed to Closing;
(k) make available to Interstone for inspection by Interstone and its
agents, accountants and attorneys during normal business hours at the Property
or the office of Reach Partnership all documents, books, records and other
matters relating to the Property, including, without limitation all documents
evidencing or otherwise relating to the Intellectual Property Rights or the
Reservation Rights, the Development Documents, the Permits, the Warranties, the
documents evidencing the Services Contracts, the Liquor License, all plans and
specifications, soil and engineering reports, environmental audits, surveys,
title work, operating and financial information, insurance policies,
maintenance and repair records and similar information in the possession or
control of Reach Partnership and all correspondence and other communications in
the files of Reach Partnership concerning the foregoing, and allow Interstone
to make copies thereof at Interstone's cost and expense;
(l) the Fine Partners and the Meisel Partners shall each make
available to Interstone for inspection by Interstone and its agents,
accountants and attorneys during normal business hours at the Property or the
office of Reach Partnership all documents, books, records and other matters
relating to the Property, including, without limitation all documents
evidencing or otherwise relating to the Intellectual Property Rights or the
Reservation Rights, the Development Documents, the Permits, the Warranties, the
documents evidencing the Services Contracts, the Liquor License, all plans and
specifications, soil and engineering reports, environmental audits, surveys,
title work, operating and financial information, insurance policies,
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<PAGE> 15
maintenance and repair records and similar information in the possession or
control of the Fine Partners or the Meisel Partners, as the case may be, and
all correspondence and other communications in the files of the Fine Partners
or the Meisel Partners, as the case may be, concerning the foregoing, and allow
Interstone to make copies thereof at Interstone's cost and expense;
(m) consent to Interstone or its agents meeting with the manager and
other personnel of the Hotel, during normal business hours at the Property and
discussing the conditions and operation of the Property with such Persons;
(n) except in the ordinary course of business, not waive, cancel or
take any other action impairing any of its rights relating to the Property;
(o) keep Interstone informed, and provide Interstone promptly with
copies of, all notices and communications concerning any of the Development
Documents, the Development Rights, and/or the possible future development of
the Real Property;
(p) maintain all of the Permits in full force and effect.
(q) notify Interstone in writing of the commencement of any
proceeding or action by or against Reach Partnership relating, in any way, to
the Property or any part thereof, or of Reach Partnership becoming aware of any
threat, claim, action, suit, inquiry, proceeding, notice of violation, demand
letter, subpoena, government audit or disallowance that could reasonably be
expected to result in a proceeding or action, such notification to be provided
to Interstone promptly after such commencement or after Reach Partnership
becomes aware as aforesaid. Each of the Fine Partners and Meisel Partners
agrees to provide similar notification to Interstone if it becomes aware of any
of the matters referred to in this Section 9.1(q);
(r) Each of the Fine Partners agrees to notify Interstone in writing
of the occurrence of any breach by Reach Partnership or the Fine Partners of
any representation, warranty, covenant or agreement contained in this
Agreement, promptly after the Fine Partners or any of them becomes aware of any
such breach, and each of the Meisel Partners agrees to notify Interstone in
writing of the occurrence of any breach by Reach Partnership or the Meisel
Partners of any representation, warranty, covenant or agreement contained in
this Agreement, promptly after the Meisel Partners or any of them becomes aware
of any such breach
(s) not make any change in the accounting methods for the Property or
any portion thereof, or in the manner of keeping books and records;
(t) not, without the prior written consent of Interstone (which
consent shall not be unreasonably withheld, delayed or conditioned):
(i) exercise any rights, options or privileges, or make any
decisions or elections under the Development Documents;
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(ii) release or waive any rights, or waive any obligations of
others under the Development Documents;
(iii) make any submissions to any Governmental Authority with
respect to the Property, its use, operation, construction or development, or
make any other commitments which will bind the Property, its use, operation,
construction or development after the Closing;
(iv) make or commit to make any capital expenditure, or group of
related capital expenditures relating to the Property; or
(v) withdraw, settle or otherwise compromise any protest or
reduction proceeding affecting real estate taxes assessed against the Real
Property, or any part thereof for the Current Tax Year.
Any reference herein or elsewhere in this Agreement to the knowledge
or awareness of the Meisel Partners shall mean the actual knowledge of, and such
knowledge which, with reasonable inquiry (excluding inquiry of Manager or its
employees) and the exercise of due diligence would have been known by, Joel
Meisel and/or [ ]. In no event shall the knowledge of any agent of the
Meisel Partners or any of them or any director, officer or manager thereof,
including, without limitation, the Manager and its employees, be attributed to
the Meisel Partners.
Any reference herein or elsewhere in this Agreement to the knowledge
or awareness of the Fine Partners shall mean the actual knowledge of, and such
knowledge which, with reasonable inquiry of Manager, would have been known by
Milton Fine. In no event shall the knowledge of any agent of the Fine Partners
or any of them or any director, officer or manager thereof, including, without
limitation, the Manager and its employees, be attributed to the Fine Partners.
ARTICLE X
CONDEMNATION AND DESTRUCTION.
10.1. If, prior to the Closing Date, all or any portion of the Property or
any means of ingress thereto or egress therefrom is taken by eminent domain (or
is the subject of a pending or threatened taking which has not been
consummated), or if any Development Rights shall be prejudiced or impaired
because of such taking or pending or contemplated taking, then Reach
Partnership shall notify Interstone of such fact and Interstone shall have the
option to terminate this Agreement upon notice to the Fine Partners and the
Meisel Partners given not later than twenty (20) days after receipt of notice
from Reach Partnership. If Interstone terminates this Agreement as aforesaid,
none of the parties shall have any further rights or obligations hereunder,
except such rights or obligations specified in this Agreement to survive the
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termination of this Agreement. If Interstone does not exercise this option to
terminate this Agreement, the parties shall close in accordance with the
provisions of this Agreement.
10.2 If prior to the Closing Date, a material part of the Property or any
material part of any means of ingress thereto or egress therefrom is damaged,
destroyed by fire or other casualty ("material" herein deemed to be any
destruction greater than "immaterial" as defined below), Reach Partnership
shall notify Interstone of such fact and Interstone shall have the option to
terminate this Agreement upon notice to the Fine Partners and the Meisel
Partners given not later than twenty (20) days after receipt of notice from
Reach Partnership. If Interstone terminates this Agreement as aforesaid, none
of the parties shall have any further rights or obligations hereunder, except
such rights or obligations specified in this Agreement to survive the
termination of this Agreement. If Interstone does not exercise this option to
terminate this Agreement, the parties shall close in accordance with the
provisions of this Agreement. In the event there is damage to or destruction of
an immaterial part of the Property or an immaterial part of a means of ingress
or egress by fire or other casualty, the damage shall be repaired by Reach
Partnership, and the Closing Date shall be adjourned at the request of the Fine
Partners and the Meisel Partners, for one or more specified periods, not
exceeding ninety (90) days in the aggregate, in order to permit Reach
Partnership to make such repairs, it being agreed that if such repairs are not
completed within said ninety (90) day period, Interstone may elect to (i)
terminate this Agreement, on the same terms as if the Property had suffered
material damage, or (ii) postpone the Closing Date for one or more further
periods, not exceeding ninety (90) days in the aggregate, until such repairs
are completed, or (iii) close under this Agreement notwithstanding that such
repairs have not been completed. An "immaterial" part of the Property or
immaterial part of the means of ingress or egress or personal property shall be
deemed to have been damaged or destroyed if the cost of repair or replacement
shall be Three Hundred Fifty Thousand ($350,000.00) Dollars or less and is
covered by Reach Partnership's casualty insurance (without reference to any
deductible thereunder).
ARTICLE XI
REPRESENTATIONS AND WARRANTIES
11.1. REPRESENTATIONS AND WARRANTIES. Each of the Fine Partners and Meisel
Partners (each a "Representing Partner") represents and warrants to Interstone
and the other parties hereto, as of the date hereof, and as of Closing, the
following:
11.1.1 Reach Partnership has good and marketable title to, and the entire
right, title and interest in, the Property, free and clear of all Liens except
the Permitted Exceptions.
