<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997 Commission file number 0-23732
WINSTON HOTELS, INC.
(Exact name of registrant as specified in its charter)
NORTH CAROLINA 56-1872141
(State of incorporation) (I.R.S. Employer Identification No.)
2209 CENTURY DRIVE
RALEIGH, NORTH CAROLINA 27612
(Address of principal executive offices)
(Zip Code)
(919) 510-6010
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--------- --------
The number of shares of Common Stock, $.01 par value, outstanding on
August 8, 1997 was 16,194,480.
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<PAGE> 2
WINSTON HOTELS, INC.
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. WINSTON HOTELS, INC. (unaudited)
Consolidated Balance Sheets - June 30, 1997 and
December 31, 1996 3
Consolidated Statements of Income - For the three
months ended June 30, 1997 and 1996 and the six
months ended June 30, 1997 and 1996 4
Consolidated Statements of Cash Flows - For the six months ended
June 30, 1997 and 1996 5
Notes to consolidated financial statements 6
WINSTON HOSPITALITY, INC. (unaudited)
Balance Sheets - June 30, 1997 and December 31, 1996 8
Statements of Income - For the three months ended June 30, 1997
and 1996 and the six months ended June 30, 1997 and 1996 9
Statements of Cash Flows - For the six months ended June 30, 1997
and 1996 10
Note to financial statements 11
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations 12
PART II. OTHER INFORMATION
Item 4. Submissions of Matters to a Vote of Security Holders 18
Item 6. Exhibits and Reports on Form 8-K 18
Signature Page 19
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
WINSTON HOTELS, INC.
CONSOLIDATED BALANCE SHEETS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS
June 30, 1997 December 31, 1996
------------- -----------------
<S> <C> <C>
Investment in hotel properties:
Land $ 22,021 $ 20,639
Buildings and improvements 178,603 166,664
Furniture and equipment 18,686 15,749
--------- ---------
Operating properties 219,310 203,052
Less accumulated depreciation 16,078 11,508
--------- ---------
203,232 191,544
Properties under development 10,583 5,138
--------- ---------
Net investment in hotel properties 213,815 196,682
Cash and cash equivalents 340 234
Lease revenue receivable 7,154 4,611
Deferred expenses, net 1,272 1,362
Prepaid expenses and other assets 1,522 613
--------- ---------
$ 224,103 $ 203,502
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Due to banks $ 63,081 $ 42,800
Accounts payable and accrued expenses 2,226 1,799
Distributions payable 4,613 4,352
Amounts due to Lessee 1,668 1,391
Minority interest in Partnership 11,274 11,347
Shareholders' equity:
Preferred stock, $.01 par value, 10,000,000 shares authorized,
no shares issued and outstanding
Common stock, $.01 par value, 50,000,000 shares authorized,
15,819,580 and 15,799,580 shares issued and outstanding 158 158
Additional paid-in capital 145,416 145,216
Unearned directors' compensation (144) (181)
Deficit (4,189) (3,380)
--------- ---------
141,241 141,813
--------- ---------
$ 224,103 $ 203,502
========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE> 4
WINSTON HOTELS, INC.
CONSOLIDATED STATEMENTS OF INCOME
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
June 30, 1997 June 30, 1996 June 30, 1997 June 30, 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenue:
Percentage lease revenue $ 9,622 $ 6,792 $ 16,770 $ 11,332
Interest and other income 24 21 54 37
----------- ----------- ----------- -----------
Total revenue 9,646 6,813 16,824 11,369
----------- ----------- ----------- -----------
Expenses:
Real estate taxes and property and
casualty insurance 591 375 1,156 695
General & administrative 492 473 862 897
Interest expense 996 900 1,811 1,574
Depreciation 2,348 1,442 4,570 2,609
Amortization 41 36 81 67
----------- ----------- ----------- -----------
Total expenses 4,468 3,226 8,480 5,842
----------- ----------- ----------- -----------
Income before allocation to
minority interest 5,178 3,587 8,344 5,527
Income allocation to minority interest 381 150 611 230
----------- ----------- ----------- -----------
Net income applicable to common
shareholders $ 4,797 $ 3,437 $ 7,733 $ 5,297
=========== =========== =========== ===========
Net income per common share $ 0.30 $ 0.34 $ 0.49 $ 0.53
=========== =========== =========== ===========
Cash distributions per share $ 0.27 $ 0.225 $ 0.54 $ 0.495
=========== =========== =========== ===========
Weighted average number of common shares and
common share equivalents 17,085,076 10,672,165 17,082,921 10,526,428
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE> 5
WINSTON HOTELS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
June 30, 1997 June 30, 1996
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 7,733 $ 5,297
Adjustments to reconcile net income to net cash provided by operating
activities:
Minority Interest 611 230
Depreciation 4,570 2,609
Amortization of franchise fees 44 30
Amortization recorded as interest expense 219 113
Unearned compensation amortization 37 37
Changes in assets and liabilities:
Lease revenue receivable (2,543) (2,616)
Prepaid expenses and other assets (909) (22)
Current liabilities 427 31
-------- --------
Net cash provided by operating activities 10,189 5,709
-------- --------
Cash flows from investing activities:
Deferred acquisition costs (27) (404)
Prepaid acquisition costs (65) (881)
Investment in hotel properties (21,426) (30,508)
-------- --------
Net cash used in investing activities (21,518) (31,793)
-------- --------
Cash flows from financing activities:
Fees paid in connection with the line of credit (81) (13)
Net proceeds from issuance of stock 200 59,368
Payment of distributions to common shareholders (8,300) (5,039)
Payment of distributions to minority interest (665) (221)
Increase in line of credit borrowing 20,281 (22,525)
-------- --------
Net cash used in financing activities 11,435 31,570
-------- --------
Net increase (decrease) in cash and cash equivalents 106 5,486
Cash and cash equivalents at beginning of period 234 2,496
-------- --------
Cash and cash equivalents at end of period $ 340 $ 7,982
======== ========
Supplemental disclosure:
Cash paid for interest, including amounts capitalized $ 1,299 $ 1,392
Summary of non-cash investing and financing activities:
Investment in hotel properties payable $ 1,557 $ 1,690
Distributions declared but not paid 4,613 4,105
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE> 6
WINSTON HOTELS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($ AMTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
1. ORGANIZATION
Winston Hotels, Inc. (the "Company") operates so as to qualify as a
real estate investment trust ("REIT") for federal income tax purposes.
The accompanying unaudited consolidated financial statements reflect,
in the opinion of management, all adjustments necessary for a fair
presentation of the interim financial statements. All such adjustments
are of a normal and recurring nature. Due to the seasonality of the
hotel business, the information for the three and six month periods
ended June 30, 1997 and 1996 are not necessarily indicative of the
results for a full year.
2. ACQUISITIONS
On May 1, 1997, the Company acquired a 215-room Comfort Suites hotel in
Orlando, Florida for approximately $11.6 million with borrowings under
its line of credit. The acquisition was accounted for by the purchase
method of accounting and the results of operations for this hotel are
included in the Consolidated Statements of Income for the period in
which it was owned by the Company.
3. PRO FORMA FINANCIAL INFORMATION
These unaudited pro forma condensed statements of income of the Company
are presented as if the June 1996 follow-on offering had occurred
January 1, 1996 and the Company had acquired all 32 of the Current
Hotels on the later of January 1, 1996 or the hotel opening date. These
unaudited pro forma condensed statements of income are not necessarily
indicative of what actual results of operations of the Company would
have been assuming such transactions had been completed as of the dates
described above, nor does it purport to represent the results of
operations for future periods:
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Six Months Ended Six Months Ended
June 30, 1997 June 30, 1996
------------- -------------
<S> <C> <C>
Percentage lease and other revenue $ 17,546 $ 15,694
----------- -----------
Expenses:
Real estate taxes and property and casualty
insurance 1,215 1,059
General and administrative 867 933
Depreciation 4,754 3,853
Amortization 84 83
Interest expense 2,086 1,778
----------- -----------
Total expense 9,006 7,706
----------- -----------
Income before allocation to minority interest 8,540 7,988
Income allocation to minority interest 633 530
----------- -----------
Net income applicable to common shareholders $ 7,907 $ 7,458
=========== ===========
Net income per common share $ 0.50 $ 0.48
=========== ===========
Weighted average number of common shares
and common share equivalents 17,082,921 16,757,982
=========== ===========
</TABLE>
6
<PAGE> 7
WINSTON HOTELS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($ AMTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
4. SUBSEQUENT EVENTS:
On July 14, 1997, the Company acquired two hotel properties for
purchase prices totaling $16.7 million which included the assumption of
debt and the issuance of 815,000 limited partnership units by WINN
Limited Partnership. On July 17, 1997, the seller redeemed 374,900 of
these limited partnership units in exchange for 374,900 newly issued
shares of the Company's Common Stock. The acquisition was accounted for
by the purchase method of accounting. On August 6, 1997, the Company
purchased a 127-room Holiday Inn Express in Clearwater, Florida for
approximately $6.4 million.
5. EARNINGS PER SHARE
The Company will adopt Statement of Financial Accounting Standards
(SFAS) No. 128, "Earnings Per Share," on December 31, 1997. SFAS
No. 128 requires the Company to change its method of computing,
presenting and disclosing earnings per share information. Upon
adoption, all prior period data presented will be restated to conform
to the provisions of SFAS No. 128.
If the Company had adopted SFAS No. 128 for the period ended June 30,
1997, the following computation would have been used to arrive at basic
income per common share and diluted income per common share that would
have been presented on the consolidated statements of income:
<TABLE>
<CAPTION>
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
June 30, 1997 June 30, 1996 June 30, 1997 June 30, 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Basic income per common share:
Net income $ 4,797 $ 3,437 $ 7,733 $ 5,297
=========== =========== =========== ===========
Weighted average common
shares outstanding 15,819,580 10,221,148 15,817,425 10,050,631
=========== =========== =========== ===========
Basic income per common share $ 0.30 $ 0.34 $ 0.49 $ 0.53
=========== =========== =========== ===========
Diluted income per common share:
Income before allocation to minority interest $ 5,178 $ 3,587 $ 8,344 $ 5,527
=========== =========== =========== ===========
Weighted average shares:
Common shares outstanding 15,819,580 10,221,148 15,817,425 10,050,631
Units with redemption rights 1,265,496 433,956 1,265,496 433,956
Stock options and advisory shares 61,293 79,609 66,529 112,518
----------- ----------- ----------- -----------
Total shares 17,146,369 10,734,713 17,149,450 10,597,105
=========== =========== =========== ===========
Diluted income per common share $ 0.30 $ 0.33 $ 0.49 $ 0.52
=========== =========== =========== ===========
</TABLE>
6. RECENTLY ISSUED STATEMENTS OF FINANCIAL ACCOUNTING STANDARDS
In June 1997, SFAS 130, "Reporting Comprehensive Income" and SFAS 131,
"Disclosures about Segments of an Enterprise and Related Information"
were issued and are effective for fiscal years beginning after December
15, 1997. The adoption of these standards is not expected to have a
material impact on the financial statements of the Company.
7
<PAGE> 8
WINSTON HOSPITALITY, INC.
BALANCE SHEETS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS
June 30, 1997 December 31, 1996
------------- -----------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 8,800 $5,463
Accounts receivable:
Trade 1,847 1,166
Lessor 1,668 1,391
Affiliates 101 95
Shareholders 71
Prepaid expenses and other assets 133 220
------- ------
Total current assets 12,549 8,406
------- ------
Furniture, fixtures and equipment:
Furniture and equipment 380 323
Leasehold improvements 113 113
------- ------
493 436
Less accumulated depreciation and amortization 232 178
------- ------
Net furniture, fixtures and equipment 261 258
------- ------
$12,810 $8,664
======= ======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable - trade $ 1,501 $1,259
Percentage lease payable to Lessor 7,154 4,611
Accounts payable - affiliates 295 146
Accrued salaries and wages 1,068 874
Accrued sales and occupancy taxes 687 462
Other current liabilities 821 618
------- ------
Total current liabilities 11,526 7,970
------- ------
Shareholders' equity:
Common stock, $0.01 par value, 100 shares authorized,
issued and outstanding 1 1
Additional paid-in capital 49 49
Retained earnings 1,234 644
------- ------
Total shareholders' equity 1,284 694
------- ------
$12,810 $8,664
======= ======
</TABLE>
The accompanying note is an integral part of the financial statements.
8
<PAGE> 9
WINSTON HOSPITALITY, INC.
STATEMENTS OF INCOME
($ IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
June 30, 1997 June 30, 1996 June 30, 1997 June 30, 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenue:
Room $20,488 $14,718 $36,813 $25,427
Food and beverage 779 403 1,410 440
Other revenue, net 383 290 687 566
Interest income 43 30 65 49
------- ------- ------- -------
Total revenue 21,693 15,441 38,975 26,482
------- ------- ------- -------
Expenses:
Property operating expenses 7,047 5,003 13,265 8,961
Repairs and maintenance 967 801 1,835 1,325
Food and beverage 524 297 979 359
General and administrative 566 512 1,160 996
Franchise costs 1,877 1,323 3,335 2,228
Management fees 352 377 649 693
Percentage lease payments 9,622 6,792 16,770 11,332
------- ------- ------- -------
Total expenses 20,955 15,105 37,993 25,894
------- ------- ------- -------
Net income $ 738 $ 336 $ 982 $ 588
======= ======= ======= =======
</TABLE>
The accompanying note is an integral part of the financial statements.
9
<PAGE> 10
WINSTON HOSPITALITY, INC.
STATEMENTS OF CASH FLOWS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
June 30, 1997 June 30, 1996
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 982 $ 588
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation 54 35
Changes in assets and liabilities:
Accounts receivable - trade (681) (716)
Prepaid expenses and other assets 87 44
Accounts payable - trade 242 669
Percentage lease payable to Lessor 2,543 2,616
Accrued expenses and other liabilities 622 1,075
------- -------
Net cash provided by operating activities 3,849 4,311
------- -------
Cash flows from investing activities:
Purchases of furniture, fixtures and equipment (57) (59)
Advances to lessor, affiliates and shareholders (63) (1,384)
------- -------
Net cash used in investing activities (120) (1,443)
------- -------
Cash flows from financing activities:
Distributions to shareholders (392) (350)
------- -------
Net cash used in financing activities (392) (350)
------- -------
Net increase (decrease) in cash and cash equivalents 3,337 2,518
Cash and cash equivalents at beginning of the period 5,463 2,249
------- -------
Cash and cash equivalents at end of period $ 8,800 $ 4,767
======= =======
</TABLE>
The accompanying note is an integral part of the financial statements.
10
<PAGE> 11
WINSTON HOSPITALITY, INC.
NOTE TO FINANCIAL STATEMENTS
The accompanying unaudited financial statements reflect, in the opinion of
management, all adjustments necessary for a fair presentation of the interim
financial statements. All such adjustments are of a normal and recurring nature.
RECLASSIFICATIONS
Certain reclassifications have been made to the 1996 financial statements to
conform with the 1997 presentation. These reclassifications have no effect on
net income or shareholders' equity as previously reported.
11
<PAGE> 12
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
($ AMOUNTS IN THOUSANDS)
OVERVIEW
Winston Hotels, Inc. (the "Company"), which consummated an underwritten initial
public offering ("IPO") in June 1994 and follow-on offerings in May 1995 and in
June 1996, operates as a REIT to invest in hotel properties and owned 32 hotels
(the "Current Hotels") as of June 30, 1997. The Company owned sixteen hotels as
of December 31, 1994 (the "1994 Hotels"), acquired five hotels in May 1995 (the
"1995 Acquired Hotels"), acquired five hotels in May 1996, three hotels in July
1996, one hotel in September 1996, one hotel in December 1996 (collectively, all
ten are the "1996 Acquired Hotels") and acquired one hotel in May 1997 (the
"1997 Acquired Hotel"). Three of the 1996 Acquired Hotels opened in 1996, on
February 29, June 27, and November 8 respectively (the "Newly Developed
Hotels"). The Company currently leases the Current Hotels to Winston
Hospitality, Inc. (the "Lessee") under Percentage Leases through which it
receives its principal source of revenue.
RESULTS OF OPERATIONS
For the three and six month periods ended June 30, 1997 and 1996, the
differences in operating results are primarily attributable to the fact that the
Company owned more hotels in 1997 than it did in 1996. The table below outlines
the Company's investment in hotel properties for the periods ended June 30, 1997
and 1996.
Properties Owned
-----------------------------------------
Type of Hotel June 30, 1997 June 30, 1996
------------- ------------- -------------
Limited-service hotels 29 21
Extended-stay hotels 2 0
Full-service hotels 1 0
-- --
Total 32 21
== ==
In order to present a more meaningful comparison of operations, in addition to
the comparison of actual results of the Company and the Lessee for the three and
six months ended June 30, 1997 versus actual results for the three and six
months ended June 30, 1996, below is an analysis of the pro forma results of the
Company for the three and six months ended June 30, 1997 versus pro forma
results for the three and six months ended June 30, 1996 as if the 1996
follow-on offering and the 1996 and 1997 acquisitions had occurred on the later
of January 1, 1996 or the hotel opening dates for the two Newly Developed Hotels
which opened prior to June 30, 1996.
THE COMPANY
ACTUAL - THREE MONTHS ENDED JUNE 30, 1997 VS ACTUAL -
THREE MONTHS ENDED JUNE 30, 1996
The Company had revenues of $9,646 in 1997, consisting of $9,622 of Percentage
Lease revenues and $24 of interest and other income. Percentage Lease revenues
increased by $2,830, or 42%, to $9,622 in 1997 from $6,792 in 1996. This
increase was comprised of: (i) $167 due to the rent formulas of the Percentage
Leases increasing rent payments by the Lessee by an average of 35% of the $249
in increased room revenues attributable to inflation, plus an average of 78% of
$102 in increased room revenues, which were attributable primarily to higher
rates; (ii) $2,318 in increased lease revenues attributable to the 1996 Acquired
Hotels; and (iii) $345 in increased lease revenues attributable to the 1997
Acquired Hotel.
Real estate taxes and property insurance costs incurred in 1997 were $591, an
increase of $216 from $375 in 1996. This increase was primarily attributable to
the greater number of hotels owned during the 1997 period than in the 1996
period. Interest expense increased by $96 to $996 in 1997 from $900 in 1996. The
increase was attributable to: (i) $89 related to the increase in the weighted
average interest rates from the second quarter of 1996 to the second quarter of
1997; (ii) $130 related to the increase in the weighted average level of
borrowings from the second quarter of 1996 to the second quarter of 1997; and
(iii) $106 of increased amortization of line of credit fees and unused line of
credit fees in connection the $125 million credit line which was obtained in the
fourth quarter of 1996. These increases were offset by $229 of capitalized
interest costs during the second quarter of 1997 in connection with the
development projects. Depreciation increased $906 to $2,348 in 1997 from $1,442
in 1996, primarily due to depreciation related to the 1996 Acquired Hotels and
the 1997 Acquired Hotel and renovations completed during 1996 and 1997.
12
<PAGE> 13
PRO FORMA - THREE MONTHS ENDED JUNE 30, 1997 VS PRO FORMA -
THREE MONTHS ENDED JUNE 30, 1996
The Company had pro forma revenues of $9,817 for the three months ended June 30,
1997, consisting of $9,793 of pro forma Percentage Lease revenues and $24 of
interest and other income. Pro forma Percentage Lease revenues increased by
$959, or 11%, to $9,793 in 1997 from $8,834 in 1996. This increase was comprised
of: (i) $392 due to rent formulas of the Percentage Leases increasing pro forma
rent payments by the Lessee by an average of 36% of the $274 in increased pro
forma room revenues attributable to inflation and 62% of the $475 in increased
pro forma room revenues attributable primarily to higher rates; plus (ii) $696
in increased pro forma lease revenues attributable to the opening of three
additional hotels; offset by (iii) $129 in decreased pro forma lease revenues,
primarily attributable to decreased occupancy at several hotels which were
undergoing renovations.
Pro forma real estate taxes and property insurance costs incurred in 1997 were
$619, an increase of $78 from $541 in 1996. The increase resulted primarily from
increases in property tax assessments from 1996 to 1997. Pro forma interest
expense increased by $162 to $1,065 in 1997 from $903 in 1996, primarily due to
additional borrowings related to two Newly Developed Hotels. Pro forma
depreciation increased $361 to $2,440 in 1997 from $2,079 in 1996 primarily due
to additional depreciation on two Newly Developed Hotels and renovations
completed during 1996 and 1997.
ACTUAL - SIX MONTHS ENDED JUNE 30, 1997 VS ACTUAL -
SIX MONTHS ENDED JUNE 30, 1996
The Company had revenues of $16,824 in 1997, consisting of $16,770 of Percentage
Lease revenues and $54 of interest and other income. Percentage Lease revenues
increased by $5,438, or 48%, in 1997 from $11,332 in 1996. This increase was
comprised of: (i) $297 due to the rent formulas of the Percentage Leases
increasing rent payments by the Lessee by an average 35% of the $492 in
increased room revenues attributable to inflation and by an average of 66% of
the $188 in increased room revenues attributable primarily to higher rates; (ii)
$4,796 for the 1996 Acquired Hotels; and (iii) $345 for the 1997 Acquired Hotel.
Real estate taxes and property insurance costs incurred in 1997 were $1,156, an
increase of $461 from $695 in 1996. This increase was primarily attributable to
the greater number of hotels owned during the 1997 period than in the 1996
period. General and administrative expenses decreased $35 to $862 in 1997 from
$897 in 1996. The decrease was attributable to the capitalization of $107 of
payroll costs related to the development projects during the first quarter of
1997 offset in part by an increase in costs attributable to the increase in size
and activities of the Company in 1997. Interest expense increased by $237 to
$1,811 in 1997 from $1,574 in 1996. The increase was attributable to: (i) $496
related to the increase in the weighted average level of borrowings from the
second quarter of 1996 to the second quarter of 1997; and (ii) $172 of
amortization of line of credit fees and unused line of credit fees in connection
with the $125 million credit line which was obtained in the fourth quarter of
1996. These increases were partially offset by $404 of capitalized interest
costs during the six months ended June 30, 1997 in connection with the
development projects. Depreciation increased $1,961 to $4,570 in 1997 from
$2,609 in 1996, primarily due to depreciation related to the 1996 Acquired
Hotels and the 1997 Acquired Hotel and renovations completed during 1996 and
1997.
PRO FORMA - SIX MONTHS ENDED JUNE 30, 1997 VS PRO FORMA -
SIX MONTHS ENDED JUNE 30, 1996
The Company had pro forma revenues of $17,546 for the six months ended June 30,
1997, consisting of $17,492 of pro forma Percentage Lease revenues and $54 of
interest and other income. Pro forma Percentage Lease revenues increased by
$1,836, or 12%, to $17,492 in 1997 from $15,656 in 1996. This increase was
comprised of: (i) $648 due to rent formulas of the Percentage Leases increasing
pro forma rent payments by the Lessee by an average of 36% of the $525 in
increased pro forma room revenues attributable to inflation and 67% of the $684
in increased pro forma room revenues attributable primarily to higher rates;
plus (ii) $1,416 in increased pro forma lease revenues attributable to the
opening of three additional hotels; offset by (iii) $228 in decreased pro forma
lease revenues attributable to decreased occupancy at several hotels which were
undergoing renovations.
Pro forma real estate taxes and property insurance costs incurred in 1997 were
$1,215, an increase of $156 from $1,059 in 1996. This increase was attributable
primarily to the Newly Developed Hotels. Pro forma general and administrative
expenses decreased $66 to $867 in 1997 from $933 in 1996. The decrease was
attributable to the capitalization of $107 of payroll costs related to the
development projects during the six months ended June 30, 1997 offset in part by
inflationary cost increases. Pro forma interest expense increased by $308 to
$2,086 in 1997 from $1,778 in 1996. The increase was primarily attributable to
additional borrowings related to the Newly Developed Hotels. Pro forma
depreciation increased
13
<PAGE> 14
$901 to $4,754 in 1997 from $3,853 in 1996 primarily due to additional
depreciation on the Newly Developed Hotels and renovations completed during 1996
and 1997.
THE LESSEE
ACTUAL - THREE MONTHS ENDED JUNE 30, 1997 VS ACTUAL -
THREE MONTHS ENDED JUNE 30, 1996
The following table sets forth certain historical financial information for the
periods indicated:
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended Change
June 30, 1997 June 30, 1996 $ %
--------------------------- ---------------------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Revenue:
Room revenue $ 20,488 94.4% $ 14,718 95.3% $ 5,770 39.2%
Food and beverage revenue 779 3.6% 403 2.6% 376 93.3%
Other operating revenue, net 383 1.8% 290 1.9% 93 32.1%
Interest income 43 0.2% 30 0.2% 13 43.3%
------------- ------------- ------------- -------------- ------------- -----------
Total revenue 21,693 100.0% 15,441 100.0% 6,252 40.5%
------------- ------------- ------------- -------------- ------------- -----------
Expenses:
Property and operating expenses 7,047 32.5% 5,003 32.4% 2,044 40.9%
Property maintenance and repairs 967 4.4% 801 5.2% 166 20.7%
Food and beverage expense 524 2.4% 297 1.9% 227 76.4%
General and administrative 566 2.6% 512 3.3% 54 10.5%
Franchise costs 1,877 8.7% 1,323 8.6% 554 41.9%
Management fees 352 1.6% 377 2.4% (25) (6.6%)
Percentage lease payments 9,622 44.4% 6,792 44.0% 2,830 41.7%
------------- ------------- ------------- -------------- ------------- -----------
Total expenses 20,955 96.6% 15,105 97.8% 5,850 38.7%
============= ============= ============= ============== ============= ===========
Net income $ 738 3.4% $ 336 2.2% $ 402 119.6%
============= ============= ============= ============== ============= ===========
</TABLE>
The increase of $6,252 in total revenue and $5,850 in total expenses is
primarily due to the operation of a greater number of hotels for the three
months ended June 30, 1997 as compared with the same period of 1996.
The increase of $5,770 in room revenues was due to: (i) an increase in room
revenues of $351, or 3%, for the 1994 Hotels and the 1995 Acquired Hotels; (ii)
an increase in room revenues of $4,694 for the 1996 Acquired Hotels; and (iii)
room revenues of $725 for the 1997 Acquired Hotel. Food and beverage revenue
increased $376 primarily due to the acquisition of a full-service hotel in May
1996.
Property maintenance and repairs expense declined as a percentage of total
revenue, in part because of the timing of certain costs which are expected to
occur during the second half of the 1997 year, and in part because of the nature
of certain fixed costs which generally do not vary as a percentage of revenues.
Food and beverage expense increased $227 primarily due to the acquisition of a
full-service hotel in May 1996. General and administrative expense declined as a
percentage of total revenue, primarily because certain fixed costs do not vary
as a percentage of revenues. Management fees decreased to 1.6% of total revenues
in 1997 from 2.4% of total revenues in 1996, primarily as a result of a lower
proportion of hotels and total revenues under third party management in 1997
than 1996.
The increase in net income was generally a result of: (i) the increase in
profits from a higher volume of revenues; (ii) temporary savings from property
maintenance and repairs which are expected to be incurred during the second half
of 1997; (iii) economies relating to general and administrative expenses; and
(iv) a lesser portion of profitable operations under third party management in
1997 than in 1996.
14
<PAGE> 15
ACTUAL - SIX MONTHS ENDED JUNE 30, 1997 VS ACTUAL -
SIX MONTHS ENDED JUNE 30, 1996
The following table sets forth certain historical financial information for the
periods indicated:
<TABLE>
<CAPTION>
Six Months Ended Six Months Ended Change
June 30, 1997 June 30, 1996 $ %
--------------------------- ---------------------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Revenue:
Room revenue $ 36,813 94.5% $ 25,427 96.0% $ 11,386 44.8%
Food and beverage revenue 1,410 3.6% 440 1.7% 970 220.5%
Other operating revenue, net 687 1.7% 566 2.1% 121 21.4%
Interest income 65 0.2% 49 0.2% 16 32.7%
------------- ------------- ------------- -------------- ------------- -----------
Total revenue 38,975 100.0% 26,482 100.0% 12,493 47.2%
------------- ------------- ------------- -------------- ------------- -----------
Expenses:
Property and operating expenses 13,265 34.0% 8,961 33.8% 4,304 48.0%
Property maintenance and repairs 1,835 4.7% 1,325 5.0% 510 38.5%
Food and beverage expense 979 2.5% 359 1.4% 620 172.7%
General and administrative 1,160 3.0% 996 3.8% 164 16.5%
Franchise costs 3,335 8.6% 2,228 8.4% 1,107 49.7%
Management fees 649 1.7% 693 2.6% (44) (6.3%)
Percentage lease payments 16,770 43.0% 11,332 42.8% 5,438 48.0%
------------- ------------- ------------- -------------- ------------- -----------
Total expenses 37,993 97.5% 25,894 97.8% 12,099 46.7%
------------- ------------- ------------- -------------- ------------- -----------
Net income $ 982 2.5% $ 588 2.2% $ 394 67.0%
============= ============= ============= ============== ============= ===========
</TABLE>
The increase of $12,493 in total revenue and $12,099 in total expenses is
primarily due to the operation of a greater number of hotels for the six months
ended June 30, 1997 as compared with the same period of 1996.
The increase of $11,386 in room revenues was due to: (i) an increase in room
revenues of $680, or 3%, for the 1994 Hotels and the 1995 Acquired Hotels; (ii)
an increase in room revenues of $9,981 for the 1996 Acquired Hotels; and (iii)
room revenues of $725 for the 1997 Acquired Hotel. Food and beverage revenue
increased $970 primarily due the acquisition of a full-service hotel in May
1996.
Property maintenance and repairs expense declined as a percentage of total
revenue, in part because of the timing of certain costs which are expected to
occur during the second half of the 1997 year, and in part because of the nature
of certain fixed costs which generally do not vary as a percentage of revenues.
Food and beverage expense increased $620 primarily due to the acquisition of a
full-service hotel in May 1996. General and administrative expense declined as a
percentage of total revenue, primarily because certain fixed costs do not vary
as a percentage of revenues. Management fees decreased to 1.7% of total revenues
in 1997 from 2.6% of total revenues in 1996, primarily as a result of the lower
proportion of hotels and total revenues under third party management in 1997
than 1996.
The increase in net income was generally a result of: (i) the increase in
profits from a higher volume of revenues; (ii) temporary savings from property
maintenance and repairs which are expected to be incurred during the second half
of 1997; (iii) economies relating to general and administrative expenses, and
(iv) a lesser portion of profitable operations under third party management in
1997 than in 1996, offset, in part, by (v) increases in food and beverage costs
from the full-service hotel operation of one hotel.
LIQUIDITY AND CAPITAL RESOURCES
The Company finances its operations from operating cash flow, which is
principally derived from Percentage Leases. For the six months ended June 30,
1997, cash flow provided by operating activities was $10,189 and funds from
operations, which is equal to net income before minority interest plus
depreciation, was $12,914. Under Federal income tax law provisions applicable to
REITs, the Company is required to distribute at least 95% of its taxable income
to maintain its tax status as a REIT. During the first six months of 1997, the
Company declared distributions of $8,543 to its shareholders. Because the
Company's cash flow from operating activities is expected to exceed its taxable
income due to depreciation and amortization expenses, the Company expects to be
able to meet its distribution requirements out of cash flow from operating
activities.
15
<PAGE> 16
The Company's net cash used in investing activities for the six months ended
June 30, 1997 totaled $21,518, including $11,628 related to the acquisition of
the 1997 Acquired Hotel, $4,353 for hotel renovations primarily of the 1996
Acquired Hotels, and $5,445 primarily for the development of four new
extended-stay hotels. The Company is developing four new extended-stay hotels
which are expected to cost approximately $42,000, of which approximately $10,400
has been expended as of June 30, 1997. The development of two of these hotels is
expected to be completed late in 1997, and the remaining two during the first
and second quarters of 1998. In addition, the Company has announced plans to
commence the development of a limited-service hotel, which is expected to cost
approximately $8 million and be completed during the second quarter of 1998. The
Company acquired two additional limited-service hotels on July 14, 1997, for
approximately $16.7 million, and acquired another limited-service hotel on
August 6, 1997 for approximately $6.4 million (collectively, the "1997 Newly
Acquired Hotels"). The Company plans to spend approximately $4 million to
renovate these three hotels.
The Company also anticipates spending approximately $2.5 million during 1997 in
connection with the refurbishment of its Current Hotels. These expenditures are
in addition to the reserve of 5% of room revenues for its limited-service hotels
and 7% of room revenues and food and beverage revenues from its full-service
hotels which the Company is required to set aside under its Percentage Leases
for periodic capital improvements and the refurbishment and replacement of
furniture, fixtures and equipment at its Current Hotels. In the six months ended
June 30, 1997, the Company set aside $1,954 for such reserves. These reserves
are in addition to amounts spent on normal repairs and maintenance which have
approximated 5.0% and 5.2% of room revenues for the six months ended June 30,
1997 and 1996, respectively, and are paid by the Lessee.
The Company's net cash used in financing activities in the quarter ended June
30, 1997 totaled $11,435, primarily attributable to an increase of $20,281 in
the line of credit borrowings, offset by the payment of distributions to
shareholders, of $8,300, and to minority interest, of $665. The Company financed
the acquisition of the 1997 Newly Acquired Hotels with approximately $12.7
million in proceeds under its line of credit and with the issuance of 815,000
limited partnership units of WINN Limited Partnership.
The Company has collateralized a portion of its $125,000 line of credit with 28
of its Current Hotels. As of June 30, 1997 there is $95,070 available for
borrowing ("Line Availability"), of which $63,081 is outstanding. The Line
Availability is calculated quarterly, and increases if cash flow attributable to
the collateral hotels increases and/or the Company adds additional hotels as
collateral. The Company's Articles of Incorporation limit its total amount of
indebtedness to 45% of the purchase prices paid by the Company for its
investments in hotel properties, as defined. As of June 30, 1997, the Company
had additional borrowing capacity under the debt limitation of approximately
$80,000 assuming it invests all borrowings in additional hotels.
In June 1997, the Company entered into an interest rate cap agreement to
eliminate its exposure to increases in 90-day LIBOR over 6.25%, and therefore
from its exposure to interest rate increases over 8.00% under its Line of
Credit, on a principal balance of $40 million for the period June 4, 1997
through June 4, 1998. The fee paid for this cap was $69 which will be amortized
as additional interest expense over the term of the agreement.
Under an arrangement with Promus Hotels, Inc. ("Promus") the Company has an
agreement to acquire a 123-suites Homewood Suites hotel being developed by
Promus in Richmond, Virginia. The Company expects to acquire this hotel upon its
completion, which Promus estimates will occur during the fourth quarter of 1997,
for a purchase price approximating Promus' development cost, estimated to be
$8,600. Conditions to the Company's obligation to purchase include its approval
of the building specifications and Promus' completion of construction within
certain cost limitations and by a specified delivery date. Pursuant to the
arrangement, Promus has agreed to invest $1,845 in the Company's Common Stock
(at the then-current market price per share), in connection with the purchase of
this hotel.
The Company intends to acquire and develop additional hotel properties,
including those described herein, that meet its investment criteria and is
continually evaluating acquisition opportunities. It is expected that future
hotel acquisitions and development will be financed, in whole or in part, from
additional follow-on offerings, from borrowings under the line of credit, from
joint venture agreements, and from the issuance of other debt or equity
securities. There can be no assurances that the Company will acquire any
additional hotels, or that any hotel development will be undertaken, or if
commenced, that it will be completed on schedule or on budget. Further, there
can be no assurances that the Company will be able to obtain any additional
financing.
16
<PAGE> 17
SEASONALITY
The hotels' operations historically have been seasonal in nature, reflecting
higher REVPAR during the second and third quarters. This seasonality and the
structure of the Percentage Leases, which provide for a higher percentage of
room revenues above the minimum equal quarterly levels to be paid as Percentage
Rent, can be expected to cause fluctuations in the Company's quarterly lease
revenue under the Percentage Leases.
FORWARD LOOKING STATEMENTS
This report contains certain "forward looking" statements within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended, including, but
not limited to, those paragraphs relating to development and acquisition of
hotels in this section. These statements represent the Company's judgment and
are subject to risks and uncertainties that could cause actual operating results
to differ materially from those expressed or implied in the forward looking
statements. Important factors that could cause actual results to differ include,
but are not limited to the following (i) risks associated with the Company's
acquisition of hotels with little or no operating history, including the risk
that such hotels will not achieve the level of revenue assumed by the Company in
calculating the respective Percentage Rent formula; (ii) development risks,
including risk of construction delay, cost overruns, receipt of zoning,
occupancy and other required governmental permits and authorizations and the
incurrence of development costs in connection with projects that are not pursued
through completion; and (iii) factors identified in the Company's filings with
the Securities and Exchange Commission, including the factors listed in the
Company's Registration Statement on Form S-3 filed with the Securities and
Exchange Commission on April 25, 1996 and amended on May 31, 1996.
17
<PAGE> 18
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
On May 13, 1997, the Annual Meeting of Shareholders was held
and the following matters were submitted to the shareholders
for a vote. There were 13,090,571 shares either present or
evidenced by proxy. Set forth below is a brief description of
the matters voted on and the number of votes cast for, against
or withheld, as well as the number of abstentions and broker
non-votes.
Election of Directors:
<TABLE>
<CAPTION>
NUMBER OF
VOTES AGAINST BROKER
NAME VOTES FOR OR WITHHELD NON-VOTES TOTALS
---- --------- ----------- --------- ------
<S> <C> <C> <C> <C>
Charles M. Winston 13,060,768 29,803 0 13,090,571
Robert W. Winston 13,060,868 29,703 0 13,090,571
James H. Winston 13,060,868 29,703 0 13,090,571
Paul Fulton 13,059,949 30,622 0 13,090,571
Thomas F. Darden 13,060,768 29,803 0 13,090,571
Richard L. Daugherty 13,056,549 34,022 0 13,090,571
Edwin B. Borden 13,060,868 29,703 0 13,090,571
</TABLE>
Ratification of the accounting firm Coopers & Lybrand L.L.P.
as external auditors:
Votes for: 13,029,524
Votes against or withheld: 24,361
Votes abstained: 36,686
Broker non-votes: 0
----------
Total 13,090,571
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
10.46 Redemption and Registration Rights Agreement,
dated as of July 14, 1997 by and among Winn
Limited Partnership, Winston Hotels, Inc.,
certain partnerships listed and certain
partners or designees thereof listed therein.
10.47 Contribution and Exchange Agreement dated as
of June, 1997 between BHI Limited Partnership
and W. Spring Limited Partnership, as
Contributor, and WINN Limited Partnership and
Winston Hotels, Inc.
10.48 Reinstatement of Agreement and Purchase and
Sale And Amendment, dated as of July 22, 1997
between WINN Limited Partnership and Park
Hotel, Limited.
10.49 Agreement of Purchase and Sale dated as of
March 25, 1997 between WINN Limited
Partnership and Park Hotel, Limited.
10.50 Agreement of Purchase and Sale dated as of
March 17, 1997 between WINN Limited Partnership
and WHB Hotel Corp., Ltd.
27 Financial Data Schedule (For SEC use only)
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter
ended June 30, 1997.
18
<PAGE> 19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
WINSTON HOTELS, INC.
Date August 8, 1997 /s/ Philip R. Alfano
---------------------------- ---------------------------------
Philip R. Alfano
Senior Vice President and
Chief Financial Officer
(Authorized Officer and Principal
Financial Officer)
19
<PAGE> 20
WINSTON HOTELS, INC.
FORM 10-Q for the quarter ended June 30, 1997
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
- ------ ----------------------
10.46 Redemption and Registration Rights Agreement,
dated as of July 14, 1997 by and among Winn Limited
Partnership, Winston Hotels, Inc., certain partnerships
listed and certain partners or designees thereof listed
therein.
10.47 Contribution and Exchange Agreement dated as of June,
1997 between BHI Limited Partnership and W. Spring
Limited Partnership, as Contributor, and WINN Limited
Partnership and Winston Hotels, Inc.
10.48 Reinstatement of Agreement and Purchase and Sale And
Amendment, dated as of July 22, 1997 between WINN
Limited Partnership and Park Hotel, Limited.
10.49 Agreement of Purchase and Sale dated as of March 25,
1997 between WINN Limited Partnership and Park Hotel,
Limited.
10.50 Agreement of Purchase and Sale dated as of March 17,
1997 between WINN Limited Partnership and WHB Hotel
Corp., Ltd.
27 Financial Data Schedule (For SEC use only)
20
<PAGE> 1
EXHIBIT 10.46
REDEMPTION AND REGISTRATION RIGHTS AGREEMENT
This REDEMPTION AND REGISTRATION RIGHTS AGREEMENT ("Agreement") is
entered into as of the 14th day of July, 1997 by and among WINN LIMITED
PARTNERSHIP, a North Carolina limited partnership (the "Partnership"), WINSTON
HOTELS, INC. a North Carolina corporation and sole general partner of the
Partnership (the "General Partner" or the "Company"), the partnerships listed on
Exhibit A (the "Contributing Partnerships") and certain partners or designees of
the Contributing Partnerships listed on Exhibit A hereto (the "Limited
Partners"). The Contributing Partnerships and the Limited Partners and their
permitted transferees and assignees are herein referred to individually as a
"Holder" and collectively, as "Holders".
RECITALS
WHEREAS, pursuant to a Contribution and Exchange Agreement among the
Partnership, the Company and the Contributing Partnerships dated June 24, 1997
(the "Contribution and Exchange Agreement"), the Contributing Partnerships have
contributed to the Partnership certain hotel properties in exchange for units of
limited partnership interest in the Partnership as set forth on Exhibit A hereto
(the "Partnership Units") and cash, as set forth in the Contribution and
Exchange Agreements; and
WHEREAS, the Contributing Partnerships may in the future distribute
some or all of the Partnership Units received from the Partnership pursuant to
the Contribution Agreements to the Limited Partners in the amounts set forth in
Exhibit A; and
WHEREAS, the General Partner, the other limited partners of the
Partnership and the Contributing Partnerships have executed, and upon receipt of
Partnership Units, the Limited Partners will execute, the Second Amended and
Restated Agreement of Limited Partnership dated July 11, 1997 of the Partnership
(the "Partnership Agreement"); and
WHEREAS, the parties hereto desire to set forth certain rights of the
Contributing Partnerships and the Limited Partners as holders of the Partnership
Units;
NOW, THEREFORE, for and in consideration of the mutual promises and
agreements contained in this Agreement, the parties hereto mutually agree as
follows:
<PAGE> 2
AGREEMENT
ARTICLE I
DEFINITIONS
Capitalized terms not otherwise defined when first used herein shall
have the meanings set forth in the Partnership Agreement.
ARTICLE II
REDEMPTION RIGHT
Beginning on the date of this Agreement, each Holder shall have the
right (the "Redemption Right") to require the Partnership to redeem on a
Specified Redemption Date all or a portion of the number of Partnership Units
held by such Holder and set forth on Exhibit A under the heading "Immediate
Redemption Units" at a redemption price equal to and in the form of the
Redemption Amount. Notwithstanding any provisions of the Partnership Agreement
to the contrary, the Partnership agrees that any Immediate Redemption Units
tendered for redemption within 10 days following the date of this Agreement
shall be redeemed for the REIT Shares Amount. On or after the date that is six
months from the date of this Agreement, each Holder shall have the Redemption
Right to require the Partnership to redeem on a Specified Redemption Date all or
a portion of the total number of Partnership Units held by such Holder and set
forth on Exhibit A, including any Immediate Redemption Units not previously
tendered for redemption, at a redemption price equal to and in the form of the
Redemption Amount. The Redemption Right shall be exercised pursuant to a Notice
of Redemption in the form of Exhibit B delivered to the Company by the Holder
who is exercising the Redemption Right. A Holder may not exercise the Redemption
Right for less than one hundred (100) Partnership Units or, if such Holder holds
less than one hundred (100) Partnership Units, all of the Partnership Units held
by such Holder. A Holder shall have no right, with respect to any Partnership
Units so redeemed, to receive any distribution paid with respect to Partnership
Units on or after the Specified Redemption Date. Subject to the provisions of
Sections 4.2 and 4.3 of this Agreement, the Redemption Right shall otherwise be
subject to applicable provisions of Section 8.05 of the Partnership Agreement.
ARTICLE III
SHELF REGISTRATION
The Company agrees to file with the SEC prior to the six month
anniversary of the date of this Agreement, a shelf registration statement
pursuant to Section 8.06 of the Partnership Agreement, with respect to (i) the
issuance by the Company of the Redemption Shares issued to the Holders with
respect to any Partnership Units which are redeemed on or after the effective
date of the Shelf Registration to the effect that such Redemption Shares will be
freely tradeable by a Holder (except to the extent a Holder may be deemed to be
an "affiliate of the Company as defined in Rule 144 under the Securities Act)
and, (ii) the resale by the Holders of any Redemption Shares issued to the
Holders upon redemption of Partnership Units prior to the effective date of the
Shelf Registration. The Company will use its best efforts to cause the Shelf
Registration to be declared effective under the Securities Act on or before the
sixth month anniversary of the date of this Agreement. With respect to the
resale of Redemption Shares included in the Shelf Registration pursuant to
subpart (ii) of the first sentence of
2
<PAGE> 3
this Article III, the Shelf Registration shall provide for customary methods of
sale or distribution including, without limitation, sales directly by the Holder
or through broker's transactions. The Shelf Registration shall not provide for
an underwritten offering of Redemption Shares. A Holder may request that the
Company amend or supplement the Shelf Registration to include other methods of
distribution of Redemption Shares by such Holder under the Shelf Registration.
If the Company deems such method of distribution to be permitted by applicable
law, the Company agrees to undertake to amend or supplement the Shelf
Registration to permit such method of distribution; provided however, that the
Company's cost and expenses in connection with any such amendment or supplement
shall be paid by the Holder or reimbursed to the Company by the Holder upon
request. The Company will use its best efforts to keep the Shelf Registration
continuously effective until the earlier of (A) the date when all of the
Redemption Shares covered thereby are issued or re-sold or (B) the date on which
Holders may sell Redemption Shares without registration under the Securities
Act, pursuant to Rule 144(k) thereunder or any similar rule that may be adopted
by the Commission (the "Shelf Registration Period"). The Company further agrees
to supplement or make amendments to the Shelf Registration, if required by the
rules, regulations, or instructions applicable to the registration form utilized
by the Company or by the Securities Act or rules and regulations thereunder for
the Shelf Registration. The Shelf Registration shall otherwise be subject to
applicable provisions of Section 8.06 of the Partnership Agreement, provided
that, subject to the provisions of this Article III, the provisions of Section
8.05(c)(iii) of the Partnership Agreement relating to the limitation on the
General Partner's obligation to pay expenses in connection with amendments or
supplements thereto after 90 days shall not otherwise apply to the Shelf
Registration.
