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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported) August 22, 1995
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HOST MARRIOTT CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Delaware 1-5664 53-0085950
(State or Other
Jurisdiction of Incorporation) (Commission FileNumber) (I.R.S. Employer
Identification Number)
10400 Fernwood Road, Bethesda, Maryland 20817
(Address of Principle Executive Offices) (Zip Code)
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Registrant's Telephone Number, Including Area Code (301) 380-9000
(Former Name or Former Address, if changed since last report.)
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FORM 8-K
Item 2. Acquisition or Disposition of Assets
On August 22, 1995, the Registrant acquired the 491-room Dallas/Fort
Worth Airport Marriott (the "Hotel") for $44 million. The purchase was funded
from the proceeds of a draw on the Registrant's $230 million secured, seven year
revolving and term loan facility. The Hotel was purchased from the Potomac Hotel
Limited Partnership, for which the Registrant is the sole general partner. The
Registrant expects the Hotel to generate Earnings Before Interest Expense,
Taxes, Depreciation, and Amortization (EBITDA) of approximately $6.6 million for
the full year 1995.
Item 7. Financial Statements and Exhibits
(a) and (b) Financial statements of acquired business and pro forma
financial information.
It is impracticable for the Registrant to provide the required
financial statements at the time of this filing. The Registrant will
file such financial statements by amendment no later than November 6,
1995 as permitted under Item 7 of Form 8-K. Pro forma financial
information of the Registrant incorporating the acquisition of the
Hotel was previously filed in the Registrant's Form 8-K/A dated August
29, 1995.
(c) Exhibit 99 - Purchase and Sale Agreement among Potomac Hotel
Limited Partnership, as Seller, and Host Marriott Corporation, as
Purchaser.
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 hereunto duly authorized.
HOST MARRIOTT CORPORATION
By: /s/ JEFFREY P. MAYER
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Jeffrey P. Mayer
Senior Vice President,
Finance and Corporate Controller
(Chief Accounting Officer)
Date: September 6, 1995
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Exhibit 99
PURCHASE AND SALE AGREEMENT
AMONG
POTOMAC HOTEL LIMITED PARTNERSHIP,
AS SELLER,
AND
HOST MARRIOTT CORPORATION
AS PURCHASER
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TABLE OF CONTENTS
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Page
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ARTICLE I -- Definition of Terms
1.01 Definition of Terms.......................................... 1
1.02 Terms Defined in Other Sections.............................. 4
ARTICLE II -- Purchase and Sale of the Hotel
2.01 Purchase and Sale............................................ 5
2.02 Excluded Items............................................... 5
2.03 Purchase Price............................................... 6
2.04 Allocation of Purchase Price................................. 6
2.05 Employees at Hotel........................................... 7
2.06 Seller's Disclaimer.......................................... 7
2.07 Certain Options of Purchaser................................. 8
ARTICLE III -- Conditions Precedent
3.01 Conditions Precedent for the Benefit of Purchaser............ 8
3.02 Conditions Precedent for the Benefit of Seller............... 11
3.03 Failure or Waiver of Conditions Precedent.................... 12
ARTICLE IV -- Due Diligence; Confidentiality
4.01 Title Inspection; Review Period.............................. 12
4.02 Termination.................................................. 14
ARTICLE V -- Seller's Representations, Warranties, and Covenants
5.01 Good Standing................................................ 15
5.02 Due Authorization............................................ 15
5.03 No Violations or Defaults.................................... 15
5.04 Litigation................................................... 15
5.05 Compliance with Laws......................................... 16
5.06 Financial Information........................................ 16
5.07 Insurance.................................................... 16
5.08 Condemnation Actions......................................... 16
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5.09 Operation of the Hotel Before Closing........................ 17
5.10 Hazardous Materials.......................................... 17
5.11 Contracts and Equipment Leases............................... 17
5.12 Bankruptcy Matters........................................... 18
5.13 Employees.................................................... 18
5.14 Additional Covenants......................................... 18
ARTICLE VI -- Purchaser's Representations, Warranties and Covenants
6.01 Good Standing................................................ 19
6.02 Due Authorization............................................ 19
6.03 No Violation or Defaults..................................... 20
6.04 Litigation................................................... 20
6.05 Bankruptcy Matters........................................... 20
6.06 HSR Filing................................................... 20
ARTICLE VII -- Deposit................................................... 21
ARTICLE VIII -- Escrow and Closing
8.01 Escrow Arrangements.......................................... 21
8.02 Closing...................................................... 22
8.03 Closing Adjustments.......................................... 23
8.04 Closing Costs................................................ 25
ARTICLE IX -- Risk of Loss or Condemnation Prior to Closing
9.01 Risk of Loss................................................. 25
9.02 Condemnation of Hotel........................................ 26
ARTICLE X -- Termination; Remedies
10.01 Termination.................................................. 27
10.02 Defects in Title............................................. 27
10.03 Remedies of Purchaser........................................ 28
10.04 Remedies of Seller........................................... 28
10.05 Notice and Cure Period....................................... 28
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ARTICLE XI -- Waiver and Partial Invalidity
11.01 Waiver ..................................................... 29
11.02 Partial Invalidity........................................... 29
ARTICLE XII -- Indemnification
12.01 Agreement to Indemnify....................................... 29
12.02 Indemnification Regarding Assumed Obligations................ 30
12.03 Notice and Cooperation on Indemnification.................... 30
ARTICLE XIII -- Miscellaneous
13.01 Brokerage Commissions and Finder's Fees...................... 30
13.02 Representations, Warranties, and Covenants................... 31
13.03 Assignment................................................... 31
13.04 Limited Liability............................................ 32
13.05 Period for Making Claims..................................... 32
13.06 Applicable Law............................................... 32
13.07 Headings..................................................... 32
13.08 Notices...................................................... 32
13.09 Entire Agreement............................................. 33
13.10 Counterparts................................................. 33
13.11 Termination Fee.............................................. 34
13.12 Further Assurances........................................... 34
13.13 Local Law Requirements....................................... 34
13.14 Business Day................................................. 34
13.15 Inspection of Books and Records.............................. 34
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EXHIBITS
Exhibit A Legal Description of Site
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PURCHASE AND SALE AGREEMENT
This PURCHASE AND SALE AGREEMENT (this "Agreement") is executed as of
the 7th day of June, 1995 by POTOMAC HOTEL LIMITED PARTNERSHIP, a Delaware
limited partnership with its principal office at 10400 Fernwood Road, Bethesda,
Maryland 20817, as seller (the "Seller"), and HOST MARRIOTT CORPORATION, a
Delaware corporation with its principal office at 10400 Fernwood Road, Bethesda,
Maryland 20817, as purchaser (the "Purchaser").
ARTICLE I
Definition of Terms
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1.01 Definition of Terms
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When used in this Agreement, the following terms shall have the
meanings indicated:
"Accountants" means Arthur Andersen, L.L.P. or another firm of
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certified public accountants mutually agreeable to Seller and Purchaser
appointed to perform the functions of a public accountant as described in this
Agreement.
"Accounts Payable" means, to the extent related to the period prior to
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the Closing, amounts payable by Seller (or by the Manager, as manager on behalf
of the Seller), to trade creditors and the like for goods, materials or services
provided at or to the Hotel.
"Accounts Receivable" means, to the extent related to the period prior
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to the Closing, any and all rents, deposits, guest, room and other charges, and
other sums owing to the Seller that are in any way attributable to the Hotel,
including, without limitation, (a) amounts receivable in connection with the
letting of rooms, the use of restaurant, banquet, conference, or other
facilities, or the provision of services by the Seller (or by the Manager, as
manager on behalf of the Seller) at the Hotel, (b) credit card charges to the
extent they have not been submitted to the applicable credit card company, and
(c) rents and/or license or other fees due from tenants, licensees or
concessionaires of the Hotel.
"Bill of Sale" means the bill of sale, assignment and assumption
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agreement the Seller is to deliver to Purchaser at Closing, dated as of the
Closing Date, conveying to Purchaser all of the Seller's right, title, and
interest in and to
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the FF&E, rights and warranties under Contracts and Equipment Leases, and
Miscellaneous Assets.
"Closing" means the consummation of the purchase and sale of the
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Hotel, as contemplated by this Agreement.
"Closing Date" means the date upon which the Closing occurs, which
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shall be a date no later than August 22, 1995 (subject to extension as set forth
in Section 10.02), as set forth in a notice by Purchaser to Seller, or such
other date as Purchaser and Seller may agree.
"Contract Date" means the date upon which this Agreement is executed
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fully by Purchaser and Seller, as evidenced by the last date indicated on the
signature page hereof.
"Contracts" means all service, maintenance, supply, and other
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contracts related to the maintenance or operation of the Hotel.
"Deed" means the special warranty deed (or local equivalent) that
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Seller is to deliver to Purchaser or the Permitted Designee at Closing, dated as
of the Closing Date, conveying to Purchaser or its Permitted Designees the
Seller's fee simple interest in the Hotel, including the Site with respect to
the Hotel.
"Encumbrance(s)" means liens, mortgages, deeds of trust, security
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interests, pledges, charges, options, encroachments, easements, covenants,
leases, reservations or restrictions of any kind.
"Equipment Leases" means the leases of equipment and other personal
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property located at, or used in the operation of, the Hotel.