11.1.2 The limited partnership interests set forth on EXHIBIT 1A attached
hereto constitute all of the limited partnership interests in Reach
Partnership; none of the Limited Partners own any interest in Reach Partnership
except as set forth on EXHIBIT 1A; the Fine
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<PAGE> 18
Partners and the Meisel Partners collectively own all of the partnership
interests in Reach Partnership; and the Representing Partner owns its
partnership interests in Reach Partnership free and clear of all liens, claims,
charges, security interests, pledges or other security interests.
11.1.3 No action or proceeding against Reach Partnership is presently
pending in any court, or to the knowledge of Representing Partner, threatened.
11.1.4 No party has any right to purchase the Property (or any part
thereof or interest therein), or any right of first refusal to purchase the
Property or any part thereof or interest therein.
11.1.5 To the knowledge of the Representing Partner, the copies of the
real property tax bills for the Real Property for the current tax year which
have been furnished by Reach Partnership to Interstone are true and correct
copies of all of the tax bills for the Real Property.
11.1.6 To the knowledge of the Representing Partner, except as set forth
in EXHIBIT 11.1.6, there exists no requirement, understanding or agreement that
any public improvements, or contributions for public purposes, be made or
provided by or on behalf of the owner of the Property in connection with the
construction, development, use or occupancy of the Property except for the
obligation of the owner of the Real Property to pay ordinary and prevailing
real estate taxes.
11.1.7 To the knowledge of the Representing Partner, the use,
construction, maintenance, operation and occupancy of the Property is in
compliance in all material respects with all Applicable Laws.
11.1.8 To the knowledge of the Representing Partner, all electric, sewer,
water, telephone and other utilities currently used in the operation or
occupancy of the Property are available to the Property, at the perimeter of
the Land; and there is no restriction or limitation on the right of the owner
of the Property to hook up to or to use any sewer utility, other than the
obligation to pay ordinary and prevailing hook-up and usage charges. Neither
Reach Partnership nor the Representing Partner has received written notice of,
and the Representing Partner has no knowledge of, any threatened or actual
reduction or curtailment of any utility service supplied to the Property.
11.1.9 Attached hereto as EXHIBIT 11.1.9 are true and correct copies of
all Permits issued in connection with the Property, all of which are in good
standing, and the fees and charges for all of which have been paid in full by
Reach Partnership.
11.1.10 There are no Service Contracts affecting the Property, except as
shown and identified on EXHIBIT 11.1.10; true, correct and complete copies of
the Service Contracts have been furnished by Reach Partnership to Interstone.
11.1.11 Reach Partnership has no employees.
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<PAGE> 19
11.1.12 To the Representing Partner's knowledge, the use being made of the
Property at present is in conformity with the certificates of occupancy issued
for the Property and all required Permits for the ownership, use and operation
of the Property (including, without limitation, final and unconditional
certificates of occupancy for the Hotel) have been issued, are in full force
and effect; neither Reach Partnership nor the Representing Partner has received
any written notice, or has any knowledge, of any threatened or actual
cancellation or suspension of any certificate of occupancy or other Permit for
any portion of the Hotel; neither Reach Partnership nor the Representing
Partner has received any notice or has any knowledge that, except as set forth
on EXHIBIT 11.1.12, the Property and the current use thereof violate any
applicable deed restrictions or other covenants, restrictions or agreements, or
any building, fire, zoning and other ordinances and regulations applicable
thereto, or any site plan approvals, zoning or subdivision regulations or urban
redevelopment plans; to the knowledge of the Representing Partner, no Permits
from any Governmental Authority have been withdrawn and there are no orders or
requirements of any Governmental Authority that have not been complied with by
Reach Partnership; to the knowledge of the Representing Partner, Reach
Partnership has complied with all of the requirements of all such Permits,
approvals and consents concerning the Property and the current use or
improvement thereof.
11.1.13 It has no knowledge of any federal, state, county or municipal
plans to change the highway or road system in the immediate vicinity of the
Property or to restrict or change access from any such highway or road to the
Property or of any pending or threatened condemnation of the Land or the
Property or any part thereof or of any plans for improvements which might
result in a special assessment against the Property.
11.1.14 To the knowledge of the Representing Partner, EXHIBIT 11.1.14 is
an accurate schedule of all insurance policies now affecting the Property; and
the only insurance policies carried on the Property are those set forth on said
schedule. For each Insurance Policy, EXHIBIT 11.1.14 indicates the type of
coverage, the name of the insureds, the insurer, the premium, the expiration
date, the period to which it relates, the deductibles and loss retention
amounts and the amounts of coverage.
11.1.15 To the knowledge of the Representing Partner, EXHIBIT 11.1.15(A)
contains detailed information (including where applicable the federal
registration number and the date of registration or application for
registration and the name in which registration was applied for) concerning (x)
all of Reach Partnership's registrations of trademarks and of other marks,
trade names or other trade rights, and all pending applications for any such
registrations and all of Reach Partnership's patents and copyrights and all
pending applications therefor, (y) all computer software used by Reach
Partnership in the conduct of its business ("Computer Software"), and (z) all
other trademarks and other marks, trade names and other trade rights and all
other trade secrets, designs, plans, specifications, and other intellectual
property rights of any kind of Reach Partnership, whether or not registered,
including, without limitation, all rights of Reach Partnership to use the name
"Reach Hotel" (and all derivatives thereof ) and any intellectual property
rights that any third party owns and that Reach Partnership uses or proposes to
use in its business, and specifies whether such use is or will be pursuant to
license, sublicense,
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<PAGE> 20
agreement or permission. Reach Partnership owns (or, as set forth on EXHIBIT
11.1.15(A) possesses adequate and enforceable licenses or other rights to use)
all Intellectual Property Rights now used or proposed to be used in its
business and has taken all necessary and desirable action to protect the
Intellectual Property Rights of Reach Partnership. No person has a right to
receive a royalty or similar payment in respect of any Intellectual Property
Rights pursuant to any contractual arrangements entered into by Reach
Partnership or otherwise. Reach Partnership has no licenses granted by or to
it and no other agreements to which it is a party, relating in whole or in part
to any of the Intellectual Property Rights. Except as set forth on EXHIBIT
11.1.15(A) Reach Partnership's use of the Intellectual Property Rights is not
interfering with, infringing upon or otherwise violating the rights of any
third party in or to such Intellectual Property Rights, and no proceedings have
been instituted against or notices received by Reach Partnership alleging that
Reach Partnership's use or proposed use of any Intellectual Property Rights
infringes upon or otherwise violates any rights of a third party in or to such
Intellectual Property Rights. Reach Partnership's confidential information has
never been misappropriated from others. Reach Partnership has supplied
Interstone with correct and complete copies of all Intellectual Property Rights
owned or used by Reach Partnership and described in EXHIBIT 11.1.15(A).
11.1.16 To the knowledge of the Representing Partner, except for minor,
immaterial quantities of such materials as are usually and customarily used in
and found in hotels (i.e., cleaning materials), no Hazardous Substances exist
on, in or under the Property or on, in or under any properties immediately
adjoining the Property, and the Property is not in violation of any
Environmental Laws or any federal, state or local law, ordinance or regulation
relating to industrial hygiene.
11.1.17 To the knowledge of the Representing Partner, there are no
underground storage tanks on the Property.
11.1.18 To the knowledge of the Representing Partner, no spillage or
discharge of any Hazardous Substances has occurred nor has there been
introduced to, on or under the Property (or any part thereof) any Hazardous
Substances or to, on or under any properties immediately adjoining the Property
or any part thereof.
11.1.19 To the knowledge of the Representing Partner, the assessed
valuation and real estate taxes set forth in EXHIBIT 11.1.19 hereto are the
assessed valuation of the Real Property, and the taxes paid or payable with
respect thereto for the Current Tax Year. Except as otherwise set forth in
EXHIBIT 11.1.19 there are no tax increases, additional assessments or
reassessments, assessments payable in annual or other installments, or tax
abatements or exemptions affecting the Real Property, and all taxes required to
be paid to any and all taxing authorities have been paid and will be paid, if
due and payable, up to Closing.
11.1.20 Neither Reach Partnership nor the Representing Partner has
retained any person to file notices of protest against, or to commence actions
to review, real property tax assessments against the Property.
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<PAGE> 21
11.1.21 To the knowledge of the Representing Partner, the Hotel and other
portions of the Property (including, without limitation, all floors, ceiling,
roofs, beams, electrical, mechanical, plumbing, HVAC, elevators and other
building systems, and structural elements thereof), are in good repair and
condition, and good operating condition (in the case of building systems) and
there are no latent or patent defects to the Property, Hotel or any part of
either thereof.