ARTICLE IV
PARTNERSHIP AGREEMENT MATTERS
4.1. Taxable Transaction. In the event that prior to January 1, 1999
(the "Restricted Period") the General Partner completes a transaction pursuant
to Section 6.09 or Section 7.01(c) of the Partnership Agreement, which causes a
Holder of Partnership Units to recognize gain for federal income tax purposes
with respect to the Holder's disposition of Partnership Units in connection with
such transaction, the Partnership shall reimburse such Holder within thirty (30)
days after the closing of such transaction for an amount equal to the loss of
the use of the tax payment calculated by multiplying the amount of tax payable
by the Holder by an interest rate of ten percent (10%) for the then-remaining
term of the Restricted Period.
4.2. Redemption Right. Notwithstanding the provisions of Section
8.05(c) and 8.05(d) of the Partnership Agreement, the parties agree that in the
event the delivery of REIT Shares to a Holder would cause one of the events
described in subsections (i)-(v) of Section 8.05(c) of the Partnership Agreement
to occur, the Holder will be paid the Cash Amount and the provisions of Section
8.05(d) of the Partnership Agreement, as they relate to the General Partner's
right to delay payment of the Cash Amount for a period of up to 180 days, shall
not apply.
4.3. Publicly Traded Partnership. Notwithstanding the provisions of
Section 8.05(e) of the Partnership Agreement , the General Partner shall not,
pursuant to Section 8.05(e) of the Partnership Agreement, place any restrictions
on the ability of the Holders to exercise their Redemption Rights during the
Restricted Period. Following the expiration of the Restricted Period, the
General Partner will give the Holders not less than sixty (60) days prior notice
of any such restriction and the Holders
3
<PAGE> 4
shall be entitled to exercise their Redemption Rights free of such restrictions
within 60 days (or such longer period set forth in the notice) of receipt of
such notice.
4.4. Transferees and Assignees. The provisions of this Agreement shall
apply to any Partnership Units transferred by a Holder pursuant to the terms of
the Partnership Agreement or the Contribution and Exchange Agreement.
ARTICLE V
GENERAL
5.1. Notices. All notices, demands, requests or other communications
required to be given or which may be given hereunder shall be in writing and
shall be deemed given on the day of delivery if hand delivered and receipted
for, or on the date of transmittal by facsimile, to be immediately followed by
certified mail, postage prepaid, return receipt requested, or by dispatch by
overnight receipted courier, addressed as follows:
If to Contributor, at:
W. Spring Limited Partnership
BHI Limited Partnership
c/o Archon Group L.P.
600 Las Colinas Boulevard, Suite 1900
Irving, Texas 75039
Attention: Mr. Wes Huff
Director of Marketing
Fax: (972) 831-2280
With a copy to:
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Attention: Robert J. Wertheimer, Esq.
Fax: (212) 856-7806
If to the Partnership, at:
Winn Limited Partnership
c/o Winston Hotels, Inc.
2209 Century Drive, Suite 300
Raleigh, North Carolina 27612
Attention: Mr. Robert W. Winston
Fax: (919) 510-6832
4
<PAGE> 5
With a copy to:
Brown & Bunch
4900 North Park
4900 Falls of Neuse Road, Suite 210
Raleigh, North Carolina 27609
Attention: William Bunch, III, Esq.
Fax: (919) 876-8062
and
Hunton & Williams
2000 Riverview Tower
900 South Gay Street
Knoxville, Tennessee 37902
Attention: David C. Wright, Esq.
Fax: (423) 549-7704
5.2. Pronouns and Plurals. When the context in which words are used in
this Agreement indicates that such is the intent, words in the singular number
shall include the plural and the masculine gender shall include the neuter or
female gender as the context may require.
5.3. Headings. The article headings or sections in this Agreement are
for convenience only and shall not be used in construing the scope of this
Agreement or any particular article.
5.4. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original copy and all of
which together shall constitute one and the same instrument binding on all
parties hereto, notwithstanding that all parties shall not have signed the same
counterpart.
5.5. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of North Carolina.
5.6. Confirmation. It shall be a condition to any Person succeeding to
the rights of a Contributing Partnership as permitted herein that such Person,
if requested by the Company, execute a counterpart to this Agreement and become
a party hereto.
5.7. Binding Agreement. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
permitted assigns.
5
<PAGE> 6
IN WITNESS WHEREOF, each party has duly executed this Agreement as of
the day and year first above written.
WINSTON HOTELS, INC., a
North Carolina corporation
By: /s/ Robert W. Winston, III
--------------------------------
Name: Robert W. Winston, III
Title: President
WINN LIMITED PARTNERSHIP, a
North Carolina limited partnership
By: WINSTON HOTELS, INC.,
its general partner
By: /s/ Robert W. Winston, III
--------------------------------
Name: Robert W. Winston, III
Title: President
By: BHI LIMITED PARTNERSHIP, a
Delaware limited partnership
By: BHI Corp., a Delaware
corporation, its general
partner
By: /s/ Michael Nelsen
-------------------------
Name: Michael Nelsen
Title: Vice President
W. SPRING LIMITED PARTNERSHIP, a
Delaware limited partnership
By: W. Spring Corp. a Delaware
corporation, its limited
partner
By: /s/ Michael Nelsen
-------------------------
Name: Michael Nelsen
Title: Vice President
6
<PAGE> 7
EXHIBIT A
Contributing Partnership Address
------------------------ -------
BHI Limited Partnership c/o Archon Group L.P.
600 Las Colinas Blvd., Suite 1900
Irving, TX 75039
W. Spring Limited Partnership c/o Archon Group L.P.
600 Las Colinas Blvd., Suite 1900
Irving, TX 75039
Partners and designees to whom the Contributing Partnership
may distribute Partnership Units
<TABLE>
<CAPTION>
Total Number of No. of Immediate
Name Address Partnership Units Redemption Units
- ---- ------- ----------------- ----------------
<S> <C> <C> <C>
QRF I Ltd. 888 7th Avenue
New York, NY 10106 374,900 374,900
GS Co-Invest, L.P. 888 7th Avenue
New York, NY 10106 163,000 ---
SFM Participation, L.P. 888 7th Avenue
New York, NY 10106 9,764 ---
G. Soros Realty, L.P. 888 7th Avenue
New York, NY 10106 46,002 ---
G. Soros Realty, Inc. 888 7th Avenue
New York, NY 10106 1,284 ---
WHQR Real Estate c/o Archon Group L.P.
Limited Partnership 600 Las Colinas Blvd.,
Suite 1900
Irving, TX 75039 203,750 ---
WHQP Real Estate c/o Archon Group L.P.
Limited Partnership 600 Las Colinas Blvd., ---
Suite 1900 16,300
Irving, TX 75039
--------------- ---------------
Total: 815,000* Total: 374,900*
</TABLE>
- ----------
* Quantum Realty Partners II, L.P. is expected to be the ultimate holder of all
the Units and/or REIT Shares issuable upon redemption of Immediate Redemption
Units.
7
<PAGE> 8
EXHIBIT B
NOTICE OF EXERCISE OF REDEMPTION RIGHT
The undersigned hereby irrevocably (i) presents for redemption ________
units of limited partnership interest ("Partnership Units") in WINN Limited
Partnership (the "Partnership") in accordance with the Agreement of Limited
Partnership of the Partnership, as amended (the "Partnership Agreement") and the
Redemption and Registration Rights Agreement dated __________, 1997 (the
"Redemption Agreement") among the Partnership, Winston Hotels, Inc. and the
other parties thereto, (ii) surrenders such Partnership Units and all right,
title and interest therein, (iii) surrenders herewith any certificate or other
writing evidencing the Partnership Units (and requests that any Partnership
Units so evidenced that are not redeemed be evidenced by the issuance of a new
certificate) and (iv) directs that the "Cash Amount" or "REIT Shares Amount" (as
determined by the General Partner subject to the Redemption Agreement), as
defined in the Partnership Agreement, deliverable upon exercise of the
Redemption Rights be delivered to the address specified below, and if REIT
Shares are to be delivered, such REIT Shares be registered or placed in the
name(s) and at the address(es) specified below.
Dated:________ __, _____
Name of Limited Partner:
--------------------------------------
(Signature of Limited Partner)
--------------------------------------
(Mailing Address)
--------------------------------------
(City) (State) (Zip Code)
Signature Guaranteed by:
--------------------------------------
If REIT Shares are to be issued, issue to:
- -------------------------------------
- -------------------------------------
- -------------------------------------
Please insert social security or identifying number:
- -------------------------------------
8
<PAGE> 1
EXHIBIT 10.47
CONTRIBUTION AND EXCHANGE AGREEMENT
Between
BHI LIMITED PARTNERSHIP
and
W. SPRING LIMITED PARTNERSHIP
(collectively, Contributor)
and
WINN LIMITED PARTNERSHIP
and
WINSTON HOTELS, INC.
(collectively, Winston Group).
Property: Hampton Inn - West Springfield, Massachusetts
Marriott Courtyard - Houston, Texas
<PAGE> 2
TABLE OF CONTENTS
Section Page
1. Contribution and Exchange Transaction........................... 1
2. Exchange Consideration and Deposit.............................. 3
3. Status of Title to Property..................................... 6
4. Title Report, Objections to Title and Due Diligence Period...... 6
5. Closing, Closing Date........................................... 8
6. Apportionments.................................................. 9
7. Accounts Receivable and Payable, Mutual Indemnities............. 11
8. Transaction Costs............................................... 13
9. Reservation Deposits............................................ 13
10. Safes and Baggage............................................... 14
11. Bulk Transfers Law.............................................. 15
12. Liquor Licenses................................................. 15
13. Representations and Warranties.................................. 15
14. Pre-Closing Covenants........................................... 23
15. Conditions to Closing........................................... 25
16. Documents to be Delivered at Closing............................ 26
17. Post-Closing Covenants.......................................... 30
18. Brokerage....................................................... 31
19. Tax Reduction Proceedings....................................... 31
20. Damage and Destruction.......................................... 32
21. Condemnation.................................................... 33
22. Tax Deferral and Gain Recognition............................... 34
23. Allocation Method............................................... 34
24. Redemption Right................................................ 35
25. Miscellaneous................................................... 35
26. Notices......................................................... 35
27. Default, Remedies............................................... 37
28. Entire Agreement................................................ 38
29. Condition of Property/Environmental Matters - Sale "AS IS"...... 38
30. Work Product to Contributor..................................... 41
31. Amendments...................................................... 42
32. Waiver.......................................................... 42
33. Partial Invalidity.............................................. 42
34. Section Headings................................................ 42
35. Governing Law................................................... 42
36. Further Assurances.............................................. 42
37. Successors and Assigns.......................................... 43
38. Counterparts.................................................... 43
39. Assignment...................................................... 43
40. Limitation on Liability......................................... 43
(i)
<PAGE> 3
41. Specific Definitions............................................ 44
42. Other Definitions............................................... 47
(ii)
<PAGE> 4
Exhibits
A Description of Land - Marriott Courtyard
A-1 Description of Land - Hampton Inn
B Space Lease
C Contributor Due Diligence Information
D Form of Opinion of Winston Group's Counsel
E Form of Redemption and Registration Rights Agreement
F Documents to be delivered by Winston Group to Contributor
G List of designees
(iii)
<PAGE> 5
CONTRIBUTION AND EXCHANGE AGREEMENT (this "AGREEMENT") is made as of
the ______ day of June, 1997 between BHI LIMITED PARTNERSHIP ("BHI") and W.
SPRING LIMITED PARTNERSHIP ("Spring LP"; Spring LP and BHI are hereinafter
collectively referred to as "CONTRIBUTOR"), each having an office at c/o Archon
Group L.P., 600 Las Colinas Boulevard, Suite 1900, Irving, Texas 75039 and WINN
LIMITED PARTNERSHIP ("WINN") and WINSTON HOTELS, INC. ("WINSTON"; Winston and
Winn are hereinafter collectively referred to as the "WINSTON GROUP"), each
having an address at 2209 Century Drive, Suite 300, Raleigh, North Carolina
27612.
RECITALS
A. Contributor owns the Property, as hereinafter defined, and desires
to contribute the Property to Winn in exchange for cash and limited partnership
interests (the "UNITS") in Winn.
B. Winn desires to accept the contribution of the Property in exchange
for the issuance of cash and Units to Contributor, as more particularly
described herein.
NOW, THEREFORE, in consideration of the respective representations and
warranties herein contained, and intending to be legally bound hereby, the
parties hereto agree as follows:
1. Contribution and Exchange Transaction.
A. Upon the terms and subject to the conditions of this Agreement, on
the Closing Date, and for the consideration specified hereinbelow, Contributor
agrees to contribute or otherwise transfer to Winn, and Winn agrees to acquire
and accept all of Contributor's right, title and interest in, to and under (i)
those certain plots, pieces and parcels of land located in (a) Houston, Texas
and known as Marriott Courtyard Brookhollow more particularly described in
Exhibit A hereof and (b) Springfield, Massachusetts and known as Hampton Inn
more particularly described in Exhibit A-1 hereof (collectively, the "LAND");
(ii) all easements, rights-of-way, privileges, appurtenances, covenants, strips
and gores pertaining to or benefiting the Land, if any (collectively, the
"APPURTENANCES"); (iii) all buildings and improvements located on the Land (the
"BUILDINGS"; the Land, Appurtenances and Buildings being hereinafter sometimes
collectively referred to as the "REAL ESTATE"); (iv) the fixtures, furniture,
furnishings, equipment, machinery and other personal property of any nature
whatsoever attached or appurtenant to or located on the Real Estate including
any personal property leased under the Equipment Leases described below, and
used in connection with the operation or maintenance of the Real Estate or of
the hotel business presently being conducted by Contributor or any Affiliate or
agent of Contributor on the Real Estate (the "BUSINESS"), all as will be
identified in a notice to Winn delivered during the Due Diligence Period
(hereinafter defined) as part of the Contributor Due Diligence Information
(hereinafter defined) (the "PERSONALTY"); (v) subject to Section 2(C) hereof,
all inventories of supplies in use and used in connection with the maintenance
of the Real Estate or the operation of the Business and physically located at
the
<PAGE> 6
Real Estate, including but not limited to office supplies, brochures and other
print and collateral materials, food, chinaware, glassware, linens (no less than
2 1/2 turns), silverware, soap, gasoline, pool chemicals, gift shop items and
other operational and guest supplies, but expressly excluding computer software
proprietary to Contributor, its Affiliates and its managers (the "INVENTORY");
(vi) the leases of, and agreements relating to, equipment, furnishings or other
personal property located on the Real Estate or used in connection with the
operation or promotion of the Business, all those which are in effect on the
date hereof will be identified in a notice to Winn delivered during the Due
Diligence Period as part of the Contributor Due Diligence Information (the
"EQUIPMENT LEASES"), together with Contributor's rights to the property covered
thereby; (vii) the service, maintenance and other agreements in connection with
the operation and promotion of the Business and the maintenance of the Real
Estate and Personalty, all those which are in effect on the date hereof will be
identified in a notice to Winn delivered during the Due Diligence Period as part
of the Contributor Due Diligence Information (the "SERVICE CONTRACTS"); (viii)
the contracts and leases for off-premises signs and billboards advertising the
Business, all those which are in effect on the date hereof will be identified in
a notice to Winn delivered during the Due Diligence Period as part of the
Contributor Due Diligence Information (the "BILLBOARD LEASES"); (ix) the
"RESERVATIONS" and the "RESERVATION DEPOSITS" (hereinafter defined), if any,
described in Section 9 hereof; (x) the books, records and files maintained in
connection with the operation or promotion of the Business which are located at
the Property (collectively, the "BOOKS"), exclusive of (a) original Books which
Contributor or its manager desires to retain as Contributor's property,
provided, however, that Contributor shall permit Winn, at Winn's sole cost and
expense, to examine and/or make copies thereof and (b) any personal income tax
and accounting records, provided, however, that Contributor shall cooperate with
Winn after Closing to enable Winn to make copies of Books that Winn was entitled
to copy but did not so copy prior to Closing; and (xi) those certain space
leases identified on Exhibit B hereof (collectively, the "SPACE LEASE"). The
Land, the Appurtenances, the Buildings, the Personalty, the Inventory, the
Equipment Leases, the Service Contracts, the Billboard Leases, the Reservations
and the Reservation Deposits, the Books, the Intangibles and the Space Lease are
hereinafter collectively called the "PROPERTY".
B. This sale also includes all right, title and interest of
Contributor, if any, in and to (i) any land within the right-of-way of any
street, road, avenue, open or proposed, public or private, in front of or
adjacent to the Land or any portion thereof, to the center line thereof, and
(ii) all oil, gas and mineral rights appurtenant to the Land.
C. It is expressly agreed by the parties hereto that the following
shall not be included in the Property to be sold hereunder:
(1) tax deposits, utility deposits and other deposits, except for any
transferable deposits assigned to Winn, for which Contributor is to be
reimbursed as herein provided, and except for Reservation Deposits which are to
be paid over to Winn in accordance with Section 9 hereof; and
-2-
<PAGE> 7
(2) any and all cash on hand and other funds, including till money and
house banks, and all checks, drafts, notes and other evidence of indebtedness
held at the Property on the Closing Date and any balances on deposit with
banking institutions relating to the Property (collectively, the "HOUSE BANKS
AND BANK ACCOUNTS") or, at Winn's election and upon no less than five (5) days
prior written notice to Contributor, Winn shall pay to Contributor the amount in
the House Banks and Bank Accounts in addition to the Consideration.
2. Exchange Consideration and Deposit.
A. On the Closing Date, as hereinafter defined, and in consideration of
its acceptance of the Property, Winn agrees to pay an aggregate amount of
$16,900,000 (the "CONSIDERATION"). The Consideration allocated between the
portion of the Property owned by BHI and Spring LP shall be as set forth in
Section 2E hereof.
B. The Consideration is payable by Winn as follows:
(1) Opening of Escrow. Upon execution of this Agreement by the parties,
the parties will open an escrow (the "ESCROW") with First American Title
Insurance Company ("ESCROW AGENT"). Escrow shall be deemed opened on the date
that Escrow Agent (x) holds this Agreement fully executed by both the Winston
Group and Contributor and (y) receives from Winn a deposit of One Hundred
Thousand Dollars ($100,000) in good funds (the "INITIAL DEPOSIT") to be held by
Escrow Agent pursuant to the provisions of this Agreement. If Winn does not
deliver the Initial Deposit to Escrow Agent on or prior to close of business on
the second Business Day after the date hereof, then Contributor may, in its sole
and absolute discretion, terminate this Agreement by notice to Winn at any time
thereafter unless (a) the Initial Deposit is delivered to Escrow Agent prior to
Contributor's termination notice and (b) Contributor ratifies this Agreement in
writing for the benefit of Winn and Escrow Agent. The Initial Deposit shall be
refundable to Winn if it expresses its intent in writing not to proceed prior to
the expiration of the Due Diligence Period, and thereafter shall, together with
the Additional Deposit (if and when delivered), as hereinafter defined, become
non-refundable except in the event of a default by Contributor under this
Agreement which is not cured or waived by Winn at or prior to Closing.
All funds and documents to be delivered shall be through the Escrow,
and the Closing shall occur on the Closing Date. Prior to the Closing Date,
Contributor and Winn each shall give appropriate written escrow instructions,
consistent with this Agreement, to Escrow Agent for the Closing in accordance
with this Agreement.
All times set forth in this Agreement shall be Central Standard Time.
-3-
<PAGE> 8
(2) Provided Winn has not timely exercised its right to terminate this
Agreement in accordance with the terms of Section 4 hereof, Winn shall deliver a
further One Hundred Fifty Thousand Dollars ($150,000) prior to the expiration of
the Due Diligence Period (the "ADDITIONAL DEPOSIT"), or, in Winn's sole
discretion, such earlier date as Winn shall have completed its due diligence
review, by check payable directly to the order of Escrow Agent, to be held by
the Escrow Agent pursuant to the provisions hereof, all of which shall be
non-refundable upon payment (except in the event of a default by Contributor
under this Agreement which is not cured or waived by Winn at or prior to
Closing), subject to terms of Section 4. The Initial Deposit and the Additional
Deposit (to the extent the Additional Deposit has been made) are sometimes
collectively referred to herein as the "DEPOSIT". The Deposit shall be delivered
to Contributor as a partial payment of the Consideration at Closing.
(3) Subject to the adjustments and additional payments described below,
the Consideration (inclusive of any funds transferred from Escrow Agent to
Contributor as provided in this Section 2.B) shall be paid as follows: (i)
$6,468,000 in cash on the Closing Date by Winn causing said amount to be wire
transferred in immediate Federal Funds to the Escrow for credit to such bank
account(s) as Contributor shall designate in accordance with its escrow
instructions and (ii) the balance, by issuance of to Contributor and/or its
designee described on Exhibit G (collectively, the "UNITHOLDERS") of Units in
Winn in the aggregate amount of 815,000 Units (the "CONTRIBUTOR UNITS") with
each Contributor Unit currently receiving the same cash distribution per Unit as
the cash dividends paid with respect to one share of Common Stock of Winston.
C. In addition to the Consideration, at the Closing, Winn or its
designee shall pay to Contributor a sum equal to the total of (i) Contributor's
cost for fuel oil, items held for resale, and new, unopened and sealed
Inventory, in type and quantity consistent with Contributor's historical
practices (including, to the extent permitted by law, food, liquor, beverages,
linens and other unopened resalable inventories, but excluding all brochures and
other print and collateral materials previously paid for and physically located
at the Property) and (ii) Contributor's prepaid or incurred marketing,
advertising, utilities and travel directory listing charges with respect to the
Property to the extent such charges relate to a period from and after the
Closing Date. Winn or its designee shall be responsible to reimburse Contributor
as an apportionment under this Agreement for all unopened, sealed carton(s) of
inventory items.
D. Prorations for certain expenses and accounts relating to the
Property shall be computed in accordance with Section 6. If such computation of
apportionments shows that a net amount is owed by Winn to Contributor, such
amount shall be paid in cash to Contributor by Winn on the Closing Date. If the
computation of apportionments shows that a net amount is owed by Contributor to
Winn, such amount shall be credited against the cash portion of the
Consideration.
E. The parties agree that the Consideration for the Property owned by
BHI and Spring LP shall be allocated among the two Buildings in accordance with
the appraisals caused
-4-
<PAGE> 9
to be prepared by Winn in connection with this transaction. Winn shall deliver
such appraisal for the Hampton Inn within ten (10) days of the date hereof and
Winn shall deliver such appraisal for the Marriott Courtyard Brookhollow no
later than July 7, 1997, if available. If the appraisal for the Marriott
Courtyard Brookhollow is not available by the Closing Date, Winn shall promptly
deliver such appraisal upon its receipt, to Contributor. The parties agree that
the appraisals shall be prepared by Hospitality Appraisal Services, LLC, located
in Germantown, Tennessee, and to use the allocations set forth in such
appraisals. This allocation has been made in accordance with the residual method
set forth in Treasury Regulations promulgated under Section 338(b)(5) of the
Internal Revenue Code of 1986, as amended. The parties agree that these
allocations have been arrived at by a process of arm's-length negotiations,
including the parties' best judgment as to the fair market value of each
respective asset, and the parties specifically agree to the allocations as final
and binding and will consistently reflect those allocations on their respective
Federal, State and local tax returns pursuant to IRS form 8594.
F. If the cash portion of the Consideration plus any amounts payable to
Contributor under Sections 2.C, 6 and 9 have not been credited to Contributor's
designated bank accounts by 3:00 p.m. on the Closing Date on the condition that
closing statements have been executed by 11 a.m. on the Closing Date, an
additional amount equal to one day's interest on such aggregate amount at a rate
per annum equal to ten percent (10%) shall be paid by Winn to Contributor.
G. Notwithstanding anything contained herein to the contrary, if at any
time after the date of this Agreement but prior to the expiration date of the
Due Diligence Period the Average Price, as hereinafter defined, of Common Stock
of Winston is less than $11.50 per share, Contributor shall have the right to
terminate the transaction, with Winn receiving a prompt return of the Initial
Deposit and, if applicable, the Additional Deposit. Contributor shall exercise
its right of termination by written notice to Winn no later than 3 Business Days
after the execution of the Due Diligence Period. "AVERAGE PRICE" means the
average closing price of Common Stock of Winston as reported on the Nasdaq
National Market System, for the 10 Trading Days immediately preceding the date
of determination.
H. With respect to the first Partnership Record Date (as defined in the
agreement of limited partnership the ("OP AGREEMENT") of Winn on or after the
Closing, the Unitholders shall receive distributions payable with respect to the
Contributor Units on a pro rata basis based upon the number of days during the
calendar quarter preceding such Partnership Record Date that the Unitholders
held the Contributor Units. The Contributor Units to be issued at the Closing
shall be issued to the Unitholders in accordance with a letter of direction to
be provided by Contributor to Winn at least two (2) Business Days prior to the
Closing Date. In addition to any transfer rights granted in the OP Agreement,
Contributor or its designee shall be permitted to transfer the Contributor Units
in whole or in part to any designee on Exhibit G, in whole to an Affiliate and
to other Affiliates otherwise reasonably acceptable to Winn, provided that
Contributor has provided Winn in reasonable detail information with respect to
the proposed
-5-
<PAGE> 10
transfer and transferee (other than with respect to a lender) and provided that
the proposed transferee shall have executed such documentation as Winn shall
reasonably request with respect to its proposed transfer, including, but not
limited to such information as Winn may reasonably request with respect to
transferee's status as an "accredited investor" as defined in Rule 501(a) of
Regulation D under the Act. It is agreed and understood that Contributor and/or
the Unitholders shall have the right to pledge the Contributor Units to
institutional lenders and to such other entities which are reasonably acceptable
to Winn.
3. Status of Title to Property.
The Property shall be contributed and transferred by Contributor to
Winn, and Winn shall accept same, subject only to the following (collectively,
the "PERMITTED ENCUMBRANCES"):
(1) provisions of all laws, ordinances and regulations
affecting the Property, including but not limited to zoning laws;
(2) the occupancy rights of transient lodging guests;
(3) the Space Leases;
(4) the liens of any real estate or personal property taxes,
assessments, and water or sewer charges, subject to apportionment as
provided in Section 6; and
(5) any other matter or thing affecting title to any of the
Property (a) that does not prohibit the use of the Property for
hotel/motel purposes or render title to the Property uninsurable or (b)
which Winn may expressly agree in writing to take subject to or waives,
or is deemed to have waived, pursuant to the provisions of this
Agreement.
4. Title Report, Objections to Title and Due Diligence Period.
A. Title Report, Objections to Title. Following delivery of the Initial
Deposit: (i) within ten (10) days, Contributor shall deliver to Winn an ALTA
title insurance report and commitment issued for an owner's title insurance
policy for the Property issued by First American Title Insurance Company ordered
through Title Network, Inc. (the "TITLE REPORT") and (ii) within five (5) days,
a full-size copy of the most recent survey of the Real Estate in Contributor's
possession or control (the "EXISTING SURVEY"). Within fifteen (15) days after
receipt of the Title Report and the Existing Survey, Winn or its counsel shall
send Contributor's counsel a written statement ("WINSTON GROUP'S TITLE NOTICE")
setting forth any exceptions to title disclosed therein (excluding preprinted
exceptions) which Winn claims that it is not required
-6-
<PAGE> 11
to accept under the terms of this Agreement, together with a copy of any report,
commitment, search or survey not previously delivered to Contributor or its
counsel. Within fifteen (15) days after its receipt of Winn's Title Notice,
Contributor shall notify Winn in writing (the "CONTRIBUTOR'S RESPONSE NOTICE")
of (i) the matters noted in Winn's Title Notice that it believes are exceptions
to title and not Permitted Encumbrances ("TITLE OBJECTIONS") and (ii) the Title
Objections which Contributor shall cure on or prior to closing ("CONTRIBUTOR
TITLE OBLIGATIONS"). Contributor shall, on or prior to closing, remove all
Contributor Title Obligations as exceptions to title and all Title Objections
which are not Contributor Title Obligations shall, from and after the expiration
of the Due Diligence Period, be deemed Permitted Encumbrances. Contributor shall
deliver the Property to Winn at Closing free and clear of all liens, claims and
encumbrances other than the Permitted Encumbrances (other than real estate taxes
and other taxes and matters which are subject to apportionment as provided
herein). Contributor may remove any such exceptions to title at Closing with the
proceeds from the Consideration. Except as required by the preceding sentences,
Contributor shall be under no obligation to incur any expense or to commence any
action or proceeding to eliminate any title exceptions to which Winn has
objected. If Contributor is unable to eliminate any Contributor Title
Obligations, unless the same are waived by Winn, Contributor may adjourn the
Closing for a reasonable period or periods, not to exceed the greater of (i)
fifteen (15) days from the Closing Date or (ii) sixty (60) days from delivery of
Winn's notice to Contributor listing all objections to title which Contributor
is required to remove hereunder, in order to attempt to eliminate such
exceptions. If Contributor remains unable to remove all Contributor Title
Obligations within the time provided herein, Contributor shall so notify Winn in
writing and Winn shall, within five (5) days thereafter, notify Contributor in
writing of its intention to either (x) accept the Property subject to such
exceptions without any abatement of the Consideration, in which event such
exceptions shall no longer be objections to title and shall be deemed to be for
all purposes Permitted Encumbrances, and Winn shall close hereunder
notwithstanding the existence of same, and Contributor shall have no obligations
whatsoever after the Closing with respect to Contributor's failure to eliminate
such exceptions, or (y) terminate this Agreement by notice given to Contributor,
in which event Winn shall be entitled to a return of the Deposit. Upon such
return of the Deposit, this Agreement shall terminate and neither party hereto
shall have any further obligations hereunder.
B. Due Diligence Period. (1) Contributor and Winn acknowledge and agree
that Winn, during the period (the "DUE DILIGENCE PERIOD") commencing on the date
hereof and ending on the date which is the earlier to occur of (x) July 14, 1997
and (y) the date which is forty-five (45) days from the date hereof, as to which
date TIME SHALL BE OF THE ESSENCE, or the next Business Day if such date is not
a Business Day, shall have the right to perform due diligence with respect to
the Property relating to inspection of the Property (as described in and subject
to the terms of Section 14.B hereof), review of agreements relating to the
Property and review of title, surveys and the environmental condition of the
Property. Contributor shall make available to Winn the items set forth on
Exhibit C attached hereto ("CONTRIBUTOR DUE DILIGENCE INFORMATION") before or at
the time of the execution of this
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<PAGE> 12
Agreement. Winn may terminate this Agreement by notifying Contributor on or
before the expiration of the Due Diligence Period that its due diligence is
unsatisfactory. If Winn terminates this Agreement on or before midnight of the
date upon which the Due Diligence Period expires, pursuant to and in accordance
with the terms hereof, then (a) Winn shall be entitled to a return of the
Deposit and (b) this Agreement shall terminate and neither party hereto shall
have any further obligations hereunder, except for such obligation which by
their terms expressly survive the termination hereof. If Winn does not terminate
this Agreement in the manner set forth above on or before midnight of date upon
which the Due Diligence Period expires, then (a) Winn shall deposit the
Additional Deposit with the Escrow Agent, and (b) this Agreement shall continue
in full force and effect. If Winn fails to deposit the Additional Deposit with
the Escrow Agent prior to 3:00 p.m. on the day which is one (1) business day
after the expiration of the Due Diligence Period, then Contributor shall have
the right to terminate this Agreement, in which event (a) Escrow Agent shall
deliver the Initial Deposit to Winn and (b) this Agreement shall terminate and
neither party hereto shall have any further obligations hereunder, except for
such obligation which by their terms expressly survive the termination hereof,
it being agreed and understood that Winn shall be responsible for, and shall
hold Contributor harmless, from and against any and all claims, liabilities,
damages, costs or expenses of whatever kind or nature, that arise from Winn, or
any agent, representative or employee of Winn, actions at the Property while
conducting its due diligence.
(2) Contributor shall have the right to (i) ask questions of, and
receive answers from, senior officers of the Winston Group. Neither the failure
to disclose information which the Winston Group deems to be inappropriate, the
results of Contributor's due diligence nor the answers to any such questions
shall be conditions precedent for Closing.
5. Closing, Closing Date.
Subject to the compliance or waiver of the various conditions set forth
herein, the payment of the balance of the Consideration and any other monies due
hereunder, the delivery of possession to the Property, the delivery of the
documents described in Section 16 and the performance of the various other
obligations and activities contemplated to take place on the Closing Date
(collectively, the "CLOSING") shall occur on a Business Day occurring in the
period within ten (10) days from the expiration of the Due Diligence Period, as
to which date TIME SHALL BE OF THE ESSENCE (the "CLOSING DATE" but in no event
beyond July 14, 1997), at 10:00 A.M., at the offices of Escrow Agent. TIME SHALL
BE OF THE ESSENCE with respect to each party's obligation to satisfy all
conditions precedent to Contributor's and Winn's obligation to close on or prior
to the Closing Date. Notwithstanding the foregoing, if the Closing does not
occur on or before July 14, 1997, Winn shall pay to Contributor, an additional
amount equal to the 1/2% prepayment premium owed by Contributor to its existing
lenders (not to exceed $35,000), by July 14, 1997. Upon the payment of such
additional amount, the
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<PAGE> 13
Closing Date shall be extended to July 31, 1997, provided Winn has otherwise
complied with its obligations hereunder, including, without limitation, the
tender of the Additional Deposit.
6. Apportionments.
A. The following shall be apportioned between Contributor and Winn as
of 11:59 P.M. on the day immediately preceding the Closing Date (the
"APPORTIONMENT DATE"):
(1) real estate taxes, personal property taxes, assessments, sewer
rents and taxes, and any other governmental tax or charge levied or assessed
against the Property (collectively, the "PROPERTY TAXES") on the basis of the
respective periods for which each is assessed or imposed, to be apportioned in
accordance with Section 6.B hereof;
(2) water charges to be apportioned in accordance with Section 6.C
hereof;
(3) charges for electricity, telephone, television, cable television,
steam, gas and any other utilities (collectively, "UTILITIES") made by the
utility companies servicing the Property to be apportioned in accordance with
Section 6.D hereof, and transferable utility deposits, if any, for which
Contributor shall be reimbursed if same be assigned, but all amounts refundable
under unassigned or unassignable utility arrangements shall remain the property
of Contributor;
(4) prepaid fees or other charges for transferable licenses, permits,
and other items, if any, but all amounts refundable under unassigned or
unassignable licenses and permits shall remain the property of Contributor;
(5) amounts paid or payable under the Service Contracts, Equipment
Leases, Billboard Leases, the Space Lease and marketing, advertising and travel
directory listing charges with respect to the Property to the extent such
charges relate to the period from and after the Apportionment Date, if any;
(6) room charges and other guest charges incurred on or before the
Apportionment Date, including, without limitation, Last Night Room Revenue (as
defined below), to be apportioned and collected in accordance with Section 6.E
and Section 7 hereof;
(7) fees or dues paid or payable for local trade, merchant or business
associations identified in a notice to Winn during the Due Diligence Period as
part of the Contributor Due Diligence Information;
(8) tax savings or refunds referred to in Section 19, if, as, and when
received;
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<PAGE> 14
(9) travel agents' commissions, if any, to be apportioned consistent
with the allocation of room revenues referable to each such travel agent; and
(10) rent and all other charges due under the Space Lease, to be
apportioned in accordance with Section 6.F.
B. Property Taxes shall be apportioned on the basis of the fiscal
period for which assessed. If the Closing Date shall occur either before an
assessment is made or a tax rate is fixed for the tax period in which the
Closing occurs, the apportionment of such Property Taxes shall be calculated on
the basis of the prior year's Property Taxes, but, after the assessment and tax
rate for the current year are fixed, the apportionment thereof shall be
recalculated and Contributor or Winn, as the case may be, shall make an
appropriate payment to the other based on such recalculation.
C. If there are water meters at the Property, Contributor shall
endeavor to have the water company servicing the Property read the meters on or
immediately prior to the Apportionment Date. Contributor shall be responsible
for all charges based on such final reading, and Winn shall be responsible for
all charges thereafter. If such readings are not obtainable, then until such
time as such readings are obtained, water charges shall be prorated as of the
Apportionment Date based upon the per diem rate obtained by using the last
period and bills for such charges that are available. Upon the taking of a
subsequent actual reading, such apportionment shall be readjusted, and
Contributor or Winn, as the case may be, shall promptly deliver to the other the
amount determined to be so due upon such readjustment.
D. The Utilities shall be apportioned (i) by having the utility company
servicing the Property make a final meter reading on the Apportionment Date, the
payment of which shall be Contributor's responsibility, or (ii) if such readings
cannot be obtained, on the basis of the most recent bills that are available. If
the apportionment is not based on actual current readings, then upon the taking
of a subsequent actual reading, such apportionment shall be readjusted and
Contributor or Winn, as the case may be, shall promptly deliver to the other the
amount determined to be due upon such readjustment. All other Utility bills
received by Contributor after the Closing shall be promptly forwarded to Winn
together with the amount, if any, owed by Contributor therefor pursuant to the
provisions hereof.
E. Income from the rental of rooms shall belong to Contributor to the
extent attributable to any period through the Apportionment Date, including half
of the room charges for the night commencing on the Apportionment Date and
ending on the morning of the Closing Date ("LAST NIGHT ROOM REVENUE"). The costs
of cleaning the rooms attributable to any period through the Apportionment Date
and ending on the morning of the Closing Date shall be divided equally between
Winn and Contributor. Income from food and beverage and other sales or services
through the close of business on the night of the Apportionment Date (or at
midnight if such sales or services continue 24 hours a day) shall belong to
Contributor. Income from food
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<PAGE> 15
and beverage and other sales or services on the Closing Date shall belong to
Winn. All income belonging to Contributor (i) due from guests on the "Guest
Ledger" as of the Closing Date (those guests in occupancy on the night
commencing on the Apportionment Date and who do not check out until the Closing
Date or thereafter) and (ii) due pursuant to any other accounts receivable for
the guests of the hotel who are then registered or otherwise occupying rooms at
the hotel on the Apportionment Date or thereafter through Closing and
attributable to any period through the Apportionment Date shall be paid to
Contributor at the Closing by Winn, who shall then be assigned the sole right to
collect all such income from these guests. Any other income belonging to
Contributor shall be collected as provided in Section 7 below. Each party shall
be responsible for the payment of any sales and/or hotel/motel occupancy taxes
collected or otherwise due and payable in connection with the income allocated
to such party hereunder.
F. Prepaid minimum rents and other fixed charges due and payable under
the Space Lease shall be apportioned. If any payments of rent or other fixed
charges received by Contributor or Winn after the Closing are payable to the
other party by reason of this allocation, the appropriate sum (less a
proportionate share of any reasonable attorneys' fees, costs and other expenses
incurred in the collection thereof) shall be promptly paid to the other party.
At the Closing, the Contributor shall furnish to Winn a complete and correct
schedule of all minimum rents and other fixed charges which are then due and
payable but which have not been paid. Percentage rents and other variable
charges under the Space Lease, such as payments for real estate taxes and other
expenses, which are not fixed in amount, shall be apportioned based on the
amounts payable for the most recent prior period, but, when the actual amounts
are determined, the apportionment thereof shall be recalculated and Contributor
or Winn, as the case may be, shall make an appropriate payment to the other
based on such recalculation. Any security deposits or advance payments of rent
held by Contributor under the Space Lease shall be paid over to Winn at the
Closing or credited against the cash portion of the Consideration.
G. In addition to the apportionments provided for herein, Winn shall
also pay to Contributor the amounts due under Section 2.C hereof.
H. Any errors or omissions in computing apportionments at Closing shall
be promptly corrected as soon as they are discovered. Winn agrees to indemnify
and hold Contributor harmless from and against any liability, cost or expense
resulting from Winn's failure to make any payment for which it has received a
credit pursuant to this Section 6. The provisions of this Section 6 shall
survive the Closing Date for a period of one (1) year.
7. Accounts Receivable and Payable, Mutual Indemnities.
A. As described in Section 6.E, the within contribution and exchange
does not include any accounts receivable of Contributor for room, food and
beverage and other guest
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<PAGE> 16
charges incurred at the Property for the period through the Apportionment Date
(the "ACCOUNTS RECEIVABLE"). Contributor shall have the sole right to receive,
collect, discharge and compromise all Accounts Receivable except those due from
guests on the Guest Ledger as of the Closing Date for which Contributor has been
reimbursed pursuant to Section 6.E.
B. Winn agrees that any moneys received by Winn after the Closing which
relates to the period prior to the Closing from any party owing any portion of
the Account Receivable (including credit card sales when payment thereon is
received by Winn), net of any reasonable collection costs, credit card service
fees or travel agent's commissions which may be owed in connection therewith,
shall be held in trust by Winn on account and for payment of such Accounts
Receivable and remitted to Contributor promptly upon Winn's receipt thereof.
Winn shall have no obligation to attempt to collect any portion of the Accounts
Receivable.
C. Contributor agrees to indemnify Winn, its successors and assigns,
from and against any and all loss, damage, cost, charge, liability or expense
(including court costs and reasonable attorneys' fees) for any accounts payable
for goods supplied or services performed prior to the Closing Date to or for
either Contributor or of the Property, and for any sales taxes and/or
hotel/motel occupancy taxes, if any, due in connection with the rental of rooms,
the sale of goods or the performance of services prior to the Closing Date,
except to the extent Winn has received a credit therefor against the
Consideration pursuant to Section 6, and to that extent Winn agrees to indemnify
Contributor, its successors and assigns, from and against any and all loss,
damage, cost, charge, liability or expense (including court costs and reasonable
attorneys' fees) relating to the payable or tax for which it has received a
credit. Winn shall not be liable for any claim arising out of any act, event or
transaction occurring prior to the Closing Date in connection with the ownership
or operation of the Property, and Contributor shall and hereby agrees to defend,
indemnify and hold Winn harmless from and against any and all costs, expenses,
losses or liabilities, including reasonable attorneys' fees, suffered or
incurred by Winn arising out of any such liability or obligation, except to the
extent Winn has expressly assumed or indemnified Contributor against any such
liability or obligation.
D. Winn shall and hereby agrees to indemnify and hold Contributor
harmless from and against any and all costs, expenses, losses or liabilities,
including reasonable attorneys' fees, suffered or incurred by Contributor
arising out of any liability or obligation (i) expressly assumed by Winn
hereunder or in any agreement executed and/or delivered at the Closing, (ii) for
which Winn has indemnified Contributor, (iii) in connection with the ownership
and operation of the Property from and after the Closing, or (iv) for which Winn
has received a payment or credit against the Consideration in accordance with
the provisions of this Agreement. For purposes of determining the scope of
Winn's liability under this Section, the parties hereto agree that Winn has
received no payment, credit, offset, or discount against the Consideration or
against the fair market value of the Property, or any of the separate parts
thereof, due to the presence on the Property, whether known or suspected, of
Hazardous Materials.
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<PAGE> 17
E. The provisions of this Section 7 shall survive the Closing Date for
a period of one (1) year.
8. Transaction Costs.
A. Contributor shall pay all transfer taxes, conveyance taxes, and/or
documentary stamp taxes due in connection with the transfer and conveyance of
the Real Estate and all recording charges for the deeds. Winn shall pay for any
survey of the Property it decides to obtain, all sales taxes, if any, due in
connection with the transfer of the Personalty and Inventory, and all mortgage
recording or indebtedness taxes and fees due in connection with Winn's
financing. Each party shall indemnify the other and its respective successors
and assigns from and against any and all loss, damage, cost, charge, liability
or expense (including court costs and reasonable attorneys' fees) which such
other party may sustain or incur as a result of the failure of either party to
timely pay any of the aforementioned taxes or fees for which it has assumed
responsibility.
B. The actually and reasonably incurred costs of all title insurance
premiums and other charges for Winn's owner's reports and policies
(collectively, the "TITLE COSTS") shall be paid by Winn. Each party shall pay
the fees and disbursements of its respective attorneys.
C. (1) Any fees or charges imposed by the franchisor as a condition to
the assumption of the franchise agreement for the Property (the "FRANCHISE
AGREEMENT") shall be paid by Winn.
(2) Any fees or charges imposed by the manager for the Property as a
condition to termination of its management agreement (the "MANAGEMENT
AGREEMENT") with Contributor shall be paid by Contributor.
D. All fees that arise in connection with the delivery of the opinion
relating to the tax status of Winston as a real estate investment trust shall be
paid one-half (50%) by Contributor and one-half (50%) by Winn up to a maximum
amount of $8,000 in the aggregate.
E. The provisions of this Section 8 shall survive the Closing Date.
9. Reservation Deposits.
A. On the Closing Date the aggregate amount of any deposits
("RESERVATION DEPOSITS") received by Contributor (whether paid in cash or by
credit card) as a downpayment for reservations ("RESERVATIONS") made for rooms,
banquets, meals or other services to be
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<PAGE> 18
supplied from and/or after the Closing Date shall be credited against the cash
portion of the Consideration due at the Closing.
B. Contributor hereby indemnifies and holds Winn harmless from and
against all claims by and liabilities to any person resulting from Contributor's
failure to pay over or credit to Winn any Reservation Deposits allegedly paid to
Contributor for the period from and after the Closing Date. Winn hereby
indemnifies and holds Contributor harmless from and against all claims by and
liabilities to any person resulting from Winn's failure to honor or return any
Reservation Deposit paid or credited to Winn.
C. The provisions of this Section 9 shall survive the Closing Date for
a period of one (1) year.
10. Safes and Baggage.
A. On the Closing Date, Contributor shall cause the delivery to Winn of
all of Contributor's keys to all safes and safe deposit boxes (collectively, the
"SAFES") at the Property. On or prior to the Closing Date, Contributor shall
give written notices to those persons who have deposited items in such safes,
advising them of the sale of the applicable Property to Winn and requesting the
removal or verification of their contents in the safes on the Closing Date. All
such removals or verifications on the Closing Date shall be under the
supervision of Contributor's and Winn's respective representatives. All contents
which are to remain in the safes shall be recorded. Safes containing items
belonging to guests who have not responded to such written notice by so removing
or verifying their safe contents by the end of the day and which cannot be
opened without the key in the possession of such guest shall be sealed until
such time as the guest appears, at which time the safe shall be opened and the
contents recorded in the presence of the respective representatives of Winn and
Contributor. Until that time, Contributor shall indemnify, defend and hold Winn
harmless from and against any liability for loss or theft of such contents and
Contributor shall retain its rights to any insurance proceeds covering such
safes. Any such contents so verified or recorded or later verified (pursuant to
the terms of the immediately preceding sentence) after Closing and thereafter
remaining in the hands of Winn (or at the Hotel) shall be the responsibility of
Winn and Winn hereby agrees to indemnify, defend and hold Contributor harmless
from any liability therefor. Winn and Contributor shall cooperate with each
other after Closing to verify the contents of all safes not inspected by Winn
prior to Closing.