"FF&E" means all appliances, machinery, devices, fixtures,
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appurtenances, equipment, furniture, furnishings and articles of tangible
personal property of every kind and nature whatsoever owned by Seller and
located in or at, or used in connection with the ownership, operation or
maintenance of the Hotel (except Excluded Items).
"Hotel" means the Dallas/Fort Worth Airport Marriott Hotel, which is
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located on the Site and has the following address: 8440 Freeport Parkway,
Irving, Texas 75063. The term "Hotel" shall include (a) the legal and
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beneficial fee simple title to and interest in the Site (as that term is defined
below); (b) all easements and other rights and obligations appurtenant to the
Site; (c) the legal and beneficial fee simple title to all buildings and other
improvements that are located on the Site; (d) all related Contracts, to the
extent assignable; (e) all related Equipment Leases,
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to the extent assignable; (f) all FF&E; (g) all working capital related to the
Hotel; (h) all amounts on deposit in the FF&E reserve related to the Hotel and
(i) all related Miscellaneous Assets, to the extent transferable.
"Management Agreement" means the Management Agreement dated as of July
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16, 1982, between Seller and the Manager related to the management of the Hotel
and other hotels, together with any and all amendments thereto or amendments and
restatements thereof.
"Manager" means Marriott International, Inc., a Delaware corporation.
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"Miscellaneous Assets" means, to the extent related to the Hotel, and
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only to the extent in Seller's possession or to the extent owned by Seller but
in the Manager's possession, all surveys, all architectural, consulting and
engineering blueprints, all plans and specifications, all drawings, and all
reports including, without limitation, all maintenance reports, all Permits, all
books and records (financial and otherwise), and all personal property relating
to the ownership or operation of the Hotel that are owned by or leased to Seller
as of the Closing Date, except FF&E, Contracts, Equipment Leases, and Excluded
Items. Seller shall use all reasonable efforts to cause the Manager to transfer
to Purchaser at the Closing all Miscellaneous Assets that are owned by Seller
and related to the Hotel which are being purchased at Closing and which are in
the Manager's possession.
"Permits" means, to the extent assignable, all licenses, franchises,
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certificates of occupancy, permits and approvals issued by any governmental
authority or any third party and used in or necessary to the operation of the
Hotel as a fully functioning hotel.
"Permitted Encumbrances" means (a) liens for taxes, assessments and
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governmental charges not yet due and payable or due and payable but not yet
delinquent (all of which shall be adjusted as of the Closing in accordance with
the terms of Section 8.03); (b) applicable zoning regulations and ordinances;
(c) overnight occupancy rights of any Hotel guest; (d) such exceptions and
defects which Purchaser agrees to accept (or is deemed to have accepted)
pursuant to Section 4.01(a) hereof; and (e) such other Encumbrances as do not
render title unmarketable and do not materially interfere with the use of the
Hotel as a fully functioning hotel.
"Purchaser" means, Host Marriott Corporation, a Delaware corporation,
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or any assignee direct or indirect wholly-owned subsidiary of Host Marriott
Corporation, and its respective successors and permitted assigns.
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"Review Period" means the period commencing on the Contract Date and
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ending at 5:00 p.m., E.S.T., on August 1, 1995.
"Seller" means Potomac Hotel Limited Partnership, a Delaware limited
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partnership, together with any affiliate thereof conveying any interest in the
assets to be conveyed hereunder.
"Site" means the parcel of land on which the Hotel is located, which
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is more fully described on Exhibit A attached hereto, including all right,
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title, and interest of Seller, if any, in and to all easements, rights and other
interests appurtenant thereto. "Site" does not include buildings and other
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improvements.
"Title Company" means Chicago Title Insurance Company, and/or another
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nationally recognized, financially sound title insurance company designated by
Purchaser.
1.02 Terms Defined in Other Sections
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As used in this Agreement, the following terms have the meanings
specified in the sections listed below:
"Agreement" -- Preamble.
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"ALTA" -- Section 3.01(a).
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"Business Day" -- Section 13.14.
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"Code" -- Section 2.04.
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"Environmental Law" -- Section 5.10(a).
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"Escrow Instructions" -- Article VII.
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"Excluded Items" -- Section 2.02.
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"FIRPTA Certificate" -- Section 8.01(a)(vi).
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"HSR Act" -- Section 3.01(f).
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"Hazardous Materials" -- Section 5.10.
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"Permitted Designee" -- Section 13.03(a).
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"Purchase Price" -- Section 2.03.
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"Real Estate Compensation" -- Section 13.01.
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"Study" -- Section 4.01(c).
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"Termination Notice" -- Section 4.02.
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"Title Commitment" -- Section 3.01(a).
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"Title Policy" -- Section 3.01(a).
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ARTICLE II
Purchase and Sale of the Hotel
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2.01 Purchase and Sale
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Seller agrees to sell, convey and assign to Purchaser, and Purchaser
agrees to purchase, accept and assume from Seller, upon the terms, covenants and
conditions set forth in this Agreement, the Hotel (other than the Excluded
Items). Purchaser shall assume any and all obligations of Seller in connection
with the Contracts, Equipment Leases and Miscellaneous Assets relating to the
Hotel, to the extent such obligations arise and accrue on or after the Closing
Date, and Seller shall be released and held harmless by Purchaser from all such
obligations arising and accruing on or after the Closing Date. Purchaser's
obligation to hold Seller harmless from such obligations shall survive the
Closing. Purchaser shall be released and held harmless by Seller from all such
obligations arising and accruing prior to the Closing Date, which obligation of
Seller shall survive the Closing.
2.02 Excluded Items
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Seller shall not be obligated to sell to Purchaser, and Purchaser
shall not be entitled or obligated to purchase, any of the following, all of
which shall remain the sole and exclusive property of Seller or the Manager, as
the case may be (collectively, the "Excluded Items"):
(a) Accounts Receivable.
(b) Non-transferable deposits such as utility deposits.
(c) All property owned by Seller or Manager not normally
located at the Hotel and used, but not used exclusively, in connection
with the Hotel.
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(d) Insurance policies covering the Hotel.
(e) Any other information or materials that are reasonably
considered by Seller, the Manager, or any of their affiliates to be
proprietary (including, without limitation, operational materials,
business plans and reports, computer software of any kind, training
manuals, legal manuals, security and loss prevention materials, and
the like).
2.03 Purchase Price
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The purchase price for the Hotel (the "Purchase Price") shall be the
sum of FORTY-FOUR MILLION AND NO/100 DOLLARS ($44,000,000.00), subject to
adjustment as set forth in Sections 2.07, 9.01 and 9.02, and shall be payable by
Purchaser to Seller on the Closing Date in cash.
In the event that: (i) the Hotel suffers a Casualty Loss prior to the Closing
Date and Purchaser does not elect to terminate its obligation to purchase the
Hotel pursuant to Section 9.01 or a portion of the Hotel is condemned and
Purchaser does not elect to terminate its obligation to purchase the Hotel
pursuant to Section 9.02, (ii) Seller has not repaired or restored such damaged
or condemned Hotel to a condition substantially equivalent to its condition
immediately before the occurrence of such Casualty Loss or condemnation, (iii)
the proceeds of any casualty insurance or condemnation award paid or assigned to
Purchaser with respect to the damaged or condemned Hotel are insufficient to
cover the full costs of such repair or restoration, and (iv) it is necessary for
Purchaser to expend its own funds to complete such repair or restoration, then,
in such event, the entire amount of out-of-pocket costs reasonably expected to
be incurred by Purchaser in excess of any insurance or condemnation proceeds or
other sums, if any, paid or assigned by Seller to Purchaser to cover the costs
of such repair or restoration shall be applied as a credit directly against the
Purchase Price; provided, however,that, if the amount of the payment that is
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offset against the Purchase Price under this paragraph would exceed $1,000,000,
Seller shall have the right to terminate this Agreement.
2.04 Allocation of Purchase Price
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The Purchase Price shall be allocated among the applicable (a)
buildings and improvements, (b) FF&E, (c) value of the Site, and (d) other asset
categories, as applicable, in such manner as shall be agreed to between the
parties before the Closing. The Seller and the Purchaser agree to file all
federal income tax returns and reports necessary in connection with the Closing,
including, without limitation, any filings contemplated by Section 1060 of the
Internal Revenue Code
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of 1986, as amended, and the regulations issued thereunder (the "Code"),
consistent with the allocations agreed to.
2.05 Employees at Hotel
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Purchaser acknowledges, based on Seller's representation contained in
Section 5.13, that all personnel employed or engaged in connection with the
operation of the Hotel are employees of the Manager or its affiliates, that
Seller has represented to Purchaser that Seller has no employees engaged in the
day-to-day operation of the Hotel, and that all matters pertaining to Hotel
employees (including, without limitation, the continuation or termination of
their employment at the Hotel) are to be worked out and resolved between
Purchaser and the Manager. Purchaser acknowledges that Seller has, and shall
have, absolutely no obligations, responsibilities, or liabilities of any kind in
respect of such employees or the terms or conditions of their employment (or the
continuation or termination thereof), and Purchaser agrees that it shall
indemnify and defend Seller, and hold Seller harmless, from and against any and
all claims, damages, losses, costs, expenses, or liabilities, of any kind or
nature including, without limitation, court costs and the reasonable fees and
expenses of attorneys' and other experts, arising out of any claims or disputes
concerning any such employees or their employment arising out of actions (or
inactions) taken during (or relating to) the period from and after the Closing.