11.1.22 Reach Partnership is a limited partnership duly formed and validly
existing under the laws of the State of Delaware, and has the power to own its
own properties and to carry on its business as now being conducted.
11.1.23 The Representing Partner has the full right, power and capacity to
enter into this Agreement and to carry out the transactions contemplated hereby
and no consent or authorization of any person is required as a condition
precedent to the consummation of this Agreement or the transactions or other
events contemplated herein except those consents that have been obtained, and,
if the Representing Partner is not an individual, the Person who executed this
Agreement on behalf of the Representing Partner is duly authorized by such
partner.
11.1.24 The execution and delivery of this Agreement, the consummation of
the transactions herein contemplated and the compliance with the terms hereof
will not conflict with or result in a breach of any agreement to which Reach
Partnership, the Representing Partner or any of partners or principals of
Representing Partner is a party or by which any of them are bound, or any
lease, indenture, mortgage, loan agreement or instrument to which Reach
Partnership, the Representing Partner or any of the partners or principals of
Representing Partner, is a party or by which the Property, Reach Partnership,
the Representing Partner or any of the partners or principals of Representing
Partner is bound or, any Applicable Law.
11.1.25 Except as specifically set forth on EXHIBIT 11.1.25, neither Reach
Partnership nor the Representing Partner has received notice of, and the
Representing Partner has no knowledge of, any pending or threatened action,
litigation, investigation, condemnation or other proceeding (by any private
person or entity or by any Governmental Authority) against or relating to the
Property, or against Reach Partnership or the Representing Partner (or the
partners or principals of Representing Partners), which would or could (i)
result in a judgment or other lien being filed against the Property, (ii)
result in a judgment or other lien being filed against any of the partnership
interests in Reach Partnership, (iii) otherwise affect the Property, its
construction, use or occupancy, (iv) affect its right or ability (or that of
Representing Partner or the partners or principals of Representing Partners) to
perform their obligations under this Agreement, or (v) relate to or affect the
business of Reach Partnership, including, without limitation, the operation and
management of the Hotel . Any action pending or threatened is covered by
insurance of a reputable and solvent insurance company and applicable insurance
policies are in full force and effect and neither Reach Partnership nor the
Representing Partner has received any notice or threat of cancellation,
limitation or non-coverage.
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<PAGE> 22
11.1.26 Reach Partnership is not a foreign persons as that term is used
and defined in Sections 1445 and 7701 of the Code.
11.1.27 To the knowledge of the Representing Partner, no services,
material or work have been supplied by Reach Partnership's contractors,
subcontractors or materialmen with respect to the Property (or any part
thereof) for which payment has not been made in full. If, subsequent to
Closing, any mechanic's or other lien, charge or order for the payment of money
shall be filed against the Property (or any part thereof) or against Reach
Partnership or Reach Partnership's assigns, based upon any act or omission, or
alleged act or omission before or after Closing, of Reach Partnership or its
agent or any contractor, subcontractor or materialman connected with the
construction and completion by Reach Partnership of improvements at the
Property, or repairs made to the Property by or on behalf of Reach Partnership
(whether or not such lien, charge or order shall be valid or enforceable as
such), within ten (10) days after notice to Reach Partnership of the filing
thereof, Reach Partnership shall take such action, by bonding, deposit, payment
or otherwise, as will remove or satisfy such lien of record against the
Property. The provisions of this Section 11.1.27 shall survive Closing.
11.1.28 To the knowledge of the Representing Partner, for a period of five
(5) years prior to the Effective Date the Land did not constitute "agricultural
land" as defined in 7 U.S.C. 3501 et seq.
11.1.29 To the knowledge of the Representing Partner, the Hotel Assets
include all assets necessary for the conduct of the Hotel in the ordinary
course consistent with past practice are free from defects, have been
maintained in accordance with good industry practice, and are in good operating
condition and repair (except for ordinary wear and tear). Reach Partnership
owns good title to all of the Hotel Assets free and clear of all liens,
encumbrances or claims other than the Permitted Exceptions.
11.1.30. Except for the Mortgage, the Service Contracts listed on EXHIBIT
11.1.10, and those contracts listed on EXHIBIT 11.1.30 attached hereto and
except for Service Contracts made in the ordinary and usual course of its
business since the date hereof consistent with past practice or in connection
with this Agreement, Reach Partnership is not a party to, or bound by, any
contract of any kind to be performed after the Closing Date pursuant to which
it is obligated to expend more than $50,000 in any twelve-month period and that
is not subject to cancellation on not more than 30 days' notice by Reach
Partnership without penalty or increased cost. EXHIBIT 11.1.30 lists the
following contracts, agreements and other written arrangements to which Reach
Partnership is a party:
(a) any written arrangements (or group of related written
arrangements) for the lease of personal property providing for lease payments
in excess of S50,000 per annum;
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(b) any written arrangement (or group of related written
arrangements) for the purchase materials, supplies, inventory, products or
other property or, including, without limitation, any customer or vendor
contracts;
(c) any written arrangement (or group of related written
arrangements) under which it has created, incurred, assumed or guaranteed (or
may create, incur, assume or guarantee) indebtedness (including capitalized
lease obligations) involving more than $50,000 in principal amount or under
which it has imposed (or may impose) a security interest or lien on any of its
assets, tangible or intangible;
(d) any written arrangement (or group of related written
arrangements) concerning confidentiality or non-competition arrangements;
(e) any written arrangement with the Fine Partners or the Meisel
Partners, or the partners, officers or employees of Representing Party or the
members of the Representing Party's immediate family (1) providing for the
furnishing of material services by, (2) providing for the rental of material
real or personal property from, or (3) otherwise requiring material payments to
(other than for services as officers or employees of Reach Partnership), the
Representing Partner or any corporation, partnership, trust or other entity in
which any Representing Partner has a substantial interest as a shareholder,
officer, director, trustee or partner;
(f) any other written arrangement (or group of related written
arrangements) under which the consequences of a default or termination could
have a material adverse effect on Reach Partnership's business or finances;
(g) any other written arrangement (or group of related written
arrangements) either involving aggregate payments of more than $50,000 or not
entered into in the ordinary course of business consistent with past practice;
(h) any oral contract, agreement or other arrangement with respect to
any of the matters referred to in the foregoing clauses (a) through (g) and any
proposal (oral or written) to enter into any contract, agreements or other
arrangement with respect to any of the matters referred to in the foregoing
clauses (a) through (g).
Reach Partnership has delivered to Interstone a correct and complete
copy of each written arrangement listed in EXHIBIT 11.1.30, and has included as
part of EXHIBIT 11.1.30 a brief summary of any such oral contracts, agreements
or other arrangements and any proposals (oral or written) to enter into any
such contracts, agreements or other arrangements. With respect to each written
arrangement listed, to the knowledge of the Representing Partner, (A) the
written arrangement is legal, valid, binding, enforceable and in full force and
effect, (B) the written arrangement will continue to be legal, valid, binding,
enforceable and in full force and effect on identical terms following Closing,
(C) no party is in breach or default, and no event has occurred which with
notice or lapse of time could constitute a breach or default or permit
termination,
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modification or acceleration, under the written arrangement and (D) no party
has repudiated any term of the written arrangement.
11.1.31 The financial statements of the operation of the Property covering
fiscal (calendar) year 1995, including the statements of income and expenses
are complete, true and accurate in all material respects, were prepared in
accordance with GAAP consistently applied throughout the periods indicated, are
in accordance with the books and records of Reach Partnership and fairly
present the financial position, cash flow, equity and results of operations of
Reach Partnership. The financial statements of the operation of the Property,
including the statements of income and expenses, covering the period January 1
to December 31 of fiscal year 1995, attached hereto as part of EXHIBIT 11.1.31,
were complete, true and accurate in all material respects as of the date of
such financial statements.