B. On the Closing Date, representatives of Winn and Contributor shall
take an inventory of all baggage, valises, trunks and packages checked or left
in the care of Contributor at the Property. From and after the Closing Date,
Winn shall be responsible for all baggage listed in said inventory and Winn
hereby indemnifies and agrees to hold Contributor harmless from and against any
liability therefor.
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<PAGE> 19
C. The provisions of this Section 10 shall survive the Closing Date for
a period of one (1) year.
11. Bulk Transfers Law.
Contributor has determined that the provisions of Article 6 of the
Uniform Commercial Code and other applicable laws concerning bulk transfers, if
any, do not apply to this transaction.
12. Liquor Licenses.
[Intentionally Deleted]
13. Representations and Warranties.
A. Contributor represents and warrants, to its actual knowledge, as
follows:
(1) There are no leases, licenses, concessions or any other agreements
giving anyone other than Contributor and transient hotel guests a right to use
or occupy the Property or any part thereof, except for the Space Lease, which
are in full force and effect, and Contributor knows of no material defaults
thereunder by either landlord or tenant. No additional rent due under the Space
Lease has been paid beyond the current month except as set forth on Exhibit B,
respectively. There are no security deposits or advance payments of rent being
held by Contributor pursuant to the Space Lease except as set forth on Exhibit
B. A true and complete copy of the Space Lease has been delivered to the Winston
Group.
(2) The Service Contracts are in full force and effect and Contributor
knows of no material defaults thereunder by any party thereto.
(3) All Personalty and Inventory included in this sale has been fully
paid for and is owned by Contributor free and clear of all liens and
encumbrances, except for the Permitted Encumbrances.
(4) Contributor has not been notified of any material default in the
due observance of any condition to any license, permit or certificate relating
to the Property.
(5) The Equipment Leases are in full force and effect and Contributor
knows of no material defaults thereunder by either party thereto.
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<PAGE> 20
(6) Contributor is not a "foreign person" or a "U.S. real property
holding corporation" for purposes of Section 1445 of the Code, or any applicable
regulations promulgated thereunder.
(7) There are no employees of Contributor at the Property.
(8) (a) BHI is a limited partnership, duly organized, validly existing
and in good standing under the laws of the State of Delaware and qualified to do
business in Texas. BHI has full power and authority to make, execute, deliver
and perform this Agreement and neither the execution and delivery of this
Agreement nor the consummation of the transaction contemplated herein will
violate or contravene the provisions of any agreement, order, judgment or
directive to which it may be a party or by which it may be bound. The person
executing this Agreement on behalf of BHI is duly authorized to do so. The
consummation of the transaction contemplated by this Agreement will not render
BHI insolvent.
(b) BHI Corp. is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and qualified to do
business in Texas. BHI Corp. has full power and authority to make, execute,
deliver and perform this Agreement on behalf of BHI, and neither the execution
and delivery of this Agreement nor the consummation of the transaction
contemplated herein will violate or contravene the provisions of any agreement,
order, judgment or directive to which it may be a party or by which it may be
bound. The person executing this Agreement on behalf of BHI Corp. is duly
authorized to do so. The consummation of the transaction contemplated by this
Agreement will not render BHI Corp. insolvent.
(9) (a) Spring LP is a limited partnership, duly organized, validly
existing and in good standing under the laws of the State of Delaware and
qualified to do business in Massachusetts. Spring LP has full power and
authority to make, execute, deliver and perform this Agreement and neither the
execution and delivery of this Agreement nor the consummation of the transaction
contemplated herein will violate or contravene the provisions of any agreement,
order, judgment or directive to which it may be a party or by which it may be
bound. The person executing this Agreement on behalf of Spring LP is duly
authorized to do so. The consummation of the transaction contemplated by this
Agreement will not render Spring LP insolvent.
(b) W. Spring Corp. is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and qualified to do
business in Massachusetts. W. Spring Corp. has full power and authority to make,
execute, deliver and perform this Agreement on behalf of Spring LP, and neither
the execution and delivery of this Agreement nor the consummation of the
transaction contemplated herein will violate or contravene the provisions of any
agreement, order, judgment or directive to which it may be a party or by which
it may be bound. The person executing this Agreement on behalf of W. Spring
Corp.
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<PAGE> 21
is duly authorized to do so. The consummation of the transaction contemplated
by this Agreement will not render W. Spring Corp. insolvent.
(10) Contributor has not entered into any oral or written agreement or
commitment to make rooms or any portion of the Property available at any time in
the future or quoting or guaranteeing certain rates or fees, except for the
Reservations and the agreements identified in a notice to the Winston Group
delivered during the Due Diligence Period as part of the Contributor Due
Diligence Information (the "RATE AGREEMENTS"). True and complete copies of the
written Rate Agreements will be delivered to the Winston Group as part of the
Contributor Due Diligence Information.
(11) Contributor has received no written notice that it is not in
compliance with any laws, ordinances, rules or regulations of any government or
agency, body or subdivision thereof, bearing on the construction, operation,
ownership, or use of the Property.
(12) Contributor has received no written notice from a governmental
agency alleging that conditions on the Property are in violation of any
Environmental Law (as hereinafter defined).
(13) In order to induce Winn to issue the Contributor Units,
Contributor hereby acknowledges its understanding that the issuance of the
Contributor Units is intended to be exempt from registration under the
Securities Act of 1933, as amended, and the rules and regulations in effect
thereunder (the "ACT"). In furtherance thereof, Contributor represents and
warrants to Winn as follows:
(a) Contributor and the Unitholders are acquiring the Contributor Units
solely for their own account for the purpose of investment and not as a nominee
or agent for any other person and not with a view to, or for offer or sale in
connection with, any distribution of any thereof (other than to the
Unitholders). Contributor and the Unitholders agree and acknowledge that they
are not permitted to offer, transfer, sell, assign, pledge, hypothecate or
otherwise dispose of ("TRANSFER") any of the Contributor Units except as
provided in this Agreement and the OP Agreement.
(b) Contributor, each of the Unitholders and any proposed transferee of
any Contributor Units (other than any lender), is an "accredited investor" (as
such term is defined in Rule 501 (a) of Regulation D under the Act) and each of
the Unitholders has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of the prospective
investment.
(c) Contributor and the Unitholders are knowledgeable, sophisticated
and experienced in business and financial matters. Contributor and the
Unitholders are able to bear
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<PAGE> 22
the economic risk of holding the Contributor Units for an indefinite period and
are able to afford the complete loss of their investment in the Contributor
Units or Common Stock.
(14) No action, suit, claim, investigation or proceeding, whether legal
or administrative or in mediation or arbitration, is pending or, to the best of
Contributor's knowledge, threatened, at law or in equity, against Contributor
before or by any Governmental Authority which would prevent Contributor from
performing its respective obligations pursuant to this Agreement. There are no
judgments, decrees or orders entered on a suit or proceeding against Contributor
an adverse decision in which might, or which judgment, decree or order does,
materially adversely affect the ability of Contributor to perform its
obligations pursuant to, or the Winston Group's rights under, this Agreement, or
which seeks to restrain, prohibit, invalidate, set aside, rescind, prevent or
make unlawful this Agreement or the carrying out of this Agreement or the
transactions contemplated hereby.
(15) To the best of Contributor's knowledge, financial information for
the years 1995 and 1996 ending December 31, and the 1997 year from January 1
through May 31, 1997, delivered by Contributor to Winn fairly and accurately
depict the operation of Contributor's business during said time period.
(16) BHI has not made a general assignment for the benefit of
creditors, filed any voluntary petition in bankruptcy or suffered the filing of
any involuntary petition by the creditors of BHI, suffered the appointment of a
receiver to take possession of all, or substantially all, of the assets of BHI
suffered the attachment or other judicial seizure of all, or substantially all,
of the assets of BHI admitted in writing its inability to pay its debts as they
come due or made an offer of settlement, extension or composition to its
creditors generally.
(17) Spring LP has not made a general assignment for the benefit of
creditors, filed any voluntary petition in bankruptcy or suffered the filing of
any involuntary petition by the creditors of Spring LP, suffered the appointment
of a receiver to take possession of all, or substantially all, of the assets of
Spring LP suffered the attachment or other judicial seizure of all, or
substantially all, of the assets of Spring LP admitted in writing its inability
to pay its debts as they come due or made an offer of settlement, extension or
composition to its creditors generally.
The representations and warranties of Contributor contained in (a)
Section 13.A shall survive for a period of one (1) year following the Closing.
B. The Winston Group represents and warrants as follows:
(1) (a) Winn is a partnership duly organized, validly existing and in
good standing under the laws of the State of North Carolina. Winn has full power
and authority to make, execute, deliver and perform this Agreement, and neither
the execution and delivery of
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<PAGE> 23
this Agreement nor the consummation of the transaction contemplated herein will
violate or contravene the provisions of any agreement, order, judgment or
directive to which it may be a party or by which it may be bound. The person
executing this Agreement on behalf of Winn is duly authorized to do so. The
consummation of the transaction contemplated by this Agreement will not render
Winn insolvent.
(b) Winston is a corporation duly organized, validly existing and in
good standing under the laws of the State of North Carolina. Winston has full
power and authority to make, execute, deliver and perform this Agreement on
behalf of itself and as general partner of Winn, and neither the execution and
delivery of this Agreement nor the consummation of the transaction contemplated
herein will violate or contravene the provisions of any agreement, order,
judgment or directive to which it may be a party or by which it may be bound.
The person executing this Agreement on behalf of Winston is duly authorized to
do so. The consummation of the transaction contemplated by this Agreement will
not render Winston insolvent.
(2) The issuance of the Contributor Units pursuant to this Agreement
have been duly authorized and, when issued by Winn, the Contributor Units will
be fully paid and non-assessable, free and clear of any mortgage, pledge, Lien,
encumbrance, security interest, claim or rights of interest of any third party
of any nature whatsoever, other than as set forth in this Agreement and the OP
Agreement. The shares of Common Stock issuable by Winston upon redemption of the
Contributor Units have been duly authorized and will be qualified for listing
upon issuance with the Nasdaq National Market System within six (6) months
following the Closing pursuant to the Redemption and Registration Rights
Agreement (as hereinafter defined), and, upon such issuance, will be fully paid
and non-assessable, free and clear of any mortgage, pledge, Lien, encumbrance,
security interest, claim or rights of interest of any third party of any nature
whatsoever.
(3) The Winston Group has furnished to Contributor a true and complete
copy of the OP Agreement, as amended through the date hereof.
(4) Winston has caused to be delivered to Contributor copies of the
documents as set forth on Exhibit F filed by Winston since its inception under
the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and all
prospectuses filed by Winston under the Act since its inception (collectively,
the "SEC DOCUMENTS"). Winston will cause to be delivered to Contributors copies
of such additional documents as may be filed by Winston pursuant to the Act or
the Exchange Act on or prior to the Closing Date. The SEC Documents were, and
those additional documents filed between the date hereof and the Closing will
be, prepared and filed in compliance with the rules and regulations promulgated
by the SEC, and do not and will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein in order
to make the statements contained therein, in light of the circumstances under
which they were made or will be made, not misleading.
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<PAGE> 24
(5) The consolidated financial statements included in the SEC Documents
have been prepared in accordance with GAAP applied on a consistent basis during
the period involved (except as may be indicated in the notes thereto or, in the
case of the unaudited statements, as permitted by Form 10-Q) and present fairly
(subject, in the case of the unaudited statements, to normal, recurring year-end
audit adjustments) the consolidated financial position of Winston and its
Subsidiaries at the dates thereof and the consolidated results of operations and
cash flows for the periods then ended.
(6) No action, suit, claim, investigation or proceeding, whether legal
or administrative or in mediation or arbitration, is pending or, to the best of
the Winston Group's knowledge, threatened, at law or in equity, against the
Winston Group before or by any Governmental Authority which would prevent the
Winston Group from performing its respective obligations pursuant to this
Agreement. There are no judgments, decrees or orders entered on a suit or
proceeding against the Winston Group an adverse decision in which might, or
which judgment, decree or order does, materially adversely affect the ability of
the Winston Group to perform its obligations pursuant to, or Contributor's
rights under, this Agreement, or which seeks to restrain, prohibit, invalidate,
set aside, rescind, prevent or make unlawful this Agreement or the carrying out
of this Agreement or the transactions contemplated hereby.
(7) Winston has no Subsidiaries and no interests or investments in any
partnership, trust or other entity or organization, other than Winn.
(8) Except as disclosed in the SEC Documents filed with the SEC prior
to the date hereof or in SCHEDULE 13 B-8, Winston and each of Subsidiaries has
conducted its business only in the ordinary course of such business and has not
(i) sold or acquired any real estate; or (ii) leased all or substantially all of
any property; or (iii) entered into any financing arrangements in connection
therewith; or (iv) granted an option to purchase or lease all or substantially
all of any property; and there has not been any change, circumstance or event
that has resulted in a material adverse effect on the business, properties,
results of operations or financial condition of Winston and its Subsidiaries,
taken as a whole.
(9) Except as set forth on SCHEDULE 13 B-9, neither the Winston nor any
Subsidiary has any material liabilities or obligations of any nature (whether
absolute, accrued, contingent or otherwise) except for (i) liabilities or
obligations reflected or reserved against in its March 31, 1997 audited
consolidated balance sheet, (ii) liabilities and obligations relating to
outstanding leases that are not required to be disclosed under GAAP and (iii)
current liabilities incurred in the ordinary course of business since the date
of such balance sheet.
(10) (a) As of the date hereof, the authorized capital stock of Winston
consists of fifty million (50,000,000) shares of its Common Stock and ten
million (10,000,000) shares of preferred stock, par value $.01 per share (the
"PREFERRED STOCK"). The issued and
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<PAGE> 25
outstanding shares of capital stock of Winston consists of 15,819,580 shares of
Common Stock of Winston. No shares of Preferred Stock are outstanding.
(b) As of the date hereof, (i) the issued and outstanding Units of
partnership interest of Winn consist of 1,265,496 Units; and (ii) the
Contributor's Units to be issued to Contributor hereunder would have constituted
39.2% of the outstanding Units(1) and, upon redemption of all of the Contributor
Units for Common Stock of Winston, 4.9% of the outstanding shares of Common
Stock of Winston(2).
(11) Winston (a) will have filed its federal income tax return for the
tax year ending on December 31, 1996, by September 15, 1997, (b) has filed its
federal income tax return for the tax year ending on December 31, 1995, as a
real estate investment trust within the meaning of Sections 856 and 857 of the
Code, (c) has, to the best of its knowledge, complied with all applicable
provisions of the Code relating to a real estate investment trust for 1994 and
1995 (d) has operated, and intends to continue to operate, in such a manner as
to qualify as a real estate investment trust for 1997 and (e) has not taken or
omitted to take any action which would reasonably be expected to result in a
challenge to its status as a real estate investment trust, and no such challenge
is pending or, to Winston's knowledge, threatened.
(12) Winston has timely filed with the appropriate taxing authority all
Tax Returns required to be filed by it or has timely requested extensions and
any such request has been granted and has not expired. Each such Tax Return is
complete and accurate in all respects. All Taxes shown as owed by Winston or any
of its Subsidiaries on any Tax Return have been paid or accrued, except for
Taxes being contested in good faith and for which adequate reserves have been
taken. None of Winston or any of its Subsidiaries has executed or filed with the
Internal Revenue Service or any other taxing authority any agreement now in
effect extending the period for assessment or collection of any Tax. Except as
set forth in SCHEDULE 13 B-12, none of Winston or any of its Subsidiaries is a
party to any material pending action or proceedings by any taxing authority for
assessment or collection of any Tax, and no material claim for assessment or
collection of any Tax has been asserted against it. No claim
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1 Calculated by dividing Contributor Units by the sum of the outstanding Units
and Contributor Units (i.e 815,000/(1,265,496 + 815,000)).
2 Calculated by dividing Contributor Units by the sum of the outstanding shares
of Common Stock of Winston and Contributor Units (i.e 815,000/(15,819,580 +
815,000)).
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<PAGE> 26
has been made by an authority in a jurisdiction where Winston or any of its
Subsidiaries does not file Tax Returns that it is or may be subject to taxation
by the jurisdiction. Except as set forth in SCHEDULE 13 B-12, there is no
material dispute or claim concerning any Tax liability of Winston or any of its
Subsidiaries, (x) claimed or raised by any taxing authority in writing or (y) as
to which Winston or any of its Subsidiaries has knowledge, and neither Winston
nor any of its Subsidiaries has entered into or intends to enter into any
agreements with any taxing authority, including but not limited to closing
agreements.
(13) Winston as of the date hereof, is a "domestically-controlled" real
estate investment trust within the meaning of Code Section 897(h)(4)(B).
(14) Except as set forth in SCHEDULE 13 B-14, to the Winston Group's
knowledge, no person or entity which would be treated as an "individual" for
purposes of Section 542(a)(2) of the Code (as modified by Section 856(h) of the
Code) owns or would be considered to own (taking into account the ownership
attribution rules under Section 544 of the Code, as modified by Section 856(h)
of the Code) in excess of 9.9% of the value of the outstanding equity interest
in Winston.
(15) Each Subsidiary organized (a) as a partnership including, without
limitation, the Winn (and any other Subsidiary that files tax returns as a
partnership for federal income tax purposes) was and continues to be classified
as a partnership for federal income tax purposes; and (b) as a corporation or an
association taxable as a corporation is either (i) a "qualified REIT
Subsidiary", as such term is defined in Code Section 856(i), or (ii) a
corporation of which less than ten percent of the voting securities, within the
meaning of Code Section 856(c)(5), are owned by Winston and of which the total
securities owned by Winston represent less than five percent of the value of the
total assets of Winston, within the meaning of Code Section 856(c)(5).
(16) Neither the Winston Group nor any of its Subsidiaries is in
violation of any provision of its organizational documents.
(17) Except as set forth on Schedule 13.B-17, all of Winston's real
property and other material assets are owned by Winston indirectly through its
ownership of Winn.
(18) The Winston Group has not made a general assignment for the
benefit of creditors, filed any voluntary petition in bankruptcy or suffered the
filing of any involuntary petition by the creditors of the Winston Group,
suffered the appointment of a receiver to take possession of all, or
substantially all, of the assets of the Winston Group, suffered the attachment
or other judicial seizure of all, or substantially all, of the assets of the
Winston Group admitted in writing its inability to pay its debts as they come
due or made an offer of settlement, extension or composition to its creditors
generally.
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<PAGE> 27
(19) Except for the OP Agreement, this Agreement, and as set forth on
SCHEDULE 13 B-19, there are no stockholders' agreements, partners' agreements,
voting trust agreements or other restrictive agreements relating to the sale or
voting of the Units or the Common Stock of Winston.
The representations and warranties of the Winston Group contained in
Section 13.B 1 through 19 shall survive for a period of eighteen (18) months
following the Closing.
14. Pre-Closing Covenants.
Contributor and Winn agree that between the date hereof and the Closing
Date, the parties shall undertake the following:
A. Subject only to conditions beyond Contributor's reasonable control,
Contributor shall continue to operate and maintain the Property in the usual and
customary manner, and may, among other things:
(1) accept cancellations of Reservations and return
Reservation Deposits, and make new Reservations and accept new
Reservation Deposits, and enter into new Rate Agreements, all in the
normal course of business and in accordance with Contributor's current
marketing practices; provided, however, if Winn has delivered the
Additional Deposit, then from and after delivery of the Additional
Deposit Contributor shall not enter into any new Rate Agreements (or
renewals of existing Rate Agreements) unless same shall be (x) at not
less than ten percent off of the then existing "rack rates", (y) for
less than six (6) months or (z) cancelable upon thirty (30) days notice
from Winn unless Winn shall have consented thereto, which consent shall
be in Winn's sole discretion;
(2) order, purchase and consume/use Personalty and Inventory
in reasonable quantities consistent with historical practice; and
(3) renew or materially modify the Space Lease or any of the
existing Service Contracts, Equipment Leases or Billboard Leases, or
enter into any new space leases, Service Contracts, Equipment Leases or
Billboard Leases, all in the ordinary course of Contributor's business
and consistent with Contributor's prior practices, provided, however,
Contributor shall not renew or materially modify any of the foregoing
except to the extent same shall be cancelable upon thirty (30) days
notice from Winn unless Winn shall have consented to the renewal or
material modification thereof, in Winn's sole discretion.
B. Contributor shall give to Winn, its attorneys, accountants,
engineers and other representatives, during normal business hours and on
reasonable advance notice, full access to
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any and all parts of the Property (other than guest rooms, if occupied) and to
all books, records and files relating to the Property. Contributor shall furnish
to Winn all information concerning the Property which Winn, its attorneys,
accountants, engineers or other representatives shall reasonably request. Winn
may, during the hours of 9 A.M. to 5 P.M., upon reasonable advance notice, and
under such conditions as Contributor shall reasonably specify, at Winn's sole
expense, (i) cause the Property and any part thereof to be inspected by such
engineers, architects and others acting on behalf of Winn, as Winn may
designate, and (ii) cause a full or partial physical count of the Personalty or
Inventory to be made, provided, however, that prior to any such entry, Winn
shall provide to Contributor evidence of public liability insurance reasonably
satisfactory to Contributor covering any liability arising as a result of such
entry and inspection of the Property and naming Contributor as an additional
insured. Winn shall repair and restore any portion of the surface or any other
part of the Property disturbed by Winn, its agents or contractors during the
conduct of any of the of the aforementioned inspections to substantially the
same condition as existed prior to such disturbance. Winn shall indemnify,
defend and hold harmless Contributor, its partners, agents and employees from
and against any and all loss, cost, expense (including reasonable attorneys'
fees and disbursements), damage or claim arising as a result of such entry. Such
inspections and counts shall be conducted in a manner and at such times as shall
not interfere with the use and enjoyment of the Property by any guests, tenants,
employees or occupants thereof or thereat. Neither Winn nor any employee,
representative or agent of Winn shall have any conversations or discussions with
any Property employee without, in each instance, Contributor's prior written
approval; provided, however, Contributor shall make available to Winn, its
representatives or agents, during normal business hours, on reasonable advance
notice to Contributor and under such conditions as Contributor shall reasonably
require, the general manager, the front office manager, the director of sales,
the executive housekeeper, the controller and the chief engineer; provided,
further, that after Winn delivers the Initial Deposit to Escrow Agent in
accordance with the terms hereof, Contributor shall make available to Winn, its
representatives or agents, during normal business hours, on reasonable advance
notice to Contributor and under such conditions as Contributor shall reasonably
require, any and all property employees of the managing company to answer
questions concerning the hotel and its operations and/or to conduct interviews
for possible employment with Winn. Following the date hereof, Winn shall have
the right to contact governmental and quasi-governmental agencies to conduct its
due diligence review of the Property, provided that this right of inquiry shall
not extend to financial or other information about Contributor's principals.
This subparagraph B shall survive the termination of this Agreement.
C. Contributor shall not make or grant any mortgage, Lien, pledge,
charge, easement, right-of-way, covenant, restriction or other encumbrance on or
with respect to the Property which will survive the Closing, except for
Permitted Encumbrances, nor will it enter into any other agreements, contracts
or commitments with respect to the Property except in the ordinary course of
business and as otherwise permitted herein.
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<PAGE> 29
D. Contributor shall cooperate with Winn and Winn's representatives to
enable and assist Winn to procure and maintain, at Winn's sole expense, all
licenses, permits and authorizations necessary for Winn's ownership and
operation of the Property and the Business, including, without limitation, any
license, permit or authorization required for the sale and service of alcoholic
beverages at the Property by Winn or its designee. Winn shall promptly apply for
and use all reasonable efforts to obtain all such requisite licenses, permits
and authorizations. Notwithstanding the foregoing, Contributor shall remain
obligated to procure, maintain and renew, at Contributor's sole expense, any and
all licenses, permits and authorizations necessary for its continued ownership
and operation of the Property and the Business through the Closing (including
any license, permit or authorization required for the sale and service of
alcoholic beverages).
E. Winn and Contributor shall fully cooperate with each other to meet
all pre-closing compliance procedures with respect to local sales or occupancy
tax.
15. Conditions to Closing.
A. Winston Group's Conditions Precedent. Satisfaction of each of the
following conditions, any of which may be waived in writing by Winn, shall be
deemed a condition to Winn's obligation to close hereunder:
(1) Contributor shall be able to deliver fee title to the
Property in accordance with the terms hereof by Special Warranty Deed
(Limited) or the equivalent in form customary for transferring Real
Estate in Texas and Massachusetts.
(2) Contributor's representations and warranties set forth in
Section 13 shall be substantially true and correct in all material
respects as of the Closing Date, with the exception of Schedules and
Exhibits which must be updated at the Closing Date to reflect changes
permitted under the terms of this Agreement.
(3) Contributor shall have terminated the Management Agreement
or shall have delivered evidence reasonably satisfactory to Winn
confirming that Winn shall have no liability or obligation whatsoever
with respect thereto.
(4) Contributor shall have substantially performed, observed,
and complied with all of the pre-Closing covenants, agreements, and
conditions required by this Agreement to be performed, observed and
complied with by it prior to or as of the Closing, including but not
limited to each of Contributor's covenants set forth in Sections 14 and
16 hereof.
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<PAGE> 30
(5) Contributor shall have delivered to Winn a representation
letter executed by each Unitholder affirming such Unitholder's status
as an "accredited investor" as defined in Rule 501(c) of Regulation D
under the Act as of the date of this Agreement and as of the Closing.
B. Contributor's Conditions Precedent. Satisfaction of each of the
following conditions, any of which may be waived in writing by Contributor,
shall be deemed a condition to Contributor's obligation to close hereunder:
(1) Winn shall have delivered to Contributor the balance of
the Consideration and shall have caused Escrow Agent to deliver the
Deposit to Contributor.
(2) Winn's representations and warranties set forth in Section
13 shall be substantially true and correct in all material respects as
of the Closing Date with the exception of Schedule and Exhibits which
must be updated at the Closing Date to reflect changes permitted under
the terms of this Agreement.
(3) Winn and Contributor shall have terminated the Franchise
Agreement or Winn shall have delivered evidence reasonably satisfactory
to Contributor confirming that Contributor shall have no liability or
obligation whatsoever with respect thereto.
(4) Winn shall have substantially performed, observed, and
complied with all of the pre-Closing covenants, agreements, and
conditions required by this Agreement to be performed, observed and
complied with by it prior to or as of the Closing, including but not
limited to each of Winn's covenants set forth in Sections 14 and 16
hereof.
16. Documents to be Delivered at Closing.
A. Contributor's Documents
Contributor, pursuant to the provisions of this Agreement, shall
deliver or cause to be delivered to Winn on or prior to the Closing Date the
following documents in connection with the transfer, assignment and conveyance
of the Property:
(1) Special Warranty Deeds (Limited) in the forms customary for
transferring Real Estate in Texas and Massachusetts conveying to Winn fee simple
title to the Real Estate free of all liens and encumbrances, except the
Permitted Encumbrances.
(2) A bill of sale conveying, selling and transferring to Winn all of
Contributor's right, title and interest in and to the Personalty and Inventory.
The bill of sale shall contain a warranty that the Personalty and Inventory are
owned by Contributor free and clear of all liens,
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<PAGE> 31
encumbrances and security interests, except for any Permitted Encumbrances which
encumber the Personalty or Inventory.
(3) An assignment and assumption of the Service Contracts, Equipment
Leases and Billboard Leases, together with Contributor's executed counterparts
(or, if not available, copies) thereof. The assignment and assumption shall
contain Winn's indemnity of Contributor against any liability for obligations
thereunder relating to periods from and after the Closing Date and Contributor's
indemnity of Winn against any liability for such obligations relating to periods
prior to the Closing Date.
(4) A duly executed Secretary's Certificate certifying that the Board
of Directors of BHI Corp. has duly adopted resolutions authorizing the within
transaction on behalf of BHI and an executed and acknowledged Incumbency
Certificate certifying to the authority of the officers of BHI Corp. executing
the documents to be delivered by BHI Corp. on the Closing Date.
(5) Originals or certified copies of any resolutions, partnership
agreements, trust indentures, agency agreements, powers of attorney, consents
and other documentation, and such affidavits and indemnities, as may be required
by the title company, with respect to the authority of BHI or of the person(s)
signing on behalf of BHI.
(6) A duly executed Secretary's Certificate certifying that the Board
of Directors of W. Spring Corp. has duly adopted resolutions authorizing the
within transaction on behalf of Spring LP and an executed and acknowledged
Incumbency Certificate certifying to the authority of the officers of W. Spring
Corp. executing the documents to be delivered by W. Spring Corp. on the Closing
Date.
(7) Originals or certified copies of any resolutions, partnership
agreements, trust indentures, agency agreements, powers of attorney, consents
and other documentation, and such affidavits and indemnities, as may be required
by the title company, with respect to the authority of Spring LP or of the
person(s) signing on behalf of Spring LP.
(8) A certificate from each of BHI and Spring LP either (i) certifying
that the representations and warranties of BHI and Spring LP contained in this
Agreement are true and correct in all material respects as of the Closing Date
or (ii) if not, identifying in detail any and all variances or deviations from
said representations and warranties and certifying that said variances or
deviations do not have a material adverse effect on the transactions
contemplated by this Agreement.
(9) Plans and specifications, technical manuals and similar material,
for the Buildings, if any, in Contributor's possession or control.
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(10) If assignable, any licenses or permits, or copies thereof, in
Contributor's possession pertaining to the operation and maintenance of the
Property, together with a duly executed assignment thereof to Winn.
(11) If assignable, any unexpired warranties and guarantees, or copies
thereof, in Contributor's possession which Contributor has received (i) in
connection with the Buildings and any work or services performed with respect
to, or equipment installed in, the Property, or (ii) from any prior owners of
the Property, together with individual or omnibus assignments thereof to Winn.
If any such warranties or guarantees are not assignable, Contributor agrees to
cooperate with Winn after the closing to the extent required to enforce any
rights under such warranties or guarantees, at Winn's expense.
(12) An assignment of the Reservation Deposits and Winn's receipt
therefor.
(13) An assignment and assumption of the Space Lease and any security
deposits held by Contributor in connection therewith, together with
Contributor's executed counterparts (or, if not available, copies) thereof. The
assignment shall contain Winn's indemnity of Contributor against any liability
for the security deposits assigned to Winn and for any other obligations of the
landlord under the Space Lease from and after the Closing Date and Contributor's
indemnity of Winn against any liability for such obligations relating to periods
prior to the Closing Date.
(14) Such other instruments and documents as may reasonably be required
by the title company to eliminate exceptions for unfiled mechanics' or
materialmen's liens, for the occupancy of any party other than transient lodging
guests, and to enable the title company to insure the "gap" between Closing and
recordation of the deeds. Contributor shall deliver originals or certified
copies of any partnership agreements, trust indentures, agency agreements,
powers of attorney, consents and other documentation, and shall execute such
affidavits and indemnities, as may be reasonably required by the title company,
with respect to the authority of Contributor or of the person(s) signing on
behalf of Contributor.
(15) An affidavit of a general partner of Contributor stating that
Contributor is not a "foreign person" within the meaning of Section 1445 of the
Internal Revenue Code of 1986, as amended.
(16) An affidavit of Contributor addressed to the Title Company
affirming that there have been no changes or additions to the Building since the
most recent survey done for the Marriott Courtyard and the Hampton Inn.
(17) All keys and master keys to all locks located on the Property.
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<PAGE> 33
B. Winston Group's Documents
Winn, pursuant to the provisions of this Agreement, shall deliver or
cause to be delivered to Contributor on the Closing Date the following
documents:
(1) A duly executed Secretary's Certificate certifying that the Board
of Directors of Winston has duly adopted resolutions authorizing the within
transaction on its behalf and as general partner on behalf of Winn, and an
executed and acknowledged Incumbency Certificate certifying to the authority of
the officers of Winston executing the documents to be delivered by Winston on
the Closing Date.
(2) Originals or certified copies of any resolutions, partnership
agreements, trust indentures, agency agreements, powers of attorney, consents
and other documentation, and such affidavits and indemnities, as may be required
by the title company, with respect to the authority of Winn or of the person(s)
signing on behalf of Winn.
(3) Certificates of good standing for Winn or any entity comprising
Winn from the States of Texas, Massachusetts, and North Carolina.
(4) Certificates of good standing for Winston or any entity comprising
Winston from the States of Texas, Massachusetts, and North Carolina.
(5) A fully executed and completed sales tax return with respect to the
sale of the Personalty, as required by the applicable state or local taxing
authority, together with the appropriate payment.
(6) An opinion of Winn's counsel substantially in the form of EXHIBIT D
ATTACHED HERETO(3).
(7) A certificate from each of Winn and Winston either (i)
certifying that the representations and warranties of Winn and Winston contained
in this Agreement are true and correct in all material respects as of the
Closing Date or (ii) if not, identifying in detail any and all variances or
deviations from said representations and warranties and certifying that said
- --------
3 Opinion will cover, among other matters: the legal existence and good
standing of Winn and Winston, respectively; the due authorization,
execution, delivery and enforceability of this Agreement and the
Closing Documents to be delivered by Winn and Winston, as applicable;
that the Units are, and the Common Stock will be, validly issued and
non-assessable; that Winston Group, the operating partnership qualifies
as a partnership for federal income tax purposes; and that Winston is
organized in conformity with the requirements for qualification, and
qualifies, as a real estate investment trust for federal income tax
purposes.
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<PAGE> 34
variances or deviations do not have a material adverse effect on the
transactions contemplated by this Agreement.
(8) A certificate of Winston, as general partner of Winn, certifying
that each Unitholder has been admitted as a limited partner of Winn and that all
Contributor Units have been issued to Contributor or Contributor's designee.
C. Jointly Executed Documents
Contributor and Winn shall each execute or cause to be executed the
following documents and deliver same as indicated:
(1) Any documents required to permit the continued sale of alcoholic
beverages at the Property.
(2) Any document mentioned in Section 16.A or 16.B above which calls
for execution by both Contributor and Winn.
(3) The Redemption and Registration Rights Agreement(4) substantially
in the form of EXHIBIT E (the "REDEMPTION AND REGISTRATION RIGHTS AGREEMENT")
attached hereto.
17. Post-Closing Covenants.
Contributor and Winn agree that from and after the Closing Date:
A. Contributor shall continue to cooperate with Winn at Winn's sole
expense to facilitate the acquisition by Winn of all nonassignable licenses and
permits required for the use and operation of the Property and the Business.
B. Contributor shall make all books and records retained by
Contributor available for inspection by Winn and its representatives during
business hours on reasonable advance notice.
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4 In addition to customary registration rights provisions, Registration
Rights Agreement to provide for shelf registration to be effective
within 6 months of the Closing Date and to remain effective until the
earlier of the issuance of all Winston Stock issued upon redemption of
100% of the Units or until all shares can be sold pursuant to Rule 144
without any volume restrictions set forth in Rule 144(e) after
redemption of the last Unit for Common Stock; all costs of preparing,
filing and maintaining evergreen status of shelf to be borne by
Winston. This agreement shall permit the immediate conversion OP Units
374,900 of units to REIT shares with a six (6) month Lock-up period
from the date of issuance.
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<PAGE> 35
C. Contributor and Winn shall cooperate in timely making any filing
required pursuant to Section 1060 of the Internal Revenue Code or any
regulations promulgated thereunder.
D. Contributor shall cooperate with Winn, at Winn's sole expense, in
enforcing any rights under any unexpired guarantees or warranties given by
persons other than Contributor in connection with the Property.
18. Brokerage.
A. Contributor and Winn each warrant and represent to the other that it
has not dealt or negotiated with any broker in connection with this transaction
other than Hotel Partners, Inc. and Goldman Sachs & Co. Contributor hereby
agrees to pay Hotel Partners, Inc. and Goldman Sachs & Co. a commission pursuant
to a separate brokerage agreement.
B. Contributor and Winn each hereby agrees to indemnify and hold the
other harmless from and against any and all claims, demands, causes of action,
loss, costs and expenses (including reasonable attorneys' fees) or other
liability arising from or pertaining to any brokerage commissions, fees, or
other compensation, which may be due to any other brokers or persons claiming to
have dealt with it in connection with this transaction.
C. The provisions of this Section 18 shall survive the Closing Date or
sooner termination of this Agreement.
19. Tax Reduction Proceedings.
During the term of this Agreement, Contributor may institute and/or
continue any proceeding or proceedings for the reduction of the assessed
valuation of the Property or any portion thereof for real estate taxes, or of
any rate applicable thereto. The net amount of any tax refunds or credits (after
deduction of all costs and expenses thereof, including legal fees) with respect
to any portion of a Property for a tax period in which the Apportionment Date
occurs, shall be apportioned between Contributor and Winn as of the
Apportionment Date and promptly paid. All refunds or credits for prior tax years
belong solely to Contributor. Contributor, however, shall not institute any new
protests regarding the assessed valuation of the Property or any portion thereof
for real estate taxes, or of any rate applicable thereto upon execution of this
Agreement until the Closing. The provisions of this Section 19 shall survive the
Closing Date.
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<PAGE> 36
20. Damage and Destruction.
If, prior to the Closing Date, all or any part of any of the Property
is damaged by fire or other casualty, the following shall apply:
A. If there is damage or destruction by fire or other casualty of a
material part of the Property, Contributor shall notify Winn of such fact and
Winn shall have the option to terminate this Agreement upon notice given to
Contributor within twenty (20) days after the giving of Contributor's notice. If
this Agreement is terminated, then (a) Escrow Agent shall deliver the Deposit,
together with all accrued interest thereon to Winn and (b) this Agreement shall
terminate and neither party hereto shall have any further obligations hereunder,
except for such obligation which by their terms expressly survive the
termination hereof, it being agreed and understood that Winn shall be
responsible for, and shall hold Contributor harmless, from and against any and
all claims, liabilities, damages, costs or expenses of whatever kind or nature,
that arise from Winn, or any agent, representative or employee of Winn, actions
at the Property while conducting its due diligence.
If Winn does not elect to terminate this Agreement within the specified
time period as aforesaid, then Contributor shall, at Contributor's option,
either (i) proceed to repair the damage and restore the damaged Property to the
same or better condition as existed immediately prior to the casualty, in which
event Contributor shall be entitled to adjourn the Closing Date for such period
of time as shall be necessary to complete such repair and restoration, or (ii)
turn over to Winn on the Closing Date an amount equal to the net amount of any
casualty insurance proceeds collected by Contributor on account of said physical
damage or destruction, and to the extent not so collected, assign to Winn the
right to receive and settle same, in either case less (x) any expense actually
incurred by Contributor in connection with any emergency repair by reason of
such damage or destruction and (y) any business interruption insurance payments
for periods prior to the Closing Date. For purposes hereof, a "material part"
shall be deemed to mean any damage or destruction to the Buildings and/or the
Personalty, the aggregate cost of repair or replacement of which exceeds Two
Hundred Fifty Thousand Dollars ($250,000).
B. If there is damage to or destruction by fire or other casualty of an
immaterial part of the Property, neither party shall have the right to terminate
this Agreement and the parties shall nonetheless consummate this transaction in
accordance with this Agreement without any abatement of the Consideration or any
liability or obligation on the part of Contributor by reason of said destruction
or damage, provided, however, that in such event, Contributor shall notify Winn
of such fact and shall, at Contributor's option, either (1) proceed to repair
the damage and restore the damaged Property to the same or better condition as
existed immediately prior to the casualty, in which event Contributor shall be
entitled to adjourn the Closing Date for up to one hundred twenty (120) days, or
(2) turn over to Winn on the Closing Date an amount equal to any casualty
insurance proceeds collected by Contributor on account
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<PAGE> 37
of said physical damage or destruction, and to the extent not so collected,
assign to Winn the right to receive and settle same, in either case less (i) any
expense actually incurred by Contributor in connection with any emergency repair
by reason of such damage or destruction and (ii) any business interruption
insurance payments for periods prior to the Closing Date. In the event
Contributor provides Winn an amount equal to any casualty insurance proceeds,
Contributor shall be responsible for payment of the deductible under
Contributor's insurance coverage for each property.
Schedule A, attached hereto, sets forth a true and complete list of
each insurance policy issued to or for the benefit of Contributor which affects
the Property. Contributor covenants to maintain such insurance on each property
until the Closing Date.
21. Condemnation.
If, prior to the Closing Date, all or any portion of the Property is
taken by eminent domain or in the event of a change of legal grade caused by an
act of governmental authority, Contributor shall promptly give Winn written
notice thereof, and the following shall apply:
A. If a material part of the Property is taken, Winn may, within twenty
(20) days after the giving of Contributor's notice, by written notice to
Contributor, elect to terminate this Agreement. In the event that Winn shall so
elect, the Deposit, with any interest accrued thereon, shall be returned to Winn
whereupon this Agreement shall terminate and neither party hereto shall have any
further rights or obligations hereunder.
B. If a material part of the Property is taken and Winn does not elect
to terminate this Agreement within the specified time period, as aforesaid, or
if an immaterial part of a Property is taken, or in the event of a change of
legal grade caused by an act of governmental authority, then Winn shall not have
any right to terminate this Agreement, and the parties shall nonetheless proceed
to the Closing in accordance with this Agreement, without any abatement of the
Consideration or any liability or obligation on the part of Contributor by
reason of such taking, provided, however, that Contributor shall, at the
Closing, (1) assign and turn over, and Winn shall be entitled to receive and
keep, the net proceeds of any award or other proceeds of such taking which may
have been collected by Contributor as a result of such taking, less any portion
thereof applied to the cost of emergency repairs made by Contributor prior to
the Closing, or (2) if no award or other proceeds shall have been collected,
deliver to Winn an assignment of Contributor's right to any such award or other
proceeds which may be payable to Contributor as a result of such taking, less an
amount equal to the cost of any emergency repairs made by Contributor prior to
the Closing, which amount shall be paid to Contributor by Winn at the Closing.
If the net proceeds are paid to the holder of any mortgage or deed of trust on
the Property and such holder refuses to release sufficient sums therefrom for
the purpose of making repairs and restorations required by reason of such
condemnation, then, unless
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Contributor (at Contributor's sole option) pays to Winn the amount required to
make such repairs and restorations at the Closing, Winn may elect to terminate
this Agreement.
C. For the purposes hereof, a "material part" of a particular Property
shall be deemed to mean any taking (1) which causes a reduction in the size of
any of the Buildings or materially interferes with the present use and operation
of any of the Buildings, or (2) which reduces the total area of any Land so that
the land area available for parking is insufficient to service the Property at
maximum capacity or to provide the number of parking spaces required under
current law (considering any variance to which the Property is entitled), or (3)
which results in the elimination of the sole or any required means of legal
ingress and/or egress from the Property to public roads, no comparable,
convenient, legal substitute ingress and/or egress being available.
22. Tax Deferral and Gain Recognition. Except for the cash component of
the Consideration and the Contributor's immediate conversion right of 374,900
Contributor Units to Common Stock, the parties acknowledge that Contributor has
structured this Agreement and the transactions contemplated by this Agreement in
a manner which Contributor (i) believes will prevent it and each of its members
and each of the Unitholders (collectively, the "CONTRIBUTOR GROUP") from
recognizing gain for federal income tax purposes upon Closing and (ii) permit
the Contributor Group to defer recognition of gain until the earlier of (i) the
redemption of all of the Contributor's Units for Common Stock and (ii) January
1, 1999 (the "RESTRICTED PERIOD") based upon the agreement of Winn to abide by
certain covenants set forth in this Agreement. Based upon the foregoing, Winn
and its Subsidiaries hereby covenant that no sale, transfer or other disposition
of the Property (or property for which it is exchanged), or a distribution which
is treated as a taxable disposition, shall occur prior the expiration of the
Restricted Period, other than an exchange or other disposition which does not
cause the Contributor Group to recognize gain for federal income tax purposes
(including, without limitation, a transaction pursuant to Section 1031 of the
Code or any successor provision which would not cause such recognition of gain).
If after the end of the Restricted Period the Contributor Group still owns
Contributor Units, Winn and its Subsidiaries shall use their best efforts to
cause any sale, transfer or other disposition of the Property (or property for
which it is exchanged), or a distribution which is treated as a taxable
disposition, to not cause the Contributor Group to recognize gain for federal
income tax purposes for a period (the "HOLDING PERIOD") of four (4) years from
the date hereof. If prior to the end of the Restricted Period, a sale, transfer
or other disposition of the Property, or a distribution, is treated as a taxable
disposition, then Winn shall reimburse Contributor within thirty (30) days after
such sale, transfer and deposit for an amount equal to the loss of the use of
the tax payment calculated by the amount of tax payable by Contributor
multiplied by an interest rate of ten (10) percent for the balance of the
Restricted Period remaining after such sale, transfer or other disposition. The
provisions of this Section 22 shall survive the Closing.
23. Allocation Method. Winn covenants that the "traditional method," as
defined in Treas. Reg. 1.704-3(b), of allocating income, gain, loss and
deduction to account for the
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variation between the fair market value and adjusted basis of the Property for
federal income tax purposes, shall be used (i) with respect to the contribution
of the Property, and (ii) with respect to any revaluation of the Property,
pursuant to Treas. Reg. ss.1.704-1(b)(2)(iv)(f), 1.704-1(b)(2)(iv)(g) and
1.704-3(a)(6). The provisions of this Section 23 shall survive the Closing.
24. Redemption Right. Contributor and the Unitholders shall have the
Redemption Rights as set forth in the Redemption and Registration Rights
Agreement.
25. Miscellaneous.
A. Whenever in this Agreement it is provided that any party shall
indemnify and hold harmless the other party, then, as a condition to such
indemnity, the party indemnified shall promptly give written notice to the
indemnitor of any claim or demand made upon it which is or may be indemnified
against, and the indemnitor shall have the right to defend against such claim or
demand by counsel of its own choice, provided that such counsel be satisfactory
to the party being indemnified. There shall be no settlement of any action
arising under any indemnity contained herein without the prior written consent
of the indemnitor.