The foregoing indemnification shall survive the Closing or the termination of
this Agreement.
2.06 Seller's Disclaimer
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(a) Except as otherwise expressly provided in Article V and in the
Deed and Bill of Sale to be delivered to Purchaser at Closing, SELLER DISCLAIMS
THE MAKING OF ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, AND WHETHER
MADE OR ASSERTED TO BE MADE BY SELLER, MANAGER OR ANYONE ELSE, REGARDING THE
HOTEL OR MATTERS AFFECTING THE HOTEL, including, without limitation, the
physical condition of the Hotel, title to or the boundaries of the Site, pest
control matters, soil conditions, the presence, existence or absence of
hazardous wastes, toxic substances or other environmental matters, compliance
with building, health, safety, land use and zoning laws, regulations and orders,
structural and other engineering characteristics, traffic patterns, market data,
economic conditions or projections, and any other information pertaining to the
Hotel or the market and physical environments in which it is located. Purchaser
acknowledges (i) that Purchaser has entered into this Agreement with the
intention of making and relying upon its own investigation of the physical,
environmental, economic and legal condition of the Hotel and (ii) that Purchaser
is not relying upon any statements, representations or warranties of any kind,
other than those specifically set forth in Article V hereof or in the Deed and
Bill of Sale, made (or purported to be
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made) by Seller or anyone acting or claiming to act on Seller's behalf,
including, without limitation, any employees or representatives of the Manager.
Purchaser further acknowledges that it has not received from or on behalf of
Seller any accounting, tax, legal, architectural, engineering, property
management or other advice with respect to this transaction and is relying
solely upon the advice of its own accounting, tax, legal, architectural,
engineering, property management and other advisors. Subject to the provisions
of Article IX hereof, Purchaser shall purchase the Hotel in its "AS IS"
condition on the Closing Date.
(b) Except with respect to any claims arising out of any breach of
covenants, representations or warranties set forth in this Agreement or in the
Deed or Bill of Sale to be delivered to Purchaser at Closing, Purchaser, for
itself and its agents, affiliates, successors and assigns, hereby releases and
forever discharges Seller, its affiliates, successors and assigns from any and
all rights, claims, liabilities, obligations, and demands, at law or in equity,
whether known or unknown to Purchaser at the time of this Agreement, which
Purchaser has or may have in the future, arising out of the physical,
environmental, economic or legal condition of the Hotel.
2.07 Certain Options of Purchaser
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If, on the Closing Date, (a) all conditions precedent to the Closing
with respect to the Hotel are not satisfied or (b) the Hotel has any structural,
environmental, legal, or material and adverse operational or title defect or
condition that would otherwise require material expenditures to bring the Hotel
into a satisfactory condition in accordance with industry standards, then
Purchaser, may terminate this Agreement, upon which termination the parties
hereto shall have no further rights or obligations hereunder (except as
specified in Sections 13.02(b) and 13.11 hereof).
ARTICLE III
Conditions Precedent
--------------------
3.01 Conditions Precedent for the Benefit of Purchaser
-------------------------------------------------
Purchaser's obligation to purchase the Hotel shall be subject to and
contingent upon the satisfaction (to Purchaser's reasonable satisfaction), or
the waiver by Purchaser, as of the Closing Date, of the following conditions
precedent:
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(a) The Title Company shall have indicated its irrevocable
commitment (the "Title Commitment") to issue as of the Closing Date,
upon the sole condition of payment of its regularly scheduled premium
and delivery by Seller of the documents called for in Section 3.01(d)
hereof, a standard American Land Title Association ("ALTA") extended
coverage owner's policy of title insurance (Form B-1970, revised
10/84, or Form B-1992 or the equivalent thereof) (the "Title Policy")
for the Hotel, in the amount of $35,000,000 insuring that fee simple
title to the Hotel on the Closing Date is vested of record in
Purchaser, subject only to Permitted Encumbrances.
(b) Seller's representations and warranties set forth in
Article V shall be true and complete as if made on and as of the
Closing Date, and Seller shall have delivered to Purchaser a
certificate to that effect. Notwithstanding the foregoing, all facts
that Seller represents "to its knowledge" (or with words of similar
effect) shall be true and correct in all material respects (regardless
of whether Seller knew of the untruth of any such matters); provided,
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however, that Seller shall not be deemed to be in breach of this
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Agreement, nor be obligated or liable to Purchaser for a breach of a
representation or warranty made to Seller's knowledge, if such matter
is untrue and Seller did not (after the inquiries required by this
Agreement) have actual knowledge of such untruth.
(c) Seller shall have performed in all material respects all
covenants set forth in this Agreement which are to be performed by
Seller on or before the Closing Date. For purposes of Section 3.01(b)
and this Section 3.01(c), a representation and warranty (or factual
matter) shall be deemed to be true and complete "in all material
respects," and a covenant shall be deemed to have been performed "in
all material respects," if the failure of any such representation or
warranty or factual matter to be true and complete, and the failure to
perform any such covenant, would not, singly or in the aggregate, be
expected to result in damages to Purchaser in excess of $250,000 (and
the amount of such damages, as reasonably ascertained by the parties,
shall be credited, against the Purchase Price.
(d) If there exist any recorded covenants, interests or
agreements, or any unrecorded covenants, interests or agreements that
Purchaser has timely advised Seller of pursuant to Section 4.01(d),
relating to the Hotel or to the Site that require the consent or
approval of, or estoppel certificates from, third parties, Seller
shall have delivered to Purchaser, in writing, such consents,
approvals and
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estoppel certificates as Purchaser may reasonably have required on or
before the Closing Date (or the Title Company shall have provided
affirmative insurance over any such matters to the Purchaser in form
reasonably satisfactory to Purchaser.
(e) Seller and Manager shall have terminated the Management
Agreement and Manager, or a subsidiary thereof, shall have entered
into a new management agreement with Purchaser on terms consistent
with the current management terms generally offered by Manager or its
subsidiaries to third parties.
(f) If any filings by Purchaser or Seller are required with
the Federal Trade Commission and the Antitrust Division of the United
States Department of Justice pursuant to the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 and the rules and regulations
promulgated thereunder (collectively, the "HSR Act"), all such filings
shall have been made, the waiting period provided by the HSR Act shall
have expired or been the subject of early termination, and no adverse
action shall have been taken or threatened by the Federal Trade
Commission or the Antitrust Division of the United States Department
of Justice.
(g) Seller shall have delivered to Purchaser such copies of
its limited partnership agreement, its general partner's bylaws, its
general partner's resolutions, incumbency certificates, certificates
of good standing and other documents as the Title Company may require
in order to issue the Title Policy contemplated by Section 3.01(a)
hereof.
(h) Purchaser shall have approved the settlement statement
prepared by the Title Company in connection with the Closing.
(i) Seller shall have deposited into the Closing escrow all
the documents and other instruments required to be delivered by Seller
in connection with the Closing, as described in Section 8.01 hereof.
(j) Seller shall have transferred, without limitation, all
permits and licenses necessary to operate the Hotel as a fully
functioning full-service Marriott hotel, including, without
limitation, the liquor licenses, or alternatively, the Manager shall
hold licenses for the benefit of Purchaser.
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Purchaser shall not terminate this Agreement for immaterial failures of any
condition precedent.
3.02 Conditions Precedent for the Benefit of Seller
----------------------------------------------
Notwithstanding anything in this Agreement to the contrary, Seller's
obligation to sell the Hotel shall be subject to and contingent upon the
satisfaction (to Seller's reasonable satisfaction), or the waiver by Seller, as
of the Closing Date, of the following conditions precedent:
(a) Purchaser shall have delivered to Seller, Purchaser's: (A)
articles of incorporation, as most recently amended or modified,
certified (i) as of a date reasonably current, but in no event earlier
than two (2) weeks prior to the Closing Date, by the appropriate
official of Purchaser's state of incorporation and (ii) as of the
Closing Date by the secretary of Purchaser, as being true and
complete; (B) copies of Purchaser's bylaws and any amendments or
modifications thereto, certified as of the Closing Date by the
secretary of Purchaser as being true and complete; (C) original
corporate resolutions authorizing Purchaser to acquire the Hotel,
certified by the secretary of Purchaser as being true, complete and
fully effective as of the Closing Date; (D) an incumbency certificate
for Purchaser, in form and content reasonably acceptable to Seller;
and (E) a certificate of good standing for each Purchaser, issued as
of a date reasonably current, but in no event earlier than two (2)
weeks prior to the Closing Date, by the appropriate official of
Purchaser's state of incorporation.
(b) If any filings by Purchaser or Seller are required with
the Federal Trade Commission and the Antitrust Division of the United
States Department of Justice pursuant to the HSR Act, all such filings
shall have been made, the waiting period provided by the HSR Act shall
have expired or been the subject of early termination, and no adverse
action shall have been taken or threatened by the Federal Trade
Commission or the Antitrust Division of the United States Department
of Justice.
(c) The board of directors or executive committee of Seller's
general partner and a sufficient number of Seller's limited partners
to comply with the provisions of Seller's partnership agreement shall
have approved, authorized or ratified the sale of the Hotel to
Purchaser, pursuant to the terms and conditions set forth in this
Agreement, and all the other transactions contemplated hereby.