11.1.32 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth on
EXHIBIT 11.1.32, since the date of financial statements referred to in Section
11.1.31, there has not been any:
(a) material adverse change in the assets, liabilities, business,
condition (financial or otherwise), operations, results of operations or
prospects of Reach Partnership;
(b) increase in the compensation payable or to become payable by
Reach Partnership or Reach Partnership's management agents to any of its or
their officers, employees, former employees or agents;
(c) sale, lease, assignment or transfer of any of the assets,
tangible or intangible, of Reach Partnership except for sales of food, beverage
and other supplies in the ordinary course of business;
(d) cancellation, compromise, waiver or release of any rights or
claim (or series of related rights or claims) either (i) involving an Affiliate
of Reach Partnership, the Fine Partners, the Meisel Partners or any of them,
(ii) involving more than $25,000 in the aggregate, or (iii) outside the
ordinary course of business consistent with past practice;
(e) amendment, cancellation or termination of any contract, license
or other instrument (i) involving an Affiliate of Reach Partnership, the Fine
Partners, the Meisel Partners or any of them, (ii) involving payments in excess
of $50,000 in the aggregate, or (iii) that are otherwise material to Reach
Partnership;
(f) capital expenditure or the execution of any lease, contract,
license, sublease or sublicense (or series of related contracts, leases,
subleases, licenses and sublicenses) or any incurring of liability therefor (i)
involving an Affiliate of Reach Partnership the Fine Partners, the Meisel
Partners or any of them, (ii) involving payments in excess of $50,000 per annum
in the aggregate, or (iii) outside the ordinary course of business consistent
with past practice;
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(g) delay or failure to repay when due any material obligation of
Reach Partnership;
(h) failure to operate the Hotel in the ordinary course consistent
with past practice so as to use reasonable efforts to preserve the Hotel
business intact, and to maintain the services of Hotel's personnel and the
goodwill of Reach Partnership's guests, customers, suppliers and others having
business relations with it;
(i) change in accounting methods or practices by Reach Partnership;
(j) revaluation by Reach Partnership of any of the assets of Reach
Partnership, including, without limitation, writing off notes or accounts
receivable;
(k) damage, destruction or loss (whether or not covered by insurance)
that has a material adverse effect or that may reasonably be expected to have a
material adverse effect on the business or finances of Reach Partnership;
(l) mortgage, pledge or other encumbrance of any of the assets of
Reach Partnership;
(m) distribution or redemption, purchase, or other acquisition of any
interests in Reach Partnership, any bonus, fee or other payment, or any other
transfer of assets to or on behalf of Representing Partner or any Affiliate of
Representing Partner, including, but not limited to, any payment of principal
of or interest on any debt owed to Representing Partner;
(n) indebtedness incurred by Reach Partnership or borrowed money or
any commitment to borrow money entered into by Reach Partnership, or any loans
or guarantees made or agreed to be made by Reach Partnership;
(o) liabilities involving $50,000 or more or otherwise material to
the business of Reach Partnership except in the ordinary course of business and
consistent with past practice, or any increase or change in any assumptions
underlying or methods of calculating any bad debt, contingency or other
reserves;
(p) payment, discharge or satisfaction of any liabilities other than
the payment, discharge or satisfaction in the ordinary course of business and
consistent with past practice of liabilities reflected or reserved against on
the financial statements (other than debt principal or interest repayment) or
incurred in the ordinary course of business and consistent with past practice
since the last date of the financial statements (other than debt principal or
interest repayment);
(q) acceleration, termination, modification, cancellation or
threatened termination or cancellation of any contract to which Reach
Partnership is a party or by which Reach Partnership is bound;
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<PAGE> 26
(r) capital investment in, any loan to, or any acquisition of the
securities or assets of any other person (i) involving Reach Partnership, the
Fine Partners, the Meisel Partners or any Affiliate of Representing Partner,
(ii) involving more than $25,000 in the aggregate, or (iii) outside the
ordinary course of business consistent with past practice;
(s) grant of any license or sublicense of any rights under or with
respect to any Intellectual Property Rights;
(t) charitable or other capital contribution made or pledged by Reach
Partnership;
(u) agreement (either oral or written) by Reach Partnership to do any
of the foregoing; or
(v) other event or condition of any character that in any one case,
or in the aggregate, has had a material adverse effect on the business or
finances of Reach Partnership or any event or condition known to Reach
Partnership which it is reasonable to expect will, in any one case or in the
aggregate, have such a material adverse effect in the future.
11.1.33 The prepaid items recorded on the balance sheets included in the
financial statements of Reach Partnership constitute a full and complete
presentation of each and every prepaid item which Reach Partnership is entitled
to list, in accordance with generally accepted accounting principles.
11.1.34 Reach Partnership has no liabilities or obligations (absolute,
accrued, contingent or otherwise) except (i) liabilities that are reflected and
reserved against on the December 31, 1995 audited financial statements of Reach
Partnership, that have not been paid or discharged since the date of the
financial statements, and (ii) liabilities incurred since the date of the
financial statements in the ordinary course of business consistent with past
practice and in accordance with this Agreement (none of which relates to any
breach of contract, breach of warranty, tort, infringement or violation of law
or arose out of any complaint, action, suit or proceeding and none of which
individually or in the aggregate could have a material adverse effect on the
business of finances of Reach Partnership).
11.1.35 The values at which the inventories are shown on the 1995 audited
financial statements of Reach Partnership have been determined in accordance
with the normal valuation policy of Reach Partnership, consistently applied,
and in accordance with GAAP. The inventories (and items of inventory acquired
subsequent to the date of the financial statements) consist only of items of
quality and quantity commercially usable and salable in the ordinary course of
business, except for any items of obsolete material or material below standard
quality, all of which have been written down to realizable market value, or for
which adequate reserves have been provided on the financial statements of Reach
Partnership and the current quantities of all inventories are reasonable in the
current circumstances of the business of Reach Partnership.
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11.1.36 Neither Reach Partnership nor the Mortgagee is in breach, default
or violation of any of the monetary or non-monetary provisions of the Mortgage,
and no event has occurred which with notice or the passing of time or both
could constitute a breach, default or violation or thereunder; the consent of
the Mortgagee to the assignment and contribution of all of the partnership
interests owned by the Fine Partners in Reach Partnership to Interstone and the
execution of the Revised Reach Partnership Agreement is valid and binding; and
the Mortgage has not been amended, modified or supplemented except as set forth
on EXHIBIT 11.1.36.
11.1.37 Intentionally deleted.
11.1.38 Reach Partnership and, to the knowledge of Representing Partner,
the conduct of the Hotel business of Reach Partnership, are in compliance with
all Applicable Laws. Neither Reach Partnership nor the Representing Partner has
received any written notice to the effect that, or otherwise been advised that,
Reach Partnership is not in compliance with any Applicable Laws, and the
Representing Partner has no reason to anticipate that any currently existing
circumstances are likely to result in violations of any Applicable Laws, which
could in any one case or in the aggregate, have a material adverse effect on
the business or finances of Reach Partnership. To the Representing Partner's
knowledge, Reach Partnership has all Permits, each of which is currently valid
and in full force and effect, necessary to carry on the business of Reach
Partnership, which Permits are set forth on EXHIBIT 11.1.38. Without limiting
the generality of the preceding representation and warranty, Reach Partnership
has not, (i) made or agreed to make any contribution, payment or gift to any
government official, employee, or agent where either the contribution, payment
or gift or the purpose thereof was illegal under any Applicable Laws , (ii)
established or maintained any unrecorded fund or asset for any purpose or made
any false entries on the books and records of Reach Partnership for any reason,
or (iii) made or agreed to make any contribution, or reimbursed any political
gift or contribution made by any other person, to any candidate for federal,
state, local or foreign public office. In addition, Reach Partnership (a) has
complied with all Applicable Laws relating to employee and civil rights and
relating to employment opportunities, (b) filed in a timely manner all reports
and documents it was required to file (and the information contained therein
was correct and complete in all respects) under all Applicable Laws, (c) has
possession of all records and documents it was required to retain under all
Applicable Laws. To the knowledge of the Representing Partner, the Property is
in compliance with the requirements of the Americans with Disabilities Act. The
Fine Partners further represent that the Fine Partners are in compliance with
all Applicable Laws, and the Meisel Partners further represent that the Meisel
Partners are in compliance with all Applicable Laws
11.1.39 TAX MATTERS.
(a) Reach Partnership has filed with the appropriate taxing or other
Governmental Authorities all returns (including, without limitation,
information returns and other information) required to be filed through the
date hereof. The information filed is complete and accurate in all respects.