B. Unless otherwise expressly stated in this Agreement to the contrary,
none of the respective obligations, agreements, indemnities, representations,
warranties and covenants of the parties hereto shall survive the Closing and the
delivery of the deeds. As to any obligations, agreements, indemnities,
representations, warranties and covenants which are expressly stated to survive
the Closing for some period of time, written notice of the alleged violation or
breach of any such obligation, etc. must be delivered to the other party prior
to the expiration of any such period and litigation thereon must be commenced
within six (6) months after the giving of such notice in order to preserve the
aggrieved party's rights hereunder.
26. Notices.
All notices, demands, requests or other communications ("NOTICES")
required to be given or which may be given hereunder shall be in writing and
shall be deemed given on the day of delivery if hand delivered and receipted
for, or on the day of transmittal by facsimile, to be immediately followed by
certified mail, postage prepaid, return receipt requested, or by dispatch by
overnight receipted courier, addressed as follows:
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If to Contributor, at:
W. Spring Limited Partnership
BHI Limited Partnership
c/o Archon Group L.P.
600 Las Colinas Boulevard
Suite 1900
Irving, Texas 75039
Attention: Mr. Wes Huff
Director of Marketing
Fax: (972) 831-2280
With a copy to:
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Attention: Robert J. Wertheimer, Esq.
Fax: (212) 856-7806
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<PAGE> 41
If to Winn, at:
Winn Limited Partnership
c/o Winston Hotels, Inc.
2209 Century Drive, Suite 300
Raleigh, North Carolina 27612
Attention: Mr. Robert W. Winston
Fax: (919) 510-6832
With a copy to:
Brown & Bunch
4900 North Park
4900 Falls of Neuse Road, Suite 210
Raleigh, North Carolina 27609
Attention: William Bunch, III, Esq.
Fax: (919) 876-8062
and
Hunton & Williams
2000 Riverview Tower
900 South Gay Street
Knoxville, Tennessee 37902
Attention: David C. Wright, Esq.
Fax: (423) 549-7704
or to such other address or addresses as the parties may designate from time to
time by notice given in accordance with this Section 26.
27. Default, Remedies.
A. IF THE WINSTON GROUP DEFAULTS IN THE PERFORMANCE OF THIS AGREEMENT,
THE ENTIRE INITIAL DEPOSIT AND ADDITIONAL DEPOSIT SHALL BE RETAINED BY
CONTRIBUTOR AS LIQUIDATED DAMAGES FOR THE WINSTON GROUP'S DEFAULT. THE WINSTON
GROUP AND CONTRIBUTOR AGREE THAT THEY HAVE MADE GOOD FAITH AND REASONABLE
EFFORTS TO DETERMINE THE AMOUNT OF CONTRIBUTOR'S DAMAGES IN THE EVENT OF A
DEFAULT BY THE WINSTON GROUP. CONTRIBUTOR AND THE WINSTON GROUP HAVE BEEN UNABLE
TO ARRIVE AT ANY MEANINGFUL FORMULA OR MEASURE OF DAMAGES FOR THE WINSTON
GROUP'S DEFAULT AND SUCH DAMAGES
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<PAGE> 42
WOULD BE EXTREMELY DIFFICULT AND IMPRACTICAL TO DETERMINE. CONTRIBUTOR AND THE
WINSTON GROUP HAVE THEREFORE AGREED THAT THE INITIAL DEPOSIT AND ADDITIONAL
DEPOSIT SHALL SERVE AS CONTRIBUTOR'S LIQUIDATED DAMAGES AND THE SOLE MEASURE OF
CONTRIBUTOR'S DAMAGES.
B. IF CONTRIBUTOR DEFAULTS IN ITS OBLIGATIONS HEREUNDER OR FAILS TO
CONSUMMATE THE SALE OF THE PROPERTY FOR ANY REASON OTHER THAN THE WINSTON
GROUP'S DEFAULT OR THE FAILURE OF ANY CONDITIONS TO CLOSING SET FORTH IN SECTION
15, THEN THE WINSTON GROUP MAY ELECT EITHER (I) TO RECEIVE A REFUND OF THE
DEPOSIT PLUS ANY INTEREST EARNED THEREON FROM THE ESCROW AGENT, AND, THEREUPON,
THIS AGREEMENT SHALL BECOME NULL AND VOID AND NEITHER PARTY TO THIS AGREEMENT
SHALL HAVE ANY FURTHER RIGHTS OR OBLIGATIONS HEREUNDER, IT BEING THE
UNDERSTANDING AND AGREEMENT OF THE PARTIES HERETO THAT THE ACTUAL DAMAGES, COSTS
AND EXPENSES SUSTAINED BY THE WINSTON GROUP IN THE EVENT OF NOT CLOSING ARE
DIFFICULT, IF NOT IMPOSSIBLE, TO ASCERTAIN OR (II) TO PURSUE THE RIGHT OF
SPECIFIC PERFORMANCE OF CONTRIBUTOR'S OBLIGATIONS HEREUNDER; PROVIDED, HOWEVER,
THAT THE WINSTON GROUP MUST ELECT TO ENFORCE ITS RIGHT TO SPECIFIC PERFORMANCE
WITHIN SIXTY (60) DAYS OF CONTRIBUTOR'S DEFAULT OR SUCH RIGHT SHALL BE DEEMED
FOREVER WAIVED AND BARRED.
CONTRIBUTOR AND THE WINSTON GROUP ACKNOWLEDGE THAT THEY HAVE READ AND
UNDERSTAND THE PROVISIONS OF THE FOREGOING PROVISION AND BY THEIR SIGNATURES OR
INITIALS BELOW AGREE TO BE BOUND BY ITS TERMS.
Contributor /s/ RF Winston Group /s/ Robert W. Winston
28. Entire Agreement.
The parties agree that this Agreement and the attached exhibits and
schedules represents and contains the entire agreement and understanding between
the parties. This Agreement supersedes any and all prior oral and written
agreements and understandings of any kind, and no representation, warranty,
condition, understanding or agreement of any kind shall be relied upon by the
parties unless incorporated herein.
29. Condition of Property/Environmental Matters - Sale "AS IS".
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<PAGE> 43
A. DISCLAIMER OF REPRESENTATION AND WARRANTIES BY CONTRIBUTOR.
NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, IT IS UNDERSTOOD AND
AGREED THAT EXCEPT AS EXPRESSLY PROVIDED ELSEWHERE IN THIS AGREEMENT,
CONTRIBUTOR AND CONTRIBUTOR'S ASSET MANAGER HAVE NOT MADE AND ARE NOT NOW
MAKING, AND THEY SPECIFICALLY DISCLAIM, ANY WARRANTIES, REPRESENTATIONS OR
GUARANTEES OF ANY KIND OR CHARACTER, EXPRESS OR IMPLIED, ORAL OR WRITTEN, PAST,
PRESENT OR FUTURE, WITH RESPECT TO THE PROPERTY, INCLUDING, BUT NOT LIMITED TO,
WARRANTIES, REPRESENTATIONS OR GUARANTIES AS TO (I) MATTERS OF TITLE (OTHER THAN
CONTRIBUTOR'S WARRANTY OF TITLE SET FORTH IN THE DEED TO BE DELIVERED AT
CLOSING), (II) ENVIRONMENTAL MATTERS RELATING TO THE PROPERTY OR ANY PORTION
THEREOF, (III) GEOLOGICAL CONDITIONS, INCLUDING, WITHOUT LIMITATION, SUBSIDENCE,
SUBSURFACE CONDITIONS, WATER TABLE, UNDERGROUND WATER, RESERVOIRS, LIMITATIONS
REGARDING THE WITHDRAWAL OR WATER AND EARTHQUAKE FAULTS AND THE RESULTING DAMAGE
OF PAST AND/OR FUTURE EARTHQUAKES, (IV) WHETHER, AND THE EXTENT TO WHICH THE
PROPERTY OR ANY PORTION THEREOF IS AFFECTED BY ANY STREAM (SURFACE OR
UNDERGROUND), BODY OF WATER, FLOOD PRONE AREAS, FLOOD PLAIN, FLOODWAY OR SPECIAL
FLOOD HAZARD, (V) DRAINAGE, (VI) SOIL CONDITIONS, INCLUDING THE EXISTENCE OF
INSTABILITY, PAST SOIL REPAIRS, SOIL ADDITIONS OR CONDITIONS OF SOIL FILL, OR
SUSCEPTIBILITY TO LANDSLIDES, OR THE SUFFICIENCY OF ANY UNDERSHORING, (VII)
ZONING TO WHICH THE PROPERTY OR ANY PORTION THEREOF MAY BE SUBJECT, (VIII) THE
AVAILABILITY OF ANY UTILITIES TO THE PROPERTY OR ANY PORTION THEREOF, INCLUDING,
WITHOUT LIMITATION, WATER SEWAGE, GAS AND ELECTRIC, (IX) USAGE OF ADJOINING
PROPERTY, (X) ACCESS TO THE PROPERTY OR ANY PORTION THEREOF, (XI) THE VALUE,
COMPLIANCE WITH THE PLANS AND SPECIFICATIONS, SIZE, LOCATION, LAND USE, DESIGN,
QUALITY, DESCRIPTION, SUITABILITY, STRUCTURAL INTEGRITY, OPERATION, TITLE TO, OR
PHYSICAL OR FINANCIAL CONDITION OF THE PROPERTY OF ANY PORTION THEREOF, (XIII)
COMPLIANCE OF THE PROPERTY WITH ANY OR ALL PAST PRESENT OR FUTURE FEDERAL, STATE
OR LOCAL ORDINANCES, CODES OR OTHER SIMILAR LAWS, BUILDING, FIRE OR ZONING
ORDINANCES, CODES OR OTHER SIMILAR LAWS, (XIV) THE EXISTENCE OR NON-EXISTENCE OF
THE UNDERGROUND STORAGE TANKS, (XV) ANY OTHER MATTER AFFECTING THE STABILITY OR
INTEGRITY OF THE LAND, (XVI) THE POTENTIAL FOR FURTHER DEVELOPMENT OF THE
PROPERTY, (XVII) THE EXISTENCE OF VESTED LAND USE, ZONING OR BUILDING
ENTITLEMENT AFFECTING THE PROPERTY, (XVIII) THE MERCHANTABILITY OF THE PROPERTY
OR FITNESS OF THE PROPERTY FOR ANY PARTICULAR PURPOSE (WINN AFFIRMING THAT WINN
HAS NOT RELIED ON CONTRIBUTOR'S OR ASSET MANAGER'S SKILL OR JUDGEMENT TO SELECT
OR FURNISH THE PROPERTY FOR
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<PAGE> 44
ANY PARTICULAR PURPOSE, AND THAT CONTRIBUTOR MAKES NO WARRANTY THAT THE PROPERTY
IS FIT FOR ANY PARTICULAR PURPOSE), OR (XIV) TAX CONSEQUENCES (INCLUDING, BUT
NOT LIMITED TO, THE AMOUNT, USE OR PROVISIONS RELATING TO ANY TAX CREDITS).
B. SALE "AS IS". THE WINSTON GROUP HAS NOT RELIED UPON AND WILL NOT
RELY UPON, EITHER DIRECTLY OR INDIRECTLY, ANY REPRESENTATION OR WARRANTY OF
CONTRIBUTOR OR ASSET MANAGER OR ANY OF THEIR RESPECTIVE AGENTS AND ACKNOWLEDGES
THAT NO SUCH REPRESENTATIONS HAVE BEEN MADE EXCEPT AS EXPRESSLY PROVIDED
ELSEWHERE IN THIS AGREEMENT. THE WINSTON GROUP REPRESENTS THAT IT IS A
KNOWLEDGEABLE, EXPERIENCED AND SOPHISTICATED BUYER OF REAL ESTATE AND THAT IS
RELYING SOLELY ON ITS OWN EXPERTISE AND THAT OF THE WINSTON GROUP'S CONSULTANT
IN PURCHASING THE PROPERTY, THE WINSTON GROUP WILL CONDUCT SUCH INSPECTIONS AND
INVESTIGATION OR THE PROPERTY AS THE WINSTON GROUP DEEMS NECESSARY, INCLUDING,
BUT NOT LIMED TO, THE PHYSICAL AND ENVIRONMENTAL CONDITIONS THEREOF, AND SHALL
RELY UPON SAME. UPON CLOSING, THE WINSTON GROUP SHALL ASSUME THE RISK THAT
ADVERSE MATTERS, INCLUDING, BUT NOT LIMITED TO, ADVERSE PHYSICAL AND
ENVIRONMENTAL CONDITIONS, MAY NOT HAVE BEEN REVEALED BY THE WINSTON GROUP'S
INSPECTIONS AND INVESTIGATIONS. THE WINSTON GROUP ACKNOWLEDGES AND AGREES THAT
UPON CLOSING, CONTRIBUTOR SHALL SELL AND CONVEY TO THE WINSTON GROUP AND THE
WINSTON GROUP SHALL ACCEPT THE PROPERTY "AS IS, WHERE IS" WITH ALL FAULTS. THE
WINSTON GROUP HEREBY WAIVES ANY RIGHT TO SUE CONTRIBUTOR BASED UPON ANY THEORY
WHICH MAY BE PERMITTED UNDER ANY STATE OR FEDERAL LAWS, INCLUDING, WITHOUT
LIMITATION, STATUTES 42 USC ss.9601 ET SEQ AND 42 USC ss.6905 ET SEQ. RELATING
TO ENVIRONMENTAL CONDITIONS AFFECTING THE PROPERTY. THE WINSTON GROUP FURTHER
ACKNOWLEDGES AND AGREES THAT THERE ARE NO ORAL AGREEMENTS, WARRANTIES OR
REPRESENTATIONS, COLLATERAL TO OR AFFECTING THE PROPERTY BY CONTRIBUTOR, ANY
AGENT OF CONTRIBUTOR OR ANY THIRD PARTY. THE TERMS AND CONDITIONS OF THIS
SECTION 29 SHALL EXPRESSLY SURVIVE THE CLOSING, NOT MERGE WITH THE PROVISIONS OF
ANY CLOSING DOCUMENTS AND SHALL BE INCORPORATED INTO THE DEED. CONTRIBUTOR IS
NOT LIABLE OR BOUND IN ANY MANNER BY ANY ORAL OR WRITTEN STATEMENTS,
REPRESENTATIONS, OR INFORMATION PERTAINING TO THE PROPERTY FURNISHED BY ANY REAL
ESTATE BROKER, AGENCY, EMPLOYEE, SERVANT OR OTHER PERSON, UNLESS THE SAME ARE
SPECIFICALLY SET FORTH OR REFERRED TO HEREIN. THE WINSTON GROUP ACKNOWLEDGES
THAT THE CONSIDERATION REFLECTS THE "AS IS" NATURE OF THIS SALE AND ANY FAULTS,
LIABILITIES, DEFECTS OR OTHER ADVERSE MATTERS THAT MAY BE
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<PAGE> 45
ASSOCIATED WITH THE PROPERTY. THE WINSTON GROUP HAS FULLY REVIEWED THE
DISCLAIMER AND WAIVERS SET FORTH IN THIS AGREEMENT WITH ITS COUNSEL AND
UNDERSTANDS THE SIGNIFICANCE AND EFFECT THEREOF.
THE WINSTON GROUP ACKNOWLEDGES AND AGREES THAT THE DISCLAIMERS AND OTHER
AGREEMENTS SET FORTH HEREIN ARE AN INTEGRAL PART OF THIS AGREEMENT AND THAT
CONTRIBUTOR WOULD NOT HAVE AGREED TO SELL THE PROPERTY TO THE WINSTON GROUP FOR
THE CONSIDERATION WITHOUT THE DISCLAIMERS AND OTHER AGREEMENTS SET FORTH ABOVE.
CONTRIBUTOR AND THE WINSTON GROUP ACKNOWLEDGE THAT THEY HAVE READ AND
UNDERSTAND THE PROVISIONS OF THE FOREGOING PROVISION AND BY THEIR SIGNATURES OR
INITIALS BELOW AGREE TO BE BOUND BY ITS TERMS.
Contributor / Winston Group /s/ Robert W. Winston
30. Work Product to Contributor.
If this Agreement is terminated by the Winston Group, then the Winston
Group shall, at no cost to Contributor, within ten (10) days after termination
of this Agreement, deliver to Contributor all of Winston Group's materials
relating to environmental and engineering studies produced for the purpose of
studying the Property or satisfying any of the conditions of this Agreement.
Contributor shall reimburse the Winston Group for costs associated with the
preparation and delivery of such documents if this Agreement is terminated by
Contributor or Contributor requests copies of other third party due diligence
reports relating to the Property.
Subject to requirements of law, as interpreted in writing by counsel,
Winston Group shall keep confidential (and shall require Winston Group's
attorneys, accountants, consultants, the existing franchisors for each of the
Property, and otherwise authorized representatives to keep confidential) any
information obtained from Contributor or produced by Winston Group for the
purpose of studying and inspecting the Property which is not readily available
from public sources, unless it receives written permission from Contributor to
disclose such information.
The obligations contained in this section shall survive the termination
of this Agreement.
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<PAGE> 46
31. Amendments.
This Agreement may not be changed, modified or terminated, except by an
instrument executed by the parties hereto who are or will be affected by the
terms of such instrument.
32. Waiver.
No waiver by either Contributor or Winston Group of any failure or
refusal of the other party to comply with its obligations hereunder shall be
deemed a waiver of any other or subsequent failure or refusal to so comply by
such other party.
33. Partial Invalidity.
If any term or provision of this Agreement or the application thereof
to any person or circumstances shall, to any extent, be invalid or
unenforceable, the remainder of this Agreement, or the application of such term
or provision to persons or circumstances other than those as to which it is held
invalid or unenforceable, shall not be affected thereby, and each term and
provision of this Agreement shall be valid and be enforced to the fullest extent
permitted by law.
34. Section Headings.
The headings of the various sections of this Agreement have been
inserted only for the purposes of convenience and are not part of this Agreement
and shall not be deemed in any manner to modify, explain, expand or restrict any
of the provisions of this Agreement.
35. Governing Law.
This Agreement shall be governed by the laws of the State of New York
applicable to contracts made and to be performed entirely within the State of
New York, except with respect to real property which shall be governed by the
laws which the real property is located.
36. Further Assurances.
Contributor and Winston Group will do, execute, acknowledge and deliver
all and every such further acts, deeds, conveyances, assignments, notices,
transfers and assurances as
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may be reasonably required for the better assuring, conveying, assigning,
transferring and confirming unto Winston Group the Property, and for carrying
out the intentions or facilitating the consummation of this Agreement.
37. Successors and Assigns.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.
38. Counterparts.
This Agreement may be executed in several counterparts, each of which
shall constitute the same instrument.
39. Assignment.
This Agreement may not be assigned (other than to an Affiliate of the
Winston Group) by the Winston Group without the prior written consent of
Contributor, which consent may be granted or withheld in Contributor's sole
discretion, provided however, that the Affiliate shall be bound by this
Agreement and the Winston Group continues to remain liable for all obligations
arising out of or relating to this Agreement.
40. Limitation on Liability.
WITH RESPECT TO CAUSES OF ACTION WHICH ARISE AFTER THE CLOSING, IN NO
EVENT WILL THE CONTRIBUTOR BE LIABLE TO WINSTON GROUP UNLESS AND UNTIL THE
AGGREGATE AMOUNT OF DAMAGES FOR A BREACH OF THE REPRESENTATIONS AND WARRANTIES
CONTAINED IN SECTION 13A EXCEEDS THE SUM OF TWENTY FIVE THOUSAND DOLLARS
($25,000), AND IN NO EVENT WILL THE CONTRIBUTOR BE LIABLE TO WINSTON GROUP TO
THE EXTENT THAT THE AGGREGATE DAMAGES TO THE WINSTON GROUP EXCEEDS THE SUM OF
ONE MILLION DOLLARS ($1,000,000). CONTRIBUTOR MAY REDEEM UNITS IN LIEU OF CASH
FOR ANY AMOUNTS DUE TO THE WINSTON GROUP HEREUNDER. THE VALUE OF THE UNITS SHALL
BE EQUAL TO $12.80 PER UNIT FOR THE FIRST SIX (6) MONTHS AFTER CLOSING AND,
THEREAFTER, AT THE CURRENT MARKET PRICE.
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<PAGE> 48
41. Specific Definitions. As used in this Agreement, the following
terms shall have the meaning set forth below:
"AFFILIATE" means, when used with reference to a specified Person, (i)
if such Person is an individual, any member of the immediate family of such
Person or any trust for the benefit of any Person or any such member of the
immediate family of such Person and (ii) any Person directly or indirectly
controlled by, controlling or under common control with the Person in question.
The term "control" shall mean, for purposes of this definition, with respect to
any Person, the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise. The term
"member of the immediate family" means, with respect to any individual, the
spouse, children and grandchildren of any such individual.
"BUSINESS DAY" means any day other than a Saturday, Sunday or other day
on which banks are authorized to be closed in the State of New York.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time, or any corresponding federal tax statute enacted after the date of this
Agreement. A reference to a specific section (ss.) of the Code refers not only
to such specific section but also to any corresponding provision of any federal
tax statute enacted after the date of this Agreement, as such specific section
or corresponding provision is in effect on the date of application of the
provisions of this Agreement containing such reference.
"COMMON STOCK" means the shares of common stock of Winston.
"ENVIRONMENTAL LAW" means the following: (i) each and every applicable
federal, state, county or municipal law, statute, ordinance, rule, regulation,
guideline, code, license, permit, authorization, approval, consent, legal
doctrine, order, judgment, decree, injunction, directive, requirement or
agreement with any Governmental Authority, relating to (y) the protection,
preservation or restoration of the environment (including, without limitation,
air, water, vapor, surface water, groundwater, drinking water supply, surface
land, subsurface land, plant and animal life or any other natural resource), or
to human health or safety, or (z) the exposure to, or the use, storage,
recycling, treatment, generation, transportation, processing, handling,
labeling, production, release or disposal of Hazardous Materials. The term
Environmental Law includes, without limitation, (i) the federal Comprehensive
Environmental Response Compensation and Liability Act of 1980, the Superfund
Amendments and Reauthorization Act, the federal Water Pollution Control Act of
1972, the federal Clean Air Act, the federal Clean Water Act, the federal
Resource Conservation and Recovery Act of 1976 (including the Hazardous and
Solid Waste Amendments thereto), the federal Solid Waste Disposal Act and the
federal Toxic Substances Control Act, the Federal Insecticide, Fungicide and
Rodenticide Act, the Atomic Energy Act, the Nuclear Waste Policy Act of 1982,
the federal Occupational Safety and Health Act of 1970, each as amended and as
now in effect, and (ii) any
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<PAGE> 49
common law or equitable doctrine (including, without limitation, injunctive
relief and tort doctrines such as negligence, nuisance, trespass and strict
liability) that may impose liability or obligations for injuries or damages due
to, or threatened as a result of, the presence of or exposure to any Hazardous
Materials.
"GAAP" means generally accepted accounting principles and practices
consistently applied for all periods so as to properly reflect the financial
condition, results of operations and changes in cash flows of any entity.
"GOVERNMENTAL AUTHORITY" means any federal, state, county or municipal
court, tribunal, government, or any department, agency, bureau, board or
commission, regulatory authority, or other governmental or similar type body,
subdivision or instrumentality obtaining authority therefrom or created pursuant
to any law.
"HAZARDOUS MATERIALS" means any substance presently defined, designated
or classified as hazardous, toxic, radioactive or dangerous, whether by type or
by quantity, including any substance containing any such substance as a
component. Hazardous Materials includes, without limitation, any toxic waste,
pollutant, contaminant, hazardous substance, toxic substance, hazardous waste,
special waste, or petroleum or any derivative or by-product thereof, radon,
radioactive material, asbestos, asbestos containing material, urea formaldehyde
products, lead and polychlorinated biphenyl, and without limitation any and all
of the following, including mixtures thereof: any hazardous substance,
pollutant, contaminant, waste, by-product or constituent regulated under the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
Section 9601 et seq., oil, petroleum and petroleum products and derivatives and
natural gas, natural gas liquids, liquefied natural gas and synthetic gas usable
for fuel; asbestos and asbestos-containing materials, PCBs and other substances
regulated under the federal Solid Waste Disposal Act and the federal Toxic
Substances Control Act, 15 U.S.C. Section 2601 et seq.; source material, special
nuclear material, by-product material and any other radioactive materials or
radioactive wastes, however produced, regulated under the Atomic Energy Act or
the Nuclear Waste Policy Act of 1982; and chemicals subject to the OSHA Hazard
Communication Standard, 29 C.F.R. ss.1910.1200 et seq.
"KNOWLEDGE OF CONTRIBUTOR", "BEST OF CONTRIBUTOR'S KNOWLEDGE" or
similar derivations thereof means the actual knowledge of Steven Ableman, Wes
Huff, the general manager and chief engineer of each property.
"KNOWLEDGE OF WINN", "BEST OF WINN'S KNOWLEDGE" or similar derivations
thereof means the actual knowledge of Philip Alfano and Robert Winston, III.
"LIEN" means any lien, mortgage, charge, option, contractual
restriction on transfer, security interest, tax lien, pledge, encumbrance,
conditional sale or title retention
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<PAGE> 50
arrangement, or any other claim against an asset or any agreement to create or
confer any of the foregoing, in each case whether arising by agreement or under
any statute or Law or otherwise.
"PERSON" means any natural person, corporation, limited partnership,
limited liability company, limited liability partnership, general partnership,
joint stock company, joint venture, real estate investment trust, association,
company, trust, bank, trust company, land trust, vehicle trust, business trust
or other organization irrespective of whether it is a legal entity, or any
government or agency or political subdivision thereof.
"SUBSIDIARIES" means (a) any entity of which the Winston Group (or
other specified entity) shall own directly or indirectly through a subsidiary, a
nominee arrangement or otherwise (x) at least a majority of the outstanding
capital stock (or other shares of beneficial interest) or (y) at least a
majority of the partnership, joint venture or similar interests or (b) any
entity in which Winston Group (or other specified entity) is a general partner
or joint partner, including without limitation Winston Group.
"TAXES" means all taxes, charges, fees, levies or other assessments,
including, without limitation, all net income, gross income, gross receipts,
sales, use, service, service use, ad valorem, transfer, franchise, profits,
license, lease, withholding, social security, payroll, employment, excise,
estimated, severance, stamp, recording, occupation, real and personal property,
gift, windfall profits or other taxes, customs, duties, fees, assessments or
charges of any kind whatsoever, whether computed on a separate consolidated,
unitary, combined or other basis, together with any interest, fines, penalties,
additions to tax or other additional amounts imposed thereon or with respect
thereto imposed by any taxing authority (domestic or foreign).
"TAX PAYMENT" means an amount equal to the sum of (i) the federal,
state, and local income Taxes payable by the members of the Contributor Group
resulting from the recognition of gain and (ii) an additional payment in an
amount equal to the amount such that after payment by the members of the
Contributor Group of all Taxes (including interest or penalties) on amounts
received under clause (i) and this clause (ii) the members of the Contributor
Group retain an amount equal to the amount described in clause (i).
"TAX RETURNS" means all federal, state, local and foreign income,
franchise, sales and other tax returns.
"TRADING DAY" shall mean a day on which the principal national
securities exchange on which the Common Stock of Winston is listed or admitted
to trading is open for the transaction of business.
"TREASURY REGULATIONS" means the income tax regulations, including
temporary regulations, promulgated under the Code, as such regulations may be
amended from time to time (including corresponding provisions of succeeding
regulations).
-46-
<PAGE> 51
42. Other Definitions. In addition to the terms defined in Section 10.1
hereof, the following terms shall have the meanings defined for such terms in
the Section set forth below:
Definition Section Reference
- ---------- -----------------
"Accounts Receivable" 7.A
"Accredited Investor" 13.A.12.b
"Act" 13.A.12
"Additional Deposit" 2.B.2
"Apportionment Date" 6.A
"Appurtenances" 1.A
"Average Price" 2.G
"Billboard Leases" 1.A
"Books" 1.A
"Buildings" 1.A
"Business" 1.A
"Closing" 5
"Closing Date" 5
"Code" 13.A.6
"Consideration" 2.A
"Contributor Due Diligence Information" 4.B
"Contributor Group" 22
"Contributor's Response Notice" 4.A
"Contributor Title Obligations" 4.A
"Contributor Units" 2.B.3
"Deposit" 2.B.2
"Due Diligence Period" 4.B
"Equipment Leases" 1.A
"Escrow" 2.B.1
"Escrow Agent" 2.B.1
"Escrow Fees" 8.D
"Exchange Act" 13.B.4
"Existing Survey" 4.A
-47-
<PAGE> 52
Definition Section Reference
- ---------- -----------------
"Franchise Agreement" 8.C.1
"Guest Ledger" 6.E
"House Banks and Bank Accounts" 1.C.2
"Initial Deposit" 2.B.1
"Inventory" 1.A
"Land" 1.A
"Last Night Room Revenue" 6.E
"Management Agreement" 8.C.2
"notices" 26
"Op Agreement" 2.B.H
"Permitted Encumbrances" 3
"Personalty" 1.A
"Preferred Stock" 13.B.10
"Property" 1.A
"Property Taxes" 6.A.1
"qualified REIT Subsidiary" 13.B.15
"rack rates" 14.A.1
"Rate Agreements" 13.A.9
"Real Estate" 1.A
"Redemption and Registration Rights 16.C.3
Agreement"
"Reservation Deposits" 9.A
"Reservations" 9.A
"Restricted Period" 22
"safes" 10.A
"SEC Documents" 13.B.4
"Service Contracts" 1.A
"Space Lease" 1.A
"Title Costs" 8.B
"Title Objections" 4.A
"Title Report" 4.A
"Transfer" 13.A.12.a
-48-
<PAGE> 53
Definition Section Reference
- ---------- -----------------
"Unitholders" 2.B.3
"Units" Recitals
"Utilities" 6.A.3
"Winston" 2.B.3
"Winston Group's Title Notice" 4.A
-49-
<PAGE> 54
IN WITNESS WHEREOF, CONTRIBUTOR AND WINSTON GROUP HAVE CAUSED THIS
AGREEMENT TO BE EXECUTED THE DAY AND YEAR FIRST ABOVE WRITTEN.
ACKNOWLEDGED AND AGREED UPON:
CONTRIBUTORS
W. SPRING LIMITED PARTNERSHIP, a
Delaware limited partnership
By: W. Spring Corp., a Delaware corporation,
general partner
By: /s/ Richard R. Frapart
----------------------------------------
Name: Richard R. Frapart
Title: Vice President
BHI LIMITED PARTNERSHIP,
a Delaware limited
partnership
By: BHI Corp., a Delaware corporation, general
partner
By: /s/ Richard R. Frapart
----------------------------------------
Name: Richard R. Frapart
Title: Vice President
-50-
<PAGE> 55
WINSTON GROUP
WINN LIMITED PARTNERSHIP, a North
Carolina limited partnership
By: Winston Hotels, Inc., sole general partner
By: /s/ Robert W. Winston, III
----------------------------------------
Name: Robert W. Winston, III
Title: President
WINSTON HOTELS, INC.
By: /s/ Robert W. Winston, III
----------------------------------------
Name: Robert W. Winston, III
Title: President
-51-
<PAGE> 56
EXHIBIT "A"
DESCRIPTION OF LAND - MARRIOTT COURTYARD
Fieldnotes for a survey of 3.9346 acres of land out Tract 1, Block 6,
BROOKHOLLOW/HOUSTON, SECTION THREE (3), a subdivision in Houston, Harris
County, Texas, according to the map or plat thereof recorded in Volume 168,
Page 85, of the Map Records of Harris County, Texas, and being that same tract
of land conveyed to The Travelers Insurance Company by Substitute Trustee's
Deed recorded under County Clerk's File No. N479413 of the Real Property
Records of Harris County, Texas, said 3.9346 acres of land being more
particularly described by metes and bounds as follows:
BEGINNING at a 5/8 inch iron rod set in the Southwesterly line of T. C. Jester
Boulevard, based on a 120.00 foot right-of-way, at the most Southerly 10 foot
cut-back corner of Dacoma Street, based on an 80.00 foot right-of-way, said
point being the most Southerly Northeast corner of said Block 6 and the herein
described tract;
THENCE, South 47 deg. 09 min. 55 sec. East, 54.29 feet with the Southwesterly
line of said T. C. Jester Boulevard to a 5/8 inch iron rod set at a point of
non-tangent curve to the left, having a radius of 1205.70 feet and a central
angle of 8 deg. 13 min. 04 sec.;
THENCE, continuing with the Southwesterly line of said T. C. Jester Boulevard
and with the said curve to the left having a radius of 1205.70 feet (chord
bearing South 51 deg. 15 min. 13 sec. East, 172.782 feet), an arc distance of
172.93 feet to a 5/8 inch iron rod found at an angle point;
THENCE, continuing with the Southwesterly line of said T. C. Jester Boulevard,
South 55 deg. 21 min. 45 sec. East, 218.04 feet to a brass disk found in
concrete marking the most Easterly Southeast corner of said Block 6 and the
herein described tract, said point being the most Northerly or Northeast corner
of that certain 27,132 square foot tract of land conveyed to Texaco, Inc. by
Suit Claim Deed recorded under County Clerk's File No. H954345 of the said Real
Property Records;
THENCE, South 62 deg. 13 min. 37 sec. West, 174.95 feet (called South 62 deg.
16 min. 22 sec. West, 175 feet, in Texaco deed) with the Southerly line of said
Block 6 and the North line of said Texaco tract to a brass disc found in
concrete marking the most Westerly or Northwest corner of the said Texaco tract
and an ell corner of said Block 6 and the herein described tract;
THENCE, South 55 deg. 19 min. 05 sec. East, 175.04 feet (called South 55 deg.
21 min. 30 sec. East, 175 feet in Texaco deed) with an Easterly line of said
Block 6 and the West line of the Texaco tract to a brass disk found in concrete
in the Northwesterly line of North Loop Freeway (Interstate 610), based on a
350.00 foot right-of-way, marking the most Southerly Southeast corner of said
Block 6 and the herein described tract, said point also being the most
Southerly or Southwest corner of the said Texaco tract;
A-1
<PAGE> 57
EXHIBIT "A"
(cont'd)
THENCE, South 62 deg. 14 min. 21 sec. West, 86.52 feet with the Northwesterly
line of the said North Loop Freeway to a 5/8 inch iron rod found at a point of
non-tangent curve to the left having a radius of 2891.62 feet and a central
angle of 4 deg. 13 min. 48 sec.;
THENCE, continuing with the Northwesterly line of said North Loop Freeway and
with the said curve to the left having a radius of 2891.62 feet (chord bearing
South 60 deg. 12 min. 47 sec. West, 213.432 feet), an arc distance of 213.48
feet to a 5/8 inch iron rod found marking the most Southerly or Southwest
corner of the herein described tract, said point also being the most Easterly
or Southeast corner of that certain 4.4995 acre tract of land conveyed to New
England Mutual Life Insurance Company by Substitute Trustee's Deed recorded
under County Clerk's File No. M664299 of the said Real Property Records:
THENCE, North 34 deg. 27 min. 32 sec. West, with the Easterly line of the said
4.4995 acre tract, at 350.31 feet passing the most Northerly or Northeast
corner of the said 4.4995 acre tract and the most Easterly or Southeast corner
of that certain 55,142 square foot tract of land conveyed to Brookstone
Corporation by deed recorded under County Clerk's File No. N959331 of the said
Real Property Records, and continuing in all, a total distance of 529.39 feet
to a point in the South line of Dacoma Street, (from which a found 5/3 inch
iron rod bears South 19 deg. 34 min. 40 sec. West, 1.9 feet marking the most
Westerly or Northwest corner of the herein described tract, said point also
being the most Northerly or Northeast corner of the said 55,142 square foot
tract, said point being in a non-tangent curve to the left having a radius of
840.00 feet and a central angle of 17 deg. 44 min. 04 sec.;
THENCE, in a Northeasterly direction with the South line of said Dacoma Street
and with the said non-tangent curve to the left having a radius of 840.00 feet
(chord bearing North 52 deg. 00 sec. 27 min. East, 258.964 feet), an arc
distance of 260.00 feet to a 5/8 inch iron rod set at the most Northerly point
of the aforesaid cut-back line of Dacoma Street for the most Northerly
Northeast corner of the herein described tract;
THENCE, North 57 deg. 50 min. 05 sec. East, 14.14 feet with the said cut-back
line to the PLACE OF BEGINNING and containing 3.9346 acres or 171,290 square
feet of land, more or less.
NOTE: The Company is prohibited from insuring the area or quantity of the land
described herein. Any statement in the above legal description herein. Any
statement in the above legal description of the area or quantity of land is not
a representation that such area or quantity is correct, but is made only for
informational and/or identification purposes and does not override Item 2 of
Schedule 5 hereof.
A-2
<PAGE> 58
EXHIBIT A-1
DESCRIPTION OF LAND - HAMPTON INN
A tract of land located on the Easterly side of Riverdale Street and the
Northerly side of Daggett Drive in West Springfield, Massachusetts, bounded and
described as follows:
BEGINNING at an iron pipe on the Easterly sideline of Riverdale Street, being
the Southwest corner of land now or formerly of C'Jack Realty Associates,
and running; THENCE South 60 degrees 40'26" East, along land now or formerly of
C'Jack Realty Associates, 310.56 feet to an iron pipe; THENCE South 15 degrees
57'22" West, along land now or formerly of Pearson-Daggett Development Company
Limited Partnership, 32.02 feet to a point; THENCE South 18 degrees 27'24"
East, along last named land, 28.91 feet to a point; THENCE South 29 degrees
19'34" West, along last named land, 181.12 feet to a point; THENCE South 18
degrees 27'24" East, along last named land, 28.91 feet to a point; THENCE South
29 degrees 19'34" West, along last named land, 181.12 feet to a point; THENCE
South 01 degrees 49'54" East, along last named land, 45.40 feet to a point;
THENCE Southeasterly on a curve to the left, having a radius of 27.00 feet
along last named land, 30.91 feet to a point; THENCE Westerly on a curve to the
right, having a radius of 322.81 feet along the Northerly sideline of Daggett
Drive, 187.12 feet to a bound; THENCE North 73 degrees 18'39" West, along last
named land, 55.75 feet to a bound; THENCE Northwesterly on a curve to the
right, having a radius of 68.00 feet along last named land and the Easterly
sideline of Riverdale Street, 103.46 feet to a bound; THENCE North 13 degrees
52'05" East, along last named land, 350.16 feet to the POINT OF BEGINNING.
Containing an area of 2.456 acres more or less.
TOGETHER WITH
Road Agreement recorded in Book 5502, Page 4 Parking and Access Easement as
recorded in Book 7021, Page 98 Utility Easement recorded in Book 7021, Page 108
Drainage Easement recorded in Book 7021, Page 123.
A-1
<PAGE> 59
EXHIBIT B
Description of Space Lease(s)
Atchafalaya River Cafe
B-1
<PAGE> 60
EXHIBIT C
Required Due Diligence Information
(1) Current rent roll.
(2) Operating statements.
(3) Current year's tax statements.
(4) Environmental studies prepared for the benefit of Contributor.
(5) Service Contracts affecting the Property.
(6) Summary of all capital expenditures during the past 12 months.
(7) Current personal property inventory.
(8) Trade, Merchant or Business Association Dues
(9) Billboard Leases
(10) Equipment Leases
(11) Rate Agreements
(12) 1995/1996 P/L Statements
(13) 1997 Year to Date P/L Statements
(14) 36 Month Operation ADR
(15) Such other information reasonably requested
C-1
<PAGE> 61
EXHIBIT D
[Form of Opinion of Winston Group's Counsel]
July , 1997
BHI Limited Partnership
W. Spring Limited Partnership
c/o Archon Group L.P.
600 Las Colinas Boulevard, Suite 1900
Irving, Texas 75039
RE: Contribution and Exchange Agreement dated June
1997 between BHI Limited Partnership and W. Spring
Limited Partnership and WINN Limited Partnership
and Winston Hotels, Inc. (the "Agreement")
Gentlemen:
We have acted as counsel to Winston Hotels, Inc., a North Carolina
corporation ("WINSTON"), and WINN Limited Partnership, a North Carolina limited
partnership ("WINN" and, collectively with Winston, the "WINSTON GROUP"), in
connection with the contribution by BHI Limited Partnership and W. Spring
Limited Partnership (collectively, the "CONTRIBUTOR") pursuant to the
Agreement. This opinion is being furnished pursuant to Section 16.B.(5) of the
Agreement. Capitalized terms used herein and not defined herein shall have the
meanings ascribed to such terms in the Agreement.
In connection with this opinion, we have examined the following
materials:
(a) an executed copy of each of the agreements listed on EXHIBIT A
hereto (the "OPERATIVE DOCUMENTS"); and
D-1
<PAGE> 62
(b) the other instruments and documents delivered at today's closing,
including certificates or telegrams of public officials as to matters set forth
therein and certificates of representatives of the Winston Group as to matters
set forth therein.
In rendering this opinion, we have assumed the genuineness of all
signatures on original and certified agreements, instruments or documents, the
legal capacity of all persons executing agreements, instruments or documents
examined or relied upon by us, the authenticity of all agreements, instruments
or documents submitted to us as originals, the conformity to executed
agreements, instruments or documents of all unexecuted copies submitted to us
and the conformity with the original agreements, instruments or documents of
all agreements, instruments or documents submitted to us as photostatic copies.
We have assumed, without investigation, as to all parties other than
the Winston Group and its Subsidiaries, (i) that the Operative Documents have
been duly authorized, executed and delivered by each of the parties thereto,
(ii) that the Operative Documents constitute the legal, valid and binding
obligations of each of the parties thereto, (iii) that the Operative Documents
are enforceable against each of the parties thereto in accordance with their
terms, (iv) that each of the parties to the Operative Documents will perform in
good faith according to each of its obligations under such agreements, (v) that
the execution and delivery of the Operative Documents by the parties thereto
does not and will not violate any law, rule or regulation, applicable to the
parties thereto and (vi) that the execution and delivery and performance of the
Operative Documents does not require the parties thereto to file, seek or
obtain, on their own behalf, any governmental notice, filing, authorization,
approval, order or consent, or be bound in satisfaction of any governmental
regulations.
With respect to matters of fact material to our opinion, and as
otherwise specifically stated in our opinion, we have made inquiries of and
relied upon oral statements, written information and certificates of officials
and representatives of the Winston Group and its subsidiaries, representations
made by Winston and Winn in the Agreement, and certificates of public officials.
Where matters are stated to be "to the best of our knowledge" or "known to us,"
our knowledge is limited to the actual knowledge of those attorneys in our
office who have directly participated in this engagement, their review of
documents provided to us by the Winston Group in connection with this engagement
and inquiries of officers of the Winston Group. We have not independently
verified the accuracy of the matters set forth in the written statements or
certificates upon which we have relied, including the organization, existence,
good standing, assets, business or affairs of the Winston Group, nor have we
undertaken any Lien, intellectual property, suit or judgment searches or
searches of court dockets in any jurisdiction.
We have relied upon the representations of Winston and its affiliates
regarding the manner in which Winston and its affiliates have been and will
continue to be owned and operated. We have neither independently investigated
nor verified such representations, and we assume that such representations are
true, correct and complete. We assume that Winston has
<PAGE> 63
been and will be operated in accordance with applicable laws and the terms and
conditions of applicable documents, and the descriptions of Winston and its
investments, and the proposed investments, activities, operations and governance
of Winston set forth in the SEC Documents continue to be true.
Statements in this opinion as to the legality, validity, binding
effect of enforceability of agreements, instruments and documents are subject
(i) to limitations as to enforceability imposed by bankruptcy, reorganization,
moratorium, fraudulent conveyance, insolvency and other similar laws and related
court decisions of general application relating to or affecting creditors'
rights generally, (ii) to equitable principles limiting the availability of
equitable remedies, and (iii) as to rights to indemnity, to limitations that may
exist under federal and state laws or the policy underlying such laws.
We do not express any opinion as to the laws of any states or
jurisdictions except as to North Carolina law.
Upon the basis of and subject to the foregoing and solely in reliance
thereon, we are of the opinion that:
1. Winston and Winn are a corporation and, limited partnership,
respectively, duly incorporated or formed, as the case may be, validly existing
and in good standing under the laws of the State of North Carolina.
2. The issuance of Contributor Units pursuant to the terms of the
Agreement has been duly authorized and, when issued and delivered to the
Contributor and the Unitholders in accordance with the terms of the Agreement,
the Contributor Units will be (i) validly issued, fully paid and nonassessable,
and (ii) free and clear of any mortgage, pledge, Lien, encumbrance, security
interest, claim or rights or interests of any third party of any nature
whatsoever, subject to the applicable provisions of the Agreement and the OP
Agreement.
3. The Common Stock issuable upon redemption of the Contributor Units,
when issued and delivered to Contributor and the Unitholders in accordance with
the terms of the Agreement and the OP Agreement, will be validly issued, fully
paid and nonassessable.
4. The execution and delivery of by Winston and Winn of the Operative
Documents have been duly and validly authorized, executed and delivered by
Winston and Winn.
This opinion is being rendered to you for your sole use and may not be
made available to or relied upon by any other person, firm or entity without our
express prior written consent.
Very truly yours,
<PAGE> 64
EXHIBIT A
[Operative Documents]
June , 1997
BHI Limited Partnership
W. Spring Limited Partnership
c/o Archon Group, L.P.
600 Las Colinas Boulevard, Suite 1900
Irving, Texas 75039
Winston Hotels Inc.
Qualification as
Real Estate Investment Trust
Ladies and Gentlemen:
We have acted as counsel to Winston Hotels, Inc., a North Carolina
corporation (the "Company"), and WINN Limited Partnership, a North Carolina
limited partnership (the "Partnership"), in connection with the contribution by
BHI Limited Partnership and W. Spring Limited Partnership (collectively the
"Contributor") of the _________________, _________________________ and the
___________________, and the land and personal property associated therewith
(the "Hotels") to the Partnership pursuant to the Contribution and Exchange
Agreement, dated June ,1997 (the "Contribution Agreement"), among the
Contributor, the Partnership, and the Company (the "Contribution"). You have
requested our opinion regarding certain U.S. federal income tax matters in
connection with the Contribution.
The Company and the Partnership own hotels and lease them to Winston
Hospitality, Inc., a North Carolina corporation (the "Leasee"), pursuant to
substantially similar operating leases (collectively, the "Leases"). The Leasee
operates certain of the hotels and the remaining hotels are operated by
Interstate Management & Investment
<PAGE> 65
BHI Limited Partnership
W. Spring Limited Partnership
June ___, 1997
Page 2
Corp., Impac Hotel Group, Inc., and Promus Hotels, Inc. on behalf of the Lessee
pursuant to management agreements (collectively, the "Management Agreements")
with the Lessee. After the Contribution, the Partnership plans to enter into
lease agreements with the Lessee with respect to the Hotels that are
substantially similar to the Leases.