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<PAGE>
(d) Seller shall have approved the settlement statement(s)
prepared by the Title Company in connection with the Closing.
(e) The Purchaser's representations and warranties contained
in Article VI hereof shall be true and complete in all material
respects as if made on and as of the Closing Date, and Purchaser shall
have delivered to Seller a certificate to that effect.
(f) Purchaser shall have delivered into the Closing escrow all
cash, documents and other instruments required to be delivered by
Purchaser in connection with the Closing, as described in Section 8.01
hereof.
(g) Seller shall not terminate this Agreement for immaterial
failures of any condition precedent.
3.03 Failure or Waiver of Conditions Precedent
-----------------------------------------
Purchaser and Seller agree to use reasonable efforts to satisfy or
cause to be satisfied by August 22, 1995 (or any such earlier date as may be
specified in Sections 3.01 or 3.02) the conditions set forth in Sections 3.01
and 3.02, as applicable. In the event any of the conditions set forth in
Section 3.01 or 3.02 are not satisfied or waived by such date, this Agreement
shall terminate at the option of the party entitled to the benefit of such
condition, whereupon all rights and obligations hereunder of each party shall be
at an end (except as provided in Sections 13.02(b) and 13.11 hereof); provided,
--------
however, that, if such failure arises from Seller's or Purchaser's breach of
- -------
this Agreement, the non-breaching party may avail itself of any remedies
provided in Article X below. Either party may, at its election, at any time or
times on or before the date specified for the satisfaction of any condition
precedent, waive in writing the benefit of any of the conditions. In any event,
Purchaser's or Seller's consent to the close of escrow pursuant to this
Agreement shall conclusively be deemed to be a waiver of any remaining
unfulfilled conditions for the benefit of such party.
ARTICLE IV
Due Diligence; Confidentiality
------------------------------
4.01 Title Inspection; Review Period
-------------------------------
(a) Prior to the expiration of the Review Period, Purchaser, at its
own expense, shall cause the Title Company to issue the Title Commitment for the
Hotel. The Title Commitment shall be in an amount and in form sufficient to
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<PAGE>
satisfy the requirements set forth in Section 3.01(a). If the Title Commitment
reflects exceptions or defects in title that are not acceptable to Purchaser,
Purchaser shall, no later than the expiration of the Review Period, have the
right to object to such exceptions or defects. If Purchaser shall fail to have
objected to any exception or defect reflected on the Title Commitment before
such date, such matters shall irrevocably be deemed to have been approved by
Purchaser. Within five (5) Business Days following Purchaser's notice to Seller
of any objections to title, Seller shall notify Purchaser either that it will
eliminate all exceptions or defects to which Purchaser has objected prior to the
Closing Date or shall specify the exceptions or defects that Seller will not
eliminate. If Seller elects not to remove all exceptions or defects to title to
which Purchaser has objected, Purchaser may terminate this Agreement (unless
such exceptions or defects are not expected to reduce the value of the Hotel by
more than $250,000, in which case Seller may elect to credit the amount of the
expected reduction in value against the Purchase Price, in which case this
Agreement shall remain in effect). If Seller agrees to eliminate all exceptions
or defects to which Purchaser has objected (or to pay the amount described in
the preceding sentence) or if Purchaser subsequently elects to accept any such
exceptions or defects and continue this Agreement, Purchaser and Seller shall
initial a list of all exceptions or defects which Purchaser agrees to accept
(all of which shall be deemed to constitute Permitted Encumbrances), which list
shall be attached hereto by amendment as an exhibit.
(b) Within 20 days after Contract Date Seller shall provide
Purchaser with a list and copies of all Contracts, Equipment Leases, operating
statements, Permits, plans, specifications and other records and documents
relating to the Hotel and the operation thereof (to the extent in Seller's
possession) as Purchaser may reasonably request.
(c) During the Review Period, Purchaser shall have the right, at its
own risk, cost and expense, upon reasonable notice to Seller and the Manager, to
enter, or cause its agents or representatives to enter, upon the Site for the
purpose of (i) interviewing the general manager and regional manager in charge
of operations at the Hotel, (ii) inspecting and copying any books, records
(including, without limitation, any general ledgers, showing assets and
liabilities, and any schedules of fixed assets with respect to the Hotel),
permits, contracts and other documents, instruments and agreements relating to
the Hotel, but only to the extent such items exist and are in Seller's
possession, and (iii) making surveys or other tests, test borings, inspections,
investigations and/or studies of the Hotel (each a "Study"). In addition, Seller
agrees to use all reasonable efforts to cause the Manager to permit Purchaser to
inspect and copy any books, records, permits, contracts and other documents,
instruments and agreements relating to the Hotel, to the extent such items are
in the Manager's possession, other than proprietary items; provided, that
--------
nothing in this Agreement shall be deemed to impose
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<PAGE>
contractual obligations on the Manager. Seller shall have the opportunity to
review all drafts of all environmental, engineering and similar assessments. All
environmental, engineering and similar assessments shall be and remain the
property of Purchaser; provided, however, that Purchaser covenants and agrees
-------- -------
(i) to supply Seller with the results of any Study and copies of any report or
document created in connection with any Study if this Agreement is terminated
for any reason other than solely because of Seller's default hereunder and (ii)
to keep the results of each Study and every report or document created in
connection therewith strictly confidential. Purchaser and Seller make no
representations or warranties regarding, and shall not have any liability to
each other with respect to, the results of any such Study or any report or
document created in connection therewith; provided, however, that Purchaser
-------- -------
shall not make any physical alterations to the Hotel, such entry shall not
interfere with the guests or management of the Hotel, and Purchaser shall hold
harmless, indemnify and defend Seller against any and all costs, claims or
expenses in connection therewith and shall repair any damage to the Hotel or
Site suffered or occasioned by any such Study. Purchaser's obligations under
this Section 4.01(c) shall survive the Closing or the termination of this
Agreement.
(d) Prior to the expiration of the Review Period, Purchaser shall
give Seller, in writing, a list of any covenants, interests or agreements
(including, without limitation, any reciprocal easement or similar agreement)
related to the Hotel or a Site that require the consent or approval of, or an
estoppel certificate from, third parties to the transactions contemplated
hereby.
4.02 Termination
-----------
If, prior to the expiration of the Review Period, Purchaser gives
Seller written notification (the "Termination Notice") that Purchaser elects not
to consummate the purchase of the Hotel in accordance with the terms of this
Agreement, this Agreement shall terminate. The Purchaser shall have the right,
in its sole discretion, to determine whether to give the Termination Notice. If
the Termination Notice is given, this Agreement shall immediately be terminated,
and neither party shall have any further liability to the other under this
Agreement (except as specified in Sections 13.02(b) and 13.11 hereof). If
Purchaser does not give the Termination Notice by the end of the Review Period,
this Agreement shall remain in full force and effect, and Purchaser shall be
bound by the terms of this Agreement.
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<PAGE>
ARTICLE V
Seller's Representations, Warranties, and Covenants
---------------------------------------------------
In order to induce Purchaser to enter into this Agreement and to
consummate the transactions contemplated hereby, Seller, with respect to itself,
and the Hotel, represents and warrants to, and covenants with, Purchaser as
follows:
5.01 Good Standing
-------------
Seller is a limited partnership duly organized, validly existing, and
in good standing under the laws of Delaware, is authorized to conduct the
business in which it is now engaged, and is duly qualified and in good standing
in the jurisdiction in which the property to be conveyed hereunder by Seller is
located. Seller has the full partnership power and authority to execute and
deliver this Agreement and to perform its respective obligations hereunder,
subject only to the consent of a majority in interest of the Seller's limited
partnership units to the transaction contemplated hereby.
5.02 Due Authorization
-----------------
The execution, delivery, and performance by Seller of this Agreement
and the consummation by Seller of the transactions contemplated hereby have been
or will be as of the Closing Date duly and validly authorized by all requisite
partnership actions of Seller (none of which actions have been modified or
rescinded, and all of which actions are in full force and effect). This
Agreement and each document to be executed and delivered by Seller at Closing
constitutes, or at the time of Closing will constitute, a valid and binding
obligation of Seller, enforceable against Seller in accordance with its terms.
5.03 No Violations or Defaults
-------------------------
The execution, delivery, and performance of this Agreement and the
consummation of the transactions contemplated hereby will not violate any law or
any order of any court or governmental authority with proper jurisdiction, which
violation or default will, in any one case or in the aggregate, materially
adversely affect the operation of the Hotel being conveyed or Seller's ability
to consummate the transactions contemplated hereby; result in a breach or
default under any material Contract or any provision of the organizational
documents of Seller; or require any consent, or approval or vote of any court or
governmental authority or of any third person or entity that, as of the Closing
Date, has not been given or taken and does not remain effective; provided,
--------
however, that Purchaser recognizes
- -------
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<PAGE>
and agrees that consummation of the transactions contemplated hereby will
require the consent of a majority in interest of Seller's limited partners,
which Seller agrees to use diligent efforts to obtain by the Closing Date.
5.04 Litigation
----------
There are no actions, suits, arbitrations, governmental
investigations, or other proceedings pending or, to Seller's knowledge,
threatened against Seller before any court or governmental authority, an adverse
determination of which might materially and adversely affect (a) Seller's
ability and right to enter into this Agreement or to consummate the transactions
contemplated hereby, or (b) Seller's title to the Hotel, or the condition or
operation of the Hotel (including the validity of any material Permits relating
thereto).