Reach Partnership has delivered to Interstone complete and accurate copies of
Reach Partnership's federal, state and local tax returns for the years
1992-1995 or such
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lesser number of years as Reach Partnership shall have been in existence. As of
the date hereof, Reach Partnership has not filed any federal, state or local
tax returns for the year 1996.
(b) All Taxes of Reach Partnership, in respect of periods beginning
before the date hereof, have been paid, or an adequate reserve (in conformity
with GAAP) has been established therefor, and Reach Partnership has no
liability for Taxes in excess of the amounts so paid or reserves so
established. All Taxes that Reach Partnership has been required to collect or
withhold have been duly collected or withheld and, to the extent required when
due, have been or will be duly paid to the proper taxing authority.
(c) No deficiencies for Taxes of Reach Partnership have been claimed,
proposed or assessed by any taxing or other Governmental Authority. There are
no pending or, to its knowledge, threatened audits, investigations or claims
for or relating to any liability in respect of taxes of Reach Partnership, and
there are no matters under discussion with any Governmental Authorities with
respect to taxes of Reach Partnership.
(d) With respect to any and all audits of federal, state and local
returns for Taxes, the assessed amount, and all penalties and interest thereon
have been paid in full. Reach Partnership has not been notified that any taxing
authority intends to audit a return for any other period. No extension of a
statute of limitations relating to Taxes is in effect with respect to Reach
Partnership.
11.1.40 TAX RETURNS. Reach Partnership has delivered to Interstone true
and complete copies of all federal, state and local returns filed by Reach
Partnership covering any year or portion of a year during which Reach
Partnership owned all or any part of the Property.
11.1.41 Intentionally deleted.
11.1.42 Intentionally deleted.
11.1.43 EXHIBIT 11.1.43 contains a true and correct list of the names of
each bank, savings and loan, or other financial institution in which Reach
Partnership has an account, including cash contribution accounts, or safe
deposit boxes, and the names of all persons authorized to draw thereon or to
access thereto.
11.1.44 No representations or warranties by Reach Partnership in this
Agreement, nor any document, exhibit, statement, certificate or schedule
furnished or to be furnished to Interstone or Reach Partnership pursuant
hereto, or in connection with the transactions contemplated hereby, contains or
will contain any untrue statement of a material fact, or omits or will omit to
state any material fact necessary to make the statements or facts contained
therein not misleading.
11.2 The representations, warranties and covenants set forth in Section
11.1 shall survive the Closing for a period of two (2) years, and upon the
expiration of such two (2) year
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period all such representations, warranties and covenants (and any and all
claims and causes of action resulting from or on account of any breach thereof
for which Partnership or Interstone has not theretofore served upon Reach
Partnership written notice of claim) shall terminate and may not be asserted.
Nothing herein shall limit the duration of (i) any indemnity or other agreement
specified in this Agreement to survive the Closing (other than indemnity
agreements relating to representations or warranties which have expired two (2)
years after the Closing), and (ii) any representations, warranties,
indemnities, covenants or agreements set forth in the instruments or documents
delivered at Closing.
11.3 Notwithstanding anything contained in this Agreement to the contrary,
the failure of Reach Partnership or any of the Fine Partners or the Meisel
Partners to disclose any matter herein of which it or he has knowledge shall
not be a breach of this Agreement if and to the extent that Manager has actual
knowledge of such matter as of the date that Interstone executes this
Agreement. This limitation shall not apply to actual knowledge acquired by
Manager after such date or to Manager's constructive knowledge at any time.
11.4 All documents and other items to be delivered by Reach Partnership,
the Fine Partners or the Meisel Partners pursuant to this Article XI shall be
deemed delivered if such documents or item is within the possession or control
of Manager and Reach Partnership, the Fine Partners and/or the Meisel Partners
have authorized Manager in writing to deliver same.
11.5 All of the Meisel Partners shall be jointly and severally liable for
all of the representations and warranties of a Representing Partner who is a
Meisel Partner, and all of the Fine Partners shall be jointly and severally
liable for all of the representations and warranties of a Representing Partner
who is a Fine Partner.
ARTICLE XII
BROKER.
12.1 The Fine Partners, the Meisel Partners and Interstone each hereby
represents to the other that it has not dealt with, or otherwise disclosed this
Agreement or the subject matter hereof to, any broker, agent, or salesman
(collectively, a "Broker"), so as to create any legal right or claim in any
Broker for a sales commission or compensation with respect to the negotiation
and/or execution of this Agreement or the closing of the transactions and other
events provided for in this Agreement. The Fine Partners jointly and severally
hereby agree to indemnify, defend and hold harmless Reach Partnership and
Interstone from any and all claims (and all expenses incurred in defending any
such claims or in enforcing this indemnity, including attorneys' fees and court
costs) made by Broker for a sales commission or similar fee resulting out of or
in any way connected with any claimed agency or other relationship with the
Fine Partners or any of them and relating to the transactions or other events
contemplated hereby. The Meisel Partners jointly and severally hereby agree to
indemnify, defend and hold harmless Reach Partnership and Interstone from any
and all claims (and all expenses incurred in defending any such claims or in
enforcing this indemnity, including attorneys' fees and court costs) made by
Broker for a sales commission or similar fee resulting out of or in any way
connected with any
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<PAGE> 30
claimed agency or other relationship with the Meisel Partners or any of them
and relating to the transactions or other events contemplated hereby.
Interstone hereby agrees to indemnify, defend and hold harmless Reach
Partnership, the Fine Partners and the Meisel Partners from any and all claims
(and all expenses incurred in defending any such claims or in enforcing this
indemnity, including attorneys' fees and court costs) made by Broker for a
sales commission or similar fee resulting out of or in any way connected with
any claimed agency or other relationship with Interstone and relating to the
transactions contemplated hereby. The provisions of this Article 12 shall
survive the Closing or the termination of this Agreement.
ARTICLE XIII
DEFAULT AND REMEDIES.
13.1 If the Fine Partners and the Meisel Partners shall tender all
documents, instruments, items and contributions required by this Agreement and
otherwise are in full compliance with their obligations hereunder, and if (a)
Interstone shall fail or refuse to make the contribution of cash required to be
made pursuant to Section 3.1 hereof, (b) Interstone shall fail to execute and
deliver the Revised Reach Partnership Agreement, or (c) Interstone otherwise is
in default hereunder so that Fine Partners, the Meisel Partners or any of them
have the right to refuse to close under this Agreement, then following receipt
by Interstone of five (5) Business Days prior written notice from the Fine
Partners and the Meisel Partners stating that Interstone is in default
hereunder, unless Interstone shall have cured such default during the five (5)
Business Day period, the Fine Partners and the Meisel Partners shall have all
remedies, at law or in equity, available to them.
13.2 If Interstone shall tender all documents, instruments, items and
contributions required by this Agreement and otherwise is in full compliance
with its obligations hereunder, and if (a) the Fine Partners, the Meisel
Partners or any of them shall fail to execute the Revised Reach Partnership
Agreement, or (b) the Fine Partners, the Meisel Partners or any of them is
otherwise in default hereunder so that Interstone has the right to refuse to
close under this Agreement, then, following receipt by the Fine Partners and
the Meisel Partners of five (5) Business Days prior written notice from
Interstone stating that the Fine Partners, the Meisel Partners or any of them,
are in default hereunder, unless the applicable Fine Partners or Meisel
Partners shall have cured such default during the five (5) Business Day Period,
Interstone shall have all remedies, at law or in equity, available to it.
13.3 Subject to Section 11.3, in the event that any of the representations
or warranties of any of the Fine Partners or Meisel Partners set forth in this
Agreement are not true and correct as of the Closing, then Interstone shall
have all remedies, at law or in equity, available to it.
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ARTICLE XIV
INDEMNIFICATION.
14.1 The Fine Partners hereby jointly and severally agree to indemnify,
defend and hold harmless Reach Partnership and Interstone from and against:
(a) Any and all claims or demands made by third parties and arising
out of any and all acts or omissions of Reach Partnership, the Fine Partners or
any of them relating to the Property and any and all liabilities and
obligations of Reach Partnership to third parties including, without
limitation, any and all liabilities or obligations of Reach Partnership, the
Fine Partners or any of them in respect of which claims are asserted against
Reach Partnership or the Property (or any part thereof) by third parties by
reason of the acts or omissions of Reach Partnership, the Fine Partners or any
of them (or their respective agents, employees or contractors) with respect to
the Property (or any part thereof), the Service Contracts, the Mortgage or
other agreements relating to the Property, by reason of events which occurred
or causes of action which accrued prior to the Closing specifically excluding
any and all claims or causes of action caused by Interstone and claims and
causes of action for which Interstone has expressly assumed liability pursuant
to this Agreement.