In connection with the opinions rendered below, we have examined the
following:
1. the Company's Amended and Restated Articles of Incorporation, as
filed with the Secretary of State of the State of North Carolina
on May 17, 1994;
2. the Company's Amended and Restated Bylaws;
3. the First Amended and Restated Agreement of Limited Partnership of
the Partnership, dated as of June 2, 1994 (the "Partnership
Agreement"), among the Company, as general partner, and several
limited partners;
4. the Leases;
5. the Management Agreements; and
6. the Contribution Agreement.
In connection with the opinions rendered below, we have assumed, with
your consent, generally that:
1. each of the documents referred to above has been duly authorized,
executed, and delivered; is authentic, if an original, or is
accurate, if a copy; and has not been amended;
2. during its taxable year ending December 31, 1997 and subsequent
taxable years, the Company has operated and will continue to
operate in such a manner that makes and will continue to make the
representations contained in a certificate, dated the date hereof
and executed by a duly
<PAGE> 66
BHI Limited Partnership
W. Spring Limited Partnership
June ___, 1997
Page 3
appointed officer of the Company (the "Officer's Certificate"),
true for such years;
3. the Company will not make any amendments to its organizational
documents or to the Partnership Agreement after the date of
this opinion that would affect its qualification as a real estate
investment trust (a "REIT") for any taxable year;
4. each partner of the Partnership (a "Partner") that is a
corporation or other entity has a valid legal existence;
5. each Partner has full power, authority, and legal right to enter
into and to perform the terms of the Partnership Agreement and
the transactions contemplated thereby; and
6. no action will be taken by the Company, the Partnership, or the
Partners after the date hereof that would have the effect of
altering the facts upon which the opinions set forth below are
based.
In connection with the opinions rendered below, we also have relied
upon the correctness of the representations contained in the Officer's
Certificate. Based solely on the documents and the assumptions set forth above,
the representations set forth in the Officer's Certificate, and without further
investigation, we are of the opinion that:
(a) the Company qualified to be taxed as a REIT pursuant to
sections 856 through 860 of the Internal Revenue Code of 1986,
as amended (the "Code"), for its taxable years ended December 31, 1994
through December 31, 1996, and the Company's organization and current
and proposed method of operation will enable it to continue to qualify
as a REIT for its taxable year ending December 31, 1997, and in the
future; and
(b) the Partnership will be treated for federal income tax
purposes as a partnership and not as a corporation or an
association taxable as a corporation or as a publicly traded
partnership.
<PAGE> 67
BHI Limited Partnership
W. Spring Limited Partnership
June ___, 1997
Page 4
Except as described herein, we have performed no further due diligence and have
made no efforts to verify the accuracy and genuineness of the documents and
assumptions set forth above, or the representations set forth in the Officer's
Certificate. In addition, we will not review on a continuing basis the
Company's compliance with the documents or assumptions set forth above, or the
representations set forth in the Officer's Certificate. Accordingly, no
assurance can be given that the actual results of the Company's operations for
its 1997 and subsequent taxable years will satisfy the requirements for
qualification and taxation as a REIT.
The foregoing opinions are based on current provisions of the Code and
the Treasury regulations thereunder (the "Regulations"), published
administrative interpretations thereof, and published court decisions. The
Internal Revenue Service has not issued Regulations or administrative
interpretations with respect to various provisions of the Code relating to REIT
qualification. No assurance can be given that the law will not change in a way
that will prevent the Company from qualifying as a REIT.
The foregoing opinions are limited to the U.S. federal income tax
matters addressed herein, and no other opinions are rendered with respect to
other federal tax matters or to any issues arising under the tax laws of any
other country, or any state or locality. We undertake no obligation to update
the opinions expressed herein after the date of this letter. This opinion
letter is solely for the information and use of the addressees, and it may not
be distributed, relied upon for any purpose by any other person, quoted in
whole or in part or otherwise reproduced in any document, or filed with any
governmental agency without our express written consent.
Very truly yours,
<PAGE> 68
EXHIBIT E
Redemption and Registration Rights Agreement
This REDEMPTION AND REGISTRATION RIGHTS AGREEMENT ("Agreement") is
entered into as of the _____ day of __________, 1997 by and among WINN LIMITED
PARTNERSHIP, a North Carolina limited partnership (the "Partnership"), WINSTON
HOTELS, INC. a North Carolina corporation and sole general partner of the
Partnership (the "General Partner" or the "Company"), the partnerships listed
on Exhibit A (the "Contributing Partnerships") and certain partners or
designees of the Contributing Partnerships listed on Exhibit A hereto (the
"Limited Partners"). The Contributing Partnerships and the Limited Partners and
their permitted transferees and assignees are herein referred to individually
as a "Holder" and collectively, as "Holders".
RECITALS
WHEREAS, pursuant to a Contribution and Exchange Agreement among the
Partnership, the Company and the Contributing Partnerships dated June ___, 1997
(the "Contribution and Exchange Agreement"), the Contributing Partnerships have
contributed to the Partnership certain hotel properties in exchange for units
of limited partnership interest in the Partnership as set forth on Exhibit A
hereto (the "Partnership Units") and cash, as set forth in the Contribution and
Exchange Agreements; and
WHEREAS, the Contributing Partnerships may in the future distribute some
or all of the Partnership Units received from the Partnership pursuant to the
Contribution Agreements to the Limited Partners in the amounts set forth in
Exhibit A; and
WHEREAS, the General Partner, the other limited partners of the
Partnership and the Contributing Partnerships have executed, and upon receipt
of Partnership Units, the Limited Partners will execute, the Second Amended and
Restated Agreement of Limited Partnership dated June ___, 1997 of the
Partnership (the "Partnership Agreement"); and
WHEREAS, the parties hereto desire to set forth certain rights of the
Contributing Partnerships and the Limited Partners as holders of the
Partnership Units;
NOW, THEREFORE, for and in consideration of the mutual promises and
agreements contained in this Agreement, the parties hereto mutually agree as
follows:
E-1
<PAGE> 69
AGREEMENT
ARTICLE I
DEFINITIONS
Capitalized terms not otherwise defined when first used herein shall
have the meanings set forth in the Partnership Agreement.
ARTICLE II
REDEMPTION RIGHT
Beginning on the date of this Agreement, each Holder shall have the
right (the "Redemption Right") to require the Partnership to redeem on a
Specified Redemption Date all or a portion of the number of Partnership Units
held by such Holder and set forth on Exhibit A under the heading "Immediate
Redemption Units" at a redemption price equal to and in the form of the
Redemption Amount. Notwithstanding any provisions of the Partnership Agreement
to the contrary, the Partnership agrees that any Immediate Redemption Units
tendered for redemption within 10 days following the date of this Agreement
shall be redeemed for the REIT Shares Amount. On or after the date that is six
months from the date of this Agreement, each Holder shall have the Redemption
Right to require the Partnership to redeem on a Specified Redemption Date all
or a portion of the total number of Partnership Units held by such Holder and
set forth on Exhibit A, including any Immediate Redemption Units not previously
tendered for redemption, at a redemption price equal to and in the form of the
Redemption Amount. The Redemption Right shall be exercised pursuant to a Notice
of Redemption in the form of Exhibit B delivered to the Company by the Holder
who is exercising the Redemption Right. A Holder may not exercise the
Redemption Right for less than one hundred (100) Partnership Units or, if such
Holder holds less than one hundred (100) Partnership Units, all of the
Partnership Units held by such Holder. A Holder shall have no right, with
respect to any Partnership Units so redeemed, to receive any distribution paid
with respect to Partnership Units on or after the Specified Redemption Date.
Subject to the provisions of Sections 4.2 and 4.3 of this Agreement, the
Redemption Right shall otherwise be subject to applicable provisions of Section
8.05 of the Partnership Agreement.
ARTICLE III
SHELF REGISTRATION
The Company agrees to file with the SEC prior to the six month
anniversary of the date of this Agreement, a shelf registration statement
pursuant to Section 8.06 of the Partnership Agreement, with respect to (i) the
issuance by the Company of the Redemption Shares issued to the Holders with
respect to any Partnership Units which are redeemed on or after the effective
date of the Shelf Registration to the effect that such Redemption Shares will
be freely tradeable by a Holder (except to the extent a Holder may be deemed to
be an "affiliate" of the Company as defined in Rule 144 under the Securities
Act) and, (ii) the resale by the Holders of any Redemption Shares issued to the
Holders upon redemption of Partnership Units prior to the effective date of the
Shelf Registration. The Company will use its best efforts to cause the Shelf
Registration to be declared effective under the Securities Act on or before the
sixth month anniversary of the date of this Agreement. With respect to the
resale of Redemption Shares included in the Shelf Registration pursuant to
subpart (ii) of the first sentence of
2
<PAGE> 70
this Article III, the Shelf Registration shall provide for customary methods of
sale or distribution including, without limitation, sales directly by the
Holder or through broker's transactions. The Shelf Registration shall not
provide for an underwritten offering of Redemption Shares. A Holder may request
that the Company amend or supplement the Shelf Registration to include other
methods of distribution of Redemption Shares by such Holder under the Shelf
Registration. If the Company deems such method of distribution to be permitted
by applicable law, the Company agrees to undertake to amend or supplement the
Shelf Registration to permit such method of distribution; provided however,
that the Company's cost and expenses in connection with any such amendment or
supplement shall be paid by the Holder or reimbursed to the Company by the
Holder upon request. The Company will use its best efforts to keep the Shelf
Registration continuously effective until the earlier of (A) the date when all
of the Redemption Shares covered thereby are issued or re-sold or (B) the date
on which Holders may sell Redemption Shares without registration under the
Securities Act, pursuant to Rule 144(k) thereunder or any similar rule that may
be adopted by the Commission (the "Shelf Registration Period"). The Company
further agrees to supplement or make amendments to the Shelf Registration, if
required by the rules, regulations, or instructions applicable to the
registration form utilized by the Company or by the Securities Act or rules and
regulations thereunder for the Shelf Registration. The Shelf Registration shall
otherwise be subject to applicable provisions of Section 8.06 of the
Partnership Agreement, provided that, subject to the provisions of this Article
III, the provisions of Section 8.05(c)(iii) of the Partnership Agreement
relating to the limitation on the General Partner's obligation to pay expenses
in connection with amendments or supplements thereto after 90 days shall not
otherwise apply to the Shelf Registration.
ARTICLE IV
PARTNERSHIP AGREEMENT MATTERS
4.1. Taxable Transaction. In the event that prior to January 1, 1999
(the "Restricted Period") the General Partner completes a transaction pursuant
to Section 6.09 or Section 7.01(c) of the Partnership Agreement, which causes a
Holder of Partnership Units to recognize gain for federal income tax purposes
with respect to the Holder's disposition of Partnership Units in connection
with such transaction, the Partnership shall reimburse such Holder within thirty
(30) days after the closing of such transaction for an amount equal to the loss
of the use of the tax payment calculated by multiplying the amount of tax
payable by the Holder by an interest rate of ten percent (10%) for the
then-remaining term of the Restricted Period.
4.2. Redemption Right. Notwithstanding the provisions of Section
8.05(c) and 8.05(d) of the Partnership Agreement, the parties agree that in the
event the delivery of REIT Shares to a Holder would cause one of the events
described in subsections (i)-(v) of Section 8.05(c) of the Partnership Agreement
to occur, the Holder will be paid the Cash Amount and the provisions of Section
8.05(d) of the Partnership Agreement, as they relate to the General Partner's
right to delay payment of the Cash Amount for a period of up to 180 days, shall
not apply.
4.3. Publicly Traded Partnership. Notwithstanding the provisions of
Section 8.05(e) of the Partnership Agreement, the General Partner shall not,
pursuant to Section 8.05(e) of the Partnership Agreement, place any
restrictions on the ability of the Holders to exercise their Redemption Rights
during the Restricted Period. Following the expiration of the Restricted
Period, the General Partner will give the Holders not less than sixty (60) days
prior notice of any such restriction and the Holders
3
<PAGE> 71
shall be entitled to exercise their Redemption Rights free of such restrictions
within 60 days (or such longer period set forth in the notice) of receipt of
such notice.
4.4. Transferees and Assignees. The provisions of this Agreement shall
apply to any Partnership Units transferred by a Holder pursuant to the terms of
the Partnership Agreement or the Contribution and Exchange Agreement.
ARTICLE V
GENERAL
5.1. Notices. All notices, demands, requests or other communications
required to be given or which may be given hereunder shall be in writing and
shall be deemed given on the day of delivery if hand delivered and receipted
for, or on the date of transmittal by facsimile, to be immediately followed by
certified mail, postage prepaid, return receipt requested, or by dispatch by
overnight receipted courier, addressed as follows:
If to Contributor, at:
W. Spring Limited Partnership
BHI Limited Partnership
c/o Archon Group L.P.
600 Las Colinas Boulevard, Suite 1900
Irving, Texas 75039
Attention: Mr. Wes Huff
Director of Marketing
Fax: (972) 831-2280
With a copy to:
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Attention: Robert J. Wertheimer, Esq.
Fax: (212) 856-7806
If to the Partnership, at:
Winn Limited Partnership
c/o Winston Hotels, Inc.
2209 Century Drive, Suite 300
Raleigh, North Carolina 27612
Attention: Mr. Robert W. Winston
Fax: (919) 510-6832
4
<PAGE> 72
With a copy to:
Brown & Bunch
4900 North Park
4900 Falls of Neuse Road, Suite 210
Raleigh, North Carolina 27609
Attention: William Bunch, III, Esq.
Fax: (919) 876-8062
and
Hunton & Williams
2000 Riverview Tower
900 South Gay Street
Knoxville, Tennessee 37902
Attention: David C. Wright, Esq.
Fax: (423) 549-7704
5.2. Pronouns and Plurals. When the context in which words are used in
this Agreement indicates that such is the intent, words in the singular number
shall include the plural and the masculine gender shall include the neuter or
female gender as the context may require.
5.3. Headings. The article headings or sections in this Agreement are
for convenience only and shall not be used in construing the scope of this
Agreement or any particular article.
5.4. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original copy and all of
which together shall constitute one and the same instrument binding on all
parties hereto, notwithstanding that all parties shall not have signed the
same counterpart.
5.5. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of North Carolina.
5.6. Confirmation. It shall be a condition to any Person succeeding to
the rights of a Contributing Partnership as permitted herein that such Person,
if requested by the Company, execute a counterpart to this Agreement and become
a party hereto.
5.7. Binding Agreement. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
permitted assigns.
5
<PAGE> 73
IN WITNESS WHEREOF, each party has duly executed this Agreement as of the
day and year first above written.
WINSTON HOTELS, INC., a
North Carolina corporation
By:
-------------------------------------
Name:
-----------------------------------
Title:
WINN LIMITED PARTNERSHIP, a
North Carolina limited partnership
By: WINSTON HOTELS, INC.,
its general partner
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
By: BHI LIMITED PARTNERSHIP, a
Delaware limited partnership
By: BHI Corp., a Delaware corporation,
its general partner
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
By: W. SPRING LIMITED PARTNERSHIP, a
Delaware limited partnership
By: W. Spring Corp., a Delaware
corporation, its limited partner
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
6
<PAGE> 74
EXHIBIT A
Contributing Partnership Address
------------------------ -------
BHI Limited Partnership
W. Spring Limited Partnership
Partners and designees to whom the Contributing
Partnership may distribute Partnership Units
- -----------------------------------------------
Total Number of No. of Immediate
Name Address Partnership Units Redemption Units
---- ------- ----------------- ----------------
QRF I Ltd.
GS Co-Invest, L.P.
SFM Participation, L.P.
G. Soros Realty, L.P.
G. Soros Realty, Inc.
WHQR Real Estate
Limited Partnership
WHQP Real Estate
Limited Partnership
One entity owned by
the above seven entities
----------------- ----------------
[Exhibit to be revised to reflect actual allocation prior to closing]
Total: 815,000 Total: 374,900
7
<PAGE> 75
EXHIBIT B
NOTICE OF EXERCISE OF REDEMPTION RIGHT
The undersigned hereby irrevocably (i) presents for redemption __________
units of limited partnership interest ("Partnership Units") in WINN Limited
Partnership (the "Partnership") in accordance with the Agreement of Limited
Partnership of the Partnership, as amended (the "Partnership Agreement") and
the Redemption and Registration Rights Agreement dated ____________, 1997 (the
"Redemption Agreement") among the Partnership, Winston Hotels, Inc. and the
other parties thereto, (ii) surrenders such Partnership Units and all right,
title and interest therein, (iii) surrenders herewith any certificate or other
writing evidencing the Partnership Units (and requests that any Partnership
Units so evidenced that are not redeemed be evidenced by the issuance of a new
certificate) and (iv) directs that the "Cash Amount" or "REIT Shares Amount"
(as determined by the General Partner subject to the Redemption Agreement), as
defined in the Partnership Agreement, deliverable upon exercise of the
Redemption Rights be delivered to the address specified below, and if REIT
Shares are to be delivered, such REIT Shares be registered or placed in the
name(s) and at the address(es) specified below.
Dated:
------------, ----
Name of Limited Partner:
-----------------------------------------
(Signature of Limited Partner)
-----------------------------------------
(Mailing Address)
-----------------------------------------
(City) (State) (Zip Code)
Signature Guaranteed by:
-----------------------------------------
If REIT Shares are to be issued, issue to:
- ---------------------------------
- ---------------------------------
- ---------------------------------
Please insert social security or identifying number:
- ---------------------------------
8
<PAGE> 76
EXHIBIT F
Documents to be Delivered by Winston Group
to Contributor
1. OP Agreement
2. 1995-1996 Annual Reports
3. 1994-1995 Tax Returns
4. Appraisals for each of the Property
F-1
<PAGE> 77
EXHIBIT G
List of Designees
1. QRF I Ltd.
2. GS Co-Invest, L.P.
3. SFM Participation, L.P.
4. G. Soros Realty, L.P.
5. G. Soros Realty, Inc.
6. WHQR Real Estate Limited Partnership
7. WHQP Real Estate Limited Partnership
8. One entity owned by the above seven entities.
F-2
<PAGE> 78
SCHEDULE A
Insurance
1. General Liability and Excess Liability coverage with Aon Risk Services
Inc. of CT
2. Property casualty coverage with Aon Risk Services Inc. of CT. Includes
Business Interruption, Flood, and Earthquake coverage.
3. Boiler coverage with Tanenbaum Harber Co. Inc.
4. D&O - General Partners Liability coverage with Tanenbaum Harber Co.
Inc.
F-3
<PAGE> 79
Schedule 13 B-17
Hampton Inn containing 130 rooms located at 201 Asheville Avenue, Cary, (Wake
County) North Carolina
<PAGE> 1
EXHIBIT 10.48
REINSTATEMENT OF
AGREEMENT OF PURCHASE AND SALE
AND AMENDMENT
THIS REINSTATEMENT OF AGREEMENT OF PURCHASE AND SALE AND AMENDMENT
("Reinstated Agreement") is made by and between WINN Limited Partnership, a
North Carolina limited partnership doing business in the State of Florida as
WINN Limited Partnership of North Carolina ("Purchaser") and Park Hotel,
Limited, a Florida limited partnership ("Seller");
WITNESSETH THAT:
WHEREAS, Purchaser and Seller entered into that certain Agreement dated
March 25, 1997 pertaining to the Premises relative to the Hotel which is defined
therein as the Holiday Inn Express located at 13625 Icot Boulevard, Clearwater,
Florida ("the Agreement"); and
WHEREAS, all of the capitalized terms defined in the Agreement shall
have the same meanings when used in this Reinstated Agreement as defined in the
Agreement; and
WHEREAS, on May 1, 1997 prior to the end of the Feasibility Period,
Purchaser gave timely notice of the termination of the Agreement; and
WHEREAS, Purchaser and Seller have agreed to reinstate the Agreement
and to make certain amendments to the Agreement as expressly set forth in this
Reinstated Agreement;
NOW, THEREFORE, for and in consideration of the Premises, the Deposit
and other good and valuable consideration, the receipt and sufficiency of which
are hereby mutually acknowledged by Purchaser and Seller, Purchaser and Seller
do hereby covenant and agree as follows:
1. Reinstatement of Agreement. Purchaser and Seller do hereby
reinstate, republish, ratify and affirm all of the terms and provisions of the
Agreement, a copy of which is attached hereto as Exhibit A, and in accordance
therewith, the Agreement and all of the terms and provisions contained therein
are hereby expressly incorporated herein in full by this reference, just as if
the Agreement had at all times remained in full force and effect and not been
terminated by Purchaser as set forth hereinbefore, subject to the amendments
thereto as are expressly set forth hereinafter.
<PAGE> 2
2. Reduction in Purchase Price. The Purchase Price set forth in Article
II of the Agreement is hereby reduced from Six Million Four Hundred Fifty
Thousand and NO/100 Dollars ($6,450,000.00) to Six Million Three Hundred Fifty
Thousand and NO/100 Dollars ($6,350,000.00), adjusted as provided in Article IX
of the Agreement. In consideration of and for the foregoing reduction in the
Purchase Price by Seller, Purchaser does hereby acknowledge, covenant and agree
that the definition of signs contained in Article I, paragraph (c), as well as
any other provision of the Agreement relative thereto, shall not and does not
include the obligation or responsibility of Seller to provide Purchaser with
off-site signage, specifically including, but not limited to, any rights to
signage addressed in paragraph 3 of that certain Addendum to Settlement
Agreement dated June 26, 1991 on or upon that certain property defined therein
as the "Rubin ICOT Retail Property". By virtue of the foregoing, Purchaser does
hereby waive, release, remise and quit claim any claim to entitlement to or
obligation on the part of Seller to provide any such off-site signage as a
portion of the Premises defined in the Agreement. Notwithstanding anything in
the foregoing which may be construed to the contrary, Seller does hereby
covenant and agree to assist Purchaser, at no cost or expense to Purchaser, in
obtaining the municipal approvals as may be necessary for Purchaser to obtain
additional signage at or for the Hotel, with no liability to Seller in the event
Purchaser is unsuccessful in obtaining any such municipal approvals.
3. Cure of Title Defects and Survey Defects. Seller acknowledges that
Purchaser has previously raised certain Title Defects and Survey Defects.
Purchaser does hereby acknowledge, covenant and agree that upon delivery by
Seller at Closing of the originals of the documents attached hereto as Exhibit
B-1 (certificate of compliance and waiver of right of first refusal), Exhibit
B-2 (parking easement agreement), Exhibit B-3 (compliance letter from Florida
Power Company relative to utility easement) and Exhibit B-4 (indemnity
pertaining to recorded development orders), which exhibits are hereby
incorporated herein by this reference, all Title Defects and Survey Defects
previously raised by Purchaser shall be satisfactorily resolved by Seller.
4. Amended Closing Date. The Closing Date is hereby amended such that
Closing shall occur on or before the 15th day following the date of this
Reinstated Agreement.
5. Joinder by ICOT Investments, Ltd. ICOT Investments, Ltd., a Florida
limited partnership, executed that certain Consent to Hotel Covenant Not to
Compete which is attached to the Agreement as Schedule 5, a copy of which is
attached hereto as Exhibit C and incorporated herein by this reference. ICOT
Investments, Ltd. joins in the execution of this Reinstated Agreement to
acknowledge that the Agreement has been reinstated and amended in accordance
with the express terms set forth in this Reinstated Agreement and does hereby
ratify, affirm and republish in full the terms and provisions of Exhibit C
hereto effective as of the date of this Reinstated Agreement and by virtue
thereof, does hereby acknowledge, consent and agree to the terms and provisions
of paragraph C of Article XV of the Agreement reinstated in full by this
Reinstated Agreement, effective as of the date hereof and which shall survive
Closing in accordance with the express terms thereof.
6. Status of Reinstated Agreement. Unless expressly amended by the
terms and provisions of this Reinstated Agreement, all of the other terms and
provisions set forth in the Agreement shall remain as expressly set forth
therein.
<PAGE> 3
7. Joinder by Escrow Agent. Escrow Agent joins in the execution of this
Reinstated Agreement to acknowledge the reinstatement of the Agreement in
accordance with the terms and provisions expressly set forth in this Reinstated
Agreement. In addition, Escrow Agent acknowledges that it continues to hold the
Deposit and will hold and disburse the Deposit in accordance with the express
terms set forth in the Agreement relative thereto.
<PAGE> 4
IN WITNESS WHEREOF, Purchaser and Seller have executed this Reinstated
Agreement under seal as of the 22 day of July, 1997.
Purchaser:
WINN Limited Partnership, a
North Carolina limited
partnership doing business
in the State of Florida as
WINN Limited Partnership of
North Carolina
By: Winston Hotels, Inc.,
a North Carolina corporation,
general partner
(Corporate Seal) By: /s/ Robert W. Winston IV
-----------------------------------
President
--------------
Attest:
/s/ Brenda G. Burns
- -------------------------
Assistant Secretary
Seller:
Park Hotel, Limited,
a Florida limited partnership
By: KGFL Park Hotel Corp.,
(Corporate Seal) a Florida corporation,
general partner
By: /s/ Marvin J. Slovacek, Jr. (SEAL)
-----------------------------
Name: Marvin J. Slovacek, Jr.
Title: Vice President
Escrow Agent:
The Title Company of North Carolina, Inc.,
as agent for First American Title Insurance
Company
Name: /s/ Alice B. Murdock
--------------------------------
Title: Vice President
<PAGE> 5
ICOT Investments, Ltd., a Florida limited partnership, joins in the
execution of this Reinstated Agreement for the sole and express purposes set
forth in paragraph 5 hereof.
ICOT Investments, Ltd.,
a Florida limited partnership
By: ICOT Investments, Inc.,
as General Partner
By: /s/ J. Bob Humphries
----------------------------------
Name: J. Bob Humphries
Title: Vice President
<PAGE> 1
EXHIBIT 10.49
AGREEMENT OF PURCHASE AND SALE
THIS AGREEMENT OF PURCHASE AND SALE ("Agreement"), dated as of the date
of this Agreement as defined hereinafter, between WINN Limited Partnership, a
North Carolina limited partnership, or its assigns, with offices at 2209 Century
Drive, Suite 300, Raleigh, North Carolina 27622 ("Purchaser") and Park Hotel,
Ltd., a Florida limited partnership ("Seller").
NOW, THEREFORE, for $1.00 and other good and valuable consideration,
the receipt and sufficiency of which is hereby mutually acknowledged, and the
mutual covenants contained herein, the parties hereto, intending to be legally
bound, hereby agree as follows:
I. PURCHASE AND SALE OF PROPERTY AND BUSINESS
On the terms and subject to all of the conditions set forth in this
Agreement, the Purchaser agrees to purchase and the Seller agrees to sell, for
the purchase price set forth herein, all of the following property
(collectively, the "Premises"):
(a) the real estate described on Schedule 1 attached hereto and made a
part hereof by this reference, including approximately 2.43 acres of land, more
or less, together with all tenements, appurtenances, easements, agreements,
development rights, air rights, rights-of-way, strips, gores, rights in adjacent
avenues, streets and alleys, rights and uses appurtenant thereto (collectively
the "Real Property");
(b) all improvements now or hereafter located on the Real Property,
including but not limited to that certain 129 room Holiday Inn Express located
at 13625 Icot Boulevard, Clearwater, Florida 34620 and all fixtures which are
affixed to the Real Property or Improvements (the "Improvements");
(c) all furniture, fixtures (not part of the Real Property and
Improvements or affixed thereto, (equipment, machinery, furnishings, carpets,
drapes, blinds or mini-blinds, service and maintenance equipment, linens (not
less than two and one-half (2 1/2) turns of linens shall be included), tools,
signs, landscaping equipment, supplies, pool equipment, television systems,
intercom equipment and
<PAGE> 2
systems, and replacement parts (the "Equipment");
(d) moneys advanced for future reservations ("Prepaid Items");
(e) all contracts, service contracts, agreements, licenses, contract
rights, rights to use and other similar rights in connection with the Real
Property and Improvements and set forth on Schedule 2 attached hereto and made a
part hereof by this reference and which the Purchaser elects to purchase and
assume as provided in Article III, Paragraph A hereof (the "Contracts");
(f) all leases, including leases of Equipment, and rights to use the
Improvements or all or any part thereof in third parties as more particularly
identified on Schedule 3 attached hereto and made a part hereof by this
reference and which the Purchaser elects to purchase and assume as provided in
Article III, Paragraph A hereof (the "Leases"). Notwithstanding anything in the
foregoing which may be construed to the contrary, with respect to any leases of
Equipment, Seller shall be responsible for all costs and expenses to pay off
same in order that all Equipment shall be conveyed in fee simple in accordance
with the requirements of Article II, Paragraph C;
(g) all permits, licenses, government licenses, certificates of
occupancy and approvals necessary to operate the Real Property, Improvements,
Equipment, Contracts, Leases, Intangible Rights and the other property and
rights transferred under this Agreement (the
"Permits");
(h) all inventory, supplies and other materials used in connection with
the Real Property and Improvements and the hotel business operated thereon
(excluding gift shop items owned by third parties) (the "Inventory");
(i) all plans, specifications and "as-built" drawings and surveys
relating to the Real Property and Improvements, all books and records relating
to the operation or management of the Real Property and Improvements and all
warranties and guaranties of Seller pertaining to the Premises; and
(j) all intangible property, guest ledgers, customer and mailing lists,
catalogues and brochures, telephone numbers and similar property used in
connection with the operation of the Real
2
<PAGE> 3
Property, Improvements and the business known as the Holiday Inn Express located
at 13625 Icot Boulevard, Clearwater, Florida (the "Hotel"), and any telephone
numbers assigned thereto (the "Intangible Rights").
II. TERMS OF PURCHASE AND SALE
The purchase price for the Premises shall be Six Million Four Hundred
Fifty Thousand and NO/100 Dollars ($6,450,000.00), adjusted as provided in
Article IX hereof, (the "Purchase Price"), payable by Purchaser to Seller as
follows:
A. The sum of One Hundred Thousand and NO/100 Dollars ($100,000.00)
(the "Deposit") within three (3) days after the date of this Agreement as
defined hereinafter by check subject to collection,payable to The Title Company
of North Carolina, Inc., as agent for First American Title Insurance Company, as
escrow agent (the "Escrow Agent"). The Escrow Agent shall maintain the Deposit
in an interest bearing account subject to the provisions of Article XIII. The
Escrow Agent shall not disburse the Deposit except in accordance with the terms
of this Agreement. Upon the satisfaction of all of the conditions contained in
this Agreement, on the Closing Date (as hereinafter defined), the Deposit shall
be paid to Seller and reduce the portion of the Purchase Price payable at
Closing pursuant to Article II, Paragraph B hereof. In the event that this
transaction is not consummated for any reason, the Deposit shall be paid as
provided in Article XIII of this Agreement. Purchaser shall be entitled to
payment of or a credit for any interest earned on the Deposit unless the Deposit
is forfeited in which event interest shall be paid to Seller.
B. The balance of the Purchase Price, plus or minus any closing
adjustments, by wire transfer on the Closing Date (as hereinafter defined) to an
account designated in writing by Seller to Purchaser at least five (5) days
prior to Closing.
C. Upon the Closing, the Seller shall deliver the Premises to the
Purchaser in fee simple, including but not limited to, the Real Property
Improvements, Equipment and Inventory, free and clear of all liens and
encumbrances of whatever type or description other than the Permitted Exceptions
as defined in
3
<PAGE> 4
Article IV, Paragraph A hereof.
D. Holiday Inn Worldwide has issued a Product Improvement Plan
(the "PIP") relative to the Hotel, a copy of which is attached hereto as
Schedule 4 and incorporated herein by this reference. Purchaser accepts the PIP
and acknowledges that the completion of same subsequent to Closing (as
hereinafter defined) shall be Purchaser's responsibility, at Purchaser's sole
cost and expense. In connection with the application for a Holiday Inn Express
franchise, Purchaser shall pay for all franchise fees to Holiday Inn Worldwide
and other associated costs to obtain such franchise as long as such costs are
acceptable to Purchaser in Purchaser's sole, absolute and unreviewable
discretion. In the event any of the foregoing are not acceptable to Purchaser,
the sole remedy of Purchaser shall be to terminate this Agreement.
III. FEASIBILITY PERIOD; PURCHASER'S CONTINGENCIES
A. This Agreement is contingent upon Purchaser's approval of the
Premises, including but not limited to, approval of the Inspection Items (as
hereinafter defined). The Inspection Items if not submitted to Purchaser on or
prior to the date of this Agreement, shall be submitted to Purchaser within five
(5) days after the date of this Agreement, or as specifically provided herein,
are available to Purchaser for inspection at the Improvements. Purchaser shall
have until a period of forty-five (45) days from and after March 10, 1997 to
review the Inspection Items and to otherwise inspect the Premises and its or
their condition (such period is hereinafter referred to as the "Feasibility
Period"). On or prior to the expiration of the Feasibility Period, the Purchaser
shall notify the Seller whether or not the Purchaser elects to purchase the
Premises, which election shall be made in the sole, absolute and unreviewable
discretion of the Purchaser. In the event that the Purchaser elects to proceed
with this transaction, then on or prior to the expiration of the Feasibility
Period, the Purchaser shall notify the Seller, which of the Contracts and Leases
the Purchaser shall accept and assume and the Seller shall retain and not assign
to Purchaser those Contracts and Leases not acceptable to Purchaser. In the
event Purchaser fails to notify Seller, on or prior to the expiration of the
Feasibility Period, whether or not the Purchaser elects to proceed with the
purchase, all items shall be deemed approved. If Purchaser notifies Seller that
it elects not to proceed with this transaction
4
<PAGE> 5
on or prior to the expiration of the Feasibility Period, then this Agreement
shall terminate and shall be null, void and without further force or effect, the
Deposit (together with all interest) shall be promptly refunded to Purchaser by
Escrow Agent and neither party shall have any further liability to the other.
The conditions enumerated in this Article III are for Purchaser's benefit only
and the non-occurrence of a state of facts sufficient to satisfy any of such
conditions may not be used or pleaded by Seller as a defense to the
enforceability of this Agreement.
For purposes of this Agreement, the term "Inspection Items" shall
mean:
(a) any existing engineer's reports, architectural plans,
appraisals, environmental reports, boundary surveys, as-built
surveys or other reviews, evaluations or studies of or with
respect to the Premises;
(b) the Leases, Contracts and Permits;
(c) the utility bills for the thirty six month (36) period
immediately preceding the date of this Agreement;
(d) tax returns and proof of payment of all taxes for the thirty
six (36) month period immediately preceding the date of this
Agreement (including, but not limited to, all ad valorem,
property, income, employment, sales or occupancy taxes
available for inspection at the Improvements);
(e) guest registration records (to be available for inspection
at the Improvements);
(f) employee records (to be available for inspection at the
Improvements);
(g) financial statements (the "Financial Statements") for the
Premises (including balance sheets, income statements,
operating statements and statements of changes in financial
position) for each of the three (3) preceding fiscal years and
for the year to date period ending thirty (30) days prior to
the Closing Date defined hereinafter. An itemized breakdown of
room sales per month, occupancy
5
<PAGE> 6
and ADR for the preceding thirty six (36) month period. The
books and records of the operations of the Premises necessary
to confirm the accuracy of the Financial Statements shall be
made available to Purchaser or its agents at the Improvements;
(h) Star Reports covering the preceding twenty four (24) month
period; and,
(i) copies of Seller's operating budgets relative to the Hotel
for calendar year 1997.
Upon receipt of all of the Inspection Items, Purchaser shall
acknowledge receipt thereof. In the event this Agreement is terminated prior to
Closing, Purchaser agrees to promptly return to seller any of the Inspection
Items in Purchaser's possession.
B. Purchaser's obligation to close this transaction shall be
conditioned on the Purchaser's receipt, on or before the Closing Date, of an
acceptable franchise license agreement for the Hotel from Holiday Inn Worldwide
with a term of not less than ten (10) years.
C. Purchaser's obligation to close this transaction shall be
conditioned on Purchaser having received, effective as of the Closing Date, all
necessary governmental approvals and licenses for operation of the Premises as a
hotel.
D. Seller acknowledges that Purchaser is a real estate investment trust
and in accordance therewith, Purchaser's obligation to close this transaction
shall be conditioned upon Purchaser obtaining the approval of this Agreement and
the transaction contemplated herein from the board of directors of the general
partner of Purchaser. Such approval or the denial thereof shall be obtained by
Purchaser prior to the expiration of the Feasibility Period.
Seller and Purchaser shall cooperate and take all actions necessary, in
a diligent and expeditious manner, to effectuate the inspections, transfers and
other reviews required by this Article III during the Feasibility Period. The
Purchaser and its representatives and agents shall be provided with access to
the Premises at all reasonable times, in order to inspect the Premises,
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including but not limited to, taking soil samples and test borings, and
conducting environmental studies, engineering studies and other such inspections
and reviews that the Purchaser shall deem reasonably necessary to determine the
condition and financial status of the Premises. Purchaser does hereby agree to
replace and repair any and all areas disturbed by any of the foregoing
activities to a condition substantially similar to that which existed prior to
such sampling, boring, study or inspection. Purchaser does hereby agree to
indemnify and hold Seller harmless from and against any loss, liability, damage
or expense resulting from Purchaser and its representatives and agents
conducting any of the foregoing activities. This provision shall survive Closing
and any termination of this Agreement.
IV. TITLE; TITLE POLICY; SURVEY
A. Within fifteen (15) days after the date of this Agreement, Purchaser
shall obtain at Purchaser's cost a preliminary title report and title insurance
binder (the "Title Commitment") through the National Accounts Office located in
Washington, D.C. of First American Title Insurance Company (the "Title Company")
pursuant to which the Title Company shall commit to issue a current A.L.T.A.
Form B (insuring access and marketability) owner's fee simple title insurance
policy or other policy of title insurance as shall be reasonably satisfactory to
Purchaser and to any lender of Purchaser (the "Lender") in the amount of the
Purchase Price (the "Title Policy") insuring that the Purchaser shall receive at
closing, good, marketable and indefeasible fee simple title to the Real
Property, free and clear of all liens, exceptions, encumbrances or defects other
than the matters expressly approved in writing by Purchaser as permitted
exceptions to title as set forth hereinafter (the "Permitted Exceptions"). With
respect to so-called "standard exceptions set forth in the preprinted portion of
the Title Commitment, the Title Commitment shall include a statement whereby the
Title Company agrees to the deletion of such standard exceptions on the basis
specified in Section 627.7842 Florida Statutes (1993). Seller shall furnish to
Purchaser copies of all liens, exceptions or defects set forth in the Title
Commitment at the same time as the Title Commitment is furnished to Purchaser.
On or prior to the expiration of the Feasibility Period, the Purchaser
shall notify (the "Title Notice") the Seller as to which of the liens, defects,
encumbrances or exceptions set forth in the
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Title Commitment are objectionable to Purchaser ("the Title Defects") and which
of such matters are acceptable to Purchaser as the Permitted Exceptions. Within
ten (10) days after receipt by Seller of the Title Notice, the Seller shall cure
the Title Defects to the reasonable satisfaction of the Purchaser. In the event
the Seller is unable to cure the Title Defects to the reasonable satisfaction of
the Purchaser (except for those Title Defects that can be cured with the payment
of money and will be satisfied of record by Seller at or prior to Closing)
within such ten (10) day period or the Purchaser does not agree to waive such
Title Defects, then this Agreement shall terminate and shall be null, void and
without further force or effect, the Deposit (together with all interest) shall
be returned to Purchaser and neither party shall have any further liability to
the other. Notwithstanding the foregoing, the Seller shall be obligated to
remove and be responsible for removing all Title Defects which are in the form
of money judgments, mortgages and liens, including mechanics' liens, regardless
of the amount thereof.
B. Within fifteen (15) days after the date of this Agreement, Seller
shall deliver to Purchaser, at Seller's expense, a survey (the "Survey") of the
Premises, dated after the date of this Agreement, prepared by a surveyor duly
licensed under the laws of the State of Florida and reasonably acceptable to the
Purchaser and the Lender in accordance with ALTA or such other standards as
shall be reasonably satisfactory to Purchaser, including meeting the minimum
technical standards set forth in Chapter 61G17-6, Florida Administrative Code,
pursuant to Section 472.027 Florida Statutes (1993). The Survey shall be in form
and substance satisfactory to the Purchaser, the Title Company and the Lender.
The Survey delivered to Purchaser and Title Company within fifteen (15) days
after the date of this Agreement, shall be certified to Purchaser and the Title
Company (the form of certification to be satisfactory to the Title Company and
Purchaser). The Survey shall show that all buildings are within lot and building
lines, the location of such lines, the dimensions and total area of the Real
Property and Improvements, the location and number of parking spaces, ingress
and egress to adjoining streets, all benefiting and burdening easements,
improvements, appurtenances, rights of way and utilities whether above or below
ground, all encroachments from or into the Premises, all structures and
improvements on the Real Property and all easements, rights-of-way and other
restrictions of record properly identified with recording information and
certifying that the
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Premises are not within a flood plain or other flood hazard area. The Survey and
certification shall be sufficient to remove the survey exception from the Title
Policy without indemnity or additional premium. On or prior to the expiration of
the Feasibility Period, the Purchaser shall notify the Seller of any objections
of Seller or Lender to the Survey ("Survey Defects"). Survey Defects shall be
deemed to be Title Defects for purposes of this Agreement and Seller shall cure
such Survey Defects according to the same procedure as for Title Defects.
C. The Purchaser and Seller shall each be responsible for the payment
of its own transaction costs, including counsel fees. Purchaser shall be
responsible for the costs incurred with the physical inspection of the Real
Property and Improvements, including any environmental and engineering studies
other than those delivered by Seller to Purchaser in accordance with Article
III, Paragraph A. At Closing, Seller shall pay for the Survey and Purchaser
shall pay all premiums for the issuance of the Title Commitment and the Title
Policy. Any and all transfer taxes, real estate excise taxes and sales taxes
payable in connection with the transfer of the Premises, or any portion thereof,
and the Personalty (as hereinafter defined) shall be paid by Seller. Purchaser
shall pay any mortgage registration tax, document recording fees and the cost
Purchaser incurs relative to financing if financing is involved. Unless
otherwise stated in this Agreement, the Purchaser and Seller shall pay all other
costs in connection with the Closing of this transaction as are customary in
Pinellas County, Florida.
V. CLOSING
A. The closing of this transaction shall occur on or about the seventh
(7th) day following the expiration of the Feasibility Period, by and through the
National Accounts office of the Title Company located at 1025 Connecticut
Avenue, N.W., Suite 709, Washington, D.C. 20036, or such other date or place as
shall be mutually acceptable to Purchaser and Seller (the "Closing Date"),
without the requirement that Purchaser or Seller be physically present thereat.
The closing of the transaction contemplated by this Agreement shall be deemed
effective as of 12:01 a.m. on the Closing Date ("Closing"). If the date of
Closing falls on a Saturday, Sunday or banking holiday, the Closing shall take
place on the next business day thereafter.
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B. At the Closing, the Seller, shall deliver to Purchaser and
perform the following:
1. A Statutory Warranty Deed conveying good, marketable, insurable and
indefeasible fee simple title to the Real Property free and clear of all
defects, exceptions, liens or encumbrances, except for the Permitted Exceptions.
2. Seller shall pay and discharge any special assessment which on or
before the date of Closing, (a) has been levied, imposed, or confirmed against
the Premises, (b) affects or is a lien upon the Premises or (c) although not yet
a lien upon the Premises, is attributable to improvements which benefit or will
benefit the Premises or the property in the vicinity of the Premises for which
improvement work has been commenced. If any of the foregoing assessments may be
paid in installments, all installments shall be deemed payable as of the day
prior to the Closing, and shall be discharged of record by Seller. If, at the
Closing, any amount which Seller is required to pay with respect to the
foregoing has not been determined, Seller agrees to pay such amount as can be
reasonably estimated at the Closing and the final amount shall be adjusted
within fifteen (15) days after Purchaser gives Seller notice that same has been
determined. This provision shall survive the Closing.
3. A Bill of Sale conveying the Equipment, Inventory, Real Property not
conveyed by other instruments provided for herein, and other personal property
and intangible property included in the Premises ("Personalty"), free and clear
of any lien or encumbrance, other than the Permitted Exceptions, and containing
a general warranty of title to the Equipment, Inventory and Personalty and an
inventory of all Equipment, Inventory and Personalty.
4. An assignment of Seller's interest in and to all Permits, Contracts
to be assumed by Purchaser in accordance with Article III, Paragraph A, Leases
to be assumed by Purchaser in accordance with Article III, Paragraph A,
Intangible Rights, Prepaid items and other items of the Premises, free and clear
of any lien or encumbrance, together with written evidence satisfactory to
Purchaser of any required third party consent to such assignment. Seller shall
deliver to Purchaser all original Contracts and Leases which Purchaser has
elected to purchase pursuant to Article III hereof; the Permits, including the
existing certificates of occupancy for
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the Premises as presently constituted and if no such certificates are available,
evidence that the Premises are legally constructed and properly zoned in
accordance with all applicable laws; all warranties and guarantees (and
assignments thereof to Purchaser) issued in connection with the initial
construction of the Real Property and Improvements; any Personalty, and any
repairs or additions thereto; cash bank; moneys advanced for future
registrations; guest registration records; keys; permits, approvals and licenses
issued by all appropriate governmental authorities and fire underwriting
organizations with respect to the construction and use of the Premises or any
part thereof; and any existing copies of architectural plans and specifications,
blueprints and building plans which may be in Seller's possession.
5. INTENTIONALLY DELETED.
6. Tax certificates or other evidence of payment from all appropriate
taxing authorities certifying the payment of all real and personal property
taxes through the current tax year.
7. A certificate of Seller dated as of the Closing that Seller is not a
foreign person or corporation within the meaning of Sections 1445 and 7701 of
the Internal Revenue Code (the "IRC").
8. A bring down certificate dated as of the Closing certifying the
truth and accuracy of each representation and warranty set forth in Article XII
as of the Closing Date.
9. An affidavit of title reasonably satisfactory to the Title Company
enabling the Title Company to issue the Title Policy without exception for
mechanic's or materialman's or other statutory liens or for the rights of
parties in possession other than temporary hotel patrons.
C. At the Closing, the Purchaser shall deliver to the Seller the
following:
1. Subject to Article IX, the Balance of the Purchase Price in
the manner elected by Seller pursuant to Article II, Paragraph
B.
2. Proof of authority for Purchaser to complete the transaction
reasonably satisfactory to Seller.