5.05 Compliance with Laws
--------------------
To Seller's knowledge, the Hotel is in compliance in all material
respects with all laws, rules, regulations, health and sanitation codes, and
zoning ordinances and with the terms of all Permits applicable to the Hotel,
non-compliance with which would have a material adverse effect on Purchaser, the
Hotel, or the use or operation thereof, and all Permits required for the Hotel's
operation are presently in full force and effect.
5.06 Financial Information
---------------------
To Seller's knowledge, all financial information regarding the Hotel
furnished by the Seller to the Purchaser is true and accurate in all material
respects and contains no material misstatement and does not omit any statement
or fact necessary to make the information contained therein not materially
misleading. Purchaser acknowledges that the aforementioned financial information
relates solely to historical performance of the Hotel and in no way represents a
projection of future performance, and Seller makes no representations as to the
future performance of the Hotel.
5.07 Insurance
---------
Seller has not received notice from any insurance company of any
defects or inadequacies in the Hotel that would adversely affect its
insurability or increase the cost of insurance. Between the date hereof and the
Closing Date, Seller shall cause all such insurance policies to remain in full
force and effect.
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<PAGE>
5.08 Condemnation Actions
--------------------
To Seller's knowledge, there are no pending condemnation actions or
special assessments of any nature with respect to the Hotel or any part thereof
that under Section 9.02 would materially impair the Hotel's economic viability
as a fully functioning full-service Marriott hotel, and Seller has not received
any notice of any such threatened or contemplated condemnation action or special
assessment. If, between the date hereof and the Closing Date, Seller receives a
notice of any threatened or contemplated condemnation action or special
assessment, Seller shall promptly notify Purchaser of notice, and Purchaser
shall have the right to consult with Seller in the settlement of any such
condemnation action or special assessment; provided, however, that Seller shall
-------- -------
consider, but not be obligated to follow, any advice offered by Purchaser.
5.09 Operation of the Hotel Before Closing
-------------------------------------
Before the Closing Date, Seller shall cause the Hotel to be operated
in a good and businesslike fashion consistent with past practices and shall
cause the Hotel to be maintained in good working order and condition.
5.10 Hazardous Materials
-------------------
(a) "Hazardous Materials" means any asbestos-containing materials,
polychlorinated biphenyls (PCBs), and any materials, wastes, substances, or
chemicals that are deemed hazardous, toxic, a pollutant or a contaminant under
the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended (42 U.S.C. Section 9601, et seq.), the Hazardous Materials
-- ---
Transportation Act, as amended (49 U.S.C. Section 1801, et seq.), or the
-- ---
Resource Conservation and Recovery Act of 1976, as amended (42 U.S.C. Section
6901, et seq.), (each, an "Environmental Law").
-- ---
(b) At the time Seller acquired the Hotel to Seller's knowledge,
there were no actual or claimed violations of any Environmental Laws or any
state laws with respect to the Hotel. During the time that Seller owned the
Hotel, to Seller's knowledge, neither Seller nor any third party has used,
generated, stored, or disposed of on, under or about the Hotel, or transported
to or from any such Hotel, any Hazardous Materials other than in compliance with
applicable Environmental Laws. For purposes of this Section 5.10, "knowledge" of
Seller shall be based on inquiries to the general manager of the Hotel, the
regional engineer, and the Assistant General Counsel-Hotel Operations of
Marriott International, Inc. with no obligation to inquire further.
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<PAGE>
5.11 Contracts and Equipment Leases
------------------------------
The Contracts and Equipment Leases delivered to Purchaser pursuant to
Section 4.01(b) will constitute all Contracts and Equipment Leases material to
the maintenance and operation of the Hotel, and all such Contracts and Equipment
Leases will be in full force and effect. There are no events or conditions that,
with notice or lapse of time or both, would constitute a default by Seller in
any material respect of any such Contract or Equipment Lease.
5.12 Bankruptcy Matters
------------------
Seller has not made a general assignment for the benefit of creditors,
filed any voluntary petition in bankruptcy or suffered the filing of an
involuntary petition by its creditors, suffered the appointment of a receiver to
take possession of all or substantially all of its assets, suffered the
attachment or other judicial seizure of all or substantially all of its assets,
admitted its inability to pay its debts as they come due, or made an offer of
settlement, extension or composition to its creditors generally. Seller is not
insolvent and will not be rendered insolvent by the consummation of the
transactions contemplated hereby.
5.13 Employees
---------
Seller has not employed or engaged any personnel in connection with
the operation of the Hotel.
5.14 Additional Covenants
--------------------
(a) Between the date hereof and the Closing Date, Seller shall not,
without the prior written consent of Purchaser, enter into, modify, or
terminate, or allow Manager to enter into, modify or terminate, any agreement or
other instrument affecting the Hotel if such action would have a material
adverse effect on the Hotel or the operation thereof, and Seller shall not,
without the prior written consent of Purchaser, enter into, or allow Manager to
enter into, any contract or make any purchase relating to the Hotel that would
not be freely terminable or cancelable within ninety (90) days or less (or such
longer period and on such other terms as shall be customary in the market for
similar contracts if such contract would not reasonably be expected to have a
material impact on the transactions contemplated by this Agreement).
(b) Between the date hereof and the Closing Date, Seller shall not
enter into any indebtedness secured by the Hotel or otherwise take any voluntary
action to encumber the Hotel unless Seller provides Purchaser with prior written
- 18 -
<PAGE>
notice thereof and covenants and agrees to pay-off such indebtedness and/or
remove such encumbrance prior to the Closing.
(c) Prior to or at the Closing, Seller shall deliver to the Title
Company such reasonable and customary affidavits as are required to remove from
the title policy described in Section 3.01(a), the exceptions for parties in
possession, mechanics' liens, unrecorded easements and other similar items for
which it is reasonable and customary to give affidavits in the various
jurisdictions.
(d) With respect to the Hotel, Seller agrees to use its commercially
reasonable best efforts to assemble, or cause to be assembled, all related
Miscellaneous Assets in Seller's possession, and originals of all related
Contracts and all related Equipment Leases in Seller's possession, and to
deliver the foregoing to Purchaser at or prior to the Closing; provided, that
--------
Seller's failure to assemble or provide the foregoing following use of
commercially reasonable best efforts shall not be a breach of this covenant if
such failure(s) in the aggregate would not reasonably be expected to have a
material adverse impact on the transactions contemplated hereby. Seller shall
use commercially reasonable best efforts to satisfy its obligations under
Sections 3.01, 3.03 and 4.01 in all material respects by the dates specified in
such Sections.
ARTICLE VI
Purchaser's Representations Warranties and Covenants
----------------------------------------------------
In order to induce Seller to enter into this Agreement and to
consummate the transactions contemplated hereby, Purchaser represents and
warrants to, and covenants with, Seller as follows:
6.01 Good Standing
-------------
Purchaser warrants that it is a corporation duly organized, validly
existing, and in good standing under the laws of Delaware and is qualified to do
business in Delaware and in the jurisdiction in which the Hotel is located.
Purchaser represents and warrants further that each Permitted Designee, if any,
will be a newly formed, single-purpose Delaware corporation, and a wholly-owned
direct or indirect subsidiary of Host Marriott Corporation, and the Permitted
Designee will be, on the Closing Date and at all relevant times thereafter, duly
organized, validly existing and in good standing in its state of organization
and in the state of Texas.
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<PAGE>
6.02 Due Authorization
-----------------
Purchaser warrants that the execution of this Agreement and the
consummation of the transactions contemplated hereby have been or will as of the
Closing Date be duly and validly authorized by all necessary corporate action,
of Purchaser (none of which actions will have been modified or rescinded, and
all of which actions will remain in full force and effect). This Agreement and
each document to be executed and delivered by Purchaser or any Permitted
Designee at or in connection with the Closing constitutes, or at the time of
Closing will constitute, a valid and binding obligation of Purchaser or such
Permitted Designee, as applicable, enforceable against Purchaser or such
Permitted Designee, as applicable, in accordance with its terms.
6.03 No Violations or Defaults
-------------------------
The execution, delivery, and performance of this Agreement and the
consummation of the transactions contemplated hereby will not violate any law or
any order of any court or governmental authority with proper jurisdiction, which
violation or default will, in any one case or in the aggregate, adversely affect
Purchaser's or any Permitted Designee's ability to consummate the transactions
contemplated hereby; result in a breach or default under any contract binding
upon Purchaser or any Permitted Designee or any of their respective assets or
any provision of the organizational documents of Purchaser or any Permitted
Designee; or require any consent, approval or vote of any court or governmental
authority or of any third person or entity that, as of the Closing Date, has not
been given or taken.
6.04 Litigation
----------
There are no suits, arbitrations, proceedings, or governmental
investigations that are pending or, to the knowledge of Purchaser or any
Permitted Designee, or any of their respective partners, threatened against
Purchaser or such Permitted Designee, an adverse determination of which might
materially and adversely affect Purchaser's or such Permitted Designee's ability
and right to enter into this Agreement or to consummate the transactions
contemplated hereby.