(b) Any material misrepresentation, breach of warranty, or
nonfulfillment of any representation, warranty, covenant or agreement under
this Agreement on the part of the Fine Partners or any of them, or from any
misrepresentation in, or omission of a material nature from, any certificate of
other instrument furnished or to be furnished under this Agreement by or for
the Fine Partners or any of them or Reach Partnership.
(c) Any losses, expenses or costs incurred by or suffered by
Interstone or Reach Partnership as a result of (i) any discharge of Hazardous
Substances caused, or knowingly permitted, by Reach Partnership or any of the
Fine Partners or their respective employees or agents, or any other
introduction of Hazardous Substances on, under or about the Real Property, or
any property adjoining the Real Property, caused, or knowingly permitted, by
Reach Partnership or any of the Fine Partners or their respective employees or
agents, during Reach Partnership's ownership of the Property prior to Closing;
or (ii) any wrongful act of Reach Partnership during Reach Partnership's
ownership of the Property prior to Closing.
(d) All claims, actions, suits, proceedings, demands, assessments,
judgments, costs and expenses (including reasonable attorneys' fees) incident
to any of the foregoing.
14.2 The Meisel Partners hereby jointly and severally agree to indemnify,
defend and hold harmless Reach Partnership and Interstone from and against:
(a) Any and all claims or demands made by third parties and arising
out of any and all acts or omissions of Reach Partnership, the Meisel Partners
or any of them relating to the Property and any and all liabilities and
obligations of Reach Partnership to third parties including, without
limitation, any and all liabilities or obligations of Reach Partnership, the
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<PAGE> 32
Meisel Partners or any of them in respect of which claims are asserted against
Reach Partnership or the Property (or any part thereof) by third parties by
reason of the acts or omissions of Reach Partnership, the Meisel Partners or
any of them (or their respective agents, employees or contractors) with respect
to the Property (or any part thereof), the Service Contracts, the Mortgage or
other agreements relating to the Property, by reason of events which occurred
or causes of action which accrued prior to the Closing specifically excluding
any and all claims or causes of action caused by Interstone and claims and
causes of action for which Interstone has expressly assumed liability pursuant
to this Agreement.
(b) Any material misrepresentation, breach of warranty, or
nonfulfillment of any representation, warranty, covenant or agreement under
this Agreement on the part of the Meisel Partners or any of them, or from any
misrepresentation in, or omission of a material nature from, any certificate of
other instrument furnished or to be furnished under this Agreement by or for
the Meisel Partners or any of them or Reach Partnership.
(c) Any losses, expenses or costs incurred by or suffered by
Interstone or Reach Partnership as a result of (i) any discharge of Hazardous
Substances caused, or knowingly permitted, by Reach Partnership or any of the
Meisel Partners or their respective employees or agents, or any other
introduction of Hazardous Substances on, under or about the Real Property, or
any property adjoining the Real Property caused, or knowingly permitted, by
Reach Partnership or any of the Meisel Partners or their respective employees
or agents, during Reach Partnership's ownership of the Property prior to
Closing; or (ii) any wrongful act of Reach Partnership during Reach
Partnership's ownership of the Property prior to Closing.
(d) All claims, actions, suits, proceedings, demands, assessments,
judgments, costs and expenses (including reasonable attorneys' fees) incident
to any of the foregoing.
14.3 The Fine Partners' and the Meisel Partners' respective obligations
under Sections 14.1 and 14.2 shall be subject to and conditioned upon the
performance and satisfaction of all of the following provisions and conditions:
(a) Within fifteen (15) days (and within ten (10) days in the event
of service of judicial process or other court pleadings or documents) after
Reach Partnership or Interstone has received written notice of a claim for
which the Fine Partners or the Meisel Partners may be responsible under
Sections 14.1 or 14.2, Interstone shall deliver a complete copy of such notice
to the Fine Partners or the Meisel Partners, as the case may be, but the
failure to notify the Fine Partners and the Meisel Partners, as the case may
be, of a particular claim within that period of time shall not defeat or
terminate the rights of the Reach Partnership or Interstone under Section 14.1
with respect to that claim, unless such failure or delay of notice prejudiced
or adversely affected the Fine Partners and/or the Meisel Partners in some
material respect.
(b) If, by the first to occur of (1) the thirtieth day after the Fine
Partners or the Meisel Partners, as the case may be, have received written
notice of a claim for indemnification and defense under this Section 14.3, and
(2) the date prior to the date on which will occur the entry of a judgment
against Reach Partnership or Interstone with respect to that
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claim, the Fine Partners or the Meisel Partners notify Interstone that the Fine
Partners or the Meisel Partners will defend such claims, then the Fine Partners
or the Meisel Partners, as the case may be, shall have the sole right to defend
such claim and to select and retain counsel to defend such claim at their
expense, and the Fine Partners or the Meisel Partners, as the case may be,
shall have complete control over all decisions relating to the defense,
contest, conduct and settlement of such claim, but if within such time the Fine
Partners and/or the Meisel Partners fail to notify Interstone that they will
defend such claim, then Interstone may retain a single joint counsel reasonably
satisfactory to the Fine Partners or the Meisel Partners, as the case may be,
to defend, contest and settle such claim, the reasonable fees, costs and
expenses of which will be paid by the Fine Partners or the Meisel Partners, as
the case may be, and, in addition, even if the Fine Partners and/or the Meisel
Partners do timely notify Interstone and engage counsel and defend such claim,
Interstone may, at its sole cost and expense, also retain separate legal
counsel to advise Interstone and Reach Partnership with respect to any such
claim. The Fine Partners or the Meisel Partners, as the case may be, shall, at
reasonable intervals, advise Interstone and Reach Partnership of the status of
such claim and the Fine Partners and/or the Meisel Partners actions pertaining
thereto.
(c) Neither the Fine Partners nor the Meisel Partners shall settle
any claim without the prior written consent of Reach Partnership and
Interstone, which consent may be withheld in the sole discretion of Reach
Partnership or Interstone.
(d) Upon the written request of the Fine Partners or the Meisel
Partners, Reach Partnership shall cooperate in the contest of such claim,
provided that the Fine Partners or the Meisel Partners that requested
cooperation shall reimburse Reach Partnership for any and all out-of-pocket
costs and expenses (not including fees or expenses of Reach Partnership's
separate legal counsel or any other outside consultants or advisers) reasonably
incurred by Reach Partnership in connection therewith.
14.3 Reach Partnership shall, and hereby does, indemnify, defend and hold
harmless the Fine Partners and the Meisel Partners from and against any and all
claims or demands made by third parties arising out of any and all acts or
omissions of Reach Partnership relating to the Property and any and all
liabilities and obligations of Reach Partnership to third parties including,
without limitation, any and all liabilities or obligations of Reach Partnership
in respect of which claims are asserted against the Fine Partners, the Meisel
Partners or any of them by third parties by reason of Reach Partnership's (or
Reach Partnership's agents', employees' or contractors') acts or wrongful
omissions with respect to the Property (or any part thereof ), the Service
Contracts, the Mortgage or other agreements relating to the Property, by reason
of events which occurred or causes of action which accrued from or after the
Closing, specifically excluding all claims or causes of action caused by the
Fine Partners or the Meisel Partners or any of them or their respective agents,
employees or contractors.
14.4 Reach Partnership's obligations under Section 14.3 shall be subject
to and conditioned upon the performance and satisfaction of all of the
following provisions and conditions:
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(a) Within fifteen (15) days (and within ten (10) days in the event
of service of judicial process or other court pleadings or documents) after the
Fine Partners or the Meisel Partners have received written notice of a claim
for which Reach Partnership may be responsible under Section 14.3, the Fine
Partners or the Meisel Partners, as the case may be, shall deliver complete
copies of such notice to Reach Partnership and Interstone, but the failure to
notify Reach Partnership and Interstone of a particular claim within that
period of time shall not defeat or terminate the rights of the Fine Partners or
the Meisel Partners under Section 14.3 with respect to that claim, unless such
failure or delay of notice prejudiced or adversely affected Reach Partnership
or Interstone in some material respect.