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VI. DELIVERY OF POSSESSION
Seller shall deliver actual and exclusive possession of the Premises to
Purchaser on the Closing Date.
Seller hereby grants to Purchaser the right to enter the Premises at
any reasonable time with reasonable notice after the date hereof for the purpose
of inspecting, testing and examining the Premises, which purpose is more
particularly provided in Article III hereof.
VII. DAMAGE TO PROPERTY
Seller shall give Purchaser immediate notice of any fire or other
casualty or of any pending or threatened condemnation occurring to all or any
portion of the Premises between the date hereof and the Closing. If prior to the
Closing, there shall occur:
(i) damage to the Premises caused by fire or other casualty,
which would cost $100,000.00 or more to repair or replace; or
(ii) the taking or condemnation of all or any portion of the
Premises (including any parking areas) as would materially interfere
with the use thereof, as determined by Purchaser; then, if any of the
events set forth in (i) or (ii) above occurs, Purchaser, at its option,
may terminate this Agreement by written notice given to Seller within
fifteen (15) days after Purchaser has received the notice referred to
above or at the Closing, whichever is earlier. If Purchaser does not
elect to terminate this Agreement, the Closing shall take place as
provided herein without an abatement of the Purchase Price and there
shall be assigned to the Purchaser at Closing, all interest of the
Seller in and to any insurance proceeds or condemnation awards which
may be payable to Seller on account of such occurrence.
If, prior to the Closing, there shall occur:
(x) damage to the Premises caused by fire or other casualty which
would cost less than $100,000.00 to repair or
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replace; or
(y) the taking or condemnation of all or any portion of the
Premises which is not material to the use thereof, as
determined by Purchaser;
then, if any of the events set forth in (x) or (y) above occurs, Purchaser shall
have no right to terminate this Agreement (solely as a result of the occurrence
of such events), and Seller shall, at its sole expense, with respect to
subparagraph (x), restore or replace the damaged Premises to its original
condition; and, with respect to subparagraph (y), there shall be assigned to
Purchaser at Closing all interest of Seller in and to any condemnation awards
which may be payable to Seller on account of any such occurrence.
VIII. REMEDIES
A. If the transaction contemplated by this Agreement is not consummated
solely by reason of Purchaser's failure to perform its obligations under this
Agreement, then Seller, as its sole and exclusive remedy, shall be entitled to
the Deposit as full liquidated damages in complete and total accord and
satisfaction, the parties hereby acknowledging and agreeing to the difficulty of
ascertaining Seller's actual damages in such circumstances.
B. If this transaction is not consummated by reason of:
(i) cancellation by Purchaser as permitted by the terms of this
Agreement, including but not limited to, cancellation by
Purchaser at any time on or prior to the expiration of the
Feasibility Period;
(ii) the inability of Purchaser to obtain any approval or consent
required pursuant to or otherwise satisfy any condition or
contingency set forth in Article III;
(iii) the occurrence of any of the events described in Article VII;
(iv) Title Defects and Survey Defects which are not cured as
provided in this Agreement (except for those Title Defects or
Survey Defects which Seller is obligated to cure); or
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(v) cancellation by Purchaser pursuant to any other applicable
provisions of this Agreement,
then Purchaser shall be entitled to a return of the Deposit (together with all
interest thereon) and this Agreement shall be null and void and all parties
relieved from any further liability hereunder, except with respect to any
provisions of this Agreement which by their express terms survive any such
termination, unless Purchaser elects to waive any of the items or occurrences
set forth in this Article VIII, Paragraph B. The items enumerated in this
Article VIII, Paragraph B are for Purchaser's benefit only and the
non-occurrence of a state of facts sufficient to satisfy any of such items may
not be used or pleaded by Seller as a defense to the enforceability of this
Agreement.
C. If this transaction is not consummated because of a
default on the part of Seller or if Seller fails to close this
transaction in breach of its obligation to do so, then Purchaser, at
its option, may
(i) seek specific performance of this Agreement; and
(ii) receive a return of the Deposit (together with all interest
thereon).
IX. PRORATIONS
All income (including cash on hand and accounts receivable for advance
reservations), current operating expenses, accounts payable, real estate taxes,
other taxes and assessments, all utilities, water and sewer charges, licenses or
permit fees relating to the operation of the Premises, real estate and personal
property ad valorem taxes, prepayments made under the Contracts (to be assumed
by Purchaser pursuant to Article III hereof) and insurance premiums (if
applicable), shall be adjusted and prorated as of the Closing. All franchise
fees, maintenance and service agreements (whether or not service is continued by
Purchaser) and utility charges shall be determined as of Closing and paid by
Seller or appropriate adjustments made if Purchaser at its option accepts an
assignment of any such agreement. If such charges and expenses are unavailable
on the Closing Date, a re-adjustment of such charges and expenses shall be made
within thirty (30) days after the Closing or as soon thereafter as such charges
and expenses are available. The parties
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agree to cooperate in good faith in effecting such a final reconciliation and
each party shall promptly pay (or reimburse the other party for) any expense
item that is chargeable to the former party and shall promptly remit any income
item to the other party if entitled thereto. Seller shall use reasonable efforts
to arrange for the rendition of final bills by the utility companies involved as
of the Closing Date.
Guest room revenues of the Premises, whether in cash or in accounts receivable,
arising from occupancy for the night beginning on the day preceding the Closing
Date and ending on the Closing Date shall be credited one-half to Purchaser and
one-half to Seller. Seller shall collect all income and other sums payable by
tenants or guests (or otherwise) and shall be responsible for the payment of all
expenses on account of services and supplies furnished to and for the benefit of
the Premises through and including the Closing, with expenses for the night
beginning on the day preceding the Closing Date and ending on the Closing Date
being handled in the same manner as guest room revenues for such period.
Purchaser shall be credited with any deposits from tenants or guests of the
Premises which are refundable to such tenants or guests. Seller shall remit to
Purchaser at closing all prepaid income items. In addition, at Closing, Seller
shall deliver to Purchaser a schedule of all unpaid accounts receivable and
other income items as of Closing. All such accounts receivable and other income
items collected by or for Purchaser after Closing shall be promptly remitted to
the order of Seller; provided, however, payments received by Purchaser following
the Closing with respect to receivables shall be deemed to be in payment of
receivables of Purchaser unless the payment received specifically identifies
that it is in payment of a receivable attributed to Seller or there is no
receivable due to Purchaser with respect to such payment. Seller and Purchaser
agree to attempt to reconcile and prorate the accounts receivable within sixty
(60) days after Closing. Except for sums actually received by Purchaser pursuant
to the immediately preceding sentence, Purchaser shall assume no obligation to
collect or enforce the payment of any amounts that may be due to Seller, except
that Purchaser shall render reasonable assistance, at no expense to Purchaser,
to Seller after Closing in the event Seller proceeds against any third party to
collect any accounts receivable or other income items due Seller. Nothing
contained in this Article shall be deemed to prohibit Purchaser and Seller from
entering into an agreed settlement in writing of all prorations at or following
Closing.
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In the event any adjustments pursuant to this Article are, subsequent
to Closing, found to be erroneous, then either party hereto is entitled to
additional monies and shall invoice the other party for such additional amounts
as may be owing, and such amount shall be paid promptly by the other party upon
receipt of the invoice. Such invoice shall be accompanied by reasonable
substantiating evidence. Notwithstanding anything contained in this Article IX
to the contrary, in order to provide security for all of the adjustments and
prorations set forth in this Article IX to be made after Closing, Purchaser and
Seller agree that the sum of $50,000.00 from the net sales proceeds portion of
the Purchase Price available to Seller at Closing shall be deposited with Escrow
Agent and shall be held by Escrow Agent until all such adjustments and
prorations are deemed final by Purchaser and Seller. Such adjustments and
prorations shall be finalized by Purchaser and Seller within ninety (90) days
after Closing, at which time the funds so held in escrow shall be disbursed in
accordance with the written instructions of Purchaser and Seller. Escrow Agent
shall not disburse such amount or any portion thereof except in accordance with
written instructions relative thereto signed by both Purchaser and Seller.
Purchaser shall have no obligation with respect to Seller's employees
whatsoever all of whom shall be compensated and terminated by Seller as of
Closing, though Purchaser reserves the right to employ any such employees.
The provisions of this Article IX shall survive the delivery of the
Deed.
X. NOTICES
Any notice to be given by either party to this Agreement shall be in
writing and shall be either delivered personally, or by facsimile (provided that
a copy of such notice is also sent on the same day by one of the other methods
set forth herein) or by certified or registered U.S. Mail, postage prepaid, or
by nationally recognized overnight courier delivery service with charges to the
sender, as follows:
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To Seller: ICOT Center, Ltd.
13925 58th Street North
Clearwater, Florida 34620
Attention: Scott Makela
Fax No. (813) 531-5964
With copies to: Joan M. Vecchioli, Esquire
Johnson, Blakely, Pope, Bokor,
Ruppel & Burns, P.A.
911 Chestnut Street
Clearwater, Florida 34616
Fax No. (813) 441-8617
To Purchaser: WINN Limited Partnership
2209 Century Drive, Suite 300
Raleigh, North Carolina 27622
Attention: Robert W. Winston, III
Fax No. (919) 510-6832
With copies to: William W. Bunch, III, Esquire
Brown & Bunch
4900 Falls of Neuse Road,
Suite 210 (street zip code 27609)
Post Office Box 19409
Raleigh, North Carolina 27619-9409
Fax No. (919)878-8062
Notice shall be deemed given if properly addressed and delivered as set forth
herein two (2) business days following deposit in the U.S. Mail, one (1)
business day following deposit with any generally recognized overnight delivery
service, on personal hand delivery to a person authorized to receive such
delivery, on the day of such hand delivery and, on the date of the facsimile
transmission as evidenced by the printed receipt therefor, provided a second
method is utilized as required hereinbefore. Any party may change addresses for
notices by delivering written notice of such change in accordance with this
Article X.
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XI. INDEMNITY
A. Seller shall indemnify and hold the Purchaser harmless from and
against any claim for any real estate commission, brokerage fee or finder's fee
made by any person, firm or corporation, claiming by, through or under the
Seller. Purchaser shall indemnify and hold the Seller harmless from and against
any claim for any real estate commission, brokerage fee or finder's fee made by
any person, firm or corporation, claiming by, through or under the Purchaser.
Notwithstanding the foregoing, Seller warrants and represents that there are no
brokerage fees, real estate commissions, finder's fees or other acquisition
costs or any other compensation payable by Seller and due to any third party in
connection with this transaction other than a commission to be paid to CB
Commercial Real Estate Group, Inc. (James P. Wall) and Westfalia Realty, Inc.
Seller shall pay such commission in full to such broker upon the Closing of the
transaction contemplated hereby. This warranty and representation shall survive
the Closing and the parties shall indemnify each other from any liability, cost
or loss arising out of a breach of said warranty and representation, including
consequential damages.
B. The Seller shall indemnify and hold the Purchaser harmless from and
against any and all liabilities, claims, demands, costs and expenses of any kind
or nature, including but not limited to, reasonable attorney's fees, arising out
of or incurred in connection with (i) any breach of the representations and
warranties of Seller set forth in this Agreement, (ii) the ownership, use,
maintenance or operation of the Premises on or prior to the Closing or the
transfer of the Premises to the Purchaser (including the payment of all
taxes),or (iii) compliance or failure to comply with the notice provisions
relating to bulk sales laws applicable to the transfer of all or any part of the
Premises. Purchaser shall indemnify and hold Seller harmless from and against
any and all liabilities, claims, demands, costs and expenses of any kind or
nature, including reasonable attorney's fees, arising after the date of Closing
and which arise out of the ownership or operation of the Premises by the
Purchaser following the Closing. Such indemnities shall survive Closing.
C. If Purchaser or Seller propose to make any claim for indemnification
under any Article or Paragraph of this Agreement
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(the "Indemnitee"), the Indemnitee shall deliver to the other party (the
"Indemnitor") a certificate signed by the Indemnitee which certificate shall (i)
state that a loss has occurred and (ii) specify in reasonable detail each
individual item of loss or other claim including the amount thereof and the date
such loss was incurred. The Indemnitor shall have the right in its discretion
and at its expense to participate in and control (a) the defense or settlement
of any claim, suit, action or proceeding (including appeals) in respect of such
item (or items) by any person other than a party hereto, (b) any and all
negotiations with respect thereto, and (c) the assertion of any claim against
any insurer with respect thereto, and the Indemnitee shall not settle any such
claim, suit, action or proceeding or agree to extend any applicable statute of
limitation without the prior written approval of the Indemnitor. The rights of
participation, control and approval granted to the Indemnitor shall be subject
as a condition precedent to the Indemnitor's acknowledging to the Indemnitee, in
writing, the obligation of the Indemnitor to indemnify the Indemnitee in respect
of such third party's claim, suit, action or proceeding giving rise to such
item. Upon satisfaction of such condition precedent, the Indemnitee shall
provide the Indemnitor with all reasonably available information, assistance and
authority to enable the Indemnitor to effect such defense or settlement and upon
the Indemnitor's payment of any amounts due in respect of such claim, suit,
action or proceeding, the Indemnitee shall, to the extent of such payment,
assign or cause to be assigned to the Indemnitor the claims of the Indemnitee,
if any, against such third parties in respect of which such payment is made. If
the Indemnitor is not so willing to acknowledge such obligation, the parties
shall jointly consult and proceed as to any such third party claim, suit, action
or proceeding.
XII. SELLER'S REPRESENTATIONS AND WARRANTIES
The Seller represents and warrants to the Purchaser that:
A. Seller is a limited partnership duly organized, and existing and in
good standing under the laws of the state of its formation and authorized to do
business in the State in which the Premises are located.
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B. Seller is authorized to enter into this Agreement and to consummate
the transaction contemplated hereby, and the individuals executing this
Agreement on behalf of Seller are also duly authorized to execute this Agreement
and to bind Seller to consummate such transaction. The execution and delivery of
this Agreement and the conveyance of the Premises by Seller, pursuant to this
Agreement, do not require the consent of any person, agency or entity not a
party to this Agreement. The execution of this Agreement by Seller and the
transaction contemplated herein have been duly authorized by proper corporate or
partnership action, as the case may be, including the board of directors of
Seller, if Seller is a corporation.
C. There are no pending or, to the knowledge of Seller, threatened,
condemnation or similar proceedings affecting the Premises, or any portion
thereof. Seller has not received any written notice that any such proceeding is
contemplated, and no part of the Premises has been destroyed or damaged by any
casualty.
D. To the best of Seller's knowledge, the maintenance, operation, use
or occupancy of the Premiss as a hotel does not violate any building, health,
zoning, environmental, fire or similar law, ordinance, regulation or restrictive
covenant. To the best of Seller's knowledge, the Premises do not violate any
federal, state, county, or municipal laws, ordinances, orders, regulations or
requirements nor has Seller received any notice of such a violation.
E. There are no options to purchase, rights of first refusal or other
similar agreements with respect to the Premises which give anyone the right to
purchase the Premises or any part thereof. There are no contracts or agreements
which affect or cover the Premises, except for the Contracts, Permits and
Leases. There are no unpaid bills or claims in connection with the construction
repair or replacement of the Premises. There are no agreements allowing for any
reduction, concession or abatement of room rates.
F. The Financial Statements for the Premises provided by Seller to
Purchaser pursuant to Article III, Paragraph A, item (g) are or shall be true,
correct and accurate in all material respects and fairly present the results of
operations of the Premises for the periods then ended. During the immediately
preceding two year period, no single customer (or its or their affiliates)
comprised more than 10% of gross room sales.
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G. The Seller has duly filed in a timely manner all federal, state,
county and local income, franchise, excise, withholding, sales, occupancy,
payroll, property (real, personal and intangible), and any other tax returns and
reports required to have been filed up to the date hereof, and has paid all
taxes, interest, penalties and all assessments that have become due. The Seller
has paid, or made adequate provision for the payment of, all taxes with respect
to the conduct of its business upon the Premises through the Closing. Neither
the Seller nor its agents have been advised or notified of any tax deficiency,
assessment or penalty with respect to the Seller, nor does the Seller know of
any basis for any additional claim or assessment for taxes, interest or
penalties. No liens for taxes, federal, state or local, have been filed against
the Seller or its assets.
H. Certificates of Occupancy for all buildings and other improvements
have been duly issued, and the buildings and improvements may be legally
occupied and are presently being occupied as a hotel/motel. Copies of such
Certificates of Occupancy or their equivalent in Florida shall be delivered by
Seller to Purchaser within five (5) days after the date of this Agreement. To
the best of Seller's knowledge, the Real Property is zoned properly for the
present uses made thereof.
I. Except as set forth in the Title Commitment, the Seller owns and
has good and marketable title to all of its assets and properties which
constitute the Premises free and clear of any security interest, mortgage,
pledge, lien, conditional sale or other encumbrance or charge. All of the
Premises owned by Seller is, and at the time of Closing will be, in good
condition and in good working order. The Premises to be purchased is all of the
property of every kind and nature necessary for the operation of the Seller's
business in the ordinary course.
J. To the best of Seller's knowledge, the Premises are in compliance
with and have not violated any statute, law, ordinance, rule, regulation, order
and directive (including, without limitation, all labor and environmental
control and antipollution laws, ordinances, rules, regulations or directives) of
any and all Governmental Agencies pertaining to the use or occupancy of the
Premises.
The Seller has not received any notice of and the Seller and the
21
<PAGE> 22
Premises have not been charged with, are not under investigation or threatened
investigation for failure to comply with and are in compliance with, any and all
statutes, laws, ordinances, rules, regulations, orders and directives of any and
all Governmental Agency or Agencies pertaining to the use, generation, dumping,
releasing, burying or disposing of or emitting of any particles, materials,
substances, or emissions that are now or have heretofore been determined by any
and all Governmental Agency or Agencies to be of a hazardous, toxic, pollutive,
or ecologically or environmentally damaging nature, including but not limited to
asbestos ("Hazardous Materials"). Seller has not previously disposed of any
Hazardous Materials at the Premises.
For purposes of this Agreement, the term "Hazardous Materials" shall include,
but not be limited to, those materials or substances now or heretofore defined
as "hazardous substances," "hazardous materials," "hazardous waste," "toxic
substances," or other similar designations under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C., Section
9601, et seq., the Resource Conservation and Recovery Act, 42 U.S.C., Section
6901, et seq., the Hazardous Materials Transportation Act, 49 U.S.C., Section
1801, et seq. and other laws, whether or not of a similar nature, applicable to
the Premises and adopted by, enacted in or applicable to the State of Florida.
For purposes of this Agreement, the term "Governmental Agency or Agencies"
means, whether of the United States of America, of any state or territory
thereof or of any foreign jurisdiction, any government, political subdivision,
court, agency, or other entity, body, organization or group exercising any
executive, legislative, judicial, regulatory or administrative function of
government.
To the best of Seller's knowledge, the Real Property has never appeared on any
federal or state registry of active or inactive hazardous waste disposal sites.
Seller has never received any notice of claim from a Governmental Agency
concerning the alleged release or threatened release of Hazardous Materials at
the Real Property. To the best of Seller's knowledge, no hazardous waste sites
exist within a one mile radius of the Real Property.
K. There are no employment or union agreements in effect relative to
any employee at the Premises and no employee has received a commitment from the
Seller for continued employment after
22
<PAGE> 23
Closing. The Seller shall be responsible for and shall pay all salary,
compensation, vacation time, bonuses and benefits to which each employee of and
at the Premises is entitled for the period of time prior to the Closing Date.
L. Seller has no knowledge of and has received no notice of any causes
of action, actions, or proceedings of whatever type or description which have
been instituted or threatened or are pending relating to the Premises or any
interest therein.
M. No representation or warranty made by the Seller, nor in any
statement or document furnished or to be furnished to the Purchaser hereunder,
or in connection with the transaction contemplated hereby, contains or will
contain any untrue statement of a material fact.
Purchaser, in Purchaser's sole and absolute discretion, may waive any
condition to close or breach of any representation or warranty provided for
herein or any Title or Survey Defect, and in such event, this transaction shall
be consummated as if such condition, representation, warranty or defect was
satisfied. All of the representations and warranties contained in this Agreement
shall survive the Closing. The representations and warranties set forth above
shall be true, correct and accurate on the date hereof and as of the date of
Closing.
XIII. ESCROW
The Escrow Agent hereby acknowledges receipt of the Deposit and agrees
to hold the Deposit in escrow until the Closing or sooner termination of this
Agreement and shall pay over and apply the proceeds thereof in accordance with
the terms of this Agreement. If, for any reason, the Closing does not occur and
either party makes a written demand upon the Escrow Agent for payment of the
Deposit, the Escrow Agent shall give written notice to the other party of such
demand. If the Escrow Agent does not receive a written objection from the other
party to the proposed payment within five (5) business days after the giving of
such notice, the Escrow Agent is hereby authorized to make such payment. If the
Escrow Agent does receive such written objection within such five (5) day
period, or if for any reason the Escrow Agent in good faith shall elect not to
make such payment, the Escrow Agent shall continue to hold the Deposit until
otherwise directed by written
23
<PAGE> 24
instructions from the parties to this Agreement or until a final judgment
(beyond any applicable appeal period) by a court of competent jurisdiction is
rendered disposing of such Deposit.
The Escrow Agent shall be liable as a depository only and its duties
hereunder are limited to the safekeeping of the Deposit and the delivery of same
in accordance with the terms of this Agreement. The Escrow Agent shall not be
liable for any act or omission done in good faith, or for any claim, demand,
loss or damage made or suffered by any party to this Agreement, except such as
may arise through or be caused by the Escrow Agent's willful misconduct or
negligence.
XIV. COVENANTS
A. Following the date of this Agreement and to and including the
Closing, the Seller (i) shall continue normal and prudent maintenance and
management of the Premises, (ii) shall continue to maintain supplies and payroll
at their current level, and (iii) shall operate the Hotel in the ordinary and
prudent course of business.
B. All taxes levied against the Premises which were or shall be due and
payable prior to the Closing have been or shall be paid in full by the Seller on
or prior to the Closing.
C. All Contracts and Leases which the Purchaser elects to assume in
accordance with Article III shall be current and not in default as of the
Closing. Seller shall not enter into new Contracts or Leases except in the
ordinary course of business, and provided that any such new Contract or Lease
shall either provide that it may be cancelled on not more than 30 days notice by
Seller at no penalty or cost or, Purchaser shall consent to such Contract or
Lease in writing.
D. Seller shall maintain fire and casualty insurance on the Premises up
to and including the Closing in amounts reasonably satisfactory to Purchaser.
E. Seller shall deliver to Purchaser a report itemizing room sales per
month, occupancy and ADR through a date which is not later than one month prior
to the Closing Date ("Monthly Report"). The Monthly Report shall be satisfactory
to Purchaser in all respects.
24
<PAGE> 25
F. During the Feasibility Period, representatives of Seller and
Purchaser shall meet at the Premises and prepare a schedule of the Equipment,
which schedule shall be attached hereto and made a part hereof at such time.
XV. BINDING EFFECT; MISCELLANEOUS
A. This Agreement shall be binding upon and shall inure to the parties
hereto, their respective heirs, successors, legal representatives and assigns.
This Agreement sets forth the entire Agreement between the parties hereto and no
other prior written or oral statement or agreement or understanding shall be
recognized or enforced. All modifications or amendments shall be in writing and
signed by the parties. This Agreement is to be construed according to the laws
of the State of Florida. This Agreement may be executed in two or more
counterparts all of which shall constitute one and the same instrument. The
singular shall include the plural and vice versa.
B. The Purchaser may assign this Agreement.
C. For a period of five(5) years immediately following the Closing,
Seller, including any and all entities and individuals owning at least a twenty
five percent (25%) ownership interest in Seller, agrees that it shall not,
directly or indirectly, for its own account or as agent, employee, officer,
director, trustee, lessor, sublessor, consultant or as a stockholder of any
corporation or any other entity, or as a member of any firm or otherwise, (i)
engage or attempt to engage within the Restricted Area (as hereinafter defined),
in the hotel, motel or other business which is the same as, substantially
similar to or competitive with the operation of the Premises purchased pursuant
to this Agreement, or (ii) employ or solicit the employment of any employees of
Seller at the Premises. For purposes of this Agreement, the term "Restricted
Area" shall mean an area which shall consists of a circle the radius of which is
10 miles with the center point being located at the Premises in Clearwater,
Florida. Each of the Seller, including any and all entities and individuals
owning at least a twenty five percent (25%) ownership interest in Seller, and
Purchaser acknowledges and agrees that the foregoing territorial, time and other
limitations and restrictions contained in this Article XV are
25
<PAGE> 26
reasonable and properly required for the adequate protection of the business and
affairs of the Purchaser, and in the event that any one or more of such
territorial, time or other limitations is found to be unreasonable by a court of
competent jurisdiction, each of Purchaser and Seller, including any and all
entities and individuals owning at least a twenty five percent (25%) ownership
interest in Seller, hereby agree to submit to the reduction of the said
territorial, time or other limitation, to such an area, period or otherwise as
the court may determine to be reasonable. In the event that any limitation or
restriction under this Article XV is found to be unreasonable or otherwise
invalid in any jurisdiction in whole or in part, each of Purchaser and Seller,
including any and all entities and individuals owning at least a twenty five
percent (25%) ownership interest in Seller, acknowledges, warrants, represents
and agrees that such limitation shall remain and be valid in all other
jurisdictions. Each of Purchaser and Seller, including any and all entities and
individuals owing at least a twenty five percent (25%) ownership interest in
Seller, acknowledges, warrants, represents and agrees that the restrictive
covenants contained in this Article XV are necessary for the protection of
Purchaser's legitimate business interests and are reasonable in scope and
content, and Seller, including any and all entities and individuals owning at
least a twenty five percent (25%) ownership interest in Seller, represents and
warrants that its and their attorneys have thoroughly and completely reviewed
this Agreement with it and them, and it and they understand the contents hereof.
Seller, including any and all entities and individuals owning at least a twenty
five percent (25%) ownership interest in Seller, and Purchaser acknowledges and
agrees that because a remedy at law for any breach of the provisions of this
Article XV will be inadequate, in addition to all other remedies available to
Purchaser, Purchaser shall have the remedies of a restraining order, injunction
or other equitable relief to enforce the provisions hereof. Each of Purchaser
and Seller, including any and all entities and individuals owning at least a
twenty five percent (25%) ownership interest in Seller, agrees that the issues
in any action brought under this Article XV will be limited to claims under this
Article XV and all other claims or counterclaims under other provisions of this
Agreement will be excluded. All expenses, including reasonable attorneys' fees
and expenses arising out of claims under this Article XV shall be borne by the
losing party to the fullest extent permitted by law. Purchaser and Seller,
including any and all entities and individuals owning at least a twenty five
percent (25%) ownership interest in
26
<PAGE> 27
Seller, acknowledge and agree that the payment of the Purchase Price is
sufficient consideration to support the enforcement of this Paragraph C. of
Article XV and further, the agreements of Seller herein, including any and all
entities and individuals owning at least a twenty five percent (25%) ownership
interest in Seller, are given and made to and for the benefit of Purchaser as a
material inducement to Purchaser to pay the Purchase Price pursuant to the terms
of this Agreement. The terms and provisions of this Article XV shall survive
Closing. The sole entity owning at least a twenty five percent (25%) ownership
interest in Seller is identified on Schedule 5 attached hereto and incorporated
herein by this reference. Such entity shall execute Schedule 5 to acknowledge,
consent and agree to the terms and provisions of this Paragraph C. of Article XV
prior to the expiration of the Feasibility Period.
D. As used herein, "the date of this Agreement" shall mean the date
noted below as the date upon which this Agreement was executed by the latter of
the Purchaser or the Seller.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement under seal as of the day and year first above written.
Purchaser:
WINN Limited Partnership,
a North Carolina limited partnership
(SEAL)
By: Winston Hotels, Inc.,
a North Carolina corporation,
General Partner
(Corporate Seal) By: /s/ Robert W. Winston III
-------------------------------
President
Attest:
/s/ Brenda G. Burns
- -------------------------
Assistant Secretary
27
<PAGE> 28
Seller:
Park Hotel, Ltd.,
a Florida limited partnership
(SEAL)
(Corporate Seal) By: Icot Center, Inc.,
a Florida corporation,
General Partner
By: /s/ Marvin J. Slovacek, Jr. (SEAL)
----------------------------
Name: Marvin J. Slovacek, Jr.
Title: Vice President
Escrow Agent:
The Title Company of North Carolina,
Inc., as agent for First American
Title Insurance Company
Name: /s/ Alice B. Murdock
----------------------------
Title: Vice President
28
<PAGE> 29
STATE OF NORTH CAROLINA
COUNTY OF WAKE
I, a Notary Public of the County and State aforesaid, certify that
Brenda G. Burns, personally came before me this day and acknowledged that she is
Assistant Secretary of Winston Hotels, Inc., a North Carolina corporation,
General Partner of WINN Limited Partnership, a North Carolina limited
partnership, and that by authority duly given and as the act of the corporation,
as such General Partner, the foregoing instrument was signed in its name by its
President, sealed with its corporate seal and attested by her as its Assistant
Secretary. Witness my hand and seal, this the 20th day of March, 1997.
My commission expires: 12/15/2001 /s/ Judy Ellington
-------------------------------
Notary Public
(SEAL)
STATE OF FLORIDA
COUNTY OF PINELLAS
I, a Notary Public of the County and State aforesaid, certify that
Marvin J. Slovacek, Jr., Vice President of ICOT Center, Inc., a Florida
corporation, general partner of Park Hotel, Ltd., a Florida limited partnership,
personally appeared before me this day and acknowledged the due execution of the
foregoing instrument on behalf of such limited partnership. Witness my hand and
seal, this the 25th day of March, 1997.
My commission expires:_____ /s/ Barbara A. Jones
-------------------------------
Notary Public
(SEAL)
29
<PAGE> 30
Schedule 1
Commitment No. 864-358380
Company File No. CL301836
LEGAL DESCRIPTION
A portion of Lot 26, RUBIN ICOT CENTER, as recorded in Plat Book 88, pages 79
through 85, of the Public Records of Pinellas County, Florida, lying in Section
5, Township 30 South, Range 16 East, Pinellas County, Florida, and being more
particularly described as follows:
Commence at the Northwest corner of Lot 25 of said RUBIN ICOT CENTER for a
point of reference; thence North 02 degrees 36'36" West, and along the East
right of way line of Icot Boulevard, 21.52 feet to a Point Of Beginning; thence
continue along said right of way line, North 02 degrees 36'36" West, 40.36
feet; thence continue along said right of way line, North 00 degrees 14'48"
East, 352.24 feet; thence continue along said right of way line, 128.15 feet
along the arc of a curve to the left having a radius of 517.00 feet, a delta of
14 degrees 12'08", a chord length of 127.82 feet, and a chord bearing of North
06 degrees 51'15" West, thence leaving said right of way line, South 48 degrees
18'20" East, 275.58 feet; thence South 03 degrees 18'20" East, 37.58 feet;
thence South 48 degrees 18'20" East, 85.00 feet; thence South 83 degrees 29'28"
East, 67.81 feet; thence South 48 degrees 18'20" East, 34.32 feet; thence South
10 degrees 55'46" East, 137.18 feet; thence North 89 degrees 45'12" West,
146.00 feet; thence South 37 degrees 31'56" West, 30.17 feet; thence North 89
degrees 45'12" West, 57.55 feet; thence North 48 degrees 18'20" West, 32.79
feet; thence North 89 degrees 45'12" West, 21.12 feet; thence South 00 Degrees
14'48" West, 76.21 feet; thence North 89 degrees 45'12" West, 106.99 feet to
the Point Of Beginning.
END OF LEGAL DESCRIPTION
2
30
<PAGE> 31
Schedule 2
Contracts
1. Agreement with Miami Elevator Company dated December 1, 1987 for
elevator maintenance.
2. Service agreement with Steritech Environmental Services dated
February 5, 1996 for pest control.
3. Agreement with ADT Security Systems, Mid-South, Inc. dated February
22, 1993 for security system.
4. Annual agreement with Danka Industries, Inc. commencing in 1991
for copier.
5. Maintenance agreement with Excel Landscape and Maintenance, Inc.
dated April 29, 1996 for landscape maintenance.
6. Contract with Green Keepers dated October 18, 1988 for live plant
installation and maintenance.
7. Agreement with Vision Cable of Pinellas, Inc. dated May 21, 1993 for
cable television service.
31
<PAGE> 32
Schedule 3
Leases
1. Equipment lease agreement with Telerent Leasing Corporation dated
December 12, 1994 pertaining to in-room televisions and related equipment.
32
<PAGE> 33
Schedule 4
Product Improvement Plan
Property Improvement Plan issued by Holiday Inn Worldwide
January 21, 1997, reference location no. 1659.
33
<PAGE> 34
Schedule 5
The undersigned owns an eighty percent (80%) ownership interest in
Seller and is therefore the sole entity owning at least a twenty five percent
(25%) ownership interest in Seller and the undersigned joins in the execution
hereof to acknowledge, consent and agree to the terms and provisions of this
Paragraph C. of Article XV of the Agreement to which this Schedule 5 is attached
and incorporated herein.
Icot Investments, Ltd.,
a Florida limited partnership
By: ___________________________
as General Partner
By:_______________________(SEAL)
Name:___________________________
Title:__________________________
34
<PAGE> 35
CERTIFICATE OF COMPLIANCE
OF DECLARANT
UNDER DECLARATION OF RESTRICTIONS
THIS CERTIFICATE OF COMPLIANCE is made this ______ day of __________, 1997,
by ICOT CENTER, INC., a Florida corporation (the "Corporation") (the
"Declarant").
W I T N E S S E T H:
WHEREAS, the Corporation is the Declarant under that certain Declaration
of Restrictions for Rubin ICOT Center, recorded in O.R. Book 5821, Page 2146,
and re-recorded in O.R. Book 5831, page 1697, as amended by and pursuant to
that certain Absolute Assignment of Declarant's Rights Under Declaration of
Restrictions recorded in O.R. Book 8863, Page 304, all of the Public Records
of Pinellas County, Florida (collective, the "Declaration"); and
WHEREAS, WINN LIMITED PARTNERSHIP, a North Carolina limited partnership,
doing business in the State of Florida as WINN LIMITED PARTNERSHIP OF NORTH
CAROLINA ("WINN") is the Buyer under that certain Agreement of Purchase and
Sale dated March 25, 1997, between PARK HOTEL, LIMITED, a Florida limited
partnership ("Park Hotel"), as Seller, and WINN, for the purchase of a portion
of the property encumbered by the Declaration, more particularly described on
Exhibit "A" attached hereto and made a part hereof (the "Property"); and
WHEREAS, the Corporation is the sole General Partner of Park Hotel; and
WHEREAS, WIN has requested that Park Hotel obtain a Certificate of
Compliance from the Declarant for matters contained in the Declaration as they
apply to the Property;
NOW, THEREFORE, the Corporation hereby states as follows:
1. The recitals set forth above are true and correct and are
incorporated herein by reference.
<PAGE> 36
2. The Declarant is a valid corporation, formed according to the laws of
the State of Florida, and in good standing with the State of Florida.
3. The Declarant (i) is the successor Declarant under the Declaration to
the original Declarant; (ii) has not assigned any of its rights as Declarant
under the Declaration to any other entity, person or individual; and (iii) has
full authority to give this Certificate of Compliance for matters contained in
the Declaration as they apply to the Property.
4. The Declarant hereby certifies that all of the restrictions contained
in the Declaration, as they apply to the Property, have been complied with to
the satisfaction of the Declarant, and the Declarant hereby waives any and all
adverse objections that it had or may have regarding any non-compliance of
certain restrictions contained in the Declaration as they may apply to the
Property.
5. The Declarant does hereby acknowledge that an unrecorded as-built
plat of survey of the property entitled "Holiday Inn Express, Boundary &
Location Survey of a Portion of Lot 26, Rubin ICOT Center", has been prepared
by Earl W. Ramer, RLS No. 3612, dated July 29, 1995, revised through June 12,
1997, Job No. 1172-001-001.411 (the "Survey"). The compliance, satisfaction and
waiver evidenced and accomplished by this Certificate of Compliance includes
any and all violations, if any, of the terms and provisions of the Declaration
as may exist or be revealed by the Survey, including, but not limited to, (i)
the plan review by Declarant contemplated by Article III, paragraph 1; (ii) the
requirement that construction be completed no later than two (2) years from the
date of purchase contemplated by Article IV, paragraph 1; (iii) waiver of any
and all violations of the minimum setback requirements set forth in Article IV,
paragraph 2; (iv) waiver of any and all violations of the green area
reservation and landscaping requirements contemplated by Article IV, paragraph
3; (v) the fact that all signs currently located on the Property comply with
the requirements of Article IV, paragraph 7 and all approvals to which
Declarant is entitled are currently in place; (vi) waiver of any violations of
the green areas due to parking areas being constructed therein as contemplated
by Article IV, paragraph 8; (vii) the fact that all exterior surfaces and signs
comply with the requirements of Article IV, paragraph 10; and (viii) the fact
that due to the prior construction of the Improvements on the Property the
requirements of Article VI, paragraph 1(d) are no longer applicable to the
Property. The foregoing is intended to specifically identify certain known
areas of compliance and waivers relative to the Property and the Improvements
constructed thereon, provided, however, it is to be expressly understood that
nothing in the foregoing is in any way intended to limit or restrict the notice
of compliance and waiver set forth in paragraph 4 hereof which is intended to
give notice of full and complete compliance by and of the Property and of full
and complete waivers of any violations relative thereto, whether the same are
identified in this paragraph 5, known to the Declarant as of the execution
hereof or unknown to the Declarant as of the execution hereof.
2
<PAGE> 37
6. The Declarant hereby certifies that all dues, charges, assessments
and fees have been paid through the date of closing, and that there are no
liens due or pending as of the date of the acquisition of the Property by WINN.
IN WITNESS WHEREOF, the Corporation has hereunto set its hand and seal the
day and year first above written.
WITNESSES: ICOT CENTER, INC., a Florida corporation
By:
- ----------------------------------- ------------------------------------
Print Name: Marvin J. Slovacek, Jr.
----------------------- Vice President
- -----------------------------------
Print Name: (Corporate Seal)
-----------------------
STATE OF FLORIDA )
COUNTY OF PINELLAS )
The foregoing instrument was acknowledged before me this ______ day of
______________, 1997, by MARVIN J. SLOVACEK, JR., as Vice President of ICOT
CENTER, INC., a Florida corporation, on behalf of the corporation, who is
personally known to me or has presented a Florida drivers license as
identification.
--------------------------------------
Notary Public
Print Name:
--------------------------
My Commission Expires:
3
<PAGE> 38
LEGAL DESCRIPTION
A portion of Lot 26, RUBIN ICOT CENTER, as recorded in Plat Book 88, pages 79
through 85, of the Public Records of Pinellas County, Florida, lying in Section
5, Township 30 South, Range 16 East, Pinellas County, Florida, and being more
particularly described as follows:
Commence at the Northwest corner of Lot 25 of said RUBIN ICOT CENTER for a
point of reference; thence North 02 degrees 36'36" West, and along the East
right of way line of Icot Boulevard, 21.52 feet to a Point Of Beginning; thence
continue along said right of way line, North 02 degrees 36'36" West, 40.36
feet; thence continue along said right of way line, North 00 degrees 14'48"
East, 352.24 feet; thence continue along said right of way line, 128.15 feet
along the arc of a curve to the left having a radius of 517.00 feet, a delta of
14 degrees 12'08", a chord length of 127.82 feet, and a chord bearing of North
06 degrees 51'15" West, thence leaving said right of way line, South 48 degrees
18'20" East, 275.58 feet; thence South 03 degrees 18'20" East, 37.58 feet;
thence South 48 degrees 18'20" East, 85.00 feet; thence South 83 degrees 29'28"
East, 67.81 feet; thence South 48 degrees 18'20" East, 34.32 feet; thence South
10 degrees 55'46" East, 137.18 feet; thence North 89 degrees 45'12" West,
146.00 feet; thence South 37 degrees 31'56" West, 30.17 feet; thence North 89
degrees 45'12" West, 57.55 feet; thence North 48 degrees 18'20" West, 32.79
feet; thence North 89 degrees 45'12" West, 21.12 feet; thence South 00 Degrees
14'48" West, 76.21 feet; thence North 89 degrees 45'12" West, 106.99 feet to
the Point Of Beginning.
END OF LEGAL DESCRIPTION
EXHIBIT "A"
<PAGE> 39
WAIVER OF RIGHT OF FIRST REFUSAL
THIS WAIVER OF RIGHT OF FIRST REFUSAL is made this ____ day of __________,
1997, by ICOT CENTER, INC., a Florida corporation (the "Corporation").
W I T N E S S E T H:
WHEREAS, the Corporation is the Declarant under that certain Declaration
of Restrictions for Rubin ICOT Center, recorded in O.R. Book 5821, Page 2146,
and re-recorded in O.R. Book 5831, Page 1697, as amended by and pursuant to that
certain Absolute Assignment of Declarant's Rights Under Declaration of
Restrictions recorded in O.R. Book 8863, Page 304, all of the Public Records of
Pinellas County, Florida (collective, the "Declaration"); and
WHEREAS, WINN LIMITED PARTNERSHIP, a North Carolina limited partnership,
doing business in the State of Florida as WINN LIMITED PARTNERSHIP OF NORTH
CAROLINA ("WINN"), is the Buyer under that certain Agreement for Purchase and
Sale dated March 25, 1997, between PARK HOTEL, LIMITED, a Florida limited
partnership ("Park Hotel"), as Seller, and WINN, for the purchase of a portion
of the property encumbered by the Declaration, more particularly described on
Exhibit "A" attached hereto and made a part hereof (the "Property"); and
WHEREAS, the Declaration contains a right of first refusal by Declarant
under Article V, Section 4 ("Right of First Refusal"); and
WHEREAS, the Corporation does not wish to exercise the Right of First
Refusal on the Property;
NOW, THEREFORE, the Corporation hereby states as follows:
1. The recitals set forth above are true and correct and are
incorporated herein by reference.
2. The Corporation is a valid corporation, formed according to the laws
of the State of Florida, and in good standing with the State of Florida.
3. The Corporation (i) is the successor under the Declaration to the
original Declarant; (ii) has not assigned any of its rights as Declarant under
the Declaration to any other entity, person or individual; and (iii) has full
authority to waive the Right of First Refusal on the Property.
<PAGE> 40
4. The Corporation hereby forever releases, remises, quitclaims and
waives its right to exercise the Right of First Refusal on the Property, and by
virtue of the foregoing, the Right of First Refusal is hereby fully and
completely terminated with respect to the Property just as if such Right of
First Refusal had never existed and pertained to the Property.
IN WITNESS WHEREOF, the Corporation has hereunto set its hand and seal the
day and year first above written.
WITNESSES: ICOT CENTER, INC., a Florida
corporation
- ------------------------------------- By:
Print Name: ----------------------------------
------------------------- Marvin J. Slovacek, Jr.
Vice President
- -------------------------------------
Print Name: (Corporate Seal)
-------------------------
STATE OF FLORIDA )
COUNTY OF PINELLAS )
The foregoing instrument was acknowledged before me this ____ day of
__________, 1997, by MARVIN J. SLOVACEK, JR., as Vice President of ICOT CENTER,
INC., a Florida corporation, on behalf of the corporation, who is personally
known to me or has presented a Florida drivers license as identification.
------------------------------------
Notary Public
Print Name:
------------------------
My Commission Expires:
2
<PAGE> 41
LEGAL DESCRIPTION
A portion of Lot 26, RUBIN ICOT CENTER, as recorded in Plat Book 88, pages 79
through 85, of the Public Records of Pinellas County, Florida, lying in Section
5, Township 30 South, Range 16 East, Pinellas County, Florida, and being more
particularly described as follows:
Commence at the Northwest corner of Lot 25 of said RUBIN ICOT CENTER for a
point of reference; thence North 02 degrees 36'36" West, and along the East
right of way line of Icot Boulevard, 21.52 feet to a Point Of Beginning; thence
continue along said right of way line, North 02 degrees 36'36" West, 40.36
feet; thence continue along said right of way line, North 00 degrees 14'48"
East, 352.24 feet; thence continue along said right of way line, 128.15 feet
along the arc of a curve to the left having a radius of 517.00 feet, a delta of
14 degrees 12'08", a chord length of 127.82 feet, and a chord bearing of North
06 degrees 51'15" West, thence leaving said right of way line, South 48 degrees
18'20" East, 275.58 feet; thence South 03 degrees 18'20" East, 37.58 feet;
thence South 48 degrees 18'20" East, 85.00 feet; thence South 83 degrees 29'28"
East, 67.81 feet; thence South 48 degrees 18'20" East, 34.32 feet; thence South
10 degrees 55'46" East, 137.18 feet; thence North 89 degrees 45'12" West,
146.00 feet; thence South 37 degrees 31'56" West, 30.17 feet; thence North 89
degrees 45'12" West, 57.55 feet; thence North 48 degrees 18'20" West, 32.79
feet; thence North 89 degrees 45'12" West, 21.12 feet; thence South 00 Degrees
14'48" West, 76.21 feet; thence North 89 degrees 45'12" West, 106.99 feet to
the Point Of Beginning.