6.05 Bankruptcy Matters
------------------
Neither Purchaser nor any Permitted Designee has made a general
assignment for the benefit of creditors, filed any voluntary petition in
bankruptcy or suffered the filing of an involuntary petition by its creditors,
suffered the appointment of a receiver to take possession of all or
substantially all of its assets, suffered the attachment or other judicial
seizure of all or substantially all of its
- 20 -
<PAGE>
assets, admitted its inability to pay its debts as they come due, or made an
offer of settlement, extension or composition to its creditors generally.
Neither Purchaser nor any Permitted Designee is insolvent or will be rendered
insolvent by the consummation of the transactions contemplated hereby.
6.06 HSR Filing
----------
In the event any filings are required under the HSR Act, as set forth
in Sections 3.01(g) and 3.02(b), Purchaser shall pay the entire filing fee
incurred in connection with such filings.
ARTICLE VII
Deposit
-------
Purchaser agrees to pay all of Seller's transaction costs related to
this Agreement and the sale of the Hotel, whether or not the sale is
consummated. Accordingly, no deposit will be required.
ARTICLE VIII
Escrow and Closing
------------------
8.01 Escrow Arrangements
-------------------
An escrow for the purchase and sale contemplated by this Agreement
shall be opened by Seller with the Title Company. On or before the Closing Date,
Seller and Purchaser shall each deliver written escrow instructions to the Title
Company consistent with this Article VIII, with a copy to the other party, and
the parties shall deposit in escrow the following funds and documents:
(a) Seller shall deposit (or cause to be deposited):
(i) the duly executed and acknowledged Deed;
(ii) the duly executed Bill of Sale;
(iii) the certificate contemplated by Section 3.01(b);
(iv) Any written consents, approvals, estoppel certificates
or other documents required by Section 3.01;
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<PAGE>
(v) any affidavits or other instruments reasonably required
by the Title Company and contemplated by Section 5.14(c);
(vi) certificates from Seller certifying the information
required by (S) 1445 of the Code to establish, for the purposes of
eliminating Purchaser's tax withholding obligations, that Seller is
not a "foreign person" as defined in (S) 1445(f)(3) of the Code (the
"FIRPTA Certificates");
(b) Purchaser shall deposit (or cause to be deposited):
(i) cash in the amount of the Purchase Price, plus
sufficient additional cash to pay all escrow costs and closing
expenses as provided in Article VII and Section 8.04;
(ii) duly executed counterparts of the Bill of Sale; and
(iii) a closing certificate, in form and content reasonably
acceptable to Seller and duly executed by Purchaser.
(c) In addition, at Closing, Seller shall furnish to Purchaser:
(i) satisfactory evidence that Seller has filed all tax
returns required to be filed before the Closing Date with respect to
the Hotel and has paid (or provided for the payment of, by escrow,
closing adjustment or otherwise) all amounts actually due or which
have accrued as of the Closing Date and will become due for all state,
county and municipal real estate, sales, purchase and use taxes, all
assessments for local improvements, and any and all other taxes,
assessments, charges and fees, the non-payment of which may result in
a lien on the Hotel or liability on the part of Purchaser; and
(ii) all original Permits, Contracts, and Equipment Leases
which are in Seller's possession and are being assigned to Purchaser.
8.02 Closing
-------
The escrow instructions to be delivered by the parties shall instruct
the Title Company, upon satisfaction of the conditions set forth therein (which
shall in all respects be consistent with the terms and conditions of this
Agreement), to close escrow by:
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<PAGE>
(a) causing the Deed to be recorded in the official records of
Dallas County, Texas;
(b) paying or causing to be paid all recording, filing and transfer
taxes, fees or expenses necessary in connection with the recordings and filings
described in subparagraph (a) above (at Purchaser's expense);
(c) delivering to Seller and Purchaser originals of the Bill of Sale
and delivering to Purchaser the FIRPTA Certificates and any consents referred to
in Section 3.01(d);
(d) delivering to Purchaser all other escrowed documents not
recorded or filed pursuant to this Section 8.02, and delivering to Seller the
full Purchase Price; and
(e) taking such other actions as may be reasonably required by
Seller or Purchaser.
8.03 Closing Adjustments
-------------------
(a) Unless otherwise provided herein, and subject to Section
8.03(c), the following items shall be adjusted between Purchaser and Seller as
of 12:01 a.m. on the Closing Date:
(i) Purchaser shall be credited with any deposits from
tenants, guests, groups, or banquet customers of the Hotel (including
interest earned thereon to the extent payable to such tenants, guests)
in Seller's possession which are refundable to such tenants, guests,
groups, or banquet customers of the Hotel. Seller shall be reimbursed
in escrow for any refundable deposits or bonds made by Seller to any
utility (to the extent assigned to Purchaser), governmental agency or
service contractor with respect to the Hotel.
(ii) Net guest room, food, beverage and other revenues of the
Hotel, whether in cash or, subject to Section 8.03(b) hereof, in
Accounts Receivable, arising from occupancy, catering, bar, restaurant
or other services for the night beginning on the day preceding the
Closing Date and ending on the Closing Date shall be credited to
Seller.
(iii) All other ordinary and customary items of income and
expense including, without limitation, room rents receivable from
current guests of the Hotel as set forth in the guest ledger for
periods prior to the night preceding the Closing Date, income from
catering
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<PAGE>
and banquet facilities, rents from licensees and concessionaires, wage
and payroll taxes and benefits, water, sewer, electricity and gas
charges, real estate taxes and assessments, personal property taxes,
ground lease rents, items of expense under maintenance contracts,
service contracts, personal property leases, rental contracts or
equipment or telephone contracts, advertising contracts, cleaning
contracts, prepaid rents and deposits for reservations shall be
prorated or adjusted as of the Closing Date (to the extent possible
with cut-off bills as of 12:01 a.m. on the Closing Date, or to such
time and date as near as possible thereto). All such items
attributable to the period prior to the Closing Date shall be credited
to Seller. All such items attributable to the period on and after the
Closing Date shall be credited to Purchaser.
(iv) Wages, salaries, payroll taxes, contributions due in
respect of pension and welfare plans and other fringe benefits for all
employees of the Hotel shall be apportioned as of the beginning of the
"day shift" on the Closing Date and Purchaser shall pay all such
amounts which accrue for services rendered thereafter. Purchaser
shall, at its option: (a) assume and receive a credit for accrued
vacation benefits and sick leave benefits due to such employees for
which such employees may receive compensation in lieu of taking such
benefits and which relate to any period prior to the Closing Date or
(b) require Seller to cause such vacation and sick leave benefits to
be paid out in cash to such employees at Seller's expense. Purchaser
shall be obligated to pay the severance or termination payments of any
employees whose employment is terminated on or after the Closing Date
in connection with the sale of the Hotel hereunder.
(b) All Accounts Receivable originating prior to 12:01 a.m. on the
Closing Date shall belong to Seller. Following the Closing, Seller (or Manager
on Seller's behalf) shall have the exclusive right to collect, account for,
compromise, settle and receipt for all such Accounts Receivable, and Purchaser
shall cooperate in all reasonable respects with Seller or Manager, as
applicable, in the collection thereof. Purchaser shall not be obligated or
entitled to collect or attempt to collect such Accounts Receivable on behalf of
Seller, nor shall Purchaser be obligated to make any payment to Seller on
account thereof.
(c) The provisions of this Section 8.03 may not specify all
adjustments properly to be made in a transaction of this nature. Representatives
of Purchaser and Seller shall perform all of the adjustments through the Closing
Date and any and all other adjustments not specifically referred to herein,
which are appropriate and usual. The adjustments hereunder shall be calculated
or paid in
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<PAGE>
an amount based upon a fair and reasonable estimated accounting performed and
agreed to by representatives of Seller and Purchaser at the Closing. Subsequent
final adjustments and payments shall be made in cash or other immediately
available funds as soon as practicable after the Closing Date, and in any event
within ninety (90) days after the Closing Date, based upon an agreed accounting
performed by representatives of Seller and Purchaser. In the event the parties
have not agreed with respect to the adjustments required to be made pursuant to
this Section 8.03 within such ninety-day period, upon application by either
party, the Accountant shall determine any such adjustments which have not
theretofore been agreed to between Seller and Purchaser. The charges of the
Accountant shall be borne in equal shares by Seller and Purchaser.
8.04 Closing Costs
-------------
Purchaser shall pay all documentary, transfer, recording or
transaction taxes or fees assessed by any jurisdiction in connection with the
transfer of title to the Hotel from Seller to Purchaser and all title insurance
premiums and other charges necessary for the issuance of the Title Policy. In
addition, Purchaser shall pay any sales or use taxes determined to be payable in
connection with this transaction. Purchaser party shall pay its own attorneys'
fees and costs in connection with this transaction and shall reimburse Seller
for the cost of its attorneys' fees and other costs.