(b) If, by the first to occur of (1) the thirtieth day after Reach
Partnership and Interstone have received written notice of a claim for
indemnification and defense under this Section 14.4, and (2) the date prior to
the date on which will occur the entry of a judgment against the Fine Partners
or the Meisel Partners or any of them with respect to that claim, Reach
Partnership notifies the Fine Partners or the Meisel Partners, as the case may
be that Reach Partnership will defend such claims, then Reach Partnership shall
have the sole right to defend such claim and to select and retain counsel to
defend such claim at Reach Partnership's expense, and Reach Partnership shall
have complete control over all decisions relating to the defense, contest,
conduct and settlement of such claim, but if within such time Reach Partnership
fails to notify the Fine Partners or the Meisel Partners, as the case may be,
that it will defend such claim, then the Fine Partners or the Meisel Partners,
as the case may be, may retain a single joint counsel reasonably satisfactory
to Reach Partnership to defend, contest and settle such claim, the reasonable
fees, costs and expenses of which will be paid by Reach Partnership, and, in
addition, even if Reach Partnership does timely notify the Fine Partners or the
Meisel Partners, as the case may be, and engage counsel and defend such claim,
the Fine Partners or the Meisel Partners, as the case may be, may, at their
sole cost and expense, also retain separate legal counsel to advise the Fine
Partners or the Meisel Partners, as the case may be, with respect to any such
claim. Reach Partnership shall, at reasonable intervals, advise the Fine
Partners or the Meisel Partners, as the case may be, of the status of such
claim and Reach Partnership's actions pertaining thereto.
(c) Reach Partnership shall have the right, in its sole discretion
and without the consent of the Fine Partners or the Meisel Partners, to settle
any claim for such amount (if any) and on such basis as Reach Partnership shall
determine in its sole discretion as long as such settlement does not obligate
the Fine Partners, the Meisel Partners, or any of them, to pay any amount or
perform any obligation or be subjected to any liability, but if the proposed
settlement of such claim would obligate the Fine Partners, the Meisel Partners
or any of them to pay any amount or perform any obligations or be subjected to
any liability, then such settlement shall be subject to the prior written
consent of the Fine Partners or the Meisel Partners, as the case may be, which
consent may be withheld in the sole discretion of the Fine Partners or the
Meisel Partners, as the case may be.
(d) Upon Reach Partnership's written request, the Fine Partners
and/or the Meisel Partners shall cooperate with Reach Partnership in the
contest of such claim, provided that Reach Partnership shall reimburse the Fine
Partners and/or the Meisel Partners, as the case may be, for any out-of-pocket
costs and expenses (not including fees or expenses of the separate
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legal counsel of the Fine Partners or the Meisel Partners or any other outside
consultants or advisers) reasonably incurred by the Fine Partners and/or the
Meisel Partners in connection therewith.
14.5 The provisions of this Article 14 shall survive the Closing for a
period of two (2) years, and upon the expiration of such two (2) year period
all such indemnities (and any and all claims and causes of action resulting
from such indemnities or on account thereof for which written notice of claim
has not then been given to the other parties) shall terminate.
ARTICLE XV
MISCELLANEOUS.
15.1 Notices. Notices required or permitted to be given hereunder shall be
in writing and shall be delivered by (i) hand, (ii) overnight courier, (iii)
telefacsimile (provided the transmitting machine produces an acknowledgment of
delivery), or (iv) certified mail, return receipt requested, postage prepaid,
and addressed to each party at its address as set forth below. Any such notice,
request, or other communication shall be considered given or delivered, as the
case may be, on the date of hand or facsimile delivery, one (1) Business Day
after mailing by a generally recognized overnight courier (requesting proof of
delivery), or three (3) Business Days after the date of deposit in the United
States mail as provided above. By giving at least ten (10) days' prior written
notice thereof, any party hereto may from time to time and at any time change
its mailing address.
If to Interstone: Interstate Hotels
Foster Plaza Ten
680 Andersen Drive
Pittsburgh, Pennsylvania 15220-8126
Telefacsimile No.: (412) 937-3116
Attention: J. William Richardson
With a copy to: Marvin I. Droz, Esq.
Vice President/General Counsel
Interstate Hotels
Legal Department
Foster Plaza Ten
680 Andersen Drive
Pittsburgh, Pennsylvania 15220-8126
Telefacsimile No.: (412) 937-3116
With a copy to: Steptoe & Johnson LLP
1330 Connecticut Avenue, N.W.
Washington, D.C. 20036
Attn.: Blake D. Rubin, Esq.
Telefacsimile No.: (202) 429-3902
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<PAGE> 36
If to Reach Partnership Interstate Hotels
Foster Plaza Ten
680 Andersen Drive
Pittsburgh, Pennsylvania 15220-8126
Telefacsimile No.: (412) 937-3116
Attention: J. William Richardson
With a copy to: Marvin I. Droz, Esq.
Vice President/General Counsel
Interstate Hotels
Legal Department
Foster Plaza Ten
680 Andersen Drive
Pittsburgh, Pennsylvania 15220-8126
Telefacsimile No.: (412) 937-3116
With a copy to: Steptoe & Johnson LLP
1330 Connecticut Avenue, N.W.
Washington, D.C. 20036
Attn.: Blake D. Rubin, Esq.
Telefacsimile No.: (202) 429-3902
If to the Meisel Partners: Martin J. Saturn
Meisel & Cohen Properties
6000 Executive Boulevard
Rockville, MD 20850
Telefacsimile No.: (301) 881-0546
With a copy to: Arnold & Porter
555 12th Street, N.W.
Washington, D.C. 20004
Attn.: S. Lee Narrow, Esq.
Telefacsimile No.: (202) 942-5999
If to the Fine Partners: Milton Fine
Foster Plaza Ten
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<PAGE> 37
680 Andersen Drive
Pittsburgh, Pennsylvania 15220-8126
Telefacsimile No.:
With a copy to: Marvin I. Droz, Esq.
Vice President/Existing Counsel
Interstate Hotels
Legal Department
Foster Plaza Ten
680 Andersen Drive
Pittsburgh, Pennsylvania 15220-8126
Telefacsimile No.: (412) 937-3116
15.2 Assignment. The obligations of Interstone hereunder may be assigned
to any Affiliate provided that the assignee shall assume all of the obligations
of Interstone under this Agreement. Upon such assignment, the assignor shall be
relieved of all further obligations under this Agreement. The obligations of
any of the Fine Partners or Meisel Partners hereunder may not be assigned.
15.3 Entire Agreement; Modification. This Agreement supersedes all prior
discussions and agreements between Interstone and all or any of the Fine
Partners or Meisel Partners with respect to the Property and contains the sole
and entire understanding between Interstone, the Fine Partners and the Meisel
Partners with respect to the subject matter hereof. All promises, inducements,
offers, solicitations, agreements, commitments, representations and warranties
heretofore made between such parties are merged into this Agreement. This
Agreement shall not be modified or amended in any respect except by a written
instrument executed by or on behalf of each of the parties to this Agreement.
15.4 Exhibits. Each and every Exhibit referred to or otherwise mentioned
in this Agreement is attached to this Agreement and is and shall be construed
to be made a part of this Agreement by such reference or other mention at each
point at which such reference or other mention occurs, in the same manner and
with the same effect as if each Exhibit were set forth in full and at length
every time it is referred to or otherwise mentioned.
15.5 Captions. All captions, headings, Article and Section numbers and
letters and other reference numbers or letters are solely for the purpose of
facilitating reference to this Agreement and shall not supplement, limit, or
otherwise vary in any respect the text of this Agreement.
15.6 Construction. All references to Articles or Sections shall be deemed
to refer to the appropriate Articles or Sections of this Agreement. Unless
otherwise specified in this Agreement, the terms "herein," "hereof,
"hereunder," and other terms of like or similar import, shall be deemed to
refer to this Agreement as a whole, and not to any particular Article, Section,
Subsection or clause hereof. Whenever required by the context, any gender used
in this
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Agreement shall include any other gender, the singular shall include the plural
and the plural shall include the singular.
15.7 Counterparts. This Agreement may be executed in several counterparts,
each of which shall constitute an original and all of which together shall
constitute one and the same instrument.