END OF LEGAL DESCRIPTION
EXHIBIT "A"
<PAGE> 42
Exhibit B-2
STATE OF FLORIDA
COUNTY OF PINELLAS
PARKING EASEMENT AGREEMENT
THIS PARKING EASEMENT AGREEMENT ("Agreement") is made by ICOT Center,
Ltd., a Florida limited partnership ("Grantor") to and for the benefit of WINN
Limited Partnership, a North Carolina limited partnership doing business in the
State of Florida as WINN Limited Partnership of North Carolina ("Grantee");
WITNESSETH THAT:
WHEREAS, Grantee has acquired from Park Hotel, Limited, a Florida limited
partnership ("Seller"), that certain real property and the improvements
constructed thereon described on Exhibit A attached hereto and incorporated
herein by this reference ("the Property"); and
WHEREAS, a portion of the paved parking lot constructed by Seller or its
predecessor in title as a portion of the improvements which are intended to
constitute the Property is actually constructed outside the boundaries of the
Property and encroaches upon certain property hereinafter specifically
identified; and
WHEREAS, Grantor is the owner of such property upon which such portion of
the paved parking lot encroaches; and
WHEREAS, Seller and Grantor are related entities and by virtue of such
relationship, Grantor will receive a material benefit from the sale of the
Property by Seller to Grantee and such material benefit is sufficient
consideration to support the enforcement of this Agreement against Grantor; and
WHEREAS, Grantor hereby agrees to grant Grantee an easement upon the area
and for the purposes hereinafter specifically set forth;
NOW, THEREFORE, for and in consideration of the sum of Ten Dollars
($10.00) in hand paid, the premises, the payment by Grantee to Seller of the
purchase price for the acquisition of the Property which is a material benefit
to Grantor due to the relationship between Grantor and Seller and other good
and valuable considerations, the receipt and sufficiency of which are hereby
mutually acknowledged by Grantor and Grantee, Grantor and Grantee do hereby
covenant and agree as follows:
<PAGE> 43
1. Parking Easement. The area of the parking lot encroachment onto
the property of Grantor is specifically identified on Exhibit B attached hereto
and incorporated herein by this reference ("the Parking Easement Area"). The
Parking Easement Area is a portion of Lot 26, Rubin ICOT Center, as recorded in
Plat Book 88, Pages 79 through 85 of the public records of Pinellas County,
Florida, lying in Section 5, Township 30 South, Range 16 East, Pinellas County,
Florida. Grantor does hereby give, grant and convey a perpetual and exclusive
easement and right to maintain encroachment to Grantee over, across and upon
the Parking Easement Area. The foregoing perpetual and exclusive easement and
right to maintain encroachment granted to Grantee by Grantor is and shall be
for the purpose of allowing and continuing the existence of the portion of the
paved parking lot which currently exists within the Parking Easement Area and
shall be for the further purpose of allowing parking associated with the
operation of the Property within the Parking Easement Area.
2. Maintenance of Parking Easement Area. Grantee shall and does
hereby accept responsibility for maintaining the portion of the paved parking
lot within the Parking Easement Area and does hereby covenant and agree to
maintain same in conjunction with and to the same condition as the paved
parking lot constructed upon the Property is maintained.
3. Status of Easement. Grantee does hereby acknowledge, covenant and
agree that a portion of the Parking Easement Area is subject to a drainage
easement which existed prior to this Agreement and therefore has priority over
this Agreement. Grantee does hereby covenant and agree that it shall continue
to maintain the portion of the paved parking lot located within the Parking
Easement Area such that such drainage easement shall not be impaired beyond
that which exists as of the date of this Agreement by virtue of the fact that a
portion of such paved parking lot is currently located within such drainage
easement. Grantor does hereby fully warrant the title to the Parking Easement
Area and the easement relative thereto granted to Grantee herein and will
defend the same against the lawful claims of all persons whomsoever.
4. Nature of Agreement. This Agreement and the terms, provisions,
easement and obligations set forth herein, in addition to being the binding
obligations and benefits, as the case may be, of Grantor and Grantee, shall be
appurtenant to and run with and benefit the Property and burden the Parking
Easement Area.
5. Amendment. This Agreement constitutes the entire agreement of
Grantor and Grantee relative to the subject matter addressed herein and shall
only be amended or terminated by a writing signed by the fee simple owners of
record at the time thereof of the Property and the Parking Easement Area. Such
amendment or termination shall only be effective upon recordation thereof in
the Official Records of Pinellas County, Florida.
2
<PAGE> 44
IN WITNESS WHEREOF, Grantor and Grantee have signed and sealed this
Agreement, with all due authorizations having been granted, as of the ____ day
of __________, 1997.
Witnesses: Grantor:
- -------------------------------- ICOT Center, Ltd.,
Print Name: a Florida limited partnership
--------------------
- -------------------------------- By: ICOT Center, Inc.,
Print Name: a Florida corporation, general partner
--------------------
By:
----------------------------------------
Marvin J. Slovacek, Jr.,
Vice President
(Corporate Seal)
Grantee:
Witnesses: WINN Limited Partnership,
a North Carolina limited partnership
- -------------------------------- doing business in the State of Florida as
Print Name: WINN Limited Partnership of North Carolina
--------------------
- -------------------------------- By: Winston Hotels, Inc.
Print Name: a North Carolina corporation,
-------------------- general partner
By:
---------------------------------------
Robert W. Winston, III, President
(Corporate Seal)
3
<PAGE> 45
State of Florida
County of Pinellas
The foregoing instrument was acknowledged before me this ____ day of
__________, 1997 by _________________, ________ President of ICOT Center, Inc.,
a Florida corporation, general partner of ICOT Center, Ltd., a Florida limited
partnership, on behalf of said corporation and partnership, who is
personally known to me.
------------------------------------------
Notary Public
Print Name:
------------------------------
My Commission expires:
-------------------
(Seal)
State of North Carolina
County of Wake
The foregoing instrument was acknowledged before me this ____ day of
__________, 1997 by _________________, ________ President of Winston Hotels,
Inc., a North Carolina corporation, general partner of WINN Limited
Partnership, a North Carolina limited partnership doing business in the State
of Florida as WINN Limited Partnership of North Carolina, on behalf of said
corporation and partnership, who is personally known to me.
------------------------------------------
Notary Public
Print Name:
------------------------------
My Commission expires:
-------------------
(Seal)
4
<PAGE> 46
LEGAL DESCRIPTION
A portion of Lot 26, RUBIN ICOT CENTER, as recorded in Plat Book 88, pages 79
through 85, of the Public Records of Pinellas County, Florida, lying in Section
5, Township 30 South, Range 16 East, Pinellas County, Florida, and being more
particularly described as follows:
Commence at the Northwest corner of Lot 25 of said RUBIN ICOT CENTER for a
point of reference; thence North 02 degrees 36'36" West, and along the East
right of way line of Icot Boulevard, 21.52 feet to a Point Of Beginning; thence
continue along said right of way line, North 02 degrees 36'36" West, 40.36
feet; thence continue along said right of way line, North 00 degrees 14'48"
East, 352.24 feet; thence continue along said right of way line, 128.15 feet
along the arc of a curve to the left having a radius of 517.00 feet, a delta of
14 degrees 12'08", a chord length of 127.82 feet, and a chord bearing of North
06 degrees 51'15" West, thence leaving said right of way line, South 48 degrees
18'20" East, 275.58 feet; thence South 03 degrees 18'20" East, 37.58 feet;
thence South 48 degrees 18'20" East, 85.00 feet; thence South 83 degrees 29'28"
East, 67.81 feet; thence South 48 degrees 18'20" East, 34.32 feet; thence South
10 degrees 55'46" East, 137.18 feet; thence North 89 degrees 45'12" West,
146.00 feet; thence South 37 degrees 31'56" West, 30.17 feet; thence North 89
degrees 45'12" West, 57.55 feet; thence North 48 degrees 18'20" West, 32.79
feet; thence North 89 degrees 45'12" West, 21.12 feet; thence South 00 Degrees
14'48" West, 76.21 feet; thence North 89 degrees 45'12" West, 106.99 feet to
the Point Of Beginning.
END OF LEGAL DESCRIPTION
EXHIBIT "A"
<PAGE> 47
[CHART]
LEGAL DESCRIPTION:
A portion of Lot 26, Rubin Icot Center, as recorded in Plat Book 88, pages 79
through 85 of the public records of Pinellas County, Florida, lying in Section
5, Township 30 South, Range 16 East, Pinellas County, Florida, and being more
particularly described as follows:
Commence at the Southwest corner of Lot 26 of said Rubin Icot Center; thence
along the South boundary line of said Lot 26, S89 degrees 43'43"W, for 410.00
feet to the Southeast corner thereof; thence N00 degrees 16'17"W, along the
East boundary line of said Lot 26, for 107.85 feet; thence leaving said Lot
line, S89 degrees 43'43"W, for 37.79 feet to the Point of Beginning; thence N10
degrees 55'46"W, for 117.66 feet; thence S52 degrees 32'28"E, for 23.79 feet;
thence S40 degrees 24'21"W, for 20.24 feet; thence S10 degrees 55'46"E, for
9.44 feet; thence N41 degrees 47'02"E, for 7.18 feet; thence S48 degrees
32'54"E, for 60.95 feet; thence S40 degrees 47'59"W, for 54.66 feet to the
Point of Beginning; and containing 2128.21 square feet, more or less.
NOTE:
1. This sketch and legal was prepared without the benefit of a title policy and
is subject to any and all recorded and or unrecorded easements,
rights-of-way, restrictions, etc.
2. There may be additional easements and/or restrictions affecting this
property that may be found in the Public Records of this County.
3. Bearings shown hereon are based upon the record plat of Rubin Icot Center,
more specifically the Bearing of S00 degrees 14'48"W, being the Centerline of
Icot Boulevard.
I hereby certify that this legal description and sketch meets the minimum
technical standards as set forth by the Florida Board of Professional Surveyors
and Mappers in Chapter 61G17-6, Florida Administrative Code, pursuant to
Section 472.027, Florida Statutes.
Sketch and Legal Description not valid without the signature and the original
raised seal of a Florida licensed Surveyor and Mapper.
CERTIFIED AS TO SKETCH AND LEGAL DESCRIPTION
/s/ Earl W. Ramer
- ---------------------------------------------
EARL W. RAMER
PROFESSIONAL LAND SURVEYOR No. LS 3612
STATE OF FLORIDA
CERTIFICATE OF AUTHORIZATION No. LB 2610
<PAGE> 48
[CHART]
LEGAL DESCRIPTION:
A portion of Lot 26, Rubin Icot Center, as recorded in Plat Book 88, pages 79
through 85 of the public records of Pinellas County, Florida, lying in Section
5, Township 30 South, Range 16 East, Pinellas County, Florida, and being more
particularly described as follows:
Commence at the Southwest corner of Lot 26 of said Rubin Icot Center; thence
along the East right-of-way line of Icot Boulevard, N02 degrees 36'36"W, for
61.88 feet; thence N00 degrees 14'48"E, for 282.15 feet; thence leaving said
East right-of-way line, S89 degrees 45'12"E, for 191.66 feet to the Point of
Beginning; thence N03 degrees 18'20"W, for 7.68 feet; thence S48 degrees
05'03"E, for 5.35 feet; thence S40 degrees 51'26"W, for 5.41 feet to the Point
of Beginning; and containing 14.45 square feet, more or less.
NOTE:
1. This sketch and legal was prepared without the benefit of a title policy and
is subject to any and all recorded and or unrecorded easements,
rights-of-way, restrictions, etc.
2. There may be additional easements and/or restrictions affecting this
property that may be found in the Public Records of this County.
3. Bearings shown hereon are based upon the record plat of Rubin Icot Center,
more specifically the Bearing of S00 degrees 14'48"W, being the Centerline of
Icot Boulevard.
I hereby certify that this legal description and sketch meets the minimum
technical standards as set forth by the Florida Board of Professional Surveyors
and Mappers in Chapter 61G17-6, Florida Administrative Code, pursuant to
Section 472.027, Florida Statutes.
Sketch and Legal Description not valid without the signature and the original
raised seal of a Florida licensed Surveyor and Mapper.
CERTIFIED AS TO SKETCH AND LEGAL DESCRIPTION
/s/ Earl W. Ramer
- ---------------------------------------------
EARL W. RAMER
PROFESSIONAL LAND SURVEYOR No. LS 3612
STATE OF FLORIDA
CERTIFICATE OF AUTHORIZATION No. LB 2610
<PAGE> 49
Exhibit B-3
[LOGO] FLORIDA POWER CORPORATION
J. Bradford Hines
Senior Counsel
June 6, 1997
Patricia D. Graf
Legal Assistant
Johnson, Blakley, Pope, Bokor, Ruppel & Burns, P.A.
911 Chestnut Street
Clearwater, FL 34617
Re: Holiday Inn Express - Ulmerton and ICOT Boulevard,
Clearwater Florida
Dear Ms. Graf:
To the best of our knowledge, the above referenced property is in full
compliance with the terms and provisions of the Florida Power Corporation
Distribution Easement recorded in OR Book 5838 at Page 1170 of the Public
Records of Pinellas County, Florida. After viewing the property and reviewing
Florida Power's records, there appear to be no existing encumbrances over
Florida Power's facilities located on the property pursuant to the easement.
Further, to the best of our knowledge the property is currently in
compliance with the terms of the Right of Way Utilization Agreement dated
December 19, 1995 and recorded in OR Book 6747 at Page 1973, of the Public
Records of Pinellas County, Florida.
Sincerely,
/s/ J. Bradford Hines
---------------------
J. Bradford Hines
cc: Kevin Price, FPC
GENERAL OFFICE (813) 888-5110 FAX (813) 888-4831
3201 Thirty-fourth Street South
P.O. Box 14042
St. Petersburg FL 33733-4042
<PAGE> 50
Exhibit B-4
INDEMNIFICATION AGREEMENT
-------------------------
THIS AGREEMENT, is made and entered into this ______ day of __________,
1997, by and between ICOT LAND, LTD., a Florida limited partnership
("Indemnitor"), and WINN LIMITED PARTNERSHIP, a North Carolina partnership
doing business in the State of Florida as WINN LIMITED PARTNERSHIP OF NORTH
CAROLINA ("Indemnitee").
W I T N E S S E T H:
-------------------
WHEREAS, Park Hotel, Limited, a Florida limited partnership ("Seller"),
and Indemnitee have entered into an Agreement Purchase and Sale dated March 25,
1997 (the "Agreement"), for the sale and purchase of that certain Holiday Inn
Express located in Pinellas County, Florida (the "Property"); and
WHEREAS, Seller and Indemnitee entered into a reinstatement of the
Agreement, dated _________________; and
WHEREAS, the Property is part of the ICOT Center development of
regional impact ("DRI") and is subject to those certain DRI development orders
adopted, pursuant to the provisions of Section 380.06, Florida Statutes, by the
Pinellas County Board of County Commissioners on February 9, 1989, as Ordinance
89-6, August 2, 1994, notice thereof being recorded in O.R. Book 6980, Page
1699, Pinellas County, Florida, as Ordinance 94-69, and August 30, 1994, as
Ordinance 94-73, notice thereof being recorded in O.R. Book 8889, Page 1446,
Pinellas County, Florida, respectively, (collectively the "Development
Orders"); and
WHEREAS, Indemnitor is the owner of certain undeveloped areas of the
ICOT Center DRI; and
WHEREAS, Indemnitor is the successor of certain rights and
responsibilities imposed upon the original developer under the Development
Orders; and
WHEREAS, Seller and Indemnitor are related entities and by virtue of
such relationship, Indemnitor will receive a material benefit from the sale of
the Property by Seller to Indemnitee and such material benefit is sufficient
consideration to support the enforcement of this Agreement against Indemnitor;
and
EXHIBIT B-4
<PAGE> 51
WHEREAS, Indemnitee intends to continue the occupation and operation of
the existing hotel on the Property; and
WHEREAS, Indemnitee acknowledges that it shall not undertake any acts
on the Property which would be in conflict with or in violation of the
provisions of the Development Orders; and
WHEREAS, Indemnitor hereby agrees to indemnify Indemnitee against all
liabilities arising by virtue of Indemnitor's failure to satisfy its
obligations under the Development Orders;
NOW, THEREFORE, in consideration of Ten and 00/100 Dollars ($10.00) and
other good and valuable consideration, receipt and sufficiency of which is
hereby acknowledged, the parties agree as follows:
1. RECITALS. The above recitals are true and correct and are
incorporated herein by reference.
2. INDEMNIFICATION. Indemnitor hereby covenants and agrees for
Indemnitor, its successors and assigns, to forever indemnify, defend and hold
harmless Indemnitee, its successors and assigns, at all times from and after
the date hereof, against any claims, actions, demands, losses, costs, expenses,
including reasonable attorneys' fees, liabilities, penalties and damages,
including incidental and consequential damages, both at trial and appeals,
arising out of the failure by Indemnitor to satisfy its obligations under the
Development Orders.
3. APPLICABLE LAW. This Agreement has been executed and delivered and
shall be construed and enforced in accordance with the laws of the State of
Florida.
4. WRITTEN MODIFICATION. This Agreement may not be changed, altered or
modified orally or in any other manner other than by a written modification
signed by all of the parties hereto.
5. BINDING EFFECT. This Agreement and the indemnity herein shall
remain in full force and effect for so long as there exists any obligations
under the Development Orders. In the event the existing hotel on the Property
is damaged or destroyed, the indemnity herein shall apply and pertain to any of
the indemnified items set forth in paragraph 1 hereof if Indemnitee is
prohibited from rebuilding such hotel due to the failure by Indemnitor to
satisfy its obligations under the Development Orders. This Agreement shall be
binding upon the parties hereto, their heirs, personal representatives,
successors and assigns, including, but not limited to, any future owners of the
Property.
2
<PAGE> 52
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
WITNESSES: INDEMNITOR:
ICOT LAND LTD., a Florida
limited partnership
By: ICOT CENTER, INC.
its General Partner
By:
- ----------------------------- -----------------------------
Print Name: Marvin J. Slovacek, Jr.
------------------ Its: Vice President
-------------
- -----------------------------
Print Name: (CORPORATE SEAL)
------------------
WITNESSES: INDEMNITEE:
WINN LIMITED PARTNERSHIP
a North Carolina partnership
d/b/a WINN LIMITED PARTNERSHIP
OF NORTH CAROLINA
By:
- ----------------------------- -----------------------------
Print Name: Its:
----------------------------
- -----------------------------
Print Name:
------------------
3
<PAGE> 53
STATE OF FLORIDA )
COUNTY OF ______________)
The foregoing instrument was acknowledged before me this _____ day of
__________________, 1997, by ___________________________, as ___________________
of ICOT LAND LTD., a Florida limited partnership, on behalf of said
partnership, who is personally known to me, or who produced a __________________
as identification.
-------------------------------
Notary Public
Print Name:
--------------------
My Commission Expires:
STATE OF FLORIDA )
COUNTY OF ______________)
The foregoing instrument was acknowledged before me this _____ day of
__________________, 1997, by ___________________________, as ___________________
of WINN LIMITED PARTNERSHIP, d/b/a WINN LIMITED PARTNERSHIP OF NORTH CAROLINA, a
North Carolina corporation, on behalf of said corporation, who is personally
known to me, or who produced a __________________ as identification.
-------------------------------
Notary Public
Print Name:
--------------------
My Commission Expires:
4
<PAGE> 54
Exhibit C
Schedule 5
Consent to Hotel Covenant Not to Compete
================================================================================
The undersigned owns, directly or indirectly, at least an eighty
percent (80%) equity ownership interest in Seller and is therefore the sole
entity owning, directly or indirectly, at least a twenty five percent (25%)
ownership interest in Seller and the undersigned joins in the execution
hereof to acknowledge, consent and agree to the terms and provisions of this
Paragraph C. of Article XV of the Agreement to which this Schedule 5 is
attached and incorporated herein.
ICOT Investments, Ltd.,
a Florida limited partnership
By: ICOT Investments, Inc.
As General Partner
By: /s/ J. Bob Humphries
-------------------------------
Name: J. Bob Humphries
Title: Vice President
<PAGE> 55
F. During the Feasibility Period, representatives of Seller and
Purchaser shall meet at the Premises and prepare a schedule of the Equipment,
which schedule shall be attached hereto and made a part hereof at such time.
XV. BINDING EFFECT; MISCELLANEOUS
A. This Agreement shall be binding upon and shall inure to the parties
hereto, their respective heirs, successors, legal representatives and assigns.
This Agreement sets forth the entire Agreement between the parties hereto and
no other prior written or oral statement or agreement or understanding shall be
recognized or enforced. All modifications or amendments shall be in writing and
signed by the parties. This Agreement is to be construed according to the laws
of the State of Florida. This Agreement may be executed in two or more
counterparts all of which shall constitute one and the same instrument. The
singular shall include the plural and vice versa.
B. The Purchaser may assign this Agreement.
C. For a period of five (5) years immediately following the Closing,
Seller, including any and all entities and individuals owning at least a twenty
five percent (25%) ownership interest in Seller, agrees that it shall not,
directly or indirectly, for its own account or as agent, employee, officer,
director, trustee, lessor, sublessor, consultant or as a stockholder of any
corporation or any other entity, or as a member of any firm or otherwise, (i)
engage or attempt to engage within the Restricted Area (as hereinafter
defined), in the hotel, motel or other business which is the same as,
substantially similar to or competitive with the operation of the Premises
purchased pursuant to this Agreement, or (ii) employ or solicit the employment
of any employees of Seller at the Premises. For purposes of this Agreement, the
term "Restricted Area" shall mean an area which shall consists of a circle the
radius of which is 10 miles with the center point being located at the Premises
in Clearwater, Florida. Each of the Seller, including any and all entities and
individuals owning at least a twenty five percent (25%) ownership interest in
Seller, and Purchaser acknowledges and agrees that the foregoing territorial,
time and other limitations and restrictions contained in this Article XV are
25
<PAGE> 56
reasonable and properly required for the adequate protection of the business
and affairs of the Purchaser, and in the event that any one or more of such
territorial, time or other limitations is found to be unreasonable by a court
of competent jurisdiction, each of Purchaser and Seller, including any and all
entities and individuals owning at least a twenty five percent (25%) ownership
interest in Seller, hereby agree to submit to the reduction of the said
territorial, time or other limitation, to such an area, period or otherwise as
the court may determine to be reasonable. In the event that any limitation or
restriction under this Article XV is found to be unreasonable or otherwise
invalid in any jurisdiction in whole or in part, each of Purchaser and Seller,
including any and all entities and individuals owning at least a twenty five
percent (25%) ownership interest in Seller, acknowledges, warrants, represents
and agrees that such limitation shall remain and be valid in all other
jurisdictions. Each of Purchaser and Seller, including any and all entities and
individuals owing at least a twenty five percent (25%) ownership interest in
Seller, acknowledges, warrants, represents and agrees that the restrictive
covenants contained in this Article XV are necessary for the protection of
Purchaser's legitimate business interests and are reasonable in scope and
content, and Seller, including any and all entities and individuals owning at
least a twenty five percent (25%) ownership interest in Seller, represents and
warrants that its and their attorneys have thoroughly and completely reviewed
this Agreement with it and them, and it and they understand the contents
hereof. Seller, including any and all entities and individuals owning at least
a twenty five percent (25%) ownership interest in Seller, and Purchaser
acknowledges and agrees that because a remedy at law for any breach of the
provisions of this Article XV will be inadequate, in addition to all other
remedies available to Purchaser, Purchaser shall have the remedies of a
restraining order, injunction or other equitable relief to enforce the
provisions hereof. Each of Purchaser and Seller, including any and all
entities and individuals owning at least a twenty five percent (25%) ownership
interest in Seller, agrees that the issues in any action brought under this
Article XV will be limited to claims under this Article XV and all other claims
or counterclaims under other provisions of this Agreement will be excluded.
All expenses, including reasonable attorneys' fees and expenses arising out of
claims under this Article XV shall be borne by the losing party to the fullest
extent permitted by law. Purchaser and Seller, including any and all entities
and individuals owning at least a twenty five percent (25%) ownership
interest in
26
<PAGE> 57
Seller, acknowledge and agree that the payment of the Purchase Price is
sufficient consideration to support the enforcement of this Paragraph C. of
Article XV and further, the agreements of Seller herein, including any and
all entities and individuals owning at least a twenty five percent (25%)
ownership interest in Seller, are given and made to and for the benefit of
Purchaser as a material inducement to Purchaser to pay the Purchase Price
pursuant to the terms of this Agreement. The terms and provisions of this
Article XV shall survive Closing. The sole entity owning at least a twenty five
percent (25%) ownership interest in Seller is identified on Schedule 5 attached
hereto and incorporated herein by this reference. Such entity shall execute
Schedule 5 to acknowledge, consent and agree to the terms and provisions of this
Paragraph C. of Article XV prior to the expiration of the Feasibility Period.
D. As used herein, "the date of this Agreement" shall mean the date
noted below as the date upon which this Agreement was executed by the latter of
the Purchaser or the Seller.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal as of the day and year first above written.
Purchaser:
WINN Limited Partnership,
a North Carolina limited partnership
(SEAL)
By: Winston Hotels, Inc.,
a North Carolina corporation,
General Partner
(Corporate Seal) By: /s/ Robert W. Winston III
---------------------------------------
President
----------------
Attest:
/s/ Brenda G. Burns
- --------------------------
Assistant Secretary
27
<PAGE> 1
EXHIBIT 10.50
AGREEMENT OF PURCHASE AND SALE
THIS AGREEMENT OF PURCHASE AND SALE ("Agreement"), dated as of the date
of this Agreement as defined hereinafter, between WINN Limited Partnership, a
North Carolina limited partnership, or its assigns, with offices at 2209 Century
Drive, Suite 300, Raleigh, North Carolina 27622 ("Purchaser") and WHB Hotel
Corp., Ltd., a Florida limited partnership ("Seller").
NOW, THEREFORE, for $1.00 and other good and valuable consideration,
the receipt and sufficiency of which is hereby mutually acknowledged, and the
mutual covenants contained herein, the parties hereto, intending to be legally
bound, hereby agree as follows:
I. PURCHASE AND SALE OF PROPERTY AND BUSINESS
On the terms and subject to all of the conditions set forth in this
Agreement, the Purchaser agrees to purchase and the Seller agrees to sell, for
the purchase price set forth herein, all of the following property
(collectively, the "Premises"):
(a) the real estate described on Schedule 1 attached hereto and made a
part hereof by this reference, together with all tenements, appurtenances,
easements, agreements, development rights, air rights, rights-of-way, strips,
gores, rights in adjacent avenues, streets and alleys, rights and uses
appurtenant thereto (collectively the "Real Property");
(b) all improvements now or hereafter located on the Real Property,
including but not limited to that certain 215 room Comfort Suites located at
9350 Turkey Lake Road, Orlando, Florida and all fixtures which are affixed to
the Real Property or Improvements (the "Improvements");
(c) all furniture, fixtures (not part of the Real Property and
Improvements or affixed thereto, (equipment, machinery, furnishings, carpets,
drapes, blinds or mini-blinds, service and maintenance equipment, linens (not
less than two and one-half (2 1/2) turns of linens shall be included), tools,
signs, landscaping equipment, supplies, pool equipment, television systems,
intercom equipment and systems, and replacement parts (the "Equipment");
<PAGE> 2
(d) moneys advanced for future guest reservations ("Prepaid Items");
(e) all contracts, service contracts, agreements, licenses, contract
rights, rights to use and other similar rights in connection with the Real
Property and Improvements and set forth on Schedule 2 attached hereto and made a
part hereof by this reference and which the Purchaser elects to purchase and
assume as provided in Article III, Paragraph A hereof (the "Contracts");
(f) all leases, including leases of Equipment, and rights to use the
Improvements or all or any part thereof in third parties as more particularly
identified on Schedule 3 attached hereto and made a part hereof by this
reference and which the Purchaser elects to purchase and assume as provided in
Article III, Paragraph A hereof (the "Leases"). Notwithstanding anything in the
foregoing which may be construed to the contrary, with respect to any leases of
Equipment, Seller shall be responsible for all costs and expenses to pay off
same in order that all Equipment shall be conveyed in fee simple in accordance
with the requirements of Article II, Paragraph C;
(g) all permits, licenses, government licenses, certificates of
occupancy and approvals necessary to operate the Real Property, Improvements,
Equipment, Contracts, Leases, Intangible Rights and the other property and
rights transferred under this Agreement (the
"Permits");
(h) all inventory, supplies and other materials used in connection with
the Real Property and Improvements and the hotel business operated thereon
(excluding gift shop items owned by third parties and tiki bar items identified
in a written list provided to Purchaser within five (5) days after the date of
this Agreement; provided, however, there shall be conveyed herewith such tiki
bar items as are necessary for the continued full service operation of the tiki
bar in a manner consistent with the current operation thereof) (the
"Inventory");
(i) all plans, specifications and "as-built" drawings and surveys
relating to the Real Property and Improvements, all books and records relating
to the operation or management of the Real Property and Improvements and all
warranties and guaranties of
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Seller pertaining to the Premises; and
(j) all intangible property, guest ledgers, customer and mailing lists,
catalogues and brochures, telephone numbers and similar property used in
connection with the operation of the Real Property, Improvements and the
business known as the Comfort Suites located at 9350 Turkey Lake Road, Orlando,
Florida (the "Hotel"), and any telephone numbers assigned thereto (the
"Intangible Rights").
II. TERMS OF PURCHASE AND SALE
The purchase price for the Premises shall be Eleven Million Five
Hundred Fifty Thousand and NO/100 Dollars ($11,550,000.00), adjusted as provided
in Article IX hereof, (the "Purchase Price"), payable by Purchaser to Seller as
follows:
A. The sum of One Hundred Thousand and NO/100 Dollars ($100,000.00)
(the "Deposit") within three (3) days after the date of this Agreement as
defined hereinafter by check subject to collection,payable to The Title Company
of North Carolina, Inc., as agent for First American Title Insurance Company as
escrow agent (the "Escrow Agent"). The Escrow Agent shall maintain the Deposit
in an interest bearing account subject to the provisions of Article XIII. The
Escrow Agent shall not disburse the Deposit except in accordance with the terms
of this Agreement. Upon the satisfaction of all of the conditions contained in
this Agreement, on the Closing Date (as hereinafter defined), the Deposit shall
be paid to Seller and reduce the portion of the Purchase Price payable at
Closing pursuant to Article II, Paragraph B hereof. In the event that this
transaction is not consummated for any reason, the Deposit shall be paid as
provided in Article XIII of this Agreement. Purchaser shall be entitled to
payment of or a credit for any interest earned on the Deposit unless the Deposit
is forfeited in which event interest shall be paid to Seller.
B. The balance of the Purchase Price, plus or minus any closing
adjustments, by certified or bank funds or by wire transfer on the Closing Date
(as hereinafter defined) to an account designated in writing by Seller to
Purchaser at least five (5) days prior to Closing. Seller shall have the right
and option to elect
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to accept all or a portion of such balance of the Purchase Price in the form of
limited partnership units in Purchaser ("Units"). The number of Units issued
shall be determined and based upon such balance of the Purchase Price or portion
thereof so elected by Seller divided by the average closing price of the stock
of Purchaser's general partner, Winston Hotels, Inc., a North Carolina
corporation, on the NASDAQ market for the ten (10) days of trading immediately
preceding the Closing Date.
C. Upon the Closing, the Seller shall deliver the Premises to the
Purchaser in fee simple, including but not limited to, the Real Property
Improvements, Equipment and Inventory, free and clear of all liens and
encumbrances of whatever type or description other than the Permitted Exceptions
as defined in Article IV, Paragraph A hereof.
D. Choice International has issued a Product Improvement Plan (the
"PIP") relative to the Hotel, a copy of which is attached hereto as Schedule 4
and incorporated herein by this reference. Purchaser accepts the PIP and
acknowledges that the completion of same subsequent to Closing (as hereinafter
defined) shall be Purchaser's responsibility. In connection with the application
for a Comfort Suites franchise, Purchaser shall pay all franchise fees to Choice
International and other associated costs to obtain such franchise as long as
such costs are acceptable to Purchaser in Purchaser's sole, absolute and
unreviewable discretion.
III. FEASIBILITY PERIOD; PURCHASER'S CONTINGENCIES
A. This Agreement is contingent upon Purchaser's approval of the
Premises, including but not limited to, approval of the Inspection Items (as
hereinafter defined). The Inspection Items if not submitted to Purchaser on or
prior to the date of this Agreement, shall be submitted to Purchaser within five
(5) days after the date of this Agreement, or as specifically provided herein,
are available to Purchaser for inspection at the Improvements. Purchaser shall
have until a period of forty-five (45) days from and after the date of this
Agreement as defined hereinafter to review the Inspection Items and to otherwise
inspect the Premises and its or their condition (such period is hereinafter
referred to as the "Feasibility Period"). On or prior to the expiration of the
Feasibility Period, the Purchaser shall notify the Seller whether or not the
Purchaser elects to purchase the Premises,
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which election shall be made in the sole, absolute and unreviewable discretion
of the Purchaser. In the event that the Purchaser elects to proceed with this
transaction, then on or prior to the expiration of the Feasibility Period, the
Purchaser shall notify the Seller, which of the Contracts and Leases the
Purchaser shall accept and assume and the Seller shall retain and not assign to
Purchaser those Contracts and Leases not acceptable to Purchaser. In the event
Purchaser fails to notify Seller, on or prior to the expiration of the
Feasibility Period, whether or not the Purchaser elects to proceed with the
purchase, all items shall be deemed approved. If Purchaser notifies Seller that
it elects not to proceed with this transaction on or prior to the expiration of
the Feasibility Period, then this Agreement shall terminate and shall be null,
void and without further force or effect, the Deposit (together with all
interest) shall be promptly refunded to Purchaser by Escrow Agent and neither
party shall have any further liability to the other. The conditions enumerated
in this Article III are for Purchaser's benefit only and the non-occurrence of a
state of facts sufficient to satisfy any of such conditions may not be used or
pleaded by Seller as a defense to the enforceability of this Agreement.
For purposes of this Agreement, the term "Inspection Items" shall mean:
(a) any existing engineer's reports, architectural plans,
appraisals, environmental reports, boundary surveys, as-built
surveys or other reviews, evaluations or studies of or with
respect to the Premises;
(b) the Leases, Contracts and Permits;
(c) the utility bills for the thirty six month (36) period
immediately preceding the date of this Agreement;
(d) tax returns and proof of payment of all taxes for the thirty
six (36) month period immediately preceding the date of this
Agreement (including, but not limited to, all ad valorem,
property, income, employment, sales or occupancy taxes
available for inspection at the Improvements, excluding,
however, Seller's partnership tax returns);
(e) guest registration records (to be available for inspection
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at the Improvements);
(f) employee records (to be available for inspection at the
Improvements);
(g) financial statements (the "Financial Statements") for the
Premises (including balance sheets, income statements,
operating statements and statements of changes in
financial position) for each of the two preceding fiscal
years and for the year to date period ending thirty (30)
days prior to the Closing Date defined hereinafter. An
itemized breakdown of room sales per month, occupancy and
ADR for the preceding thirty six (36) month period. The
books and records of the operations of the Premises
necessary to confirm the accuracy of the Financial
Statements shall be made available to Purchaser or its
agents at the Improvements;
(h) Star Reports covering the preceding thirty six (36) month
period (upon the execution of this Agreement, Seller shall
deliver to Purchaser the written documentation as required by
Randy Smith Travel, Inc. necessary for Purchaser to obtain
Star Reports for the Premises; and,
(i) copies of all condominium documents relative to the Real
Property and Improvements, including, but not limited to,
copies of the declaration of condominium and all amendments
thereto, all condominium plats of record, copies of the
articles of incorporation and by-laws of the condominium
association.
B. Purchaser's obligation to close this transaction shall be
conditioned on the Purchaser's receipt, on or before the Closing Date, of an
acceptable franchise license agreement for the Hotel from Choice International
with a term of not less than ten (10) years.
C. Purchaser's obligation to close this transaction shall be
conditioned on Purchaser having received, effective as of the Closing Date, all
necessary governmental approvals and licenses for operation of the Premises as a
hotel.
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D. Seller acknowledges that Purchaser is a real estate investment trust
and in accordance therewith, Purchaser's obligation to close this transaction
shall be conditioned upon Purchaser obtaining the approval of this Agreement and
the transaction contemplated herein from the board of directors of the general
partner of Purchaser.
Seller and Purchaser shall cooperate and take all actions necessary, in
a diligent and expeditious manner, to effectuate the inspections, transfers and
other reviews required by this Article III during the Feasibility Period. The
Purchaser and its representatives and agents shall be provided with access to
the Premises at all reasonable times, in order to inspect the Premises,
including but not limited to, taking soil samples and test borings, and
conducting environmental studies, engineering studies and other such inspections
and reviews that the Purchaser shall deem reasonably necessary to determine the
condition and financial status of the Premises. Purchaser does hereby agree to
replace and repair any and all areas disturbed by any of the foregoing
activities to a condition substantially similar to that which existed prior to
such sampling, boring, study or inspection. Purchaser does hereby agree to
indemnify and hold Seller harmless from and against any loss, liability, damage
or expense resulting from Purchaser and its representatives and agents
conducting any of the foregoing activities.
IV. TITLE; TITLE POLICY; SURVEY
A. Seller has provided Purchaser with a copy of Seller's owner's title
insurance policy issued by Chicago Title Insurance Company and copies of all
exceptions to title shown thereon. Within fifteen (15) days after the date of
this Agreement, Purchaser shall obtain at Purchaser's cost a preliminary title
report and title insurance binder (the "Title Commitment") from First American
Title Insurance Company (the "Title Company") pursuant to which the Title
Company shall commit to issue a current A.L.T.A. Form B (insuring access and
marketability) owner's fee simple title insurance policy or other policy of
title insurance as shall be reasonably satisfactory to Purchaser and to any
lender of Purchaser (the "Lender") in the amount of the Purchase Price (the
"Title Policy") insuring that the Purchaser shall receive at closing, good,
marketable and indefeasible fee simple title to the Real Property, free and
clear of all liens, exceptions, encumbrances or defects
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other than the matters expressly approved in writing by Purchaser as permitted
exceptions to title as set forth hereinafter (the "Permitted Exceptions"). With
respect to so-called "standard exceptions set forth in the preprinted portion of
the Title Commitment, the Title Commitment shall include a statement whereby the
Title Company agrees to the deletion of such standard exceptions on the basis
specified in Section 627.7842 Florida Statutes (1993). Seller shall furnish to
Purchaser copies of all condominium documents, liens, exceptions or defects set
forth in the Title Commitment at the same time as the Title Commitment is
furnished to Purchaser.
On or prior to the expiration of the Feasibility Period, the Purchaser
shall notify (the "Title Notice") the Seller as to which of the liens, defects,
encumbrances or exceptions set forth in the Title Commitment are objectionable
to Purchaser ("the Title Defects") and which of such matters are acceptable to
Purchaser as the Permitted Exceptions. Within ten (10) days after receipt by
Seller of the Title Notice, the Seller shall cure the Title Defects to the
reasonable satisfaction of the Purchaser. In the event the Seller is unable to
cure the Title Defects to the reasonable satisfaction of the Purchaser (except
for those Title Defects that can be cured with the payment of money and will be
satisfied of record by Seller at or prior to Closing) within such ten (10) day
period or the Purchaser does not agree to waive such Title Defects, then this
Agreement shall terminate and shall be null, void and without further force or
effect, the Deposit (together with all interest) shall be returned to Purchaser
and neither party shall have any further liability to the other. Notwithstanding
the foregoing, the Seller shall be obligated to remove and be responsible for
removing all Title Defects capable of being removed or discharged by payment of
money, including but not limited to, money judgments, mortgages and mechanic's
liens.
B. Within fifteen (15) days after the date of this Agreement, Seller
shall deliver to Purchaser, at Seller's expense, a survey (the "Survey") of the
Premises, dated after the date of this Agreement, prepared by a surveyor duly
licensed under the laws of the State of Florida and reasonably acceptable to the
Purchaser and the Lender in accordance with ALTA or such other standards as
shall be reasonably satisfactory to Purchaser, including meeting the minimum
technical standards set forth in Chapter 61G17-6, Florida Administrative Code,
pursuant to Section 472.027 Florida Statutes
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(1993). The Survey shall be in form and substance satisfactory to the Purchaser,
the Title Company and the Lender. The Survey delivered to Purchaser and Title
Company within fifteen (15) days after the date of this Agreement, shall be
certified to Purchaser and the Title Company (the form of certification to be
satisfactory to the Title Company and Purchaser). The Survey shall show that all
buildings are within lot and building lines, the location of such lines, the
dimensions and total area of the Real Property and Improvements, the location
and number of parking spaces, ingress and egress to adjoining streets, all
benefiting and burdening easements, improvements, appurtenances, rights of way
and utilities whether above or below ground, all encroachments from or into the
Premises, all structures and improvements on the Real Property and all
easements, rights-of-way and other restrictions of record properly identified
with recording information and certifying that the Premises are not within a
flood plain or other flood hazard area. The Survey and certification shall be
sufficient to remove the survey exception from the Title Policy without
indemnity or additional premium. On or prior to the expiration of the
Feasibility Period, the Purchaser shall notify the Seller of any objections of
Seller or Lender to the Survey ("Survey Defects"). Survey Defects shall be
deemed to be Title Defects for purposes of this Agreement and Seller shall cure
such Survey Defects according to the same procedure as for Title Defects.
C. The Purchaser and Seller shall each be responsible for the payment
of its own transaction costs, including counsel fees. Purchaser shall be
responsible for the costs incurred with the physical inspection of the Real
Property and Improvements, including any environmental and engineering studies
other than those delivered by Seller to Purchaser in accordance with Article
III, Paragraph A. At Closing, Seller shall pay the Survey and Purchaser shall
pay all premiums for the issuance of the Title Commitment and Title Policy. Any
and all transfer taxes, real estate excise taxes and sales taxes payable in
connection with the transfer of the Premises, or any portion thereof, and the
Personalty (as hereinafter defined) shall be paid by Seller. Purchaser shall pay
any mortgage registration tax, document recording fees and the cost Purchaser
incurs relative to financing if financing is involved. Unless otherwise stated
in this Agreement, the Purchaser and Seller shall pay all other costs in
connection with the Closing of this transaction as are customary in Orlando,
Florida.
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V. CLOSING
A. The closing of this transaction shall occur on or about the
fifteenth (15th) day following the expiration of the Feasibility Period, but in
no event later than May 1, 1997, by and through the National Accounts office of
the Title Company located at 1025 Connecticut Avenue, N.W., Suite 709,
Washington, D.C. 20036, or such other date or place as shall be mutually
acceptable to Purchaser and Seller (the "Closing Date"), without the requirement
that Purchaser or Seller be physically present thereat. The closing of the
transaction contemplated by this Agreement shall be deemed effective as of 12:01
a.m. on the Closing Date ("Closing"). If the date of Closing falls on a
Saturday, Sunday or banking holiday, the Closing shall take place on the next
business day thereafter.
B. At the Closing, the Seller, shall deliver to Purchaser and
perform the following:
1. A General Warranty Deed conveying good, marketable, insurable and
indefeasible fee simple title to the Real Property free and clear of all
defects, exceptions, liens or encumbrances, except for the Permitted Exceptions.
2. Seller shall pay and discharge any special assessment which on or
before the date of Closing, (a) has been levied, imposed, or confirmed against
the Premises, (b) affects or is a lien upon the Premises or (c) although not yet
a lien upon the Premises, is attributable to improvements which benefit or will
benefit the Premises or the property in the vicinity of the Premises for which
improvement work has been commenced. If any of the foregoing assessments may be
paid in installments, all installments shall be deemed payable as of the day
prior to the Closing, and shall be discharged of record by Seller. If, at the
Closing, any amount which Seller is required to pay with respect to the
foregoing has not been determined, Seller agrees to pay such amount as can be
reasonably estimated at the Closing and the final amount shall be adjusted
within fifteen (15) days after Purchaser gives Seller notice that same has been
determined. This provision shall survive the Closing.
3. A Bill of Sale conveying the Equipment, Inventory, Real Property not
conveyed by other instruments provided for herein, and other personal property
and intangible property included in the
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Premises ("Personalty"), free and clear of any lien or encumbrance, other than
the Permitted Exceptions, and containing a general warranty of title to the
Equipment, Inventory and Personalty and an inventory of all Equipment, Inventory
and Personalty.
4. An assignment of Seller's interest in and to all Permits, Contracts
to be assumed by Purchaser in accordance with Article III, Paragraph A, Leases
to be assumed by Purchaser in accordance with Article III, Paragraph A,
Intangible Rights, Prepaid items and other items of the Premises, free and clear
of any lien or encumbrance, together with written evidence satisfactory to
Purchaser of any required third party consent to such assignment. Seller shall
deliver to Purchaser all original Contracts and Leases which Purchaser has
elected to purchase pursuant to Article III hereof; the Permits, including the
existing certificates of occupancy for the Premises as presently constituted and
if no such certificates are available, evidence that the Premises are legally
constructed and properly zoned in accordance with all applicable laws; all
warranties and guarantees (and assignments thereof to Purchaser) issued in
connection with the initial construction of the Real Property and Improvements;
any Personalty, and any repairs or additions thereto; cash bank; moneys advanced
for future registrations; guest registration records; keys; permits, approvals
and licenses issued by all appropriate governmental authorities and fire
underwriting organizations with respect to the construction and use of the
Premises or any part thereof; and any existing copies of architectural plans and
specifications, blueprints and building plans which may be in Seller's
possession.
5. At Purchaser's option, an assignment of all fire and extended
coverage insurance policies, liability policies and loss of rental policies,
affecting any of the Premises to the extent assignable (if assigned, premiums to
be adjusted at Closing).
6. Tax certificates or other evidence of payment from all appropriate
taxing authorities certifying the payment of all real and personal property
taxes through the current tax year.
7. A certificate of Seller dated as of the Closing that Seller is not a
foreign person or corporation within the meaning of Sections 1445 and 7701 of
the Internal Revenue Code (the "IRC").
8. A bring down certificate dated as of the Closing
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certifying the truth and accuracy of each representation and warranty set forth
in Article XII as of the Closing Date.
9. An affidavit of title reasonably satisfactory to the Title Company
enabling the Title Company to issue the Title Policy without exception for
mechanic's or materialman's or other statutory liens or for the rights of
parties in possession other than temporary hotel patrons.
C. At the Closing, the Purchaser shall deliver to the Seller the
following:
1. Subject to Article IX, the Balance of the Purchase Price in
the manner elected by Seller pursuant to Article II, Paragraph
B.
2. Proof of authority for Purchaser to complete the transaction
reasonably satisfactory to Seller.
VI. DELIVERY OF POSSESSION
Seller shall deliver actual and exclusive possession of the Premises to
Purchaser on the Closing Date.
Seller hereby grants to Purchaser the right to enter the Premises at
any reasonable time after the date hereof for the purpose of inspecting, testing
and examining the Premises, which purpose is more particularly provided in
Article III hereof.
VII. DAMAGE TO PROPERTY
Seller shall give Purchaser immediate notice of any fire or other
casualty or of any pending or threatened condemnation occurring to all or any
portion of the Premises between the date hereof and the Closing. If prior to the
Closing, there shall occur:
(i) damage to the Premises caused by fire or other casualty,
which would cost $100,000.00 or more to repair or replace; or
(ii) the taking or condemnation of all or any portion of the
Premises (including any parking areas) as would materially interfere
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with the use thereof, as determined by Purchaser; then, if any of the
events set forth in (i) or (ii) above occurs, Purchaser, at its option,
may terminate this Agreement by written notice given to Seller within
fifteen (15) days after Purchaser has received the notice referred to
above or at the Closing, whichever is earlier. If Purchaser does not
elect to terminate this Agreement, the Closing shall take place as
provided herein without an abatement of the Purchase Price and there
shall be assigned to the Purchaser at Closing, all interest of the
Seller in and to any insurance proceeds or condemnation awards which
may be payable to Seller on account of such occurrence.