ARTICLE IX
Risk of Loss or Condemnation Prior to Closing
---------------------------------------------
9.01 Risk of Loss
------------
Risk of loss as a result of fire or other casualty to the Hotel shall
be on Seller up until the Closing and shall be on Purchaser thereafter. If, at
any time on or before the Closing Date, the Hotel has suffered damage,
destruction, or casualty (each, a "Casualty Loss") that is "material" (as
defined below), the Purchaser, at its option and in addition to its rights under
Section 2.07, may terminate this Agreement. For purposes of this Section 9.01, a
Casualty Loss to the Hotel shall be considered "material" if either (a) the cost
of repairing such Casualty Loss may reasonably be expected to exceed $250,000,
or (b) such Casualty Loss is of a nature which precludes in any material respect
the normal operation of the Hotel and such Casualty Loss cannot reasonably be
expected to be repaired within six (6) months after the date of such Casualty
Loss. If, in the event of a material Casualty Loss, Purchaser does not elect to
terminate its obligation to purchase the Hotel pursuant to this Section 9.01,
Seller shall, at
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Purchaser's election, either (a) promptly and fully repair the damage so as to
restore the Hotel to a condition substantially equivalent to its condition
immediately before the occurrence of such Casualty Loss or Casualty Losses or
(b) pay Purchaser the full amount of any casualty insurance proceeds collected
by Seller with respect thereto, and if such insurance proceeds are insufficient
to cover the full costs of such repair, Seller shall be liable to Purchaser for
the full amount of the deficiency (as estimated by the parties at Closing);
provided, however, that, notwithstanding the foregoing, if the aggregate cost of
- -------- -------
repairing all material Casualty Losses may reasonably be expected to exceed
$1,000,000, then Seller shall have the right to terminate this Agreement, upon
written notice to Purchaser, with the same effect as if Purchaser had made such
election. In the event of any Casualty Loss that does not result in the
termination of Purchaser's obligation to acquire the Hotel so damaged, Seller
shall pay or assign to Purchaser (a) the proceeds of all casualty insurance for
casualties occurring prior to the Closing (to the extent the damage to which
such proceeds are related has not previously been repaired) and (b) the proceeds
of all business interruption and similar insurance for the period after the
Closing.
9.02 Condemnation of Hotel
---------------------
If, before the Closing Date, part or all of the Hotel is condemned or
threatened with condemnation to such an extent as would materially impair the
Hotel's economic viability as a fully functioning full-service Marriott hotel,
Purchaser, at its option and in addition to its rights under Section 2.07, may
terminate this Agreement. Without limiting the generality of the foregoing, an
actual or threatened condemnation shall be deemed materially to impair the
Hotel's economic viability as a fully functioning full-service Marriott hotel,
if it involves an actual or threatened condemnation of (i) a number of guest
rooms at the Hotel such that the number of guest rooms remaining after such
condemnation would be less than eighty percent (80%) of the number of guest
rooms in existence on the date hereof, (ii) a portion of the lobby, meeting
room, bars, restaurant, banquet, and recreation facilities, "back-of-house"
areas, parking facilities, or other public areas with the result that such areas
can no longer reasonably serve their intended purposes and cannot reasonably be
replaced, or (iii) a principal means of ingress or egress to the Site which
cannot reasonably be replaced. If Purchaser does not elect to terminate its
obligation to purchase the condemned Hotel pursuant to this Section 9.02, or if
the condemnation or threatened condemnation would not materially impair the
affected Hotel's economic viability as a fully functioning full-service Marriott
hotel, Seller shall assign to Purchaser at the applicable Closing, by written
instrument, the proceeds of any condemnation award arising out of an actual or
threatened condemnation or otherwise, and Seller will turn over to Purchaser any
such proceeds upon Seller's receipt thereof. For the purposes of the
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<PAGE>
foregoing, a "threat" of condemnation shall not be deemed to have arisen unless
and until Seller either (a) shall have received an official notice to such
effect from a public authority or (b) shall have knowledge of same. For purposes
of this Section 9.02, "knowledge" of Seller shall be based on inquiries to the
Chief Financial Officer of the Manager, the general manager of the Hotel, and
the Assistant General Counsel-Hotel Operations of Marriott International, Inc.,
with no obligation to inquire further.
ARTICLE X
Termination; Remedies
---------------------
10.01 Termination
-----------
Subject to the provisions of Section 10.05, if at the Closing (i)
Seller is unable to deliver title to the Hotel as defined in this Agreement and
in accordance with all of the terms, provisions and conditions of this
Agreement, (ii) Seller shall have failed to comply in any material respect with
any other term, provision or condition of this Agreement, or (iii) any of the
conditions to Purchaser's obligations hereunder or under any other agreement
referenced herein shall not have been satisfied in all material respects,
Purchaser shall have the right:
(a) to cancel this Agreement by giving written notice to Seller, at
which time this Agreement shall be deemed to be terminated, and Purchaser shall
be entitled to the remedies of Purchaser set forth in Section 10.03 below; or
(b) to take title to the Hotel subject to the defect, exception,
objection, inaccuracy, violation or failure and receive a credit against the
Purchase Price in an amount equal to the cost of removing or curing the defect,
violation, exception, objection or inaccuracy, up to an amount not to exceed
$250,000 in the aggregate.
10.02 Defects in Title
----------------
In the event that Purchaser notifies Seller, in writing (which notice
shall be given prior to the expiration of the Review Period, that the Title
Commitment for the Hotel reveals exceptions constituting defects in title, other
than Permitted Encumbrances, and Seller elects to but is unable to remove such
exceptions by the Closing, Seller shall be entitled to an adjournment of the
Closing for a period not to exceed one hundred twenty (120) days in order to
remove such title defects, provided that (i) such title defects cannot
reasonably be removed prior to the Closing and (ii) Seller promptly commences
and diligently pursues removal of
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<PAGE>
the same. If (i) the conditions to the 120-day adjournment period set forth in
the immediately preceding sentence are not satisfied or (ii) after such 120-day
period the Title Company remains unwilling to remove such exceptions, then, in
either case, Purchaser shall have the option to terminate the Agreement and
there shall be no further obligation between the parties with respect to such
Hotel (except as provided in Sections 13.02(b) and 13.11 hereof). In lieu
thereof, however, Purchaser may elect to proceed with the
Closing and notify Seller to said effect, in which event the provisions of
Section 10.01(b) shall apply.
10.03 Remedies of Purchaser
---------------------
Subject to the provisions of Section 10.05, if Seller shall fail to
consummate the transactions contemplated herein due to Seller's default of any
of the terms or conditions of this Agreement, Purchaser's sole rights hereunder
in such event shall be to (i) compel specific performance of Seller's
obligations to convey the Hotel in accordance with the terms of this Agreement,
and receive reimbursement of attorneys' fees and court costs incurred by
Purchaser in compelling such specific performance, if Purchaser is successful,
or (ii) terminate this Agreement. In no event shall Purchaser be entitled to
indirect or consequential damages arising from Seller's default of any of the
terms or conditions of this Agreement, including, without limitation, any
damages based on the lost value of the Hotel. The right of specific performance
made available to Purchaser but not to Seller in this Section 10.03 shall not
render this Agreement invalid by reason of lack of mutuality.
10.04 Remedies of Seller
------------------
Subject to the provisions of Section 10.05, if Purchaser shall fail to
consummate the transactions as required herein for any reason except (i)
Seller's default; (ii) failure of title; or (iii) failure of the conditions set
forth in Section 3.01 of this Agreement, Seller as its sole remedy hereunder, at
law or in equity, shall have the right to reimbursement for its out of pocket
costs incurred in connection herewith, including, without limitation, all costs
incurred in connection with the solicitation of consents from its limited
partners and any related SEC filings.
10.05 Notice and Cure Period
----------------------
Notwithstanding anything contained herein to the contrary, in
the event that Seller or Purchaser believe that the other party is in default of
any of the terms or conditions of this Agreement, the non-defaulting party shall
not begin to exercise any of its rights or remedies under this Agreement until
after it has given to the defaulting party written notice of the alleged default
and a period of 10 days thereafter within which to cure such default, and the
time for performance
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<PAGE>
of such term or condition shall be extended for such ten (10) day period, but
not longer, unless both parties otherwise agree in writing.
ARTICLE XI
Waiver and Partial Invalidity
-----------------------------
11.01 Waiver
------
The failure of either party to insist on strict performance of any of
the provisions of this Agreement or to exercise any right granted to it under
this Agreement shall not be construed as a relinquishment or future waiver;
rather, the provision or right shall continue in full force. No waiver of any
provision or right shall be valid unless it is in writing and signed by the
party giving it.
11.02 Partial Invalidity
------------------
If any part of this Agreement is declared invalid by a court of
competent jurisdiction, this Agreement shall be construed as if such portion had
never existed, unless this construction would operate as an undue hardship on
Seller or Purchaser or would constitute a substantial deviation from the general
intent of the parties as reflected in this Agreement.
ARTICLE XII
Indemnification
---------------
12.01 Agreement to Indemnify
----------------------
(a) Seller shall hold harmless, indemnify, and defend Purchaser
against any and all obligations, claims, losses, damages, liabilities, and
expenses (including, without limitation, reasonable attorneys' and accountants'
fees and disbursements) arising out of (i) events, taxes, contractual
obligations (including, without limitation, any contractual obligations of
Seller with respect to contracts entered into between the Manager and third
parties pursuant to the Management Agreement), acts, or omissions of Seller that
occurred or accrued in connection with the ownership or operation of the Hotel
related to the period prior to the Closing or, (ii) any damage to property of
others or injury to or death of any person or any claims for any debts or
obligations occurring or accruing on or about or in connection with the Hotel or
Site or any portion thereof at any time or times prior to the Closing, and (b)
Purchaser shall hold harmless, indemnify, and defend Seller
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<PAGE>
against any and all obligations, claims, losses, damages, liabilities and
expenses (including, without limitation, reasonable attorneys' and accountants'
fees and disbursements) arising out of (i) events, taxes, contractual
obligations, acts, or omissions of Purchaser that occur or accrue in connection
with the ownership or operation of the Hotel related to the period from and
after the Closing, or (ii) any damage to property of others or injury to or
death of any person or any claims for any debts or obligations occurring or
accruing on or about the Hotel or Site or any portion thereof at any time or
times after the Closing.