15.8 Waiver. Any condition or right of termination, cancellation or
rescission granted by this Agreement to either party may be waived by such
party, but no such waiver may be relied upon or asserted by the other party
unless such waiver has been made in writing by the waiving party, except as
specifically provided herein.
15.9 Rights Cumulative. Except as expressly limited by the terms of this
Agreement, all rights, powers, and privileges conferred hereunder shall be
cumulative and not restrictive of those given by law.
15.10 Successors and Assigns. Subject to the restrictions on assignment
contained in Section 15.2, this Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and
assigns.
15.11 Date of Performance. If the time period by which any right, option,
or election provided under this Agreement must be exercised or by which any
acts or payments required hereunder must be performed or paid, or by which the
Closing must be held, expires on a day other than a Business Day, then such
time period shall be automatically extended to the close of business on the
next regularly scheduled Business Day.
15.12 Governing Law. This Agreement shall be governed by the internal laws
(and not the conflict of laws rules) of the State of Florida. In any action or
proceeding concerning this Agreement, or any agreement or instrument delivered
pursuant to this Agreement, or the transactions delivered pursuant to this
Agreement, or the transactions contemplated by this Agreement, (a) all parties
(and the existing partners of such parties, and the partners of such the
existing partners) to this Agreement or such other agreement or instrument
hereby consent (i) to the jurisdiction of the State of Florida over all such
parties and their the existing partners, and the partners of such the existing
partners and (ii) that venue for all actions and proceedings shall be in the
State of Florida.
15.13 Third Party Beneficiaries. Nothing in this Agreement is intended or
shall be construed to confer upon or to give to any person, firm or corporation
other than the parties hereto, their successors and assigns any right, remedy,
or claim under or by reason of this Agreement. All terms and conditions in this
Agreement shall be for the sole and exclusive benefit of the parties hereto,
their successors and assigns.
15.14 Further Assurances. Each of the parties hereto agrees to execute
promptly on demand without additional consideration therefor, but without cost
thereto, and deliver to the other such further documents or instruments as may
be reasonable and necessary in furtherance
- 38 -
<PAGE> 39
of the performance of the terms, covenants and conditions of this Agreement.
This Section 15.14 shall survive the Closing.
15.15 Partial Invalidity. If any term or provision of this Agreement or
the application thereof to any person or circumstances shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement, or the application
of such term or provision to persons or circumstances other than those as to
which it is held invalid or unenforceable, shall not be affected thereby, and
each term and provision of this Agreement shall be valid and be enforced to the
fullest extent permitted by law.
15.16 Income Taxes. The Fine Partners, the Meisel Partners and Interstone
have each conducted their own "due diligence" investigations and analyses with
respect to the Property for U.S. Federal, state and local income tax purposes.
The Fine Partners, the Meisel Partners and Interstone each agrees that the
other parties has not made and does not make any representation or warranty
concerning the treatment or character of any item of income, gain, loss,
deduction or credit for U.S. Federal, state or local income tax purposes that
arises from or in respect of the Property from and after the Closing.
15.17 Attorneys' Fees. Each party shall pay directly any and all fees,
costs and expenses of its attorneys incurred on its behalf pertaining to the
negotiation and preparation of this Agreement and the closing of the
contributions and transfers contemplated by this Agreement. If any party hereto
brings an action or suit against any other party arising out of this Agreement,
the prevailing party in such action or suit shall be entitled to recover from
the other party all reasonable costs and expenses (including, but not limited
to, all court costs and reasonable attorneys' fees and expenses) of such action
or suit.
15.18 Publicity. Neither party shall issue any press release or make any
public statement regarding the transactions contemplated hereby, without the
prior approval of the other party; provided, however, that nothing herein shall
be deemed to prohibit any party from making any disclosure which its counsel
deems necessary in order to fulfill such party's disclosure obligations imposed
by law.
15.19 Intentionally deleted.
15.20 Books and Record. Each party agrees that it will cooperate with and
make available to the other party, during normal business hours, all books and
records, information and personnel (without substantial disruption of
employment) retained and remaining in existence after the Closing Date that are
necessary or useful in connection with any tax inquiry, audit, investigation or
dispute, any litigation or investigation or any other matter requiring any such
books and records, information or employees for any reasonable business
purpose. The party requesting any such books and records, information or
employees shall bear all of the out-of-pocket costs and expenses (including
without limitation, attorneys' fees, but excluding reimbursement for salaries
and employee benefits) reasonably incurred in connection with providing such
books and records, information or employees.
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<PAGE> 40
IN WITNESS WHEREOF, this Agreement was executed as of the day and year
first above written.
IHC REACH CORPORATION, a Delaware
corporation
By: /s/ TIMOTHY Q. HUDAK
---------------------------
Name: Timothy Q. Hudak
-------------------------
Title: Asst. Secretary
------------------------
REACH RESORT INVESTMENT
CORPORATION, a Maryland corporation
By: /s/ JOEL S. MEISEL
---------------------------
Name: Joel S. Meisel
------------------------
Title: President
-----------------------
INTERSTONE PARTNERS I, L.P., a Delaware
limited partnership
By: IHC/Interstone Corporation, General Partner
By: /s/ TIMOTHY Q. HUDAK
----------------------
Name: Timothy Q. Hudak
--------------------
Title: Asst. Secretary
-------------------
By: IHC Member Corporation, General Partner
By: /s/ TIMOTHY Q. HUDAK
----------------------
Name: Timothy Q. Hudak
--------------------
Title: Asst. Secretary
-------------------
S-1
<PAGE> 41
THE KEY WEST REACH LIMITED
PARTNERSHIP, a Delaware limited partnership
By: IHC Reach Corporation, General Partner
By: /s/ TIMOTHY Q. HUDAK
-----------------------
Name: Timothy Q. Hudak
---------------------
Title: Asst. Secretary
--------------------
By: Reach Resort Investment Corporation, General
Partner
By: /s/ JOEL S. MEISEL
-----------------------
Name: Joel S. Meisel
---------------------
Title: President
--------------------
IHC ASSOCIATES LIMITED PARTNERSHIP,
a Delaware limited partnership
By: IHC Associates Corporation, General Partner
By: /s/ TIMOTHY Q. HUDAK
----------------------
Name: Timothy Q. Hudak
--------------------
Title: Asst. Secretary
-------------------
/s/ DAVID J. FINE
--------------------------------------------
David J. Fine, trustee, under an Irrevocable
Trust dated December 15, 1989
MILTON FINE REVOCABLE TRUST
By: /s/ MILTON FINE
---------------------------
Name: Milton Fine
-------------------------
Title: Trustee
------------------------
S-2
<PAGE> 42
MEISEL FAMILY HOTEL TRUST
By: /s/ STEPHEN W. PORTER
---------------------------
Name: Stephen W. Porter
-------------------------
Title: Trustee
------------------------
/s/ MARTIN J. SATURN
-------------------------------
Martin J. Saturn
/s/ MARLENE PATTON
-------------------------------
Marlene Patton
S-3
<PAGE> 43
Schedules to Contribution Agreement and Agreement to Assign Partnership
Interests and Enter into a First
Amended and Restated Limited Partnership Agreement
<TABLE>
<S> <C>
1A Partnership interests
1B Tangible assets
1C Legal description of land
1D Operating supplies
1E Permitted exceptions
1F Service contracts
1G Equipment for site improvements
2.3 Amended and Restated Agreement of Limited Partnership
2.4 Consent and Waiver
8.1(b) Assignments of Limited Partnership Interests
8.1(g) Right of First Refusal
8.2(d) Opinion of Steptoe & Johnson
11.1.6 Obligations for public improvements and contributions
11.1.9 Licenses and Permits
11.1.10 Service contracts
11.1.12 Violations of zoning provisions or certificate of occupancy
11.1.14 Insurance policies
11.1.15(a) Trademark registrations, patents, copyrights
11.1.19 Assessed value of real estate taxes
11.1.25 Pending litigation
11.1.30 Contracts requiring payments in excess of $50,000
11.1.31 Financial Statements
11.1.32 Changes in financial statements
11.1.36 Breaches and violations of mortgage
11.1.38 Permits necessary to conduct business
11.1.43 Financial institutions
</TABLE>
- ---------------
The Company agrees to furnish supplementally a copy of the above omitted
schedules to the Securities and Exchange Commission upon request.