If, prior to the Closing, there shall occur:
(x) damage to the Premises caused by fire or other casualty which
would cost less than $100,000.00 to repair or replace; or
(y) the taking or condemnation of all or any portion of the
Premises which is not material to the use thereof, as
determined by Purchaser;
then, if any of the events set forth in (x) or (y) above occurs, Purchaser shall
have no right to terminate this Agreement (solely as a result of the occurrence
of such events), and Seller shall, at its sole expense, with respect to
subparagraph (x), restore or replace the damaged Premises to its original
condition; and, with respect to subparagraph (y), there shall be assigned to
Purchaser at Closing all interest of Seller in and to any condemnation awards
which may be payable to Seller on account of any such occurrence.
VIII. REMEDIES
A. If the transaction contemplated by this Agreement is not consummated
solely by reason of Purchaser's failure to perform its obligations under this
Agreement, then Seller, as its sole and exclusive remedy, shall be entitled to
the Deposit as full liquidated damages in complete and total accord and
satisfaction, the parties hereby acknowledging and agreeing to the difficulty of
ascertaining Seller's actual damages in such circumstances.
B. If this transaction is not consummated by reason of:
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(i) cancellation by Purchaser as permitted by the terms
of this Agreement, including but not limited to,
cancellation by Purchaser at any time on or prior to
the expiration of the Feasibility Period;
(ii) the inability of Purchaser to obtain any approval or
consent required pursuant to or otherwise satisfy any
condition or contingency set forth in Article III;
(iii) the occurrence of any of the events described in
Article VII;
(iv) Title Defects and Survey Defects which are not cured
as provided in this Agreement (except for those Title
Defects or Survey Defects which Seller is obligated
to cure); or
(v) cancellation by Purchaser pursuant to any other
applicable provisions of this Agreement,
then Purchaser shall be entitled to a return of the Deposit (together with all
interest thereon) and this Agreement shall be null and void and all parties
relieved from any further liability hereunder, unless Purchaser elects to waive
any of the items or occurrences set forth in this Article VIII, Paragraph B. The
items enumerated in this Article VIII, Paragraph B are for Purchaser's benefit
only and the non-occurrence of a state of facts sufficient to satisfy any of
such items may not be used or pleaded by Seller as a defense to the
enforceability of this Agreement.
C. If this transaction is not consummated because of a default on the
part of Seller or if Seller fails to close this transaction in breach of its
obligation to do so, then Purchaser, at its option, may
(i) seek specific performance of this Agreement;
(ii) receive a return of the Deposit (together with all interest
thereon) and to recover monetary damages as allowed by law;
and
(iii) seek any other remedy available at law or in equity to enforce
the terms of this Agreement, all of which
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remedies available to Purchaser shall be cumulative.
IX. PRORATIONS
All income (including cash on hand and accounts receivable), current
operating expenses, accounts payable, real estate taxes, other taxes and
assessments, all utilities, water and sewer charges, licenses or permit fees
relating to the operation of the Premises, real estate and personal property ad
valorem taxes, prepayments made under the Contracts (to be assumed by Purchaser
pursuant to Article III hereof) and insurance premiums (if applicable), shall be
adjusted and prorated as of the Closing. All franchise fees, maintenance and
service agreements (whether or not service is continued by Purchaser) and
utility charges shall be determined as of Closing and paid by Seller or
appropriate adjustments made if Purchaser at its option accepts an assignment of
any such agreement. If such charges and expenses are unavailable on the Closing
Date, a re-adjustment of such charges and expenses shall be made within thirty
(30) days after the Closing or as soon thereafter as such charges and expenses
are available. The parties agree to cooperate in good faith in effecting such a
final reconciliation and each party shall promptly pay (or reimburse the other
party for) any expense item that is chargeable to the former party and shall
promptly remit any income item to the other party if entitled thereto. Seller
shall use reasonable efforts to arrange for the rendition of final bills by the
utility companies involved as of the Closing Date.
Guest room revenues of the Premises, whether in cash or in accounts receivable,
arising from occupancy for the night beginning on the day preceding the Closing
Date and ending on the Closing Date shall be credited one-half to Purchaser and
one-half to Seller. Seller shall collect all income and other sums payable by
tenants or guests (or otherwise) and shall be responsible for the payment of all
expenses on account of services and supplies furnished to and for the benefit of
the Premises through and including the Closing, with expenses for the night
beginning on the day preceding the Closing Date and ending on the Closing Date
being handled in the same manner as guest room revenues for such period.
Purchaser shall be credited with any deposits from tenants or guests of the
Premises which are refundable to such tenants or guests. Seller shall remit to
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Purchaser at closing all prepaid income items. In addition, at Closing, Seller
shall deliver to Purchaser a schedule of all unpaid accounts receivable and
other income items as of Closing. All such accounts receivable and other income
items collected by or for Purchaser after Closing shall be promptly remitted to
the order of Seller; provided, however, payments received by Purchaser following
the Closing with respect to receivables shall be deemed to be in payment of
receivables of Purchaser unless the payment received specifically identifies
that it is in payment of a receivable attributed to Seller or there is no
receivable due to Purchaser with respect to such payment. Seller and Purchaser
agree to attempt to reconcile and prorate the accounts receivable within sixty
(60) days after Closing. Except for sums actually received by Purchaser pursuant
to the immediately preceding sentence, Purchaser shall assume no obligation to
collect or enforce the payment of any amounts that may be due to Seller, except
that Purchaser shall render reasonable assistance, at no expense to Purchaser,
to Seller after Closing in the event Seller proceeds against any third party to
collect any accounts receivable or other income items due Seller. Nothing
contained in this Article shall be deemed to prohibit Purchaser and Seller from
entering into an agreed settlement in writing of all prorations at or following
Closing.
In the event any adjustments pursuant to this Article are, subsequent
to Closing, found to be erroneous, then either party hereto is entitled to
additional monies and shall invoice the other party for such additional amounts
as may be owing, and such amount shall be paid promptly by the other party upon
receipt of the invoice. Such invoice shall be accompanied by reasonable
substantiating evidence. Notwithstanding anything contained in this Article IX
to the contrary, in order to provide security for all of the adjustments and
prorations set forth in this Article IX to be made after Closing, Purchaser and
Seller agree that the sum of $50,000.00 from the net sales proceeds portion of
the Purchase Price available to Seller at Closing shall be deposited with Escrow
Agent and shall be held by Escrow Agent until all such adjustments and
prorations are deemed final by Purchaser and Seller. Escrow Agent shall not
disburse such amount or any portion thereof except in accordance with written
instructions relative thereto signed by both Purchaser and Seller. The terms of
such escrow shall be set forth in an escrow agreement to be executed at Closing,
the terms thereof being subject to the reasonable approval of Purchaser and
Seller.
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Purchaser shall have no obligation with respect to Seller's employees
whatsoever all of whom shall be compensated and terminated by Seller as of
Closing, though Purchaser reserves the right to employ any such employees.
The provisions of this Article IX shall survive the delivery of the
Deed.
X. NOTICES
Any notice to be given by either party to this Agreement shall be in
writing and shall be either delivered personally, or by facsimile (provided that
a copy of such notice is also sent on the same day by one of the other methods
set forth herein) or by certified or registered U.S. Mail, postage prepaid, or
by nationally recognized overnight courier delivery service with charges to the
sender, as follows:
To Seller: WHB Hotel Corp., Ltd.
c/o Mr. Bill Bodenhamer
Post Office Box 7193
Ft. Lauderdale, FL 33339-7193
Fax No. ______________________
With copies to: Nathan I. Leder, Esquire
Sandler, Travis & Rosenberg
5200 Blue Lagoon Drive, Suite 600
Miami, Florida 33126
Fax No. (305) 267-5155
To Purchaser: WINN Limited Partnership
2209 Century Drive, Suite 300
Raleigh, North Carolina 27622
Attention: Robert W. Winston, III
Fax No. (919) 510-6832
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With copies to: William W. Bunch, III, Esquire
Brown & Bunch
4900 Falls of Neuse Road,
Suite 210 (street zip code 27609)
Post Office Box 19409
Raleigh, North Carolina 27619-9409
Fax No. (919)878-8062
Notice shall be deemed given if properly addressed and delivered as set forth
herein two (2) business days following deposit in the U.S. Mail, one (1)
business day following deposit with any generally recognized overnight delivery
service, on personal hand delivery to a person authorized to receive such
delivery, on the day of such hand delivery and, on the date of the facsimile
transmission as evidenced by the printed receipt therefor, provided a second
method is utilized as required hereinbefore. Any party may change addresses for
notices by delivering written notice of such change in accordance with this
Article X.
XI. INDEMNITY
A. Seller shall indemnify and hold the Purchaser harmless from and
against any claim for any real estate commission, brokerage fee or finder's fee
made by any person, firm or corporation, claiming by, through or under the
Seller. Purchaser shall indemnify and hold the Seller harmless from and against
any claim for any real estate commission, brokerage fee or finder's fee made by
any person, firm or corporation, claiming by, through or under the Purchaser.
Notwithstanding the foregoing, Seller warrants and represents that there are no
brokerage fees, real estate commissions, finder's fees or other acquisition
costs or any other compensation payable by Seller and due to any third party in
connection with this transaction other than commissions to be paid to
International Hospitality Group (Pat Peters). Seller shall pay such commission
in full to such brokers upon the Closing of the transaction contemplated hereby.
This warranty and representation shall survive the Closing and the parties shall
indemnify each other from any liability, cost or loss arising out of a breach of
said warranty and representation, including consequential damages.
B. The Seller shall indemnify and hold the Purchaser harmless from and
against any and all liabilities, claims, demands, costs and
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<PAGE> 19
expenses of any kind or nature, including but not limited to, reasonable
attorney's fees, arising out of or incurred in connection with (i) any breach of
the representations and warranties of Seller set forth in this Agreement, (ii)
the ownership, use, maintenance or operation of the Premises on or prior to the
Closing or the transfer of the Premises to the Purchaser (including the payment
of all taxes),or (iii) compliance or failure to comply with the notice
provisions relating to bulk sales laws applicable to the transfer of all or any
part of the Premises. Purchaser shall indemnify and hold Seller harmless from
and against any and all liabilities, claims, demands, costs and expenses of any
kind or nature, including reasonable attorney's fees, arising after the date of
Closing and which arise out of the ownership or operation of the Premises by the
Purchaser following the Closing. Such indemnities shall survive Closing.
C. If Purchaser or Seller propose to make any claim for indemnification
under any Article or Paragraph of this Agreement (the "Indemnitee"), the
Indemnitee shall deliver to the other party (the "Indemnitor") a certificate
signed by the Indemnitee which certificate shall (i) state that a loss has
occurred and (ii) specify in reasonable detail each individual item of loss or
other claim including the amount thereof and the date such loss was incurred.
The Indemnitor shall have the right in its discretion and at its expense to
participate in and control (a) the defense or settlement of any claim, suit,
action or proceeding (including appeals) in respect of such item (or items) by
any person other than a party hereto, (b) any and all negotiations with respect
thereto, and (c) the assertion of any claim against any insurer with respect
thereto, and the Indemnitee shall not settle any such claim, suit, action or
proceeding or agree to extend any applicable statute of limitation without the
prior written approval of the Indemnitor. The rights of participation, control
and approval granted to the Indemnitor shall be subject as a condition precedent
to the Indemnitor's acknowledging to the Indemnitee, in writing, the obligation
of the Indemnitor to indemnify the Indemnitee in respect of such third party's
claim, suit, action or proceeding giving rise to such item. Upon satisfaction of
such condition precedent, the Indemnitee shall provide the Indemnitor with all
reasonably available information, assistance and authority to enable the
Indemnitor to effect such defense or settlement and upon the Indemnitor's
payment of any amounts due in respect of such claim,
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suit, action or proceeding, the Indemnitee shall, to the extent of such payment,
assign or cause to be assigned to the Indemnitor the claims of the Indemnitee,
if any, against such third parties in respect of which such payment is made. If
the Indemnitor is not so willing to acknowledge such obligation, the parties
shall jointly consult and proceed as to any such third party claim, suit, action
or proceeding.
XII. SELLER'S REPRESENTATIONS AND WARRANTIES
The Seller represents and warrants to the Purchaser that:
A. Seller is a limited partnership duly organized, and existing and in
good standing under the laws of the state of its formation and authorized to do
business in the State in which the Premises are located.
B. Seller is authorized to enter into this Agreement and to consummate
the transaction contemplated hereby, and the individuals executing this
Agreement on behalf of Seller are also duly authorized to execute this Agreement
and to bind Seller to consummate such transaction. The execution and delivery of
this Agreement and the conveyance of the Premises by Seller, pursuant to this
Agreement, do not require the consent of any person, agency or entity not a
party to this Agreement. The execution of this Agreement by Seller and the
transaction contemplated herein have been duly authorized by proper corporate or
partnership action, as the case may be, including the board of directors of
Seller, if Seller is a corporation.
C. There are no pending or, to the knowledge of Seller, threatened,
condemnation or similar proceedings affecting the Premises, or any portion
thereof. Seller has not received any written notice that any such proceeding is
contemplated, and no part of the Premises has been destroyed or damaged by any
casualty.
D. To the best of Seller's knowledge, the maintenance, operation, use
or occupancy of the Premiss as a hotel does not violate any building, health,
zoning, environmental, fire or similar law, ordinance, regulation or restrictive
covenant. To the best of
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Seller's knowledge, the Premises do not violate any federal, state, county, or
municipal laws, ordinances, orders, regulations or requirements nor has Seller
received any notice of such a violation.
E. There are no options to purchase, rights of first refusal or other
similar agreements with respect to the Premises which give anyone the right to
purchase the Premises or any part thereof, except as set forth in Section 16 of
that certain Declaration of Condominium of Capital Hotel Restaurant Group - A
Condominium, dated October 30, 1989, recorded in Official Records Book 4127,
Page 4155, as amended by the First Amendment thereto recorded in Official
Records Book 4149, Page 607, Public Records of Orange County, Florida, given and
granted therein to the owner of Unit 2 of such Condominium, the same having been
waived by such owner of such Unit 2 by letter dated February 28, 1997. There are
no contracts or agreements which affect or cover the Premises, except for the
Contracts, Permits and Leases. There are no unpaid bills or claims in connection
with the construction repair or replacement of the Premises. There are no
agreements allowing for any reduction, concession or abatement of room rates,
other than coupons based on room availability and standard concessions and
wholesale and bulk room customers, a list setting forth the names, rates and
term of agreement for such concessions and amount of outstanding coupons shall
be provided to Purchaser within five (5) days after the date of this Agreement,
to be updated at Closing.
F. The Financial Statements for the Premises provided by Seller to
Purchaser pursuant to Article III, Paragraph A, item (g) are or shall be true,
correct and accurate in all material respects and fairly present the results of
operations of the Premises for the periods then ended. Attached hereto as
Schedule 5 and incorporated herein by this reference is a trailing twelve (12)
month profit and loss statement ending February, 1997, evidencing a net
operating income for the Premises of $1,391,472.00, and such Schedule 5 is true,
correct and accurate in all material respects and fairly presents the results of
the operations of the Premises for such period. It is acknowledged that such
profit and loss statement has been amended and adjusted as agreed to by
Purchaser and Seller to be in accordance with generally accepted accounting
principles and to exclude therefrom items extraneous to the operation of the
Hotel previously included therein. During the immediately preceding two year
period, no single customer (or its or their affiliates) comprised more than 10%
of gross room sales, with the exception that
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in 1995, Choice-Sunburst accounted for 14.2% and Carnival accounted for 16.8%
and in 1996, Carnival accounted for 9.6%, Choice-Sunburst accounted for 13.5%
and AAA accounted for 18.8%.
G. The Seller has duly filed in a timely manner all federal, state,
county and local income, franchise, excise, withholding, sales, occupancy,
payroll, property (real, personal and intangible), and any other tax returns and
reports required to have been filed up to the date hereof, and has paid all
taxes, interest, penalties and all assessments that have become due. The Seller
has paid, or made adequate provision for the payment of, all taxes with respect
to the conduct of its business upon the Premises through the Closing. Neither
the Seller nor its agents have been advised or notified of any tax deficiency,
assessment or penalty with respect to the Seller, nor does the Seller know of
any basis for any additional claim or assessment for taxes, interest or
penalties. No liens for taxes, federal, state or local, have been filed against
the Seller or its assets.
H. Certificates of Occupancy for all buildings and other improvements
have been duly issued, and the buildings and improvements may be legally
occupied and are presently being occupied as a hotel/motel. Copies of such
Certificates of Occupancy or their equivalent in Florida shall be delivered by
Seller to Purchaser within five (5) days after the date of this Agreement. The
Real Property is zoned properly for the present uses made thereof.
I. Except as set forth in the Title Commitment, the Seller owns and has
good and marketable title to all of its assets and properties which constitute
the Premises free and clear of any security interest, mortgage, pledge, lien,
conditional sale or other encumbrance or charge. All of the Premises owned by
Seller is, and at the time of Closing will be, in good condition and in good
working order. The Premises to be purchased is all of the property of every kind
and nature necessary for the operation of the Seller's business in the ordinary
course.
J. To the best of Seller's knowledge, the Premises are in compliance
with and have not violated any statute, law, ordinance, rule, regulation, order
and directive (including, without limitation, all labor and environmental
control and antipollution laws, ordinances, rules, regulations or directives) of
any and all
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Governmental Agencies pertaining to the use or occupancy of the Premises.
The Seller has not received any notice of and the Seller and the
Premises have not been charged with, are not under investigation or threatened
investigation for failure to comply with and are in compliance with, any and all
statutes, laws, ordinances, rules, regulations, orders and directives of any and
all Governmental Agency or Agencies pertaining to the use, generation, dumping,
releasing, burying or disposing of or emitting of any particles, materials,
substances, or emissions that are now or have heretofore been determined by any
and all Governmental Agency or Agencies to be of a hazardous, toxic, pollutive,
or ecologically or environmentally damaging nature, including but not limited to
asbestos ("Hazardous Materials"). Seller has not previously disposed of any
Hazardous Materials at the Premises.
For purposes of this Agreement, the term "Hazardous Materials" shall
include, but not be limited to, those materials or substances now or heretofore
defined as "hazardous substances," "hazardous materials," "hazardous waste,"
"toxic substances," or other similar designations under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C., Section 9601, et seq., the Resource Conservation and Recovery Act, 42
U.S.C., Section 6901, et seq., the Hazardous Materials Transportation Act, 49
U.S.C., Section 1801, et seq. and other laws, whether or not of a similar
nature, applicable to the Premises and adopted by, enacted in or applicable to
the State of Florida.
For purposes of this Agreement, the term "Governmental Agency or
Agencies" means, whether of the United States of America, of any state or
territory thereof or of any foreign jurisdiction, any government, political
subdivision, court, agency, or other entity, body, organization or group
exercising any executive, legislative, judicial, regulatory or administrative
function of government.
To the best of Seller's knowledge, the Real Property has never appeared
on any federal or state registry of active or inactive hazardous waste disposal
sites. Seller has never received any notice of claim from a Governmental Agency
concerning the alleged release or threatened release of Hazardous Materials at
the Real Property. To the best of Seller's knowledge, no hazardous waste sites
exist within a one mile radius of the Real Property.
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K. There are no employment or union agreements in effect relative to
any employee at the Premises and no employee has received a commitment from the
Seller for continued employment after Closing. The Seller shall be responsible
for and shall pay all salary, compensation, vacation time, bonuses and benefits
to which each employee of and at the Premises is entitled for the period of time
prior to the Closing Date.
L. Seller has no knowledge of and has received no notice of any causes
of action, actions, or proceedings of whatever type or description which have
been instituted or threatened or are pending relating to the Premises or any
interest therein.
M. No representation or warranty made by the Seller, nor in any
statement or document furnished or to be furnished to the Purchaser hereunder,
or in connection with the transaction contemplated hereby, contains or will
contain any untrue statement of a material fact or omits or will omit to state a
material fact necessary to make the statements contained therein not misleading.
The Seller has disclosed herein to the Buyer all facts or developments of any
kind which are material to the assets, prospects, financial condition and
business of the Seller, and is solely responsible for the accuracy and
completeness of the contents thereof and all other statements and documents
submitted in connection with this Agreement and the transactions contemplated
hereby.
Purchaser, in Purchaser's sole and absolute discretion, may waive any
condition to close or breach of any representation or warranty provided for
herein or any Title or Survey Defect, and in such event, this transaction shall
be consummated as if such condition, representation, warranty or defect was
satisfied. All of the representations and warranties contained in this Agreement
shall survive the Closing. The representations and warranties set forth above
shall be true, correct and accurate on the date hereof and as of the date of
Closing.
XIII. ESCROW
The Escrow Agent hereby acknowledges receipt of the Deposit and agrees
to hold the Deposit in escrow until the Closing or sooner termination of this
Agreement and shall pay over and apply the proceeds thereof in accordance with
the terms of this Agreement.
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If, for any reason, the Closing does not occur and either party makes a written
demand upon the Escrow Agent for payment of the Deposit, the Escrow Agent shall
give written notice to the other party of such demand. If the Escrow Agent does
not receive a written objection from the other party to the proposed payment
within five (5) business days after the giving of such notice, the Escrow Agent
is hereby authorized to make such payment. If the Escrow Agent does receive such
written objection within such five (5) day period, or if for any reason the
Escrow Agent in good faith shall elect not to make such payment, the Escrow
Agent shall continue to hold the Deposit until otherwise directed by written
instructions from the parties to this Agreement or until a final judgment
(beyond any applicable appeal period) by a court of competent jurisdiction is
rendered disposing of such Deposit.
The Escrow Agent shall be liable as a depository only and its duties
hereunder are limited to the safekeeping of the Deposit and the delivery of same
in accordance with the terms of this Agreement. The Escrow Agent shall not be
liable for any act or omission done in good faith, or for any claim, demand,
loss or damage made or suffered by any party to this Agreement, except such as
may arise through or be caused by the Escrow Agent's willful misconduct or
negligence.
XIV. COVENANTS
A. Following the date of this Agreement and to and including the
Closing, the Seller (i) shall continue normal and prudent maintenance and
management of the Premises, (ii) shall continue to maintain supplies and payroll
at their current level, and (iii) shall operate the Hotel in the ordinary and
prudent course of business.
B. All taxes levied against the Premises which were or shall be due and
payable prior to the Closing have been or shall be paid in full by the Seller on
or prior to the Closing.
C. All Contracts and Leases which the Purchaser elects to assume in
accordance with Article III shall be current and not in default as of the
Closing. Seller shall not enter into new Contracts or Leases except in the
ordinary course of business, and provided that any such new Contract or Lease
shall either provide that it may be cancelled on not more than 30 days notice by
Seller
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at no penalty or cost or, Purchaser shall consent to such Contract or Lease in
writing.
D. Seller shall maintain fire and casualty insurance on the Premises up
to and including the Closing in amounts reasonably satisfactory to Purchaser.
E. Seller shall deliver to Purchaser a report itemizing room sales per
month, occupancy and ADR through a date which is not later than one month prior
to the Closing Date ("Monthly Report"). The Monthly Report shall be satisfactory
to Purchaser in all respects.
F. During the Feasibility Period, representatives of Seller and
Purchaser shall meet at the Premises and prepare a schedule of the Equipment,
which schedule shall be attached hereto and made a part hereof at such time.
XV. 1031 EXCHANGES. Seller may elect at Seller's option to structure
the sale of the Premises as a tax free exchange as follows:
A. Direct Exchange. To conclude the Closing of the Premises, in whole
or in part, by exchanging the Premises for property of "like kind" as defined in
Section 1031 of the Internal Revenue Code of 1986 (the "Code"), and, in
accordance with all of the terms and conditions for such an exchange, as
provided in Section 1031 of the Code. Purchaser agrees to cooperate fully and
completely with Seller to exchange the Premises, rather than sell the Premises
directly; provided, however, that Seller agrees to be solely responsible for any
and all costs or additional costs or expenses relating to such an exchange
transaction. Seller shall provide to the Purchaser notice of same, which notice
shall include all of the usual and customary "exchange" requirements, as
provided in Section 1031 of the Code, together with the details regarding the
party or parties making the exchange and the proposed structure of such
exchange. The notice shall expressly incorporate all of the terms, provisions
and conditions of this Agreement which are not directly contrary to such
exchange transaction.
B. Delayed Exchange. Without limitation to the generality of the
foregoing, Seller may further elect to conduct the aforesaid
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exchange on a delayed basis (provided, however, that such delayed exchange shall
have no adverse effect on the Purchaser and not result in additional costs,
expenses, liabilities or obligations to the Purchaser), in which case the
balance of the Purchase Price of the Premises shall, upon the Closing, be
delivered to the Title Company or other designee of the Seller, pursuant to such
exchange entity's standard tax-deferred exchange documents.
C. No Delays or Liability to Purchaser. Notwithstanding anything in the
foregoing to the contrary, the Purchaser shall not be required to take title to
any property of "like kind", shall incur no liability whatsoever as a result of
the efforts of Seller to proceed under Section 1031 of the Code, and the failure
of Seller to locate or identify property of "like kind" shall not delay or
affect this Agreement in any manner whatsoever.
XVI. BINDING EFFECT; MISCELLANEOUS
A. This Agreement shall be binding upon and shall inure to the parties
hereto, their respective heirs, successors, legal representatives and assigns.
This Agreement sets forth the entire Agreement between the parties hereto and no
other prior written or oral statement or agreement or understanding shall be
recognized or enforced. All modifications or amendments shall be in writing and
signed by the parties. This Agreement is to be construed according to the laws
of the State of North Carolina. This Agreement may be executed in two or more
counterparts all of which shall constitute one and the same instrument. The
singular shall include the plural and vice versa.
B. The Purchaser may assign this Agreement.
C. For a period of four (4) years immediately following the Closing,
Seller, including any and all entities and individuals owning at least a twenty
five percent (25%) ownership interest in Seller, agrees that it shall not,
directly or indirectly, for its own account or as agent, employee, officer,
director, trustee, lessor, sublessor, consultant or as a stockholder of any
corporation or any other entity, or as a member of any firm or otherwise, (i)
engage or attempt to engage within the Restricted Area (as hereinafter defined),
in the hotel, motel or other business which is the same as, substantially
similar to or competitive with the operation of the Premises purchased pursuant
to this Agreement, or
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(ii) employ or solicit the employment of any employees of Seller at the
Premises; provided, however, the foregoing shall not apply to Tom Williams who
is currently employed by Seller at the Hotel and therefore, notwithstanding the
foregoing, Seller, including any and all entities and individuals owning at
least a twenty five percent (25%) ownership in Seller, shall have the right to
employ Tom Williams subsequent to Closing. For purposes of this Agreement, the
term "Restricted Area" shall mean an area which shall consists of a circle the
radius of which is seven (7) miles with the center point being located at the
Premises in Orlando, Florida. Each of the Seller, including any and all entities
and individuals owning at least a twenty five percent (25%) ownership interest
in Seller, and Purchaser acknowledges and agrees that the foregoing territorial,
time and other limitations and restrictions contained in this Article XVI are
reasonable and properly required for the adequate protection of the business and
affairs of the Purchaser, and in the event that any one or more of such
territorial, time or other limitations is found to be unreasonable by a court of
competent jurisdiction, each of Purchaser and Seller, including any and all
entities and individuals owning at least a twenty five percent (25%) ownership
interest in Seller, hereby agree to submit to the reduction of the said
territorial, time or other limitation, to such an area, period or otherwise as
the court may determine to be reasonable. In the event that any limitation or
restriction under this Article XVI is found to be unreasonable or otherwise
invalid in any jurisdiction in whole or in part, each of Purchaser and Seller,
including any and all entities and individuals owning at least a twenty five
percent (25%) ownership interest in Seller, acknowledges, warrants, represents
and agrees that such limitation shall remain and be valid in all other
jurisdictions. Each of Purchaser and Seller, including any and all entities and
individuals owing at least a twenty five percent (25%) ownership interest in
Seller, acknowledges, warrants, represents and agrees that the restrictive
covenants contained in this Article XVI are necessary for the protection of
Purchaser's legitimate business interests and are reasonable in scope and
content, and Seller, including any and all entities and individuals owning at
least a twenty five percent (25%) ownership interest in Seller, represents and
warrants that its and their attorneys have thoroughly and completely reviewed
this Agreement with it and them, and it and they understand the contents hereof.
Seller, including any and all entities and individuals owning at least a twenty
five percent (25%) ownership interest in Seller, and Purchaser acknowledges and
agrees that because a remedy
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at law for any breach of the provisions of this Article XVI will be inadequate,
in addition to all other remedies available to Purchaser, Purchaser shall have
the remedies of a restraining order, injunction or other equitable relief to
enforce the provisions hereof. Each of Purchaser and Seller, including any and
all entities and individuals owning at least a twenty five percent (25%)
ownership interest in Seller, agrees that the issues in any action brought under
this Article XVI will be limited to claims under this Article XVI and all other
claims or counterclaims under other provisions of this Agreement will be
excluded. All expenses, including reasonable attorneys' fees and expenses
arising out of claims under this Article XVI shall be borne by the losing party
to the fullest extent permitted by law. Purchaser and Seller, including any and
all entities and individuals owning at least a twenty five percent (25%)
ownership interest in Seller, acknowledge and agree that the payment of the
Purchase Price is sufficient consideration to support the enforcement of this
Paragraph C. of Article XVI and further, the agreements of Seller herein,
including any and all entities and individuals owning at least a twenty five
percent (25%) ownership interest in Seller, are given and made to and for the
benefit of Purchaser as a material inducement to Purchaser to pay the Purchase
Price pursuant to the terms of this Agreement. The terms and provisions of this
Article XVI shall survive Closing. The entities and individuals owning at least
a twenty five percent (25%) ownership interest in Seller are identified on
Schedule 6 attached hereto and incorporated herein by this reference. Such
entities and individuals have executed Schedule 6 to acknowledge, consent and
agree to the terms and provisions of this Paragraph C. of Article XVI.
D. As used herein, "the date of this Agreement" shall mean the date
noted below as the date upon which this Agreement was executed by the latter of
the Purchaser or the Seller.
XVII. SECURITIES MATTERS. Purchaser and Seller acknowledge, agree,
represent and warrant each to the other, that the Units to be issued pursuant to
this Agreement will be received and accepted as follows:
A. Each of such persons to whom the Units will be transferred
(a) if an individual, either (i) has an individual net worth, or a
joint net worth with his/her spouse, at the time of purchase in excess
of
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$1,000,000.00; or (ii) has an individual gross income (jointly with
his/her spouse) in excess of $200,000.00 for the two most recent years
and reasonably expects an income in the current year in excess of
$300,000.00, or (b) if a corporation, partnership or trust, is
otherwise an "accredited investor" as that term is defined in
Regulation D promulgated by the Securities and Exchange Commission; and
Seller shall have written corroboration of such matters as to each
party who will receive Units as a result of the transaction provided
for herein, as of the time they receive Units;
B. Seller and each of the persons to whom the Units may be
transferred hereby acknowledge and agree that the Units shall be held
by Seller and such persons for a period of at least one (1) year from
and after their issuance to Seller or such persons and that the Units
are being acquired pursuant to the terms and conditions described in
the Partnership Agreement of Purchaser, a copy of which has been
obtained by or otherwise provided to Seller and such persons;
C. Except in connection with a redemption of the Units, the
Units are being and shall be received and held by Seller and such
persons for their own account for investment purposes only, and not
with a view to any offering or distribution thereof, and Seller and
such persons have no present intention of selling or otherwise
disposing of the Units;
D. The Units have been obtained by Seller and such persons
without the service of any broker, dealer, investment banker or finder,
and there is no obligation to pay a commission, fee, bonus or
remuneration of any type to any broker, dealer, investment banker, or
finder;
E. Seller and such persons have been given access to all
registration statements, proxy materials, financial statements and
filings with the Securities and Exchange Commission relating to the
shares of Winston Hotels, Inc. and the business of the Purchaser, and
such materials are understood by Seller without the benefit of an
investment adviser, lawyer, accountant or other professional;
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F. Seller and such persons have been afforded the opportunity
to ask questions of and receive answers from Winston Hotels, Inc., the
Purchaser and their representatives concerning matters relating to the
capitalization, management, financial condition, operations and
prospects, financial and otherwise, of the Purchaser and Winston
Hotels, Inc., and no verbal information has been furnished to Seller or
such persons in connection with this transaction which is in any way
inconsistent with or at variance from the written information so
provided;
G. The Units are not registered under the Securities Act of
1933, as amended, and the owners thereof may be required to bear the
economic risk of ownership of the Units for an indefinite period of
time; and, consequently, the Units cannot be sold unless the offer and
sale thereof is subsequently registered under the Securities Act of
1933 and the "blue sky" law of each state in which any of the Units are
offered for sale, unless an exemption from registration is available;
H. Purchaser will distribute or transfer the Units only to
persons who make the same representations and warranties as are set
forth in this Article XVII; and,
I. Seller and such persons understand that the Units have not
been and will not be registered under state or federal securities laws.
Seller and such persons shall be entitled to convert the Units into an
equal number of shares of common stock, par value $.01 per share, in
Purchaser's general partner, Winston Hotels, Inc., a North Carolina
corporation ("Shares"), at a conversion price based on the then current
trading price of the common stock of Winston Hotels, Inc. at the time
of such conversion or cash as set forth in the partnership agreement of
Purchaser. Seller and such persons further understand that neither the
Units nor Shares may be sold or transferred except according to the
terms of this Agreement, the partnership agreement of Purchaser and
pursuant to an effective registration statement under the Securities
Act of 1933, as amended, or pursuant to an exemption from registration.
Notwithstanding the
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foregoing, Seller hereby requests and Purchaser hereby agrees, that it
shall cause the registration of Shares issuable hereunder upon
redemption of Units on at least sixty (60) days notice after the
expiration of the one (1) year period set forth in paragraph B above.
Purchaser shall use its best efforts to file and obtain the necessary
regulatory approvals for a registration statement under which Seller
and such persons can sell the Shares. Seller and such persons shall
cooperate with Purchaser, at no expense to Seller or such persons, with
respect to obtaining the necessary regulatory approvals for a
registration, all of which shall be at the expense of Purchaser.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal as of the day and year first above written.
Purchaser:
WINN Limited Partnership,
a North Carolina limited partnership
(SEAL)
By: Winston Hotels, Inc.,
a North Carolina corporation,
General Partner
(Corporate Seal) By: /s/ Robert W. Winston
--------------------------------
President
---------
Attest:
Brenda G Burns
- --------------------
Assistant Secretary
32
<PAGE> 33
Seller:
WHB Hotel Corp., Ltd.,
a Florida limited partnership
By: Hotel Investors of Orlando, Inc,
a Florida corporation,
general partner
By: /s/ William H. Bodenhamer (SEAL)
--------------------------------
Name: William H. Bodenhamer
Title: President
Escrow Agent:
The Title Company of North Carolina,
Inc., as agent for First American
Title Insurance Company
Name: /s/ Alice B. Murdock
--------------------------------
Title: Vice President
--------------------------------
33
<PAGE> 34
STATE OF NORTH CAROLINA
COUNTY OF WAKE
I, a Notary Public of the County and State aforesaid, certify that
Brenda G. Burns, personally came before me this day and acknowledged that she is
Assistant Secretary of Winston Hotels, Inc., a North Carolina corporation,
General Partner of WINN Limited Partnership, a North Carolina limited
partnership, and that by authority duly given and as the act of the corporation,
as such General Partner, the foregoing instrument was signed in its name by its
President, sealed with its corporate seal and attested by herself as its
Assistant Secretary. Witness my hand and seal, this the 17th day of March, 1997.
My commission expires:_____ _____________________________
Notary Public
(SEAL)
STATE OF FLORIDA
COUNTY OF BROWARD
I, a Notary Public of the County and State aforesaid, certify that
William H. Bodenhamer, President of Hotel Investors of Orlando, Inc., a Florida
corporation and general partner of WHB Hotel Corp., Ltd., a Florida limited
partnership, personally appeared before me this day and acknowledged the due
execution of the foregoing instrument. Witness my hand and seal, this the 14th
day of March, 1997.
My commission expires: 10/18/99 /s/ Lucia Neforos
--------------------------------
Notary Public
(SEAL)
34
<PAGE> 35
Schedule 1
Legal Description
BEING ALL of Unit 1 established by and pursuant to that certain
Declaration of Condominium of Capital Hotel Restaurant Group - A Condominium,
dated October 30, 1989, recorded in Official Records Book 4127, Page 4155,
Public Records of Orange County, Florida, as amended by the First Amendment
thereto dated November 6, 1989, recorded in Official Records Book 4149, Page
607, Public Records of Orange County, Florida (collectively "the Declaration"),
together with all of the rights, benefits and easements to which such Unit 1 is
entitled pursuant to the Declaration, and an undivided interest in and to the
Common Elements appurtenant to such Unit 1 as set forth in the Declaration and
membership in and to the Association defined in the Declaration, together with
all of the rights and benefits arising by virtue of membership in such
Association, subject to all of the responsibilities and obligations, including
the obligation for Common Expenses and assessments, as set forth in the
Declaration.
(Subject to change in accordance with the requirements of the Title Company
relative to the description of the Real Property.)
35
<PAGE> 36
Schedule 2
CONTRACTS
<TABLE>
<CAPTION>
CONTRACTS BUSINESS AMOUNT TERM EXPIRES
- --------- -------- ------ ------------
<S> <C> <C> <C>
Brownie Quarterly Grease $200.00/cleaning 30 Day Notice
Trap Cleaning
Coca-Cola Vending Machine Vending Comm 30 Day notice
Copy Co. Copier Maint $693.00/yr-Prepaid 9/26/97
Entech Pest Control $220.00/mo 8/31/97-30 Day Notice
Firestone Roof Warranty N/C 4/25/2000
Griffin Tiki Fryer Oil No Fee 6/2/98-30 Day Notice
Removal
Hemisphere Time Share Desk Income
$4,000.00/mo
Hotel Computers Computer $150.00/mo 30 Day Notice
Software
Lodgenet In-Room $619.00/mo 5/22/04
Entertainment +10% Comm
Massey Services Termite Control $713.00/yr 4/3/97
Annual Renewal
Miami Elevator Repair/Upkeep $225.00/mo 4/1/98
Muzak Lobby Music $43.00/mo 90 Day Notice
Sand Lake Commons Assoc. Dues $543.00/mo Indefinite
Simply Computers Computer $175.00/mo 30 Day Notice
Hardware
Stewart's Landscaping Monthly Lawn $12,400.00/yr 8/1/97-30 Day Notice
Maintenance 10 Installments
Vending Services Coin Laundry 50% Commission 1/15/02
Visitel In-room TV Info N/C 60 Day Notice
Waste Management Trash Removal $612.50/mo 6/26/98-60 Day Notice
</TABLE>
36
<PAGE> 37
Schedule 3
LEASES
<TABLE>
<CAPTION>
CONTRACTS BUSINESS AMOUNT TERM EXPIRES
- --------- -------- ------ ------------
<S> <C> <C> <C>
Pitney Bowes Mail Machines $63./mo 1/10/98
Postage Scale
Auto Feeder
Meter Rental $162./qtr 90 day notice
Maintenance $156./yr 12/31/97
Contract-Mailing
Machine
Maintenance $173./yr 12/31/97
Scale
Maintenance $88./yr 12/31/97
Auto Feeder
</TABLE>
37
<PAGE> 38
Schedule 4
Product Improvement Plan
AES Addenda for FL268
Franchisee agrees to make the following changes and additions to upgrade
the Hotel to meet the Franchisor's standards or to cure existing deficiencies
after entering the comfort suites System, in accordance with the following
schedule, at which time the property will be reinspected.
<TABLE>
<CAPTION>
HSKP MCI Unit Cost Ext. Exp
- ---- --- ---- ---- --------
<C> <C> <S> <C> <C> <C>
0 0 paint all railings 1 1,200.00 1,200.00
0 0 seal parking lot 1 7,500.00 7,500.00
0 0 increase exterior building lighting to improve 1 5,000.00 5,000.00
security
0 0 add glass door or window to the guest laundry room 1 300.00 300.00
door to allow view or guest laundry from outside
the laundry room for guest security
0 0 replace all damaged/fogged windows 50 150.00 7,500.00
0 0 install electronic locks 215 300.00 64,500.00
0 0 increase linen parr inventory to 3 changes per room 1 8,000.00 8,000.00
to include all terry and bed linens
0 0 replace worn sofas 45 500.00 22,500.00
0 0 replace worn guest room chairs or recover chairs 50 45.00 2,250.00
0 0 replace sagging mattresses 100 300.00 30,000.00
0 0 replace damaged/rusted room lamps 50 75.00 3,750.00
0 0 repair desilvered vanity mirrors 100 35.00 3,500.00
0 0 replace worn bath floors 25 150.00 3,750.00
- --- --- ----------
0 0 Grand Totals 159,750.00
</TABLE>
38
<PAGE> 39
Schedule 5
Twelve Month Trailing Profit and Loss Statement
COMFORT SUITES ORLANDO
TRAILING 12 MONTHS DEPARTMENTAL SUMMARY
<TABLE>
<CAPTION>
Mar-96 Apr-96 May-96 Jun-96 Jul-96 Aug-96 Sep-96 Oct-96 Nov-96 Dec-96 Jan-97 Feb-97 TOTAL
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ -----
PRELIM
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Rooms Available 6665 6450 6665 6450 6665 6665 6450 6665 6450 6665 6665 6020 78,475
Rooms Occupied 6430 6112 5733 6268 6556 6228 4369 5687 4988 5103 5884 5821 69,179
Occupancy % 96.47% 94.76% 86.02% 97.18% 98.36% 93.44% 67.74% 85.33% 77.33% 76.56% 88.28% 96.69% 88.15%
ADR 58.09 55.86 48.79 52.14 55.35 51.68 49.70 49.97 50.35 54.16 59.15 62.53 53.96
REVPAR 54.12 52.93 41.97 50.67 54.44 48.29 33.67 42.64 38.96 41.49 52.22 60.46 47.59
REVENUES
Rooms Dept 360,679 341,393 279,737 326,829 362,864 321,871 217,158 284,170 251,316 276,499 348,028 363,995 3,734,539
Food Dept 6,883 6,400 5,435 5,946 4,857 3,888 2,326 4,044 3,809 2,648 5,044 7,520 68,800
Beverage Dept 6,491 7,708 7,295 6,960 5,276 5,706 4,723 6,347 5,852 3,407 6,025 7,070 72,860
Telephone Dept 9,632 8,613 7,068 7,863 5,910 7,819 5,910 8,042 6,695 6,893 7,479 6,984 88,908
Net Other Inc. 19,306 21,396 20,255 26,098 26,944 23,601 16,762 16,280 16,750 22,616 40,679 20,824 271,511
------------------------------------------------------------------------------------------------------------
TOTAL REVENUE 402,991 385,510 319,790 373,696 405,851 362,885 246,879 318,883 284,422 312,063 407,255 406,393 4,226,618
COST OF REVENUE
Rooms Dept 75,271 77,942 70,738 76,605 85,969 85,198 70,870 70,519 70,558 87,821 83,055 74,569 929,115
Food Depts 1,905 1,726 4,761 5,928 (822) 3,089 2,084 1,674 2,485 1,664 1,600 4,094 30,188
Beverage Depts 5,623 8,054 7,867 6,120 9,522 6,396 5,965 6,321 6,029 4,432 5,653 6,136 78,118
Telephone Dept 5,007 5,086 4,662 3,645 2,506 3,083 3,054 4,569 2,535 725 876 3,006 38,754
Choice Fees 3,367 4,550 4,148 3,069 3,944 4,481 3,807 1,984 3,106 2,532 2,973 4,224 42,185
------------------------------------------------------------------------------------------------------------
TOTAL COST OF REV 91,173 97,358 92,176 95,367 101,119 102,247 85,780 85,067 84,713 97,174 94,157 92,029 1,118,360
TOTAL OPERATING REV 311,818 288,152 227,614 278,329 304,732 260,638 161,099 233,816 199,709 214,889 313,098 314,364 3,108,258
UNDISTRIBUTED COST
Adm & General 32,980 30,865 31,674 35,773 28,855 35,026 31,560 29,266 27,871 59,384 38,065 37,453 418,772
Sales & Mktg 44,818 40,256 35,773 36,327 37,331 38,866 36,350 36,734 34,500 29,936 35,753 42,373 449,017
Energy/Util 18,819 17,153 17,336 19,039 21,537 24,487 19,670 18,336 17,059 16,707 18,797 18,095 227,035
Prop. Maintenance 16,934 12,177 17,049 15,705 19,375 22,576 27,532 17,415 15,968 19,680 12,738 14,506 211,655
------------------------------------------------------------------------------------------------------------
TOTAL UNDISTRIBUTED 113,551 100,451 101,832 106,844 107,098 120,955 115,112 101,751 95,398 125,707 105,353 112,427 1,306,479
GROSS PROFIT - OPER 198,267 187,701 125,782 171,485 197,634 139,683 45,987 132,065 104,311 89,182 207,745 201,937 1,801,779
49.20% 48.69% 39.33% 45.89% 48.70% 38.49% 18.63% 41.41% 36.67% 28.58% 51.01% 49.69% 42.63%
PROPERTY TAXES $ (121,307)
7% MGMT/RESERVE FEE $ (289,000)
NOI 1,391,472
</TABLE>
39
<PAGE> 40
Schedule 6
The undersigned are all of the entities and individuals owning at least
a twenty five percent (25%) ownership interest in Seller and the undersigned
join in the execution hereof to acknowledge, consent and agree to the terms and
provisions of Paragraph C. of Article XVI of the Agreement to which this
Schedule 6 is attached and incorporated into.
/s/ William H. Bodenhamer (SEAL)
-----------------------------
William H. Bodenhamer,
Individually
40
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 340
<SECURITIES> 0
<RECEIVABLES> 7,154
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 9,016
<PP&E> 229,893
<DEPRECIATION> 16,078
<TOTAL-ASSETS> 224,103
<CURRENT-LIABILITIES> 8,507
<BONDS> 63,081
0
0
<COMMON> 158
<OTHER-SE> 141,083
<TOTAL-LIABILITY-AND-EQUITY> 224,103
<SALES> 0
<TOTAL-REVENUES> 16,824
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 6,669
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,811
<INCOME-PRETAX> 7,733
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,733
<EPS-PRIMARY> .54
<EPS-DILUTED> 0
</TABLE>