12.02 Indemnification Regarding Assumed Obligations
---------------------------------------------
Whenever it is provided in this Agreement that an obligation of Seller
will be assumed by Purchaser after the Closing, Purchaser shall be deemed to
have also agreed to indemnify, defend, and hold harmless Seller and their
respective successors and assigns from all claims, losses, damages, liabilities,
costs, and expenses (including, without limitation, reasonable attorneys' and
accountants' fees and expenses) arising from any failure of Purchaser to perform
the obligation so assumed after the Closing, but only to the extent such
obligation relates to the period from and after the Closing.
12.03 Notice and Cooperation on Indemnification
-----------------------------------------
Whenever either party shall learn through the filing of a claim or the
commencement of a proceeding or otherwise of the existence of any liability for
which the other party is or may be responsible under this Agreement, the party
learning of such liability shall notify the other party promptly and furnish
such copies of documents (and make originals thereof available) and such other
information as such party may have that may be used or useful in the defense of
such claims and shall afford said other party full opportunity to defend the
same in the name of such party and shall generally cooperate with said other
party in the defense of any such claim.
ARTICLE XIII
Miscellaneous
-------------
13.01 Brokerage Commissions and Finder's Fees
---------------------------------------
Each party to this Agreement warrants to the other than no person or
entity can properly claim a right to a real estate commission, real estate
finder's fee, real estate acquisition fee or other brokerage-type compensation
based upon the acts of that party with respect to the transactions contemplated
by this Agreement
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<PAGE>
(collectively, "Real Estate Compensation"). Each party shall indemnify, defend
and hold the other harmless from any and all claims, suits, obligations,
liabilities, damages, losses, costs, and expenses (including, without
limitation, reasonable attorneys' and accountants fees and returned commissions)
resulting from any claim for Real Estate Compensation by any person or entity
based upon such acts or from payment of Real Estate Compensation to any person
by such party or by any entity affiliated with such party.
13.02 Representations, Warranties, and Covenants
------------------------------------------
(a) Except as provided below, the representations and warranties
contained in this Agreement shall be effective as of the date made or deemed
made and on the Closing Date only and shall not continue beyond the Closing or
termination of this Agreement; provided, however, that any liability with
-------- -------
respect to breach thereof on or as of the Closing Date shall survive the Closing
for a period of no more than one (1) year, TIME BEING OF THE ESSENCE; and
provided, further, that Seller shall not have liability on account of any breach
- -------- -------
thereof unless and until the aggregate amount of all such claims shall exceed
$250,000.
(b) The indemnification provisions set forth in Sections 2.01, 2.05,
4.01(c), 4.02, 12.01, 12.02, 12.03 and 13.01 shall survive the Closing.
13.03 Assignment
----------
(a) Neither party shall assign or transfer or permit the assignment
or transfer of its rights or obligations under this Agreement without the prior
written consent of the other, in its sole and absolute discretion, and any such
assignment or transfer without such prior written consent is hereby declared to
be null and void; except that Purchaser shall be permitted to designate any
wholly-owned direct or indirect subsidiary of Host Marriott Corporation (each, a
"Permitted Designee") as the entity to whom the Deed and Bill of Sale with
respect to the Hotel is to be delivered; provided, however, that nothing in this
--------- -------
Section 13.03 shall be deemed to limit Purchaser's obligations hereunder and
Purchaser shall continue to be liable for such Permitted Designee's performance
of its obligations hereunder.
(b) In the event either party consents to an assignment of this
Agreement by the other, no further assignment shall be made without another
written consent from the consenting party, unless the assignment may otherwise
be made without consent under this Agreement. An assignment by either Seller or
Purchaser of interest in this Agreement shall not relieve Seller or Purchaser,
as the case may be, from its obligations, but this Agreement shall then inure to
the benefit of, and be binding on, the assignee and its successors, heirs, legal
representatives,
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<PAGE>
and permitted assigns. All assignees shall be subject to this Section 13.03 as
though they were an original party to this Agreement.
13.04 Limited Liability
-----------------
Seller and Purchaser agree that no partner, member or shareholder
shall have any personal liability under this Agreement and that Purchaser shall
have recourse for the faithful performance by a party of its obligations
hereunder and thereunder shall be only to the assets of that party.
13.05 Period for Making Claims
------------------------
Except as otherwise expressly provided herein, all claims by a party
hereto, whether for amounts due or otherwise, under any provision of this
Agreement, must be made in writing to the other parties by the date which is one
(1) year from the Closing Date, TIME BEING OF THE ESSENCE.
13.06 Applicable Law
--------------
This Agreement shall be governed by the laws of the State of Maryland
(excluding the choice of law provisions thereof), except that any matter of real
estate law affecting the Hotel shall be governed by the laws of the State of
Texas.
13.07 Headings
--------
The headings of articles and sections of this Agreement are inserted
only for convenience; and are not to be construed as a limitation of the scope
of the particular provision to which they refer or otherwise to affect the
interpretation of any provision hereof.
13.08 Notices
-------
Notices and other communications required by this Agreement shall be
in writing and (a) delivered by hand against receipt, (b) transmitted by
telecopy and confirmed by telephone or (c) sent by certified or registered mail,
postage prepaid, with return receipt requested, or by nationally-recognized
overnight courier. All notices shall be addressed as follows:
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<PAGE>
If to Seller:
Potomac Hotel Limited Partnership
c/o Host Marriott Corporation
10400 Fernwood Road
Bethesda, Maryland 20817
Attention: Mr. Bruce Stemerman
Host Marriott Lodging Partnerships
Department 72/924.25
301/380-3883
301/380-8260 (FAX)
If to Purchaser:
Host Marriott Corporation
10400 Fernwood Road
Bethesda, Maryland 20817
Attention: Mr. Bruce Wardinski
Treasury Department 72/924.11
301/380-7451
301/380-3588 (FAX)
or to such other address as may be designated in writing by a proper notice
delivered by one party to the other. Any properly mailed notice shall be
effective upon receipt (and confirmation by telephone, if sent by telecopy) or,
if refused, upon refusal to accept delivery by the party to be charged with
notice.
13.09 Entire Agreement
----------------
This Agreement, and the exhibits attached hereto, constitutes the
entire agreement between the parties with respect to the purchase and sale of
the Hotel and supersedes all prior oral and written understandings. Amendments
to this Agreement shall not be effective unless in writing and signed by the
party against whom enforcement of the amendment is sought.
13.10 Counterparts
------------
This Agreement may be executed in several counterparts, each of which
shall be deemed to be an original, and all of which taken together shall
constitute one and the same instrument.
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<PAGE>
13.11 Termination Fee
---------------
In the event that either party exercises its termination rights
pursuant to Sections 2.07, 3.03, 4.01(a), 4.02, 10.01 or 10.02 of this
Agreement, the party terminating this Agreement shall be obligated to pay to the
other party a termination fee in the amount of Five Hundred and No/100 Dollars
($500.00), and such obligation shall survive the termination of this Agreement.
13.12 Further Assurances
------------------
Seller and Purchaser each agree to execute and deliver such other
documents, certificates, agreements and other writings, and to take such other
actions, as may be reasonably requested by the other party to consummate the
transactions contemplated by this Agreement.
13.13 Local Law Requirements
----------------------
To the extent not inconsistent with this Agreement, Seller agrees to
make such modifications to the Deed and Bill of Sale and to execute such other
additional settlement documents or other related documents, as may be necessary
or reasonably requested so that such documents comply with the local law and
custom of the applicable jurisdiction.
13.14 Business Day
------------
To the extent that any date of performance required under this
Agreement does not fall on a Business Day, the date of performance shall be
extended to the next succeeding Business Day. "Business Day" shall mean any day
that is not a Saturday, a Sunday or a federal, District of Columbia, or State of
Maryland holiday on which commercial office operations are typically closed.
13.15 Inspection of Books and Records
-------------------------------
Seller shall permit Purchaser and its agents and representatives, at
all reasonable times and upon reasonable notice, to examine and copy the books
and records of Seller pertaining to the Hotel, to the extent such books and
records are in Seller's actual possession or control.
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<PAGE>
IN WITNESS WHEREOF, Seller and Purchaser have caused this Agreement to
be executed by their duly authorized officers as of the date set forth below.
POTOMAC HOTEL LIMITED
PARTNERSHIP
Attest:
[CORPORATE SEAL] Host Marriott Corporation, its
General Partner
By: /s/ Pamela J. Murch By: /s/ Christopher G. Townsend
--------------------------- -------------------------------
Assistant Secretary. Title: Vice President
Date: July 14, 1995
Attest: HOST MARRIOTT CORPORATION
[CORPORATE SEAL]
By: /s/ Pamela J. Murch By: /s/ Christopher G. Townsend
--------------------------- -------------------------------
Assistant Secretary. Title: Vice President
Date: July 14, 1995
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